DEGI Enters Romanian Real Estate Market

With the purchase of an office property portfolio in Bucharest, DEGI Deutsche Gesellschaft fur Immobilienfonds mbH is the first German property fund company to enter the Romanian property market, for a investment volume totalling around 111 million euros. With a total area of 34,700 square meters changing hands, the transaction is the biggest ever on the Romanian office market.

The Millennium Business Center and the Construdava Business Center, with a total investment volume of 82.6 million euros, are earmarked for the portfolio of DEGI INTERNATIONAL, which having closed this transaction is broadly diversified with 25 properties in ten countries. The PGV Tower, for a price of 28.8 million euros, goes to the semi-institutional fund DEGI GLOBAL BUSINESS, which thus owns eight properties in seven countries.

The two funds are purchasing the properties through holding companies. The seller is the European Convergence Property Company, listed on the AIM in London. For this transaction, DEGI received commercial advice from EURISKO and legal consultancy from the law firm Wolf Theiss.

Bucharest contributes about 23 percent of the country"s GDP, which rose by 6 percent in 2006. Bucharest"s economic performance soared by 8.4 percent over the same period, thus exhibiting the most dynamic growth of any metropolis in Eastern Europe. The city possesses 650,000 square meters of modern office space; the vacancy ratio for Class A office premises is currently around two percent. DEGI intends in the future to acquire not only office buildings but also retail properties in Romania.

The 18-storey Millennium Business Center, together with a 5-storey annex with terrace, is located in a very good inner-city district at the corner of Carol Boulevard and Armand Calinescu Str., featuring 14,840 square meters of rented space and underground parking lots for 98 cars. The property is located opposite the Bucharest Stock Exchange, and is currently let in its entirety to 18 creditworthy tenants like the World Bank and Sanofi Aventis Romania.

The likewise fully let Construdava Business Center is an 8-storey office building, with a total rented area of 9,264 square meters and parking lots for 195 cars. It is located in the north-eastern part of the city, directly on the Pipera-Tunari main road. This property, like the Millennium Business Centre, was completed in 2006.

The PGV Tower, also known as the Banc Post Building after its principal tenant, is located in Bucharest"s southern inner-city aree, not far from Unirii Boulevard. The office building, with a total of 10,617 square meters rented space, consists of two wings with 13 and six floors respectively, divisible into two or three rental units per storey, plus parking lots for 89 cars in the basement. The building is completely let to nine creditworthy tenants; the tenancy agreement with Banc Post runs until 2014.