GTC Romania buying 67% of Bucharest housing project

Publish date: 02-07-2007
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GTC Romania, a member of the GTC Real Estate (TASE: GTC)  group, is buying 67% of a housing project in Romania from the Gmul Investment Company (TASE: GMUL) group.

Technically, GTC Romania is buying 66.7% of the shares in a company called GML Pipera.

It is also assuming 66.7% of the shareholders loans that Gmul extended to GML Pipera. Altogether GTC Romania will be paying 11.1 million euros.

GML Pipera owns about 13.5 acres of land in Bucharest that it bought for 10 million euros. The area is zoned for a new neighborhood, to be called Pipera.

The master plan for the area allows the construction of up to 130,000 square meters, subject to approval of specific plans.

In parallel GTC Romania entered a deal to provide management services to GML Pipera, in exchange for 5% of the project's income, not including the cost of the land and 10 euros for each square meter sold in the future.

Gmul says it expects the transaction to generate it a capital gain of 3 million euros, before tax.

GTC Romania is controlled (94.6%) by GTC Poland. It also owns America House in Bucharest, which generates rental income of 6.3 million euros a year. It is presently completing the construction of two more office buildings with a total area of 75,000sqm, at an anticipated total cost of $130 million.

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