2
“Hadovka out-performs the market”
EXECUTIVE SUMMARY Hadovka Office Park is an investment opportunity with an attractive risk-weighted yield and impressive financial performance. The relocation of its anchor tenant in 2010 prompted a change of control and a new strategy focussed on long-term stable underwriting, tenant relations and lifestyle amenities. Some 18,000m2 have been leased to bring the property to full occupancy with strong commercial terms during a 3 year workout period. Hadovka has managed to draw tenants from established submarkets demonstrating the buildings quality and the strong attributes of Prague 6 as an office sub-market.
Located in Prague 6 on the Evropska corridor within close proximity to the airport and city center. A Hochtief development completed in two phases, 1999 and 2000. Comprehensively restructured by Resolution Capital Management from 2010 to 2013. Fully occupied with weighted average unexpired lease term of circa 2.91 years and average headline rents of € 13.23/m2/mo. Recent lease extensions demonstrate the tenant retention power and competitive strength of the asset post restructuring. Diversified credit tenant rent roll, a resilient stacking plan and coherent long-term strategy for full occupancy. Extensive improvements have been made to M&E systems, the building and lifestyle amenities. Hadovka is managed by an on-site (in-house) operating platform organized and resourced to run the asset at full occupancy and cash flow.
PROPOSAL Hadovka Property s.r.o. is a Czech registered SPV. Offers are invited subject to contract for 100% of the share capital of the Czech SPV. Contact the seller for pricing guidance, data-room access and transaction procedure information.
3
“A precedent setting workout success”
ONE OF PRAGUE'S MOST RECOGNIZABLE OFFICE BUILDINGS Attractive investment volume › Full cash flow in-place › Attractive yield opportunity
Strong releasing history › Ca 18 000m2 leases signed in ca 36 months › Robust stacking plan › Excellent tenant relationships and goodwill in-place › Impressive post-workout lease extension performance
Diversified income stream › Credit-tenant rent roll › 12 core-strategic tenants › 40 tenants in-place › Smallest office tenant ca 18sqm
Extensive investments › New air cooling system › New building management system › New food services facilities › Extensive new tenant improvements › Extensive other property improvements › Detailed long-term capex plan in-place
“Hadovka is positioned to outperform the market on a long-term basis." 4
In-house management team › High-performance tenant service team › Strong new branding in-place › Focus on tenant services & amenities to promote tenant retention
LOCATION “Prague is a low-cost European service center and gateway to CEE” Address Evropska 2589/33, Prague 6, Czech Republic Relative location: North-west of city center
Situated on a high profile arterial route between and within close proximity to both Prague’s international airport and city center in a prime neighborhood of executive residences, universities, embassies and commercial services. Prague 6 office sub-market, until recently, has been a relatively under developed, representing less than 10% of the city’s office stock, though it has strong office location attributes.
5
Improving transportation infrastructure development and complimentary on-going office development at Dejvicka is bringing the Prague 6 office market into focus as one of the established office hubs in city. In particular, regional tenant offices increasingly look to Prague 6 for office space.
“Major infrastructure expansion improving Prague 6 communications”
COMMUNICATIONS INFRASTRUCTURE EXPANSION Extensive transportation infrastructure development and improvements including inner ring road tunnels, metro Line A expansion and Evropska tram line improvements shall significantly enhance Prague 6 communications. Ring road tunnel connections: Strahovský tunnel connecting Prague 6 with Prague 5 opened in 2011. The Blanka tunnel, opening scheduled for 2014, shall connect Prague 6 to Prague 8 to complete the inner city ring. Metro line connections: Line A shall be extended north-westward from Dejvicka by four stations: Borislavka, Nádraží, Veleslavín, Petriny and Nemocnice Motol.
Vehicle access to the Property is excellent as Evropska Street is 4-lanes (2 in either direction) and the principal arterial route from the city center to the airport. The side and rear streets bordering the property facilitate efficient traffic access and egress from rear underground parking entrances. A lane at the frontage of the property, off Evropska, facilitates drop-off areas and parking.
