Equest: Investment funds keep away from asset acquisitions

George Teleman, the manager running the operations of Equest Balkan Properties fund with a portfolio of 11 properties in Romania, maintains that not even cash rich investors are placing funds in real estate asset development and acquisition during this period, as the worst is not yet over on the real estate market. Teleman says there are several reasons why real estate investors should “sit on cash” in this period.

Equest owns four small office buildings in Bucharest, three shopping centres-Vitantis in Bucharest, Moldova Mall in Iasi and another project in Targoviste, a logistic park at the entranceway of the Bucharest-Pitesti highway and another two plots of land destined to the development of a retail project in Ploiesti and a car park in Bucharest. “The project of Ploiesti is in stand-by. For the parking lot of Bucharest we’re in talks with Raiffeisen and Bank Austria, with which we’ve collaborated so far, for financing, but conditions have changed, with the necessary equity part standing at 50% of the value of investments,” says Teleman. He says he “hasn’t heard for three months” about any banking financing for project development or real estate acquisitions, but only for working capital. The firm has recently finalised the logistic park part of its portfolio, which has reached a 60,000 square metre usable area, of which 40,000 square metres are rented. In Vitantis shopping centre, the occupancy rate of retail space stands at 92%, while Moldova Mall is 87% rented. “In December, sales topped expectations, but during this period, January-March, there are higher pressures on rents. We expect rent incomes to drop this year, but we agree to negotiate with retailers only in mutually beneficial conditions (…),” Teleman also says. Equest last November announced the finished properties of its portfolio, put at around 160m euros, are for sale, but has sealed no deal in this regard in this period. “We received several offers, but they were all 0.5%-0.7% (in terms of investment yield accepted by the buyer) above what we could have digested. We thus decided to keep them in our portfolio to strengthen them,” Equest’s boss says Equest is one of the first London-listed funds that entered the Romanian market, more than three years ago, when it mainly operated acquisitions of finished properties, then focusing on development projects, as well.