The Fabian Romania Property Portfolio

 
Scroll down for details of each development.
 

 
Click the map to view a large version in a new window (depending on your browser's capabilities, you should be able to zoom and pan around the map), or scroll down for details of each property.
 

In June 2008, the Company agreed to enter into a joint venture with SCD Group to develop residential projects in western Romania. On formation, the joint venture completed the acquisition of two residential development sites, one in Oradea and the other in Satu Mare.

These two acquisitions form part of Fabian’s strategy to invest in and develop residential schemes in the fast growing secondary cities, particularly in western Romania.

The purchase price for the two sites was an initial €2.5 million with an additional equity requirement of €3.75 million, adding up to a total investment of €6.25 million, contributed by Fabian and SCD in equal proportions.

The Oradea site comprises 33,862 square metres with the intention to deliver 388 apartments. Detailed planning has been achieved and construction consents are expected to be received by the third quarter of 2008. The second site in Satu Mare comprises 6,700 square metres and has a building permit for 165 apartments. Construction on both sites is expected to commence in the first quarter of 2009 with practical completion anticipated in the first half of 2011 for the Satu Mari development and in the fourth quarter of 2012 for the Oradea development

Oradea is a historic city dating back to the 10th century. With a population of over 200,000, it is a top ten city within Romania. Located close to the border with Hungary it has many ties with its neighbour and has a mixed culture and a popular tourist location. The site is located on the outskirts of the city in a park hillside location which overlooks the river and city centre. This is the most expensive area for residential in Oradea and creates an opportunity to develop mid to high end sector of the market.

On 7 March 2008, the Company completed the acquisition of the Romana office project. The Romana office building will be built for the Company on a centrally located site on Dacia Boulevard and is targeted to attract international tenants. The building will be built to Class A specifications with a gross area of approximately 3,000 square meters with views over Romana square. The project management will be undertaken by Globus, an experienced local developer in Romania. Construction commenced in June 2008 with completion anticipated in the second quarter of 2010. Upon completion, the building will provide a net lettable office area of around 2,480 square meters over 7 floors, together with 40 car parking spaces. The acquisition gives the company further exposure to both city centre location and the office rental market.

On 21 November 2007, the Company acquired the Evo Centre office building from its developer, the Adama Group of Israel. The building comprises 2,648 square meters of net lettable office and retail space. The building is located in a predominately residential area just north of the major development area of Pipera. By agreeing to purchase the building empty, the company took on the ‘letting risk’ enabling it to purchase the building at a more advantageous price. This transaction was very similar to the manner in which the Company had previously purchased the Banu Antonache building, also unlet, from a developer.

On 18 June 2007, the Company acquired the Baneasa Business Centre office building from the Austrian developer Immoconsult Leasinggesellschaft Gm.b.H.. The building is a Class A office building comprising 9,799 sqm of net lettable area. It is located in the rapidly emerging office district of North Bucharest. The building hosts a range of multinational tenants including Wrigley, Colgate, Fresenius, Cargill and Volksbank thereby meeting the targeted tenant profile of the Company. The acquisition gives the Company further exposure to a high quality office building located in the heart of the emerging business district of North Bucharest. The investment manager believes there is rising demand for space by both existing multinational tenants seeking to expand and new multinational tenants entering Romania.

On 25 June 2007, the Company purchased a 50 per cent interest in a residential development site to build 595 apartments in Timisoara. The acquisition is structured through a development company that owns a 1.1 hectare site in north Timisoara. Coltex, the co-shareholder and developer holding the other 50 per cent. interest, has entered into a partnership agreement with Fabian to complete this residential development. Coltex will also be the development manager and has a known track record, having developed and sold the successful Banu Antonache office building to the Company in late 2005.

The acquisition was the Company’s first joint venture residential project outside Bucharest. It gives Fabian further exposure to the rising residential sector as well as to Timisoara. The City is Romania’s third largest city with a population of over 300,000 and is located in the West close to the Hungarian border. The area is the focus of a large amount of foreign direct investment in manufacturing industry, particularly from German and Italian companies. The Company believes the city has attractive characteristics for supply of modern residential apartments.

In late 2007, the Company, in conjunction with its development partner, Coltex, purchased a further 2,320 square metres of land to take the total size of the plot to 13,245 square meters of land. This should allow the joint venture to construct 38,524 square meters of residential space above ground, as approved. The Company currently forecasts project completion to be achieved by the end of quarter one of 2011.

On 30 April 2007, the Company announced that it had entered into an agreement to purchase at practical completion the Cubic Center office building in the Pipera district of North Bucharest. The building will be a Class A office building with a gross area of approximately 44,000 square meters, located in north Bucharest. The building is being developed by Kendama, an experienced local developer in Romania. Construction is now well under way and completion is anticipated in the second quarter of 2009.

Upon completion, the building will provide a net lettable office area of 26,673 sqm over 12 floors, together with 533 car spaces. The building is located in a prominent location in the Pipera district and is likely to attract international tenants seeking Class A office space. Pipera is recognised as the most popular office destination to the north of the city and is undergoing massive transformation in terms of new office development and government infrastructure improvement. Being equidistant between the city and the airport its benefit as an ideal office location are excellent.