Distance to:
Airport: 8.1 Kms » 14 minutes by car City center: 7.7 Kms » 13 minutes by car in light traffic, 25 minutes peak traffic
2 tram stops from Dejvicka metro station (line A)
Prague 5 (Smicov): 8 minutes by car (Strahovský tunel)
1 tram stop from Borislavka metro station, opening 2014
Prague 8: 8 minutes (Blanka tunnel)
Tram line connections – A tram station is situated in front of the Property:
2 tram stops to Devicka commercial area The Evropska tram line has been substantially improved.
6
PROPERTY DESCRIPTION The Property is a Hochtief development completed in two phases in 1999 and 2000. The building reflects good original design and execution. Consistent maintenance and extensive recent improvements have preserved the representative stature of the property.
The building configuration comprises a footprint of 5 256m2, four floors above ground, two underground levels of parking and extensive garden areas on a sloping site of ca 11 260m2. It is partitioned into four sections with individual lobby entrances. Flexible partitioning of space to unit sizes less than 100m2 or contiguous occupation of a floor across the entire building is possible.
Specifications Air cooling throughout Flexible open / cellular space planning 1.35 meters grid partitioning Floor to ceiling clear height of 2.75 meters Suspended ceilings Raised floors / floor boxes Optical cabling 24/7 security / reception services External blinds Openable windows Loading bay / freight elevators Magnetic security card access system Visitor parking CCTV
7
Approximate measurement summary Office 22 374 m2 Fitness 558 m2 Canteen 368 m2 Coffee shop 34 m2 Storage 1 667 m2 Parking (UG) 401 spaces Parking (AG) 8 spaces Parking ratio 1/55
Lifestyle amenities have been introduced in recent years to promote tenant retention and the overall competiveness of the property. New canteen and main lobby coffee shop facilities have been developed as well as a fitness facility, dance studio and common terrace areas.
“Major investments have been made to M&E systems and the overall building standard”
CAPITAL EXPENDITURES Major investments have been made to the property in recent years. New cooling systems and BMS throughout (final phase pending completion) Refurbished underground parking levels New food services facilities including kitchen, ventilation systems and seating areas New coffee shop, common terrace and garden areas New health and fitness facility Refreshed and upgraded WCs Entrance lobby reception upgrades New exterior surface parking facilities New signage totems Extensive general upgrades to the property including 18 000m2 of tenant improvements as well as common area and technical improvements
A detailed capital expenditure plan and budget is in-place. Depending on the implementation schedule and preferred technical solutions, this could represent approximately € 200 000 of annual expenditure for the next 10 years. This is not reflected in the NOI stated herein.
8
“Flexible partitioning can accommodate single tenants across the entire floor plate of the property or small tenants of less than 100m2”
FLOOR AREAS Reception E
Reception D Reception C Reception AB
P
P
P
BUILDING C
B UILDING D
BUILDING A
BUILDING B
P offices
toilets
parking
A
B
C
D
Total
F4
799.14
1,300.43
1,005.20
1,442.69
4,547.46
F3
797.18
1,264.00
982.94
1,392.30
4,436.42
F2
797.33
1,270.36
982.50
1,385.99
4,436.18
F1
735.97
1,255.81
982.44
1,377.72
4,350.94
GF
927.73
1,133.23
969.16
1,274.51
4,303.63
-F1
1,259.39
0
0
0
1,259.39
Total
5,314.74
6,223.83
4,922.24
6,873.21
23,334.02
Storage
33.29
844.22
504.00
286.15
1,667.66
Building/Floor
9
Parking spaces
0
60
47
44
151
Parking spaces
76
47
58
69
250
KEY FINANCIAL INFORMATION
Headline (avg/m2 /mo) €13.23 WAULT (years) 2.91 NOI € 3 890 137
*Figures are estimated as at 30-June-2014 and subject to potential purchaser's own due diligence
Occupancy 99.40% Vacant office (m2) 134 Vacant storage (m2) 47
NET OPERATING INCOME AS AT JUNE 30, 2014
Vacant parking (space) 23
In-place passing rent
4 002 688
Vacant signage (places) 14
Non-recoverable fitness rent
69 301
No. key tenants 12
Adjusted in-place net rental income
3 933 387
Total no. tenants 40
Non-recoverable service charges (approx)
13 584
Largest tenant area (m ) 3 265
VAT leakage*
29 666
Smallest tenant area (m2) 18,22
In-place NOI
3 890 137
2
Trends
* 2 013 figure related to Taipei Foreign Service, Grant Agency & Technology Agency VAT exemptions.
