First Property Group plc, the property fund manager and investor, announces that it has, in conjunction with a club of investors, acquired The Maestro office building on 21 Decembrie 1989, Boulevard, in Cluj-Napoca, Romania. Cluj-Napoca is the capital of Transylvania and has a population of some 320,000. A further 100,000 live in the wider metropolitan area. It also has 11 universities and a student population of over 100,000, according to lse.co.uk.
The net operating income being generated by the property is around €875,000 million per annum and the property was acquired at a yield on purchase costs of some 9.4% per annum. The weighted average unexpired lease term is approximately 3 years.
The investment was funded by a combination of equity and bank debt. The equity component amounted to just over €3 million, of which the Group invested circa €510,000, pari passu with other investors.
The forecast annual pre-tax profit from the investment is €550,000 per annum, of which the Group’s share after tax would be €85,000 per annum, which would equate to a post-tax rate of return on equity of 16% per annum.
In addition the Group will earn an acquisition fee of €89,000 and ongoing management fees of some €111,000 per annum.
The cash position of the Group following this investment amounts to £12.8 million.
Commenting on the new investment, Ben Habib, Group Chief Executive, said: “I am very pleased by the investment made by our clients and ourselves in this well located office building in the centre of Cluj-Napoca. Cluj-Napoca is a fast growing city which is supportive for both rents and capital values”.
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