CA Immo has signed a sales and purchase agreement to acquire the Millennium Towers Class A office complex comprising of 70,400 sqm GLA in Budapest, Hungary. The transaction volume of the fully rented asset amounts to €175 million, the annual rental income reaches €12 million.
The sellers are TriGranit and an affiliate of Heitman LLC. With this transaction CA Immo expands its presence in Hungary, where it currently holds the third largest property portfolio following Germany and Austria. The closing of the transaction, which is subject to standard closing conditions, is expected to take place within the next weeks. Therefore, the acquisition will already contribute to recurring earnings (FFO) of CA Immo in the fourth quarter of 2016. The transaction is financed from the existing liquidity of CA Immo. Law firm CHSH acted as advisor to the buyer.
Frank Nickel, CEO of CA Immo: "What we see at the moment is an extremely positive dynamic in the Budapest real estate market, which is one of the core markets for the CA Immo Group. We are confident that this is a good time in the real estate cycle to make long-term investments in this region. Expanding our Hungarian property portfolio by acquiring this modern office complex with a strong cash-flow will make an important contribution to the recurring earnings of CA Immo. The acquisition will further strengthen our income producing portfolio which already has a high occupancy rate of 92% and is a perfect addition to our high-growth development activities in Germany."
Millennium Towers were developed between 2006 and 2011 on a former brownfield site by TriGranit. In 2011, an affiliate of Heitman LLC acquired a 74% interest in the portfolio, with TriGranit remaining co-owner and property manager of the assets. The office complex is located at the banks of the Danube, offering a panoramic view of the Buda hills south of the CBD in the 9th district. The overall project consists of four buildings (Towers I., II., III and Building H of the K&H Headquarters) with a gross floor space of approx. 70,400 sqm and 1,200 parking spaces.
The Class-A property has received the LEED sustainability certificate, making it among the first LEED registered buildings in Hungary. The ground floor of the buildings provides 6,600 sqm of space for retail tenants. The complex is fully let with an occupancy rate of 99,7% to tenants such as Vodafone, Morgan Stanley and Lexmark. The weighted average unexpired lease term (WAULT) is more than four years.
The Hungarian asset portfolio, which accounted for approximately 8% of the total portfolio of CA Immo as at 30 June 2016, consists of eight office buildings in Budapest and a shopping centre in Győr. The book value of the rentable area comprising around 203,000 sqm was approximately €314 million as at 30 June 2016. Following this transaction, it will increase to a rentable area of around 273,400 sqm worth approximately €490 million.