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REAL ESTATE - RETAIL - THREE MAJOR REAL ESTATE TRANSACTIONS SINCE DECEMBER 2005

Big players come to town

INTERNATIONAL real estate investors are discovering the Slovak capital's retail and office centres and marking them clearly on their investment maps. Between December 2005 and January, three major transactions took place on the Bratislava real estate market.

INTERNATIONAL real estate investors are discovering the Slovak capital's retail and office centres and marking them clearly on their investment maps. Between December 2005 and January, three major transactions took place on the Bratislava real estate market.


Apollo goes to German Hannover Leasing


The Apollo Business Centre is the largest single piece of office real estate offering high quality premises in Slovakia. The office colossus, developed by the Slovak HB Reavis, entered the market at a competitive rental price of €10 to €11 per square metre at a time when comparable office space in Bratislava was going for €13 to €15 per square metre. In doing so Apollo achieved a 100-percent occupancy rate.

The Apollo success story did not go unnoticed by international players. Ivan Valjent, chairman of the board of directors of HB Reavis, said it was just a question of time before an international investor acquired Apollo. In the end, the German Hannover Leasing came out the winner.

"Apollo received its finishing touches about one year ago. At around that time the idea of acquiring it came up. We had talks with about 30 potential investors who were international players," Valjent told a press conference.

He added that Hannover Leasing was in at the beginning of the talks, and that HB Reavis had found an ideal candidate in the company.

"Hannover Leasing submitted the best bid. The issue of finance was not the only important issue. We were looking for a long-term partner with whom we could administer the building," Valjent said.

As a result, a closed-end mutual fund managed by Hannover Leasing acquired the Apollo Business Centre in the middle of January 2006. Hannover Leasing now acts as fund manager, while HB Reavis Group provides property management. HB Reavis Group has an option to buy back the property.

At the time, the more than €100 million transaction was declared the largest real estate transaction in Slovakia's history. The exact price as well as the return on investment were not revealed.

"The price is between €100 million and €110 million. The yield is similar to that in the case of the Aupark transaction with Rodamco [see part three of this article]," Valjent said.

Norbert Fath, CEO of Hannover Leasing, said: "The acquisition of the Apollo Business Centre corresponds to our investment policy and complements our current portfolio of prime real estate in Central and Eastern Europe.

"We believe the Apollo Business Centre is the best administrative commercial property on the Slovak real estate market with quality development and design that fully meets the criteria of a "category A" office building."

The ceremonial opening of Apollo was in March 2005. In October last year it was awarded the annual architecture prize of the Slovak Chamber of Architects in Bratislava.


Polus City Centre in Austrian hands


The Austrian Immofinanz Immobilien Anlagen also announced a major deal in January to take over Polus City Centre in Bratislava from the Canadian-Hungarian developer TriGránit for over €200 million.

Immofinanz intends to purchase the modern shopping and administrative centre through its daughter company, Immoeast.

Polus City Centre has 40,100 square metres in retail space as well as two towers with 57,000 square metres in office space.

"The centre is almost entirely rented," an Immofinanz source said, as reported by the SITA news agency on January 23.

Plans are already in the pipeline for a new combined use project near Polus with an area of 120,000 square metres, two-thirds of which will be office space and one-third luxury apartments.

Immofinanz has already secured an option to buy the planned real estate project.

"We will thereby become the largest international real estate investor in the Slovak capital," said Karl Petrikovics, the chairman of the board of directors of Immofinanz and Immoeast.

The Polus Shopping Centre, together with the Millennium Tower I office building, was completed in November 2000 on construction costs of approximately €75 million. In 2003 the Millennium Tower II was built at a cost of €30 million.


Aupark to Rodamco


Even before the Apollo deal, HB Reavis made the headlines in December 2005 by announcing it had joined forces with Rodamco Europe, the largest publicly listed retail sector property investor in Europe.

Rodamco took a 50-percent stake in HB Reavis' flagship shopping centre, Aupark in Bratislava, for €75 million and a guaranteed return of 7.75 percent for the first three years, with the intention of expanding cooperation to other projects in Slovakia and beyond.

Rodamco's CIO for asset selection, Willem Ledeboer, said the Aupark deal stemmed from his firm's recent focus on Central Europe.

Following Rodamco's investments in Warsaw, Prague, Budapest, and Vienna, the company studied the Slovak market for more than a year to find the right piece of real estate. "That's how long it took us to convince HB Reavis to sell us part of Aupark, which we believe is the best shopping centre in Slovakia," Ledeboer said.

Aupark was opened in 2001 as a three-level, 43,900 square metre shopping centre.

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