A Bulgarian-language media report said that investment fund Equest Balkan Properties plc had hinted at its intention to sell City Center Sofia.
Equest bought City Center Sofia for 94 million euro in March 2006, just two months before the mall’s official opening. Investor.bg, reporting the possible sale, claimed that the information had come from Equest Partners Limited’s investor relations officer Naomi Kora.
The centre has a 44 000 sq m built-up area, 24 000 sq m of which is retail space. It has four floors and two underground levels, which have underground parking for about 500 vehicles, a hypermarket, two levels of shops, an entertainment centre with a six-screen cineplex and a total of 1500 seats, and a number of fast food outlets, restaurants, bars and coffee shops.
The construction of the mall began in 2004 with an initial investment of 40 million euro from Stroitown OOD.
Currently, less than three per cent of the total retail area of the mall is not rented out, Equest said. In 2007, the mall achieved an 8.3 per cent investment profitability. Since its opening in 2006, the mall has attracted significant footfall with an estimated annual equivalent of more than seven million visitors, according to a May 1 2008 preliminary results report issued by Equest.
Equest itself considers City Center Sofia the asset with the biggest weight in its portfolio.
According to investor.bg, the fund was also considering selling Serdika Forum (the former Serdica Hotel), which the fund bought in 2006, and a project in the old part of the Serbian capital, Belgrade.
Equest is awaiting planning permission for Serdika Forum, which is to become a trade and office complex of nearly 30 000 sq m with underground parking for 234 vehicles. The completed investment value is expected to exceed 64 million euro and Equest would own 61 per cent of the project. The complex is scheduled for completion 18 months after construction begins, provisionally in August 2008.
The fund was in negotiations with a key tenant for all the 8600 sq m of office area in the complex, the report said.
The sale of City Center Sofia, together with the sale of the other projects, would decrease the fund’s need for external capital in 2008. The fund would try to improve its cash positions, to preserve its current share in the debt capital and to decrease the capital risk, investor.bg said.
Equest hopes that it could sell the assets in question, according to a recent evaluation by consultancy company CBRE. The evaluation says that by the end of 2007, Equest’s portfolio was worth 373.5 million euro. The figures were 16 per cent higher than those at the end of 2005, when the fund was founded. About 36 per cent of the portfolio of the fund is in Bulgaria. Equest possesses 28 properties in the country, worth more than 152 million euro, the evaluation said.
Equest Balkan Properties registered a 4.8 million euro net return and 16.21 million euro income in 2007, compared to its 25.5 million euro net return and 8.16 million euro income in 2006, investor.bg said. The fund invested a total of 70 million euro in acquisition of new assets in 2007.
On Equest
According to Equest’s preliminary results report, the asset portfolio of the fund in Bulgaria includes City Center Sofia, Serdika Forum and 40 per cent of the 26 projects in the Glorient Investment BV portfolio. Equest purchased shares in Glorient worth 29.5 million euro in 2006 and invested an additional million euro in 2007. The fund’s stake in Glorient is currently worth 44 million euro.
In March 2007, through another of its companies, Novera, owned by Equest Investments Balkans Ltd, the fund bought the three refuse collecting companies in Sofia. The deal was worth 45 million euro. By the time of the deal, the three companies had registered a turnover of 22.4 million euro for 2006 and their assets totalled at 13.6 million euro. Novera’s name was involved in a public controversy over snow clearing in Sofia, when, at the beginning of January 2008, the company failed to clean the city, presumably because of the traffic jams, the numerous vehicles parked in the streets and unco-operative behaviour by motorists. The company then demanded an increase in the payment for cleaning by 21.4 per cent.
In 2007, Equest Investments Balkans acquired 67 per cent of the company Rila-Samokov 2004, which is in charge of the completion of mountain resort project Super Borovets. Equest invested five million euro in the company to obtain the right to take part in the project. Super Borovets and its infrastructure are estimated at 600 million euro. The resort will have a total built-up area of 623 500 sq and 40 km of ski runs.
Bulgarian-language media reports claim that Equest also wanted to construct the 80-km-long Rila Highway, between Ihtiman, Samokov and Doupnitsa, connecting Trakiya and Strouma highways.
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