M7 Real Estate, a pan-European investor and asset manager, has announced that it has completed the sale, on behalf of M7 Central European Real Estate Fund I, of a portfolio of five logistics parks across Hungary, as well as a retail park in Paks.
The deal represents the largest logistics transaction by gross leasable area (GLA) in Hungary this year, according to a press release sent to the Budapest Business Journal. The total 84,000 square-meter portfolio, which includes three assets in Budapest, one in Eger and another in Pécs, was assembled by M7 in three separate transactions during 2016 and 2017.
M7 says that it identified an opportunity to enhance the performance of these assets and reduce vacancy by implementing a targeted EUR 4.6 million capex program and new marketing strategies.
As a result of the activity, the average occupancy of the portfolio grew from 63% on acquisition to 94%, while total rental income increased by 60%. In addition, the weighted average lease term (WALT) of the portfolio has almost doubled to three years, notes the press release.
In a separate transaction, M7 also announced the disposal of the Atom Center, a 2,614 sqm retail park in Paks, southern Hungary.
“M7 acquired the assets in this portfolio as part of the CEREF I fund, from three different sellers,” recalled Balázs Magyar, managing director for Hungary at M7. "We have subsequently worked closely with our partners to implement our strategy for the portfolio, leveraging our asset management expertise, improving occupancy by 28,500 sqm. Having successfully finished our asset management plan and created an institutional quality core plus portfolio, we made the decision to complete our business plan ahead of schedule, through this sale. This transaction, together with the sale of the Atom Center, has allowed us to generate attractive returns for our investors.”
M7 was advised by Colliers on the transactions, the press release notes.