Dentons advises GTC on €52m Budapest tower deal

International law firm Dentons said it advised CEE property investor Globe Trade Centre (GTC) on the acquisition of Duna Tower in Budapest for €52 mln.

The 60-metre-high, twin-tower office property stands on the Pest side of Árpád Bridge and dominates the skyline in the Váci Corridor district of the Hungarian capital.

Duna Tower comprises 31,500 m2 of gross leasable area plus a three-floor underground garage with nearly 400 parking spaces.

'This deal demonstrates the continuing potential for cross-border real estate transactions in the current CEE/SEE environment. It also pairs an active and dynamic buyer with a value-accretive asset which can be further enhanced as part of the new ownership’s growth strategy,' said Judit Kõvári, head of Dentons’ Budapest Real Estate group.

Yield
The purchase price reflects a 7% yield on current rent income based on 80% occupancy. 'We will invest in upgrading the buildings' specification and amenities to improve service and comfort level to new and existing tenants. Increased occupancy combined with increased lease terms will contribute to value appreciation,' said GTC CEO Thomas Kurzmann.

GTC now owns 118,000 m2 of office space in Hungary, including Center Point, GTC Metro and Spirál in Budapest.

The Hungarian economy has displayed strong growth over the past year, with GDP growing 3.3% year-on-year in Q1 2015 and an unemployment rate dropping from 10% to below 7% in just two years.

Currently, the vacancy rate in Budapest’s Class A office sector stands at 12.8% but is expected to drop further to 10% over the next two to three years, mainly due to an increase in demand and lack of new Class A developments in the foreseeable future.