WAULT improving with robust lease extension pipeline Rolling average net effective rents improving Restacking to accommodate core strategic lease expansions / extensions Qualitative improvement of services and amenities Improvement of building technical standards with on-going capex implementation 10
TENANCIES Rent roll / stacking breakdown
GLA Office (m2)
Percentage GLA Office
Percentage Income
5 largest tenants
12 278
54,88%
55,57%
Core-strategic tenants
13 081
58,47%
60,17%
Non-core tenants
7 363
32,91%
33,57%
Flex-tenants
502
2,24%
2,30%
Service tenants
903
4,04%
3,95%
Hadovka has been re-let with long-term stable commercial terms. No single tenant accounts for more than 17% of income. An impressive diversified credit tenant rent roll comprises a substantial volume of new tenants (70% GLA) which have moved to the property since 2010.
LEASE MATURITY SCHEDULE
“Diversified credit tenant rent roll” Some 60% of the rent roll matures in 2015 and 2016. Most of these extensions are presently under negotiation with no substantial voids anticipated. Meanwhile, a number of lease extensions have been completed at above market commercial terms which demonstrates the property’s tenant retention power post-restructuring.
Year
2015
2016
2017
2018
GLA office maturities (m2)
4 246
8 342
1 057
3 686
Storage space maturities (m2)
395
500
-
Parking space maturities
91
174
16
21
Net rental income (EUR)
807 891
1 499 228
181 646
656 848
Service charge income (EUR)
236 967
451 563
53 228
186 783
Gross income (EUR)
1 044 858
1 950 791
234 847
843 630
GLA office (%)
18,98%
37,29%
4,72%
16,47%
Rental income (%) (approx)
20,20%
37,48%
4,54%
16,42%
137
RECENT LEASES / EXTENSIONS Tenant
Lyoness
Amrest
Nemetschek Scia
Otis
Freightwatch
New tenant / extension
Extension
Extension
Extension
New tenant
New tenant
Commencement / extension date
April 2013
July 2013
June 2014
June 2014
July 2014
Maturity date
May 2016
June 2018
May 2019
May 2020
Dec 2018
36
60
60
72
54
481,41
588,98
398,17
704,50
183,04
14,00
13,00
13,63
12,50
12,50
Landlord contributions/incentives (EUR)
-
20 614
10 000
73 000
-
Rental abatement (months)
-
5
-
7
4
14,00
11,15
13,21
9,85
11,57
Duration (months) GLA office Headline office rent (eur/m /mo) 2
Net effective office rent
11
Tenant
Use
Area (sqm)
Lease Start
Lease Maturity
Merck Sharp & Dohme s.r.o.
Pharma
AB03, C02
Office
3 265
14-Feb-11
13-Feb-16
589 923
12,85
Abbott Laboratories, s.r.o.
Pharma
D00-03
Office
3 238
1-Jan-10
31-May-15
610 586
13,56
AeskuLab k.s.
Medical
A02, B0-02
Office/lab
3 030
16-May-11
15-May-21
518 424
12,81
Consulting
A00-01
Office
1 422
1-Nov-10
31-Oct-16
261 783
13,34
Grantová agentura
Government
B04, C03
Office
1 322
1-Feb-11
31-Jan-18
243 431
13,87
Comparex CZ, s.r.o.
IT
A04
Office/shop
1 074
15-Jun-12
14-Jun-16
217 743
13,52
Industrial
E00-01
Office
1 026
1-Jul-12
18-Dec-18
173 583
12,88
Carrier Refrigeration Operation Czech Republic s.r.o. Novo Nordisk s.r.o.
