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Revetas acquires Eastern European mall

A rare example of an investment by an opportunistic Central and Eastern Europe fund manager has been provided by Revetas, which has acquired a shopping center in Bulgaria originally purchased by Heitman’s European Property Partners III fund in 2008.

Opportunistic and value-added real estate deals are not yet widespread in Central and Eastern Europe (CEE), but some transactions are beginning to occur.

Revetas Capital Advisors, which is in the midst of a raising €300 million for Revetas Capital Recovery Fund I, has struck a deal to buy the City Center Sofia Shopping Mall that originally was purchased by Heitman on behalf of Heitman European Property Partners III in 2008 for €101.5 million.

No acquisition price was revealed by Revetas but, according to local media reports, the City Center Sofia was the first shopping mall to open in the Bulgarian capital when it began trading in 2006 and a loan taken out by Heitman with UniCredit Bank Austria two years later fell into breach of covenants in December 2010.-Revetas said it would be investing more than €10 million to improve and modernize the asset and rebrand it as Park Center Sofia.

The deal comes at an interesting time as some experts say sales of bank controlled assets or loans could begin to gain in frequency. In an interview with PERE in June, Deloitte’s global head of portfolio lead advisory services group, David Edmonds – whose team has been involved in 100 distressed real estate and corporate debt transactions in Europe over the last four years – said his group had been talking with banks and asset management agencies and expected CEE deals to unfold over the next year. “Finally, there are signs of a developed market in Central and Eastern Europe to unfold in the next six to 12 months,” he said. “There are a host of Austrian, Italian and Greek banks with subsidiaries in CEE that need to reduce their assets.”

In a statement, Revetas noted that this is the fifth investment for its Fund I. “The continued success of Revetas’ strategy throughout CEE validates Revetas’ decision to launch a specialist fund supporting the recapitalization of high-quality, cash flowing assets that are under pressure given the current illiquidity in the region,” it stated.

The 473,000-square-foot City Center Sofia will be added to the fund’s Park Centers retail platform, which now has a total of 14 retail assets across the region. Radu Boitan, senior investment director, said it would be the first of several deals in Bulgaria.

Earlier this year, Revetas announced it had reached a first close of €100 million for Fund I. That fund is set to close in September, according to the firm.