Immoeast announced acquisition of two office buildings in Warsaw, Poland. First “Rondo” office building should provide 20,000 sqm of rentable space. The project is scheduled for development from Fall 2007 until Summer 2009. Total investment is estimated at EUR 36m. Second “Passat” office building provides 15,000 sqm of rentable space. Building’s occupancy is reportedly excellent and the investment is approx. EUR 27m. Immoeast’s portfolio in Poland counts 61 properties now with total usable space of 2.2m sqm, representing 17% of the portfolio.
Our view: The acquisition price of EUR 1,800 per sqm seems to be fair or even slightly favorable in comparison to other similar transaction in Warsaw. We believe that Immoeast is betting on increasing rents rather than yield compression as the Warsaw office yields compressed to 5.5% already some 50 bp difference to Western Europe. Rents are on the other hand increasing and reached EUR 25/sqm/month in prime location, while EU15 average was some EUR 36.5/sqm/month in 1Q07.