Pharma
C01
Office
991
1-Jul-10
31-Mar-16
198 144
13,98
Government
C03
Office
818
17-Feb-11
16-Feb-18
149 163
13,87
Foreign service
C04
Office
792
1-May-10
30-Apr-15
156 971
14,69
OTIS, a.s.
Industrial
E03
Office
705
1-Jun-14
31-May-20
128 734
12,50
Rohde & Schwarz - Praha s.r.o.
Consulting
C00
Office
620
31-Dec-10
31-Dec-16
113 366
13,25
Restaurant brands
E04
Office
589
19-Sep-08
30-Jun-18
109 163
13,23
Marketing
E00
Office
481
19-Aug-08
14-Apr-16
90 332
14,25
IT
D04
Office
398
1-Jun-14
31-May-19
74 136
13,63
EVRAZ VÍTKOVICE STEEL, a.s.
Industrial
A02
Office
274
1-Feb-13
31-Jan-16
47 317
13,18
AZELIS CZECH Republic s.r.o
Chemicals
A02
Office
215
6-Sep-12
5-Sep-15
40 334
13,52
Meditrade spol. s r.o.
Logistics
C00
Office
183
1-Jul-14
31-Dec-18
29 256
12,50
Rosso Steel, a.s.
Flexible
B00
Office
148
5-Dec-13
Indefinite
23 049
13,00
Radomír Hesoun
Flexible
B00
Office
97
1-Dec-13
Indefinite
16 101
13,00
Business development, s.r.o.
Flexible
B00
Office
55
18-Jun-12
Indefinite
12 435
12,50
GMCS - PRAHA s.r.o.
Flexible
B00
Office
50
1-Aug-13
31-Jul-14
9 929
12,50
Flexible
B00
Office
45
10-Oct-13
9-Oct-14
6 699
12,50
TAMTAM MEDIA CZ s.r.o.
Flexible
B00
Office
26
13-Dec-13
Indefinite
4 101
13,00
Tomáš Mácha
Flexible
B00
Office
26
1-Oct-13
30-Sep-14
3 942
12,68
Keystone Engineering
Flexible
B00
Office
18
10-Oct-13
9-Oct-14
2 742
12,50
Flexible
A02
Office
18
1-Apr-14
Indefinite
2 733
12,50
18
12,50
Technologická agentura Taipei Economic and Cultural Office Prague
AmRest s.r.o. Lyoness Czech Prague s.r.o. Nemetschek Scia, s.r.o.
Comparex CZ, s.r.o. (additional space B GF)
Keil Telecom Vertriebs GmbH & Co KG
12
Office Rent (EUR/sqm/mo)
Building/Floor
Capgemini Czech Republic s.r.o.
TENANCY SCHEDULE
Passing Rent (EUR/annum)
Sector
GT Praha
Flexible
B00
Office
9-Oct-13
8-Oct-14
2 661
ClinTec
Flexible
A-02
Parking
1-Jul-11
Indefinite
1 800
FALKON CAPITAL_storage
Flexible
B-01
Storage
1-Dec-13
30-Nov-14
3 965
Helena Líbalová
Flexible
A-02
Parking
1-Mar-11
Indefinite
311
Leading Clinical Research
Flexible
A-02
Parking
29-Sep-11
Indefinite
900
Radomir Šimek
Flexible
B-01
Parking
1-Apr-10
Indefinite
741
Dial Telecom, a.s.
Service
D-02
Other
3-Jan-11
Indefinite
1 136
GTS Czech s.r.o.
Service
D-02, C-02
Other
18-Aug-04
Indefinite
363
Telefonica O2
Service
C-01
Other
1-Jun-12
Indefinite
385
T-Mobile
Service
D-02
Other
1-Jan-10
Indefinite
5 333
Vodafone Czech Republic a.s.
