Acquisition

RNS Number:3460Y
European Convergence Property CoPLC
14 February 2006

                   European Convergence Property Company plc

                           ("ECPC" or the "Company")



The Board of ECPC is pleased to announce that it has successfully completed the
first acquisition in its investment program.  The acquired property, known as
PGV Tower, is located in central Bucharest and was acquired for Euro24.0 million.
It is expected that the property will generate a projected running yield of over
10% after all expenses and taxes on ECPC's net equity contribution. The property
was acquired from a leading Romanian property developer.



PGV Tower, completed in 2003, consists of two adjoining towers, one of six
floors and a second of fourteen floors.  PGV Tower is the head office of
Postbank, the EFG Eurobank owned Romanian banking group.  Postbank and other EFG
 related companies account for 86% of the revenue and 93% of the 9,989 sqm of
net lettable area.  The manager believes that rent levels being paid by all
tenants are at market levels.  ECPC intends to borrow approximately 70% of the
total purchase price.





ECPC investment outlook



Notwithstanding the above acquisition announcement, the Company's investment
program is currently approximately three to five months behind the planned
timetable.



In Romania and Bulgaria, this delay is principally due to three factors:



 1. Lower transaction volume of buildings in the targeted countries.
 2. Sellers seeking terms that create excess risk burdens for potential buyers.
 3. Yield expectations have increased amongst potential sellers.



The expectations for lower yields/higher prices is potentially the most limiting
of these factors to ECPC's investment program.  However, lending spreads for
property investment at Romania's leading banks have also dropped and therefore
the investment yield premium over borrowing rates remains exciting.  Lower
transaction volumes and adverse transaction term expectations are partially
related.  In what is perceived as a seller's market, current owners are seeking
to eliminate post-completion liabilities.  This has led to fewer transactions
completing.  The Company is not willing to complete acquisitions on what may be
reasonable economic terms if standard legal protections are not in place.



Within Romania and Bulgaria, the manager currently has eight pipeline
investments at varying stages of negotiation that have a combined value in
excess of Euro210 million.  In addition, the pipeline includes a further seven
projects that are not at sufficient development stages to warrant active
negotiation but could reach such a stage in the near future.  While not all
pipeline projects will reach investment completion, the manager is happy with
the depth of opportunities available to the Company.



Over the past six to nine months, Turkey has seen a rapid yield compression in
an environment of rising interest rates.  During this time, the Turkish market
has gone from the highest yielding target market to the lowest yielding target
market.  As the market is primarily a US Dollar based market and US Dollar
interest rates have increased, medium term investment return expectations have
declined.  As Turkey has the longest expected time to EU entry of the three
target markets, and is therefore furthest from long-term yield convergence, the
manager is not currently involved in any investment negotiations in that
country.  However, the manager continues to monitor prices actively and should
an opportunity arise, will seek to make additions to the portfolio.



In summary, despite the investment program being three to five months behind the
planned timetable, the manager believes a sufficient number of opportunities
exist in the pipeline to expect full resource deployment. The Company is
currently focusing on Romania and Bulgaria and is seeing a number of very
exciting transaction opportunities.  Funding conditions are constantly improving
and this should lead to favourable capital structures for subsequent
acquisitions.




Enquiries:

European Convergence Property Company plc                     01624 640200
Anderson Whamond

Charlemagne Capital                                           020 7518 2100
Christopher Fitzwilliam Lay/Varda Lotan

Panmure Gordon & Co                                           020 7459 3600
Hugh Morgan/Stuart Gledhill









                      This information is provided by RNS
            The company news service from the London Stock Exchange
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