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Fabian & AIG/Lincoln Co-Invest In Bucharest Office Building
Hamilton, Bermuda, September 21, 2006 - The Fabian Romania Property Fund has reached agreement for its first office co-investment project in Bucharest. The Fund has taken a 50% stake in the company in ownership of a 5,048 sqm land plot in central north Bucharest. The Fund's co-investment partner in the acquisition is AIG/Lincoln, the European real estate development arm of AIG, a joint venture between AIG and Lincoln Properties.
The development will involve the construction of an A class office building of 26,000 sqm gross built area above ground. AIG/Lincoln will act as developer on the project. The Fund has signed JV, development and construction management agreements with AIG/Lincoln to this effect. The site comes with outline planning consent (PUZ) but will require detailed planning and construction consents from local planners. The first construction work is forecast to begin in the third quarter of 2007 with practical completion forecast for the fourth quarter 2008.
The fund has paid E5.3m for a 50% stake in the development company, BVB SRL through the Luxemburg based joint venture company, AIG/Lincoln Lakeview. The Fund sourced the land plot for the joint venture from three Romanian individuals. Total project costs excluding land but including hard and soft costs, bank finance and interest on shareholder loans are forecast to be around E34m. The total net lettable area is forecast to be 22,000 sqm with a parking ratio of 1:60.
Commenting on the transaction, Mark Holdsworth, Managing Director of Fabian Capital, the investment advisor to the Fund said: €˜We are delighted that the Fund has sealed agreement with both AIG/Lincoln and the Romanian sellers to co-invest in this new office scheme. AIG/Lincoln have considerable development experience in both Western and Eastern European property and are the ideal partner for the Fund'
€˜The site is in a prominent location in the emerging business district in the City. There is a shortage of Class A office space in Bucharest and the joint venture plans to develop a market leading building in terms of both architectural design and construction quality'
DTZ acted as property advisors on the transaction.