Aberdeen renews Deutsche Bank’s lease in Focus, Warsaw

Aberdeen Immobilien Kapitalanlagegesellschaft entered into a long-term renewal lease agreement with Deutsche Bank for its Polish head office in Warsaw. The property is directly held by the Open-ended Property Fund Degi International.

The Focus Filtrowa building, which comprises a rental area of 34,000 sqm, was built in 2000 and purchased by Aberdeen Immobilien for Degi in 2007.

The centrally-located property has held its own against numerous competitors, including new developments in the area. The 9,900 sqm lease agreement has a fixed term of seven years.

Cushman & Wakefield acted as broker on behalf of Aberdeen, whereas Jones Lang LaSalle represented Deutsche Bank.

REIT results questioned

If you don’t like those scary articles in which big bank analysts with total job security predict dire things for your industry, or at least a part of it, don’t read AlphaVille’s take on Nomura’s bean counter Mike Prew. He’s just warned that if you want to know what REITs are really worth, you need to look at the cash flow.

The cash flow accounts are often neglected in REIT analysis which is surprising. It’s a better measure of a business’s profits than earnings because a company can show positive profits and earnings, and still not be able to pay its capital servicing requirements. It’s cash flow that pays the bills (Enron went bankrupt in 2001 with 2Q ‘profits’ of $1bn but cash flow negative by $1bn).

Warimpex posts Q1 results

Hotel developer Warimpex, listed on the Vienna and Warsaw stock exchanges, posted a 38 per cent increase in sales in the first quarter of 2010, pushing revenues to €20.4m.

The sales growth was primarily due to revenues from the new hotels that opened in Berlin and Łódź in 2009 and that had a very good start, but revenues at hotels in Poland, Germany and France also improved. However, it will be some time before Prague and Bucharest see a significant recovery.

“The hotel industry in Poland benefits from a high level of domestic demand, and over half of the guests at these hotels are from Poland. Thanks to this, the decline in international business on the Polish market did not have as significant an impact as was seen in the Czech Republic, for example,”  said Warimpex’s CEO Franz Jurkowitsch.

The company notes that development financing has again become available at reasonable terms and will allow to move forward with the planned projects.

GTC and Polnord to build mall in Warsaw

Globe Trade Centre and Polnord signed a set of agreements on co-ownership of a SPV that will own 7.5 ha of land in Wilanów district of Warsaw. The two companies GTC and Polnord will develop a 60,000 sqm shopping and entertainment center on the plot, currently owned by Polnord. Construction is expected to start within next 12 months, after obtaining a building permit. The total cost of investment, including land, is estimated at  €170m.

GTC will have a leading role in the development and management of the project with a full support of Polnord. The value of  the mall upon completion is estimated at €250m.

Bratislava Kempinski to open June 17

Cityof Hotels.com is reporting that the 231 room Kempinski Bratislava River Park is scheduled to open June 17. Located right on the Danube, it’s part of a larger project that was designed by Erick van Egeraat for J&T Real Estate. In late 2008, J&T slashed prices on the flats being sold as part of the development, marking the beginning of tough times for the entire residential sector in the Slovak capital.

Prodi: Fiscal federalism for European finance

Former Italian prime minister Romano Prodi says Europe must centralize authority in order to save the Euro. If you’ve been following the roller coast ride of the past couple days on the equity, bond and FX markets, it’s hard to disagree.

When the euro was born everyone knew that sooner or later a crisis would occur. It was inevitable that, for a such a bold and unprecedented project, in some countries (even the most virtuous ones), mistakes would be made and unforeseeable events occur. It was also clear that the stability and growth pact was – as I have said before – “stupid”, not because it was mistaken in its objectives, but because it was founded on purely mathematical parameters without any discretionary powers or political instruments to enforce it. Germany and France were the first countries to violate it, although not in a destabilising way: their finance ministers decided to ignore the objections of the European Commission (possibly because they were “too big to fail”)…

Orco Q1 losses fall

Orco’s first quarter losses fell to €15.6m from €54.8m in the first quarter of 2009. Revenues also fell more than €3m to €51.5m in the same period, while operational costs fell 12%. EBITDA rose 42% to €8m. The developer reports that €43m of project refinancing took place in the first quarter.

