Following earlier news about acquisition of multi-purpose City Gate building at the boundary of historic downtown in Bratislava, Slovakia. Orco plans to split available space into 4,850 sqm into retail, 1,576 sqm into office and 5,408 sqm into luxury residentials. Achievable rents in that area should be in retail part at least EUR 52/sqm/month, in office part EUR 14/sqm/month and selling price in residential part EUR 3,800/sqm.
Based on available figures we estimate the market value of redeveloped property using conservatively 7.0% yield, 10% hair cut for collection and vacancy reasons at some EUR 63m. Deducting estimated CAPEX EUR 42m provided by company we arrive to contribution of approx. EUR 2.0 per fully diluted number of shares. As we mentioned previously we see the acquisition positively, proving Orco’s ability to close favorable deals and reiterate our Buy recommendation.