In September 2006, Fabian acquired its first office co-development project in Bucharest. The Company purchased a 50 per cent. stake in the company which owns a 5,048 sqm land plot in central north Bucharest. Initially, Fabian was able to secure exclusivity over the plot which gave time to find a development partner for the Company. AIG/Lincoln was chosen to partner the Company in the acquisition. AIG/Lincoln is the European real estate development arm of the joint venture between AIG and Lincoln Properties, both of the United States. The Company invested €5.3 million for a 50 per cent. stake in the development company, BVB SRL through the Luxemburg based joint venture company, AIG/Lincoln Lakeview.

The development involves the construction of a Class A office building of 23,256 sqm gross built area above ground. AIG/Lincoln acts as developer on the project. The Company signed joint venture, development and construction management agreements with AIG/Lincoln to this effect. The Lakeview will most likely be the most technically advanced A class office building to have been built in the city when it is completed in 2009.

In September 2007, final building consent was granted for the Lakeview office building. During the third quarter of 2007, extensive work was undertaken by our development partner, AIG/Lincoln, to prepare the site for the start of construction. Construction started on site during the second quarter of 2008. The Company currently forecasts project completion to be achieved by the end of 2009.

New Town is a scheme of 72,000 square metres above ground involving the construction of 651 apartments over two phases. The Company paid €5.75 million for 50 per cent. of the development and the acquisition was completed in August 2006. Mivan are the joint venture partner in the project as well as the development manager of the scheme through their local subsidiary, Ropotamo SRL. The joint venture development company, Phoenix Park SRL, agreed a fixed price build contract with Mivan Kier. Mivan Kier is itself a construction joint venture between Mivan and Kier Group P.L.C. The scheme was granted final building consent at the start of April 2007. The site is 22,000 square metres in size and situated close to a nearby metro station. The apartments will be in the region of 100 square metres per unit and are targeted at Bucharest’s emerging middle income families.

A full sales launch for New Town commenced in mid July 2007 with the release of the first of six phases.

At 31 March 2008 DTZ valued Fabian’s 50 per cent. share in New Town at €15.6 million. Adding work in progress of €13.0 million, but subtracting advances from customers of €4.7 million, the value of the company’s investment stands at €23.9 million. This has been financed by €5.8 million of equity and bank debt drawn down from HVB of €9.4 million. The resultant gain of €8.7 million equates to a 153 per cent. return on the company’s original invested equity of €5.8 million.

DTZ’s forecast implies future development profits amounting to €8.1 million or some €0.16 per share. The Company currently forecasts project completion to be achieved by the end of 2009.

Cascades was purchased from a Dutch developer in April 2006. It is a high quality Class A office building in a prime location. It was completed in October 2004 and comprises 4,347 square metres of lettable space with 24 underground car parking spaces. The building is fully let to an excellent set of tenants, namely Pro Credit Bank (backed by the IFC and the German Government), Aviva PLC, SC Rompetrol, HBO Romania and the Taiwan Trade Delegation. It is located on Buzesti Street, just off Victoria Square, in the heart of the City’s new central business district.

The Company signed a share purchase agreement to purchase the Cascades office building in November 2005. The transaction was successfully closed in April 2006. The price paid by the Company was €12.2 million, giving a headline yield of 8.7 per cent.

When the Company originally negotiated the share purchase agreement in November 2005, Buzesti Street was very much the emerging business district of the city. As the city has continued to expand to the north since 2005, Buzesti Street’s relative location in the city has correspondingly continued to rise in prominence.

DTZ valued Cascades at €18.4 million at 30 June 2008. With an original equity investment of €2.8 million, post debt drawdown, the return on the Company’s equity invested in Cascades has now grown to over 200 per cent since acquisition in April 2006.

40-44 Banu Antonache was acquired in December 2005 from Israeli developer Coltex with just one tenant in place. During the first six months of 2006 the Company successfully leased the building to a selection of multinational tenants including Garanti Bank of Turkey (in which GE has a significant minority stake), DTZ, General Motors, Arval (BNP Paribas) and Amway. Upon being fully let, the implied acquisition yield was 9.2% based on a purchase price of €12.3 million. All leases were set in euro’s, indexed to Eurozone CPI and were set for five years from the outset.

The building is centrally located in central North Bucharest just off Floreasca Street, in the Floreasca District. It is a predominantly residential location that has grown popular recently and now developed as a commercial location for office and retail with easy access to the city centre and the airport to the North. It is a high specification Class A building comprising 4,445 square metres of lettable office space over five floors with two sub basement car parking levels providing 84 car spaces.

The value at 30 June 2008, according to DTZ, amounted to €17.5 million, a gain since acquisition of €5.2 million or 42 per cent. On the net invested equity of €3.4 million, the return on the company’s equity has grown to 160 per cent.

40-44 Banu Antonache’s growth in value which has been derived from DTZ’s view that the building is ‘under-rented’ compared to the average achievable office rents in the market for a similar quality and located building if it was being leased out today and from a markedly lower yield compared to the implied acquisition yield.