What can one do with one billion euros now? An investor coming with such a budget on the real estate market could buy all the office buildings that Immofinanz has in Bucharest, which total over 200,000 square meters, the City Gate towers in Piata Presei (northern Bucharest), the AFI Palace Cotroceni, as well as the Militari Shopping Center in the capital city, taking into account the market value of such projects at the moment.
Ziarul Financiar analyzed the financial reports of the largest real estate companies on the local market, and arrived at the conclusion that a potential EUR1 billion shopping basket could include these assets.
On the other hand, no data about the market value of the malls in Baneasa, Vitan (Bucuresti Mall) or Piata Sudului (Sun Plaza) has been published lately, but these projects might cost about EUR800 million together, according to ZF estimates.
AFI Cotroceni is the most expensive shopping center ever built on the Romanian market, following an investment of around EUR300 million, and last year produced EUR23.8 million in revenue. Its owner, Israel-based AFI Europe, evaluated the mall at EUR350 million to EUR370 million last year. If a buyer were to pay more than EUR350 million for the mall, they should accept a yearly yield of less than 7%.
An investor buying the City Gate, a project owned by Israel-based GTC and Switzerland’s Bluehouse and valued at EUR173 million, should accept an even lower yield, considering the average rent of EUR20 to EUR21/square meter and the lettable area of 46,000 square meters of office space. The tenants include Rompetrol, Romtelecom, Millennium Bank and Microsoft.
The two properties generate sufficient revenue for the owners to repay the loans they took for the investment so that they are not pressured to sell now, but probably will once investors return to the market.
Were that to happen now, and the investor with EUR1 billion available bought them both, they would still have about EUR450 million left for other acquisitions.
If looking at office space, an interesting portfolio is the 200,000 square meter portfolio of Austrian investment Immofinanz, which could be had for some EUR350 million. It includes the IRIDE business park in Pipera, the Bucharest Corporate Center on Buzesti Street (the headquarters of insurer Generali), S-Park and Baneasa Airport Tower, and generates about EUR25 million in revenue every year. The owner evaluated it at EUR346.5 million in its latest report.
Immofinanz has not sold any of its strategic assets on the local market in its eight years of active involvement, proving it is a long-term investor. It did sell some of its projects on other markets, meaning it might do the same in Romania.
Having now bought Immofinanz’s office portfolio, the EUR1 billion investor would have about EUR100 million left. A project that might fit the budget is the Militari Shopping Center in western Bucharest, now owned by Atrium European Real Estate and valued at EUR71.3 million. The project’s lettable area stands at 53,000 square meters and tenants include Praktiker, Decathlon, Auchan, C&A and New Yorker, which generated EUR6.5 million in net rental revenue.
Unlike 2006 or 2007, when every active investor was looking at acquisitions foremost and the market had few buildings completed, now there are enough properties available, but no buyers.
Other than the above-mentioned projects, whose value was extracted from financial reports, the potential acquisition targets in Bucharest include the Baneasa project owned by Gabriel Popoviciu and Radu Dimofte, the Sun Plaza mall or office buildings such as The Lakeview, Nusco Tower, Euro Tower and Premium Plaza.
What is the real market value of these pieces of property? The price will be decided by the market over the coming years once foreign investors return to Romania.
(English version by Loredana Fratila-Cristescu)