Record Romanian deal paves way for strategic investors

AFI Europe’s €307 million purchase last week of a portfolio of offices in Romania is said to be the largest office deal in the country’s history as well as being highly significant for the CEE region.

The acquisition, from NEPI Rockcastle, also “puts Romania on the map” for large strategic investors according to Colliers International which said the deal could be a catalyst for significant new transactions in the future.

Colliers, which acted for the vendor, added that the deal accounts for a third of the expected investment volume in Romania during 2020.

Green credentials

The portfolio of four office projects has a total leasable area of 118,500 sq m. It includes three buildings in Bucharest – Floreasca 169, The Lakeview and Aviatorilor 8 – and the City Business Center in Timisoara. All the buildings have green credentials and are strategically located in the top business centres, according to Colliers.

The deal, which Colliers describes as “a benchmark in value and complexity” was originally agreed at the end of 2019.

“The fact that it was completed in an economic context marked by Covid-19, under the terms initially agreed upon, confirms the investor’s confidence in the potential of the assets and the market,” said Colliers International director investment services Robert Miklo.

Strategic disposal

The sale was a strategic disposal on behalf of the NEPI Rockcastle investment fund, which has a total portfolio valued at around €6.1 billion, primarily high quality retail. AFI Europe is expanding locally and already owns the AFI Cotroceni shopping center and around 92,000 sq m of offices in AFI Park and AFI Tech Park in Bucharest.

This year the first half real estate investment volume in Romania was €400 million, 18% up on the same period in the previous year. Offices accounted for nearly 86% of this according to Colliers International. More than 25% of the first half volume was generated by the sale of the GTC portfolio to Optimum Private Equity Fund, a deal which included several office projects in Bucharest and was worth about €116 million for Romania.

Colliers said that taken together the NEPI Rockcastle/AFI Europe deal and transactions between German fund GLL and Chinese investment company Fosun, the investment volume to date exceeds €800 million and is expected to reach €1 billion for the full year, a similar level to 2019.

During the first half, Central and Eastern Europe (CEE) attracted about €6.3 billion of which Romania accounted for 6.5%. Poland and the Czech Republic remain regional leaders with 78% of the total, followed by Hungary and Romania.

Demand is strongest for offices which accounted for 41% of total investment, followed by industrial and logistics (22%) and retail 12%.