M7 acquires Hungarian office and secures €57m loan facility

M7 has also agreed a €56.7 mln loan facility on a five year term for the fund with Erste Group, one of the largest financial services providers in Central and Eastern Europe, establishing a new banking relationship in the region.

The newly acquired property is located on the Róbert Károly Boulevard near the Váci corridor, an office sub-market that is immediately to the north of Budapest’s CBD. It comprises 7,066 m2 lettable area across eight floors, with 89 underground parking spaces and various amenities including cycle storage, a café and a restaurant. The asset is 91% let to nine tenants, providing a diverse income profile and short to medium term opportunities to improve asset value significantly.

This is the second acquisition undertaken on behalf of the fund, which is now 30% invested following the purchase in July of a 12,672 m2 multi-tenanted modern office building in the city of Katowice, Poland. There is a secure pipeline of potential acquisitions, with further completions expected in Q1 2021 moving the Fund towards its €100 mln capital deployment target.

Hugh Fraser, CEO M7 Capital commented: 'We have been developing our relationship with Erste Group over a number of years and we’re pleased to have concluded our first major financing with them, which we hope marks the formal start of a long term partnership across the region.'

Balazs Magyar, managing director, Hungary at M7 said: 'Given the challenging market backdrop of the pandemic, we’re very pleased to have concluded this transaction efficiently which is testament to our relationships on the ground in Budapest.

'This is a strong addition to the M7 Ceref II portfolio and, with a healthy 8% office vacancy in the Hungarian capital, we are confident of being able to improve the rental profile and rent income of the building through a tailored asset management plan – in the same way as we did with the assets in our first fund, M7 Ceref I.'