MIL Equity Partners increases size of Eastern European Commercial Real Estate Fund (US/EUR)

MIL Equity Partners, L.P. earlier this week announed that its Fund I was increased to over US$100 million. When MIL Equity Partners L.P. announced the formation of its Eastern European commercial real estate fund in September 2004, the company only expected to raise $10 million. But interest in Eastern European property has been so great that MIL expanded the size of the fund to more than $100 million.

"Once our funding is completed, MIL will be the largest and only U.S. based real estate fund investing in commercial properties within Bulgaria and neighboring Eastern and Central European countries. We decided to increase Fund I size to accomodate strong institutional demand, which validates our investment strategy," said MIL Founder and Principal, Milo Georgieff.

"Our research on future growth throughout Eastern and Central Europe identifies Bulgaria as the prime country for MIL's real estate investment criteria. While large international funds are concentrating on Bulgarian residential real estate, we believe the best opportunity for growth is in the mid-level Class A and B commercial properties," added Michael Perlas, CFO.

The firm anticipates completing the fundraising in the next two to three months. The fund will focus on office properties of mid-level quality (both Class A and B, as opposed to Class A-plus) starting in Bulgaria and later moving on to Romania, Hungary and possibly Slovakia (map pictured). Perlas pointed out that most investors have committed to less risky Eastern European countries like Poland, Hungary and the Czech Republic, all of which have been admitted into the European Union. Yields in those regions, however, have already decreased as opportunistic buyers flood the market.

By contrast, MIL's core investment region Bulgaria offers higher returns - but at a greater risk. "We're jumping in very early in the growth curve," Perlas said. "But Bulgaria still offers a stable and business-friendly economy." The country is already a member of NATO and is expected to join the European Union in 2007. Its currency is also pegged to the Euro, showing the country's commitment to the Union, Perlas noted.

Additionally, MIL already has a real estate infrastructure established in the country. Milo Georgieff, MIL's founder and principal, is originally from Bulgaria and has capitalized on his connections in the country to locate properties in a market that does not traditionally list assets for sale.

"We're blending the real estate expertise and experience that our U.S. people have with the local knowledge our people in Bulgaria have," Perlas said. "There are a lot of undervalued assets, but it is a hidden market." Already, MIL has Bulgarian properties in its sights as soon as the fund is ready to acquire.

Source: MIL/

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