Before 2009 NEPI was known on the real estate market as just another investment fund listed on the London stock exchange looking to multiply its money in Bucharest, where it had assets more likely to be considered “class B”, as well as an industrial project in the Rasnov area and office buildings in the small towns of Slatina, Calarasi and Alexandria.
Now from NEPI’s headquarters in northern Bucharest one can see the Barbu Vacarescu-Floreasca area of Bucharest, the only area of the Romanian capital to have weathered the crisis in the last few years and where the South-African fund bought for over EUR160 million two of Bucharest’ leading business centers – Floreasca Business Park and The Lakeview.
“I believe Lakeview and Floreasca are two of the best three office buildings in the city. Anyway, the genuinely class A buildings in Bucharest are very few,” says Slabbert, asked about the reasons that determined him to sign the acquisition of Lakeview recently for almost EUR62 million, the largest transaction of the beginning of the year.
Slabbert says the yield of the transaction is 8.7% per year in euros, but specifies there will be maintenance costs and that additional investments will be made in the building.
In addition, NEPI has agreed to include in the price of the transaction the repayment of an around EUR40 million loan that developers AIG Lincoln and Dinu Patriciu had contracted from MKB Bank in Hungary, an institution that no longer wants to be a creditor on the Romanian market as it is in the process of selling its local subsidiary.
Slabbert says the Royal Bank of Scotland, which occupies around 8,000 sq m (almost a third of the building’s 25,000 sq m-area and will cut its office area down to around 2,000 sq m, so NEPI will have to find tenants for around 6,000 sq m of the building.
What is the target of the South African fund on the office market, where currently the largest owners in Bucharest are Austria’s Immofinanz and CA Immo, as well as Romanian businessman Liviu Tudor?
“We want to be the no. 1 office owner in Romania, which can offer spaces to multinationals present here,” says Slabbert, who in the spring of last year also bought the largest business park outside Bucharest, City Business Center (CBC) in Timisoara, a project that now has a leasable area of 36,000 sq m in four buildings.
NEPI has also recently started work on a 19,000 sq-m building within The Office business park in Cluj in partnership with Ovidiu Sandor, the developer of the Timisoara project. The plan is to finalize the building by spring of next year.
“In Timisoara and Cluj it will be quite easy [to become the largest office owner] as these cities don’t have a rich supply of business centers. In Bucharest we have focused our attention on the Barbu Vacarescu area because we believe the old CBD [central business district – Piata Victoriei] has traffic problems, few parking spaces, and the existing buildings don’t have a lot of area per floor, which is something that multinationals don’t like. In the Barbu Vacarescu area there are many new developments and starting this autumn there will also be a mall there, so this will be the city’s new CBD.”
Through the Lakeview acquisition, NEPI has reached a portfolio of around 140,000 sq m of office, which places it among the top three owners of business centers, with the South African fund to boost its stock of offices by developing its Cluj portfolio, a fifth building in CBC Timisoara, as well as a building in Bucharest’s Piata Victoriei square.
“We will develop the Piata Victorie project at some point. We want to develop a 7,000 sq-m building, not a project that dominates the area, this is not our intention. We want to restore the monument and make a three-level underground parking lot, given that this is a major problem for Piata Victoriei square.”
“Giant mall” in north-western Bucharest
NEPI has also become a major player on the shopping center segment in the past few years, where it owns projects in Pitesti, Ploiesti, Braila and Brasov, and intends to expand to Galati and in Bucharest.
In Bucharest the South-African fund targets two projects – a retail park on the platform of the former Vulcan plant, where it is doing the last demolition work and awaiting the construction permit, as well as a mall in north-western Bucharest, where it is negotiating the purchase of land.
“We are in due diligence for the acquisition of a sizeable land in north-western Bucharest. We want to develop a mall there and in order to have a dominant project in Bucharest it is not enough to build a 50,000-60,000 sq-m project because there are also larger projects. You have to make a 100,000 sq-m project,” says Slabbert, without providing further details.
While the land for the Bucharest mall has not been bought yet, NEPI has bought a 12-ha plot in Galati, where it intends to build a 50,000 sq-m mall in two stages next to a Kaufland store.
“We have signed the acquisition contract for the plot in Galati and will build a shopping center there: the first one is for a 30,000 sq-m area and the second is for 20,000 sq m. The first stage is almost fully pre-rented – we are negotiating with two hypermarkets and have yet to decide who to sign a contract with – but as concerns clothing retailers, the problem has been solved.”
Slabbert says he is awaiting the construction permit in order to start work on the Galati project. “Sometimes the authorization process takes too long, but outside Bucharest it is faster.”
A new acquisition in Brasov
The provincial city with the tightest competition among developers over a dominant mall is Brasov, where NEPI owns a 5,000 sq-m shopping gallery next to which it bought the space of the Mobexpert store last year, both properties being located close to the city’s Carrefour hypermarket. There, as well as on a 7,000 sq-m plot bought from Romstal, NEPI wants to develop together with Carrefour a project that will reach a leasable area of 65,000 sq m, and will integrate the current hypermarket and the shopping gallery.
NEPI currently has real estate assets of over EUR600 million, as well as future development plans and acquisition targets that over the next few years could take the fund’s portfolio to one billion euros, a value reached so far only by Austria’s Immofinanz. “We don’t have targets to meet, but when it happens, we will exceed the EUR1 billion mark.”
(English version by Daniela Stoican)