City Empiria revisited

There hasn’t been a lot of official clarity so far from ECM on the sale of City Empiria. That leaves only the off-record, unconfirmed chatter. Among the unsurprising rumors doing the rounds is that the asset has stayed within the family, with names like Generali PPF topping the list. We say unsurprising because it doesn’t appear to have been widely-known that the building was up for sale.

That might go some way to explaining the price of €71.5m, which must have raised the eyebrows of a couple valuers. How long are the average lease lengths at the moment, for example? We’ll just have to wait and see what eventually emerges. No comment from the bank, by the way, on if it was able to claw anything back.

While the price was definitely good for ECM, there wasn’t much joy when it put out its Q1 numbers for 2010 yesterday. Net rental income fell to €2m (from €2.8m Q1 2010) and a net operating loss of -€1.9m , compared to going €300,000 in the black the year before. It added up to a net loss of €6m for the period. More details available here.

C&W wins Vodafone work in Czech, Hungary

Cushman & Wakefield has won a tender held by Vodafone in which it selected its “preferred supplier of property services” in the Czech Republic, Hungary, Italy and Greece. In the Czech Republic, Radka Novak will lead all office-related negotiations, while Jan Kotrbacek will handle the retail side.

Orco exits creditor protection period

Confirming rumors that were already circulating last week, Orco has announced that the commercial court in Paris has accepted its safeguard plan, a move which allows the company to exit its creditor protection period. The company has pledged to pay off its debts over the next ten years, and says the lifting of protection will allow it to invest again in real estate.

Laurent Le Guernevé, Orco’s Court Administrator says:

“Orco Property Group’s Sauvegarde procedure has been innovative, as it is the first application of the new 2008 law revising the Sauvegarde procedure. It provided not only an efficient instrument for the judicial treatment of the group’s bonds, but also an amicable and consensual treatment of the bank debt, underwritten by the Group’s 180 subsidiaries located in Central and Eastern Europe. This Sauvegarde procedure, which included a “conciliation” process, concerned approximately 1.5 billion Euros worth of debt, and provided all stakeholders, the Group’s 2150 employees, its shareholders and creditors, with a balanced solution.”

The news just came out today. The implications are obviously pretty far-reaching, so we’ll be interested in people’s viewpoints on all this….

ECM sells City Empiria

Something does seem to be afoot at ECM, which announced yesterday that it sold its office building City Emperia along with the neighboring conference center City forum for €71.5m. It added that all but €12.1m of that will go towards paying off debts associated with the assets. Yield watchers will be interested to note that the transaction, completed with an as-yet anonymous institutional investor, represents a yield of 7.5%.

The sale took place just a week after the listed developer announced that a meeting of warrant holders had been convened for May 27. ECM’s existing liquidity position is at the top of the agenda, not least because its 2009 annual report lists its debts as 80% of assets – 15% higher than called for under agreements with holders of ECM debt. Its heightened debt levels are being blamed on depressed property prices.

Hospodarske noviny quotes Patrik Vyroubal as saying a solution with warrant holders must be found, otherwise a worst case scenario could see bankruptcy proceedings begin. ECM reduced its losses in 2009 to €62.3m from €92.1m in 2008. Its first quarter results for 2010 are due out tomorrow.

Galeria Victoria lands new tenants

Claiming there’s retailer demand in Poland is one thing. Leasing space, however, is what it’s all about. So the market will be heartened to hear that Keen Property Partners have signed up Mango, Orsay and Era at Galeria Victoria  in Wałbrzych. Completion of the mall is due in October this year.