Orco informed about 1st acquisition of its Endurance fund aimed at residential segment. It has acquired 5 buildings in Hamburg for EUR 10m, comprisiong 105 residential units and 10 retail units. Further acquisitions are expected in Czech Republic as well as Germany shortly. Fund targets middle class and luxury residential properties with expected equity of EUR 100m to be employed.
Our view: As the plans to launch Endurance Residential sub-fund were announced already in 4Q2006, we see the news as neutral for today’s trading. Orco’s stake in this fund is expected to reach max. 15%. Note that endurance funds are good source of free cash flow for Orco, as it charges acquisition fee of 1% and management fee of 2%. We expect Orco to book in 2007 revenue from this sub-fund of EUR 3.7m.