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DEGI purchases Iris Shopping Center-Titan for 147 million Euros from Avrig 35
06.06.2008
06.06.2008
DEGI, a part of the Aberdeen Property Investors Group, today announced that it has signed a contract to purchase the Iris Shopping Center-Titan developed in Bucharest by the Avrig 35 Group, for an investment volume of around 147 million euros. The new acquisition, purchased through a property company will be integrated into the special property fund DEGI EUROPE RETAIL, which specializes in retail properties throughout Europe.
The Iris Shopping Center is located in the third district of Bucharest, the Titan district, the most heavily populated area in the city. The complex consists of two attached commercial units. In November 2006, the Auchan Hypermarket with the connected shopping gallery was opened. In May of 2008, the ground floor of the Iris Commercial Gallery was opened and will be followed, in the coming months, by the opening of the first floor, which will consist of a cinema, bowling alley and food court. In total, the retail property has a gross rental area of approximately 48,000 mp, and 2,000 underground and above-ground parking spaces.
The French retail chain Auchan has agreed to lease the hypermarket and the shopping gallery for a long-term period and this will secure the largest portion of the cashflow for many years to come. The shopping center is fully let to institutional lessees with high credit-worthiness. All leases are concluded in euros and fully index-linked. This largely secures the investment against currency and inflation risks.
The Iris Shopping Center is situated in an easily visible location directly on the main artery of a densely populated district in the east of the city. Around 130,000 residents live in the primary market area of one kilometre radius; approximately 300,000 residents live within a radius of five kilometres. In this area there are no other competitive properties apart from smaller food stores. Existing or currently planned shopping centres are located on the edge of the market area of five kilometres and seek to attract a different type of target customer.
With a population of around 22 million inhabitants, Romania is not only one of the largest sales markets in the EU, but also one of the most dynamic economies with a gross domestic product (GDP) growth of 6% in 2006. In December the constantly falling unemployment rate was at around 6.3%, with an inflation rate of around 5%. Private consumption is the main driver of the good economic trend. An annual increase of 5.3% is forecast up until 2012. "This makes Romania one of the countries with the strongest growing consumer spending for private households in Central and Eastern Europe. The retail trade in modern shopping centres will profit in particular from this." according to Barbel Schomberg, CEO of the DEGI management board.
The 2 million inhabitants of Bucharest (around 10% of the country's population), the largest city in Romania, contribute to approximately 23% of Romania's GDP. The GDP growth of Bucharest is estimated at around 9% for 2007 and at an annual rate of 8.4% for the years from 2008 to 2010. Accordingly, Bucharest is the region with the fastest economic growth in Eastern Europe.
"Auchan Titan, located in the Iris Shopping Center, is the first shopping center in Romania which, thanks to its excellent location, has recorded annual sales in excess of 100 million euros and therefore surpassed all expectations. We assume that this expansion of our investments in Romania will be more than worthwhile and that the investors of DEGI EUROPE RETAIL will profit to a special degree from the dynamic development of the Romanian economy." Schomberg emphasized.
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Avrig 35 Group
Avrig 35 Group was established in 1999 by four American investors. Since its inception the Group has grown to become one of the leading real estate developers in Romania. The company draws upon the extensive experience of its owners and employees to approach ambitious projects in different sectors of the Romanian market. Our ability to deliver exceptional services and value to our clients derives from the strength of our investment analysts and construction professionals working together towards a common goal.
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