REDSIDE closes largest Slovakian industrial investment transaction of 2018
Fund management company REDSIDE has successfully closed the largest industrial transaction of this year in Slovakia. The prime investment opportunity drove exceptionally strong interest among a number of institutional investors and asset managers.
The purchaser, REDSIDE investicni spolecnost, manages assets worth over EUR500 million in five funds. With this acquisition REDSIDE enters the Slovak industrial real estate market. The value of the transaction is close to EUR90 million. The Trencin Industrial Park was developed for AU Optronics in 2010 and is currently leased to a portfolio of premium automotive and electronics tenants except for the area used by itself.
Rudolf Vrestal, CFO and Chairman of the Board at Redside, says: “After an extremely successful built-up of Subfund I within NOVA Real Estate Fund structure, managed by our company, Trencin is our first acquisition on the Slovak market. For REDSIDE, this is also a first step in the creation of a new Subfund II, focused on CEE industrial and logistics properties. We are pleased to become an owner of such a unique and technologically advanced property as Trencin Industrial Park. This is a great flagship property of our new industrial sub-fund portfolio.”
“Currently, the existing Subfund I provides the investors with a chance to participate in a well-established and stable investment vehicle with EUR250m of AUM, distributed equally between grade “A” office buildings in Prague and regional retail shops in the Czech Republic, generating over 7 per cent per annum net return to its investors. The structure of the subfund allows for business-sector as well as geographic diversification, with long-term secured rental inflow in mind. Building on these fundaments, we launched a new subfund, focussed on yet another business sector, so as to broaden the palette of investment products we want to offer to our investors,” says Tomas Berka, Real Estate Fund Manager at REDSIDE.
Zuzana Kolarova, Managing Director at ASB Slovakia (part of ASB Group) said, “We are happy to assist investment company REDSIDE in this unique transaction as financial and tax advisor. Considering the size and the importance of a deal, the project has required not only high level of technical expertise during due diligence or deep knowledge of real estate market, but also dedication of our team and passion for what we do.”
The seller AU Optronics Slovakia was represented by the Investment team at JLL Slovakia who facilitated the transaction.
“Trencin Industrial Park received extremely positive reception from the market coming from a broad variety of investors, local and international. The structured sale process resulted in the highest number of bidding parties that Slovak real estate market has so far experienced. The disposal will have a dramatic impact on industrial yield levels in Slovakia”, added Rudolf Nemec, Capital Markets at JLL.
Trencin Industrial Park offers 120,000 sq m of prime industrial premises. Sitting on the D1 highway in Western Slovakia, the European hub of automotive production, the park is well cross-connected via European highway network. Western Slovakia, which has gained a flattering reputation of being the production and manufacturing hub of CEE, brings 6 car producers within 150 km radius (Kia, Hyundai, PSA Peugeot Citroen, Volkswagen, Jaguar Land Rover, Audi) and intensive network of suppliers thanks to tens of 1st tier and hundreds of 2nd and 3rd tier producers and approximately 250 industrial/logistics prime tenants located across the region and high number of stand-alone owner occupiers.
In contrast to share deals typical for real estate transactions in Slovakia, Trencin Industrial Park saw the sale of an asset. “Many investors in Slovakia consider asset deals as a no-go option, and fear from opening a Pandora Box of lease renegotiations. However, with proper legal preparation, lease agreements automatically continue under the new owner and remain unconditionally valid into the future,” says Martin Manina, who facilitated the transaction as vendor’s legal representative. “Asset deals provide several benefits to the buyers, such as limited legal, commercial and accounting risks, and allow for full depreciation of purchase price.”