Service
ABCD
Other
23-Jun-14
11-Jun-24
370
Hadovka Services s.r.o. (Fitness)
Service
A-01
Fitness operation
1-Feb-12
31-Jan-18
68 301
9,13
Hadovka Services s.r.o. (PM office)
Service
B00
Office
99
1-Jan-12
Indefinite
16 673
12,50
SOREHA ROUT (Canteen)
Service
A-01
Food services
368
14-Mar-12
13-Mar-17
61 129
13,62
SOREHA ROUT (Coffee Shop)
Service
A00
Food services
34
14-Mar-12
13-Mar-17
4 497
10,91
401
“Fully let resilient stacking plan with coherent long-term tenant retention strategy�
STACKING PLAN Full occupancy objectives and decision-making are governed by a leasing strategy comprising four tenant categories; corestrategic tenants, non-strategic, flexible lease and service-tenants.
Efficient floor plans enable partitioning for small tenants on flexible lease terms so that full occupancy can be targeted at all times.
Management promotes flexibility and costs savings for tenants with a primary focus on core-strategic tenants, by proactively enabling expansion or reduction of premises.
A restacking of the property is in-progress with the objective to facilitate tenant expansions and reductions and in turn extend leases with pending maturities in 2015 and 2016.
Building C
Building D
Building A
Building B
Taipei | 792,18
Nemetschek Scia
F4
Comparex | 846,17
Grant Agency | 1322,50
Technology Agency | 817,68
Abbott (AbbVie) 711,98
F3
Merck | 861,42
Merck | 1355,73
Merck | 1047,71
AeskuLab | 1354,67
NovoNordisk | 990,74
F2
Evraz | 274,17
CapGemini | 674,57
GF
UG2
Aeskulab | 336,42
CapGemini | 747,43
F1
F-1
Azelis 215,45
Studio 156,51
Restaurant 368,29
AeskuLab | 1339,25 Coffee 34,35
227,68
PM 99,15
Fitness Center 401,29
Flex-space | 520,89 Parking
Parking
Freightwatch
183,04
Non-strategic
Flexible
Service
588,98 Otis
Abbott | 1383,68 Abbott | 565,92 Vacant 133,76
Abbott (AbbVie) 555,92
F3
F2
Abbott | 1383,68 Carrier 186,43
F4
Lyoness 481,41
F1
GF
Parking
Parking
UG1
Parking
Parking
UG2
Parking
Core-strategic
13
Comparex
Rohde & Schwarz 620,00
AmRest
Vacant
ADDITIONAL INFORMATION Warranties Limited warranties shall be provided by the seller. Accordingly, warranty insurance should be considered.
Data-room Data-room access may be provided to qualified purchasers upon request and signing of an NDA provided by the seller. The secure dataroom includes: leases, title documents, corporate documents, capital allowance information, financial and tax information.
In-house management team The seller is prepared to facilitate orderly transition and control of the asset according to a well-defined handover protocol and support process as required by the purchaser.
GIF re-measurement The property was re-measured in 2011 according to GIF.
14
Other
PROPOSAL
A deferred tax liability is in-place, see 2013 statutory accounts. Carried forward tax losses are projected to be fully utilized in by the tax year of 2016.
Hadovka Property s.r.o. is a Czech registered SPV. Offers are invited subject to contract for 100% of the share capital of the Czech SPV. Contact the seller for pricing guidance, data-room access and transaction procedure information.
Bank approval: Sale is subject to approval of the in-place financing bank.
Contact the seller:
Effective date of numerical information included in this document is as of 30 June 2014.
GEORGE LESLIE george.leslie@hadovka.com
This document is issued by Resolution Capital management Ltd. It is not for general public distribution and any other persons who receive this document should not rely on or act upon its contents. This document may not be distributed or reproduced in any form without the express permission of Resolution Capital Management Ltd. No responsibility or liability is accepted by Resolution Capital Management or by the Seller for any action taken on the basis of the content of this document. This document does not constitute or form part of any offer or solicitation to issue, sell, subscribe or purchase any investment in any state or jurisdiction to any person to where it is unlawful to make such offer or solicitation in such state or jurisdiction. The distribution of this document and the offer and sale of interests in the asset in certain jurisdictions is restricted by law. Taxation will depend on individual circumstances. Property is an illiquid investment and may result in deferment of redemption.
w w w. h a d ov k a .co m
