Within the framework of the Company's strategy of further expansion of its investment portfolio, Eurobank Properties Real Estate Investment Company (Eurobank Properties REIC) has entered into an agreement for the purchase of a Serbian joint stock company, Reco Real Property AD (Reco), which is the owner of a mixed use office and retail building in the centre of Belgrade. The said building is located at 7-9, Terazije street in Belgrade and consists of ground floor, basement, mezzanine and another 8 floors above mezzanine of gross lettable area 5.503,46 sqm. Reco has already entered into an agreement for the lease of the office spaces of total area of 3.121,66 sqm to a multi-national advertising company, McCann Erikson Public Relation d.o.o Belgrade. In addition, Reco has entered into two pre-agreements for the lease of the retail spaces of total area of 2.381,80 sqm partly for use as a cafe and partly as a fashion store to multi-national brands.
The building will undergo refurbishment in order to accommodate the tenants' specifications, through a construction agreement that will be signed between Reco and the Sellers. The cost of the refurbishment works is currently estimated at approx. Euro 2,5 million, and the agreed timetable for delivery is October 1st 2007, which will also be the start date of the leases, subject to the successful completion of the works. The Sellers are responsible for the timely and satisfactory completion of the refurbishment works to the tenants' specifications and satisfaction. The acquisition price for the shares of Reco was agreed at Euro 22,63 million on a liability-free basis. Of this, Euro 15 million will be paid to the Sellers upon registration of Reco shares under the name of Eurobank Properties REIC. The rest of the price will be paid to the Sellers upon satisfactory completion of the refurbishment works and delivery of the building to the tenants. Any obligations that will arise for Reco relating to the refurbishment works will be deducted from the remaining price to be paid upon the successful completion of the works.
Mr George Chryssikos, Investment Manager, underlined that with this transaction, the Company has committed the remaining IPO proceeds.
Mr. Aristotle Karytinos, executive member of the Board of Directors and member of the Investment Committee of Eurobank Properties REIC, noted: This acquisition is our first international transaction, and proves that our company has the ability to execute successfully international transactions to build on our track record in Greece. It is important to mention that this deal would not have been possible without the recent changes in the Greek REIC legislation. Following the recent law amendment, Greek REICs can now invest in special purpose vehicles which own real estate (with a minimum stake of 90%), can gear up to 50% on assets for acquisition, completion or refurbishment, can proceed with the signing of agreements for the future acquisition of real estate once their development is completed (with certain provisions that minimize development risk), are no longer required to maintain 10% of their assets as cash and cash equivalents, are exempt from Greek capital gains tax and enjoy certain Greek tax benefits when absorbing other Greek real estate companies and finally can acquire or dispose of a property within a deviation by 5% of the valuation of the Body of Sworn-In Valuers of Greece (SOE). All these changes give Eurobank Properties REIC access to a number of deals that were unavailable to the company previously, thus increasing the potential for future growth.