Austrian fund buys into Poland, looking for more deals

CA Immo, a subsidiary of Austria's Credit Anstalt Group, acquired the Renaissance Tower office building in Warsaw for €55 million earlier this month. "Good location, full occupancy and long-term tenants were among the reasons for buying the building," said Wolfhard Fromwald, member of the board at CA Immo. The building is 100% leased; tenants include mobile telecom operator PTK Centertel, which occupies 70% of the space under an eight-year lease. Other tenants include Kredyt Bank, Com-Net Ericsson, Nike Poland and Pepsi-Cola, which have lease contracts running from three to five years. The 18,500 square-meter project, completed by U.S.-based Apollo Rida in 2000, is located on ulica Kasprzaka. The Vienna-based property fund expects that Renaissance Tower would yield 10.6%. Rafał Nowicki, vice president of Apollo Rida, said the sale of Renaissance Tower was part of the firm's strategy. "We develop and sell," he said. He added that the deal took about six months until the transaction was concluded.

Dorota Latkowska, head of the finance and investment department at U.K.-based Knight Frank Nieruchomości, said investment deals usually take more than a year to complete. "It was done at an express pace," she said. The acquisition is subject to Interior Ministry approval. "We are hoping to receive consent next month," Fromwald said. U.S.-based CB Richard Ellis property consultancy acted on behalf of Apollo Rida. Alan Colquhoun, managing director of DTZ Zadelhoff Tie Leung, said Renaissance Tower is a good investment product because it has reliable tenants, a clear income structure and technical specifications are right. "These factors - technical parameters and financial structure - make the building a good investment product," he said. Colquhoun added that any institutional investors have been interested in the Polish property market for more than two years but the lack of good-quality product has been a limiting factor. "The biggest problem is the shortage of quality buildings, which is what is holding back the institutional investors from injecting money in Poland," Colquhoun said. Still, there are a couple of deals in the due-diligence stage and property experts expect more institutional deals to wrap up this year.

Renaissance Tower is the second CA Immo investment in Poland. The fund also has agreed to inject about €22 million in a 7,200-square-meter office building on Warsaw's ulica Wspólna last October. Final terms are under negotiation. The project, developed by Germany-based Mahler Project, was completed in June 2000 and its tenants include Royal PBK, an insurance company and Novell, a software firm. CA Immo AG's Fromwald said that the yield on this scheme should exceed 11%. With the acquisition of Renaissance Tower and the Wspólna property, the fund has total assets worth €400 million, of which 32% was devoted to Central and Eastern European countries, including Hungary, Slovakia and Poland. The latest investment was the largest deal done by CA Immo in this region. The Austrian fund is currently looking at other office schemes in downtown Warsaw. "We are interested in purchasing at least two more buildings in Warsaw in the future, one of them even this year," Fromwald said. He declined to say which one. "All I can say is that we focus our attention on centrally located office buildings, ranging from 5,000 square meters to 15,000 square meters of net space," he said. CA Immo AG's budget for domestic and foreign acquisitions in 2002 amounts €150 million.

In brief: - U.S.-based developer GE Capital Golub Europe will hold a topping-off ceremony for the first phase of the International Business Center (IBC) office building on April 12. The first stage, which broke ground in June 2001, totals 17,500 square meters, including 1,500 square meters of retail space. It is slated for completion in January 2003. Global consultancy PricewaterhouseCoopers has already leased 8,000 square meters in the scheme. The company will vacate the offices on Aleje Jerozolimskie and ulica Nowogrodzka and will move its 750 employees to the new headquarters next year. IBC is located at the intersection of Aleja Armii Ludowej and ulica Polna. Total value of the investment is estimated at $85 million. The second stage comprises another building totaling 17,500 square meters. Erste Bank der Oesterreichischen Sparkassen, Golub Europe and Heitman Central European Property Partnership provided the financing. As with other GE Capital Golub Real Estate investments, which include the Warsaw Corporate Center and the Warsaw Financial Center, no agency was hired to market the IBC.

- David S. Smith, a packaging producer, took 1,150 square meters in an office and warehouse complex on ulica Fleminga in Warsaw. Maxon Nieruchomości, a Warsaw-based property consultancy, represented the building's owner.

- Manta, a Polish importer and distributor of computer accessories, leased 650 square meters in the Elemis warehouse and distribution center in Warsaw's Targówek district. Maxon Nieruchomości acted on behalf of the building's owner.

- Germany's ECE Projektmanagement, a developer, signed a letter of intent with Szczecin city authorities to build a zł. 400 million ($97.6 million) shopping center on ulicas Niepodległości, Obrońców Stalingradu and św. Wojciecha. Construction should last 18-22 months.