Monthly Archives: June 2012

HB Reavis acquires Metronom

CBRE has helped a private Austrian group dispose of the Prague 13 office project Metronom. The 34,000 sqm office project has been waiting to happen for at least a decade, but somehow never got built. That’s surprising, on the face of it, considering it sits right on top of the Nove Butovice metro station and across from a shopping mall (granted, not exactly the most successful one ever).

The owners, originally connected in some fashion with Doughty Hanson (which also used to own the Nove Butovice Business Park)  seem to have decided the current development environment didn’t suit them and sold it to a company (i.e. HB Reavis) better suited to the times. Originally, the project was being sold along with a 20,000 sqm residential component, but the owners were advised to split the plot into two separate investment packages to increase the final price (and probably its sell-ability). The residential portion could end up being sold soon as well, as it happens.

“I wouldn’t say it’s the best time to sell such projects,” says one market observer. “But it’s a good time to buy. A lot of companies are coming under pressure from the banks, so they have to sell. They’re not selling for the price they wanted to achieve, but the price that the market is telling them.”

This should be music to the ears of agents everywhere, but they’re hoping someone will turn up the volume a bit higher…

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Hungary on the IMF track now?

It wasn’t long ago at all now that supposedly well-placed observers were warning that Budapest was hunkering down for a long bout of negotiations that they might not even be interested in. The perception was that the Hungarian government thought it either didn’t need more money from the IMF and the EU, or it figured it could do a nationalist/populist pirouette in order to ride out the consequences if the deal fell through.

So what’s changed? The world’s financial markets aren’t generally very forgiving in such matters, so it seems unlikely the world has capitulated. More likely is that Budapest is sending a very different message now. The Wall Street Journal blog says

A senior Hungarian official welcomed that Budapest submitted next year’s draft budget early, saying this allows lawmakers enough time to make necessary changes to ensure the debt-laden country will meet its deficit target for 2013, a pre-requisite to get much needed financial aid from the EU.

“There are unresolved issues in next year’s budget but there’s still time to amend them thanks to the early discussion,” Arpad Kovacs, head of the Fiscal Council, told the Wall Street Journal in an interview Monday. The fiscal council is an independent body, which monitors the country’s fiscal policy with a veto right on the budget.

That’s a very different mood from just a few weeks ago.

Der Spiegel: Investors search for alternatives

It’s the same old story in Der Spiegel, but it’s really the story: big funds with tons of cash can’t figure out where to invest. The answer for some of them is emerging market real estate. Though by that, they no longer mean CEE. Maybe some of our readers have suggestions for these guys.

As head of the Norwegian sovereign-wealth fund, Slyngstad collects his country’s oil revenues, which currently total more than €100 million — per day. The fund is supposed to use these revenues to provide the country with prosperity for the long term. It’s no easy task, because the government expects Slyngstad and his staff of more than 300 people to generate a 4 percent return on investment.

In the past, investment professionals would have dismissed this requirement as uninspiring. But times have changed. Between 1999 and 2007, the Norwegian sovereign-wealth fund achieved an average annual return of almost 6 percent, but since then it has slumped to only about 1 percent.

Read the whole story here.

Treichl: Bring on fiscal union

Erste Group is making its feelings known about what should be done about the euro. Its CEO Andreas Treichl says regulation should be handled centrally, adding that deposit insurance should be treated the same way.  “If we want to keep the common currency, we need a fiscal union in Europe,” he said. “And that must also mean that the states are prepared to subordinate their banking supervision to a European regulator.”

Meanwhile, Hospodarske noviny reports that Pavel Kysikla, Ceska sporitelna’s boss, says Greece, Spain and Portugal should leave the Eurozone. “If it’s communicated well, leaving the euro is manageable,” he says. “There are only a few months left to take this decision.”

“Greece [leaving] is bearable, Spain and Portugal would mean a bigger hit,” says his colleague on the Czech government’s economic council, Pavel Kohout. “But the expenses of these countries leaving would be lower than them staying in the eurozone.”

UniCredit to expand in Warsaw

Not bad news at all for Warsaw. Confirming an ongoing trend in which the Polish capital is becoming the financial center of CEE, UniCredit has just announced it will be making the city its regional hub. Office developers will be rubbing their hands in anticipation at the news, because the company will be hiring lots of people to make this happen. Fox has the full story:

Unicredit CAIB Poland will handle all central European business with the exception of Turkey and Russia, Jacek Radziwilski said, adding that the Warsaw office will address more local client needs. The Unicredit subsidiary includes a brokerage, corporate finance arm and capital markets unit.

“The situation on global capital markets means many people are moving,” Radziwilski said, when asked whether it would be hard to convince potential employees to move to Warsaw. “Lots of people in the City [of London] are looking for work right now.”

Crestyl to lead reorganization of ECM REI

ImageThe credit committee of ECM Real Estate Investments has chosen to entrust the reorganization of the company to the development group Crestyl.

The reorganization of ECM REI was accepted back in March as the outcome by the courts of an insolvency process that had taken a year. Crestyl’s goal will be to minimize the impact of insolvency on ECM’s position and its properties.
Crestyl’s director Omar Koleilat said “This is a very interesting experience and I believe we’ll be able to complete the assignment successfully. We intend to work very closely with the credit committee and with the whole management of ECM.”

The option before the committee, and which was reportedly preferred by some, would have been to simply liquidate all the property of the company. The implication would seem to be that with a professional property company running the show, considered decisions on how best to proceed with ECM’s assets will be taken, meaning some properties may yet be developed in order to produce a greater level of return. Part of the deal is that ECM REI’s management structure will be changed, including the appointment of Koleilat as board member. ECM’s various companies will then be moved to Crestyl’s offices “in order to maximize the synergies of both teams.”