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Retail property investment company Dawnay, Day Carpathian (DDC) has acquired six supermarkets in Croatia for a total sum of EUR 53.7 mln, representing an initial yield of 7.65%. The deal is DDC's first in Croatia. DDC said it will acquire four Croatian special-purpose vehicles that own the stores and will rent them to Konzum, the largest retailer in Croatia, after the acquisition.

Two of the stores are located in Zagreb, two in commuter suburbs of Zagreb, one in Slavonski Brod and one in Kutina. The total lettable area is over 32,000 m². Five of the stores are to be acquired on new 15-year leases that will run for a minimum of 10 years. Of the four stores in Zagreb, one, at Spansko, has three years left on the lease. At all the acquired stores, the rent will be indexed annually.

The transaction will initially be financed with equity upon completion. However, a credit approved loan offer has been received from a third party debt provider to refinance a proportion of the consideration early in the first quarter of 2008. In the event that the refinancing should not materialise and to mitigate the risk of equity financing the entire transaction, DDC may exercise a put option to transfer the properties back to the seller.

Commenting on the acquisition, Rupert Cottrell, chairman of DDC, said: 'This acquisition represents the sixth transaction since the £ 100 mln secondary
fund raising completed in May 2007 and the company’s first acquisition in Croatia, one of our target countries. This demonstrates the continued market expansion of DDC across Central and Eastern Europe, as we continue to build a diversified portfolio of quality assets.'

DDC listed on London's junior AIM market in July 2005 and raised new funds to create a geared EUR 1 bn portfolio of retail properties.