Investing - the Austrian way

The Akron Investment Central Eastern Europe investment fund, managed by Akron Group of Vienna was established in December last year. Fund investors, everyone who is able to disburse a minimum 200,000 euro, decided to designate 250 million euro for real estate investments in Poland, Czech Republic and Hungary. Between 80 and 100 million euro of that sum will be invested in Poland, with all capital to be spent within two years.

Transaction worth emulating

In late February Akron mentioned the purchases it had made in Poland - two office buildings (Bokserska and Cybernetyki Office Centre) and a warehouse project (Bokserska Distribution Park) bought from Ghelamco Group for 45 million euro. This transaction with Ghelamco highlights exactly the properties in which we are interested, remarks Stefan Ausch, Akron Group Executive Director responsible for operations in this part of Europe, adding that the Group wishes to focus on office buildings and warehouses. AICEE knows exactly what features are required from properties it wishes to include in its portfolio. These should be fully-let office buildings outside a central business district, with rents at normal market level. Stefan Ausch was keen to stress that there are many properties in Poland with excessive leasing contracts. That is bad from an investor's point of view since developers do not want to sell such objects due to their high revenues. And, in addition, such properties are overvalued - he remarked

Asking price - 20 million euro

But things are not all that bad with Polish real estate, since Akron is already negotiating the purchase of yet another Warsaw office building, expected to cost no more than 20 million euro and to be concluded this autumn. The Fund is clearly encountering more problems in this case than when purchasing the Ghelamco properties. Stefan Ausch smiles wryly: "Those negotiations took three months including a holiday break. Today developers refuse to spend half a year on negotiations with investors". In addition to that second Warsaw investment, the Austrian Group is negotiating five other contracts for purchasing real estate in Prague and Budapest, of a total value of 130 million euro. It is evident, from that, that the fund is trying to purchase smaller buildings of a value around 20 to 25 million euro. Purchases already concluded comprise the Ghelamco portfolio and also one real estate in Hungary of 15 million euro value.

Staying longer in Poland

The fund intends to hold on to its portfolio properties for 5 to 7 years. In 2003, the largest funds managed by Akron generated a return on investments of 11.2 percent after taxation. The firm presently promises an 8 percent return on investments. Akron is to open a Warsaw office within a matter of weeks, and will then be able to take a closer look at investments in other Polish cities. Stefan Ausch explains that buying and managing real estate from Vienna is no easy task, which is why a Warsaw branch office is imperative. Obviously we intend to stay longer in Warsaw - he adds.