Well now, this is interesting:
“Plaza Centers announces it has successfully completed the sale of 100% of its interest in a vehicle which holds the interest in the Prague 3 project (“Prague 3”), a logistics and commercial center in the third district of Prague. Earlier this year, Plaza completed its successful application to change the zoning use of Prague 3 to a residential scheme. The transaction values the asset at circa €11 million and, as a result, further to related bank financing and other balance sheet adjustments, Plaza has received cash proceeds of net circa €7.5 million.
Ran Shtarkman, President and CEO of Plaza Centers N.V., said:
“Less than two months after our first exit in India, we are pleased to announce the sale of our holding in Prague 3 in the Czech Republic. The sale is in line with our strategy and disposal programme of deleveraging and reallocating realised capital from stabilised completed projects and non-core assets to the core yielding assets across our portfolio.”
In case you’re wondering what in tarnation is going on in Czech politics and why cops are arresting current politicians, former politicians and the biggest names in lobbying this small nation can produce, here’s a pretty good schematic.
The woman in the center is basically the right-hand of the prime minister, Peter Necas (to her right), whose role in the whole matter (if any) isn’t clear yet. Though it seems