Degi acquires Bucharest mall for EUR 140m

Frankfurt-based property investment company Degi announced on Tuesday that is has signed a contract to purchase Iris Shopping Centre Titan in Bucharest for EUR 140mln. The acquisition was carried out by a vehicle that is to be integrated into special property fund, Degi Europe Retail.

Degi, which was taken over by Aberdeen Property Investors Group at the start of the year, said the shopping complex consists of two attached commercial units in Titan, the most populous district of the Romanian capital. The Auchan hypermarket portion of the centre with a connected shopping gallery was opened in November 2006, followed by the ground floor of the Iris Commercial Gallery last month. The first floor - consisting of a cinema, bowling alley and food court - is to open in the next few months. The property has a total gross rental area of 48,000 m² and 2,000 parking spaces.

French retail chain Auchan has agreed to occupy the hypermarket and the shopping gallery on a longterm lease and this will secure the largest portion of the expected cashflow. The rest of the shopping centre is almost completely let to 'highly credit-worthy institutional tenants', Degi said. All leases are in euros and fully index-linked helping to secure against currency and inflation risks.

'Romania is one of the countries with the strongest growing consumer spending for private households in Central and Eastern Europe, and quality modern shopping centres will profit from this trend,' said Degi CEO Barbel Schomberg.

The 2 million inhabitants of Bucharest account for around 10% of the country's population and contribute approximately 23% of its gross domestic product (GDP). The city's GDP growth is estimated at around 9% for 2007 and at an annual rate of 8.4% for the years from 2008 to 2010 suggesting that it is set to be one of fastest growing locations in Eastern Europe, according to Degi.

'Thanks to its excellent location, Auchan Titan has surpassed all expectations, becoming the first shopping centre in Romania to record annual sales in excess of 100 million euros. This expansion of our investments in Romania will be well worthwhile, allowing us to create significant value for investors in Degi Europe Retail fund through exposure to the dynamic Romanian economy,' Schomberg added.