GTC buys two Budapest office buildings

GTC, a leading developer and asset manager in Central and Eastern Europe, has decided to boost its Hungarian portfolio again by investing EUR 160 mn in the acquisition of two office properties in Budapest: the Ericsson headquarters and the Siemens evosoft headquarters. The acquisition of two unique A-class office buildings occupied by triple-A tenants is an excellent opportunity to continue GTC’s growth. Both buildings have LEED Gold green certification. The transaction is in line with GTC’s strategy of refreshing its portfolio to newer, more modern buildings and focus exposure on office developments in the CEE region as well as fulfil the policy of investing in projects which comply with eco-friendly standards, the statement said.

Having purchased the Váci Greens D office building, GTC continues its streak of seizing new opportunities by acquiring two assets in Budapest. The new acquisition complements the existing portfolio of modern, eco-friendly office properties in the Hungarian capital confirming the company’s dedication to operate green, quality projects on the CEE markets.

Both buildings are conveniently located in the southern part of Buda on the Danube riverbank. One of the most modern office buildings in Hungary, the Ericsson HQ comprises 21,100 sqm of A-class lettable space. The evosoft office building is WING’s latest property development project delivered in late 2020, with 20,700 sqm of modern space. This means the average price per square metre came to about HUF 1.4 mn.

According to market sources, rent in the two buildings is slightly higher than the segment’s average, at EUR 17 or EUR 18 per sqm, which means yields of around 5.5%

Yields have decreased markedly in the Budapest office market in recent years, similar to other countries in the region. As Adorján Salamon, president-CEO of Eston International Zrt., said at a conference in late 2019, downtown offices were sold at yields as low as 4.9% at the time. It remains to be seen how the pandemic will affect office rents and yields in the long term.

Earlier events

GTC issued bonds for HUF 19.6 bn at the end of last year under the National Bank of Hungary’s (MNB) Bond Funding for Growth Scheme. At the time, the company said it planned to use the funds to re-finance loans and for further acquisitions and developments.

Currently, the office portfolio of GTC Hungary comprises six office assets, including Duna Tower, Váci Greens D, Center Point I and II, and GTC Metro. The company is also developing Pillar, a development that will offer 29,000 sqm of office space in the Váci corridor.

Almost exactly one year ago, a fund of Optima Zrt., which manages the assets of the MNB Foundation, bought a 61.49% stake in GTC.