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. Last Updated: 07/27/2016

TriGranit to Invest $6.7Bln in Russia

BUDAPEST -- TriGranit, Hungary's biggest property company, will spend about 5 billion euros ($6.7 billion) to buy companies and develop real estate in Russia, chairman Sandor Demjan said in an interview.

TriGranit, based in Budapest, purchased a Russian company earlier this month and aims to acquire as many as nine more, Demjan said. TriGranit formed a venture with a unit of Gazprombank in January to build retail and office buildings in several cities, including Moscow and St. Petersburg.

"There is huge potential and huge possibilities right now in Russia," said Demjan, 64, at his company's headquarters in downtown Budapest, next to Eastern Europe's largest shopping center. The mall was built by TriGranit in 1999.

Investment in Russian real estate increased to $4.2 billion last year, up from less than $500 million in 2005, Jones Lang LaSalle said in March. TriGranit also plans to raise more than 5 billion euros by selling shares and will list them in Moscow and London within three years, Demjan said.

Demjan is Hungary's third-richest man with a fortune of 50 billion forint ($260 million), according to a list compiled by Nepszabadsag newspaper in October. He created TriGranit in 1996 and now owns 34 percent of the shares.

Immoeast Immobilien Anlagen, an Austrian property developer, bought 25 percent of TriGranit for 400 million euros in August. Atticus Capital's Nathaniel Rothschild and Sandor Csanyi, chief executive officer of OTP Bank, together own 25 percent of the company.

"Most developers are looking at the former Soviet Union, where yields are still significantly higher" than in Central Europe, said Robert Keller, an analyst at Patria Finance in Prague.

TriGranit earlier this month bought a "medium-sized" Russian property company. Its first project in the country will be developing 200,000 square meters of space in the center of Krasnodar at a cost of about $1 billion.

The company's venture with Gazprombank's property unit will build "entire city suburbs," said Patrick Berger, an analyst at Creditanstalt Investment. "TriGranit seems to be making smart strategic decisions."

In the past 10 years, TriGranit has spent 1.5 billion euros developing real estate in Eastern Europe and will invest a total of 8 billion euros outside Russia in the next three to four years, Demjan said. Projects include a sports arena in Zagreb and shopping malls and hotels in Bucharest.

"We just have an endless supply of money right now," Demjan said. "Every day I get phone calls and am offered money from people interested in good investments."