Emerging markets investment manager Argo Group has announced that its private equity fund, the Argo Capital Partners Fund 1, together with a local joint venture partner, Omilos Group, has
Emerging markets investment manager Argo Group has announced that its private equity fund, the Argo Capital Partners Fund 1, together with a local joint venture partner, Omilos Group, has opened the Era Shopping Park in Iasi, the first of two planned retail parks to operate under the Era Shopping Park brand. The Iasi retail park will be the largest outside of Bucharest and the second largest in Romania.
The Era Shopping Park Iasi is based in Romania’s second largest city, situated in the north-east of the country close to the Moldovan border. The Era Shopping Park Iasi will offer on completion more than 115,000 square metres of gross lettable area, and once completed it is projected to generate EUR18m in annual rental income.
The first phase of the development has opened with an occupancy rate of 100 per cent, with 37,000 square metres divided between four anchor tenants, French retailer Carrefour, German DIY chain Praktiker, consumer electronics chain Altex and Carrefour Galleries.
The second phase of the development, which will house additional anchor tenants including Mobexpert and a large cinema complex, is expected to be completed and open for business between spring 2009 and spring 2010. Phase two has a gross lettable area of 43,000 square metres and leases for these units are in early stages of negotiation.
The project was funded by equity provided by Argo Capital Partners Fund 1 and the Omilos Group, a local developer, on a 50:50 basis and a senior debt facility of EUR126.5m provided by a syndicate of western European banks.
Once completed, the project will occupy 350,000 square metres out of a total plot size of 520,000 square metres. Plans for the remaining land may involve construction of residential or commercial office space alongside the retail park.
The Era Shopping Park Oradea, the second facility planned under the Era Shopping Park brand, is located in Oradea in the north-west of Romania, close to the Hungarian border. This smaller project with a gross lettable area of 65,000 square metres is expected to open in March next year. The Oradea site is projected to generate annual rental income of EUR10.5m.
‘From Argo’s perspective this has been an excellent investment,’ says Argo Capital Management chief investment officer Andreas Rialas. ‘Through our partnership with Omilos we acquired two excellent sites at a time when property and land prices were relatively low. Since then both projects are well advanced and demonstrating their potential to generate substantial returns.
‘Economically, Romania continues to perform strongly. Following its EU accession, there has been a significant uplift in consumer spending and as demonstrated by tenant demand for Era, western European retailers are increasing their presence in the country.’
The Argo Group has significant experience in property notably through the Argo Real Estate Opportunities Fund, a Guernsey-domiciled closed-ended investment company that invests in the commercial property markets of Central and Eastern Europe. The AIM-listed company is managed by Argo Capital Management Property, which has offices in London, Bucharest and Kiev.
The Argo Capital Partners Fund I was launched in August 2006 to focus on delivering private equity returns from different types of investments and situations in emerging markets. The fund, which was launched targeting a minimum internal rate of return of 40 per cent, has not yet exited any investments.
Its current portfolio includes Infarmasa, a generics pharmaceutical company in Peru, Nigerian commercial and retail bank Intercontinental Bank, Greek triple-play telecommunications Telecoms and Russian regional bank Probusinessbank as well as the Era Shopping Parks.
