He added that AFI Europe is hoping to obtain in February the financing needed to carry on its office building projects AFI Park 2 and AFI Park 3 and to reach a refinancing agreement until the May 25 deadline for the loan taken out to develop shopping center AFI Palace Cotroceni in Bucharest.
Hay pointed out that the negotiations with banks are easier for AFI Europe, considering its background, but financing conditions remain difficult.
According to Hay, AFI Europe has not yet obtained financing for AFI Park 2 and AFI Park 3, because so far, it has used its own resources to this purpose, but, it is on the verge of contracting a loan, most likely within a month. Hay said an investment loan will be contracted for AFI Park 2, which is due for completion in April, whereas for AFI Park 3, which is due for delivery in December 2014, it will be contracted a development loan.
Hay did not give any details regarding the value of financing and the financing bank.
As regards office compound AFI Park, AFI Europe contracted a loan of EUR13.4 million from UniCredit Bank to develop AFI Park’s first office building which was entirely completed and leased. Considering that all five office buildings that make up AFI Park cover similar areas (12,000 square meters) and have approximately the same investment budget (around EUR25 million), the loans needed to complete AFI Park 2 and AFI Park 3 could also amount to roughly EUR13 million each.
Hay added he is optimistic about reaching a refinancing agreement for the loan AFI Europe took out in 2007 from Hypo Real Estate for the construction of AFI Palace Cotroceni, the Israeli developer’s first project in Romania. The loan matures in May 2014 and, in the fall of 2013, AFI Europe had yet to repay EUR220 million of the entire debt.
Financing remains the main and biggest problem real estate developers and investors have been facing over the past years and it is also a setback for further projects in the real estate sector.
AFI Europe develops and manages retail and realty projects in Romania, the Czech Republic, Serbia, Poland, Bulgaria, Germany and Latvia.