Subprime crisis led players into standby mode on the local real estate market, and banks have restricted their lending conditions, this being a period marked by negotiations. In the actual market conditions, those who will cope best with the gloomy conditions are buyers who will bet on the capital they hold.
“There have been many negotiations in this direction and their course was extremely difficult. You would start negotiations and you had a well-settled plan, but meanwhile, the market altered, and at the end of negotiations, the offer would change. At that time, landlords refused and re-launched the product on the market trying to sell it”, said Georgiana Anghelus, consultant at Colliers International.
According to her, overall value of closed deals in first nine months this year slid 50% compared to value of deals closed in the same interval last year, the decline being caused by subprime crisis.
“Negotiations ‘evolution was hardened and lasted more. Furthermore, outturns were bigger, as people signaled the downshift of the market. Most of the deals closed this year started last year, because if they would have started in 2008 they hadn’t been completed by now or had had one-year delays,” Colliers’ specialist added.
It is less likely to witness any other transactions completed by yearend, as a part of the players were feared and entered standby mode waiting for a write-off of yields.
“Those who chose to wait experienced difficult borrowing procedures. If they started a forward-purchase deal, banks would not fund them, unless the project was 60% leased,” Georgiana Anghelus added.
Top Transaction: RREEF Real Estate- Upground Estates
Late May, real estate investor RREEF Real Estate, subsidiary of German-based Deutsche Bank, acquired a real estate project in Bucharest for 340 million euros, which includes residential compound Upground and two office buildings, developed by businessmen from Greece and UK.
The deal was forward purchase, following the projects to be acquired at the construction works completion, this being the biggest real estate deal in Romania.
“Being a forward purchase deal, it means that RREEF Real Estate pumped 20% of the overall amount, namely 70 million euros,” Georgiana Anghelus explained.
The seller appointed law firm Biris Goran to lead the transaction, while the buyer appointed NNDKP for the deal.
Second position: NCH Advisors
Italian-based Immobiliare Grande Distribuzione sealed late March a preliminary agreement with NCH Advisors, to takeover the 15-units Winmarkt chain and a commercial real estate that was up for lease, the transaction value amounting to 18.25 million euros.
NCH Advisors administrates operations in Romania of American investment fund Broadhurst, and NCH’s activities are headed by businessman Andrei Siminel.
“It was a long-lasting transaction, if we think that NCH had several attempts to sell Winmarkt’s portfolio, and the initial price was 250-280 million euros,” Colliers representative said.
3rd position: DEGI – Avrig 35
Early this summer, investment fund Deutsche Gesellschaft fur Immobilienfonds (DEGI), subsidiary of Scottish Aberdeen Property Investors Group, acquired from Avrig 35 commercial center Iris from Bucharest for 147 million euros. The transaction was brokered by real estate advisor CBRE/Eurisko and completed in September.
The transaction confirms CBRE/Eurisko’s forecasts: local market is less affected by mortgage crisis that United States is experiencing, being perceived as an attractive market.
Fourth position: Raiffeisen Evolution – Petrom
Real estate developer, Raiffeisen Evolution project development GmbH won in September the tender for 11-hectares land acquisition from Romanian oil company Petrom for 90 million euros, this being the biggest land acquisition deal ever made in Romania.
“We joined the race too late, and it was a fierce competition. In December 2007 we won the tender, and the pre-contract was signed late December 2007,” said Monica Barcutean (photo), managing director at Raiffeisen Evolution Romania.
Fifth position: AEW Europe – Bel Rom
AEW Europe, subsidiary of Natixis Global Asset Management and owner of office building America House, took over in early 2008 a retail park developed at Targu Mures by company with Belgian capital Bel Rom Real Estate for 90 million euros.
According to Real Estate consultant, although the transaction was closed in early 2008, the negotiations started in summer 2007.
Sixth position: Raptis Kavouras - Costica Constanda
Greek real estate developer Raptis Kavouras acquired 1.6 hectares of a land parcel in French Village from businessman Costica Constanda (photo), the transaction being closed at 68 million euros price. The company appointed law firm Tuca Zbarcea and Associates.
“We all know that subprime crisis’ woes triggered a major dive in real estate deals number and in this landscape, a 68 million euro transaction for 1.6 hectares raises players’ interests,” said Dan Borbely, partner at Tuca Zbarcea and Associates and coordinator of the real estate department.
Seventh position: New Europe Property Investments - Avrig 35
Investment company New Europe Property Investments (NEPI) acquired two companies, that hold 18 real estates in different cities in Romania from a subsidiary of Avrig 35, paying 46.3 million euros.
“NEPI bought last year two real estates owned by Flamingo in Bucharest, Iasi, Bacau and Brasov, therefore, the company is highly interested in this kind of portfolios,” Colliers specialist added.
Eight position: Ioannis Papalekas - Eurobank Real Estate Investment
A group of investment funds, represented in Romania by Ioannis Papalekas, a Greek businessman, sold an office building for 40 million euros, to real estate investor, Eurobank Real Estate Investment.
“Transaction with Eurobank Properties REIC lasted for 12 months, and three law experts were involved in the deal. The building is located in northern Bucharest, and covers 23,000 sqm in seven floors,” representatives of Biris Goran law firm stated for Wall-Street.
Ninth position: CBRE – Eurisko
CB Richard Ellis, one of the world’s biggest real estate agencies acquired in February it’s biggest competitor Eurisko, for 35 million US dollars.
Radu Lucianu (photo), managing partner at Eurisko said both companies would combine resources and personal experience in providing best-quality services. “We will work with CBRE to serve all its clients in the region”, Radu Lucianu said.
Tenth position: Eurobank Properties - Retail Development
Greek investor, Eurobank Properties member of Eurobank EFG closed in June takeover deal of Romanian Retail Development company that holds a 8,980 sqm real estate in Iasi, leased to Praktiker.
The transaction value was set at 14.5 million euros. Market value of Retail Management was estimated at 14.57 million euros.
Translated and adapted by Camelia Oancea.
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