Orco announced first post-capital increase acquisition of two adjoin shopping buildings in Bratislava, Slovakia with some 10,000 sqm of retail and storage area. Orco plans to redevelop these buildings in order to provide modern retail space. Total investment is estimated at EUR 34m.
We agree with Orco, that these buildings are ideally located within the main shopping city area. The investment of EUR 3,400 per sqm is similar to other project City Gate, Orco bought recently in Bratislava, which we see value creative. Based on its prime location and redevelopment potential, we expect Orco could reach conservatively average rents at least EUR 30/sqm/month. Applying 7% yield, 10% haircut for collection loss and vacancy reasons on net rentable area of some 8,500 sqm, we expect the project to add approx. EUR 0.9 to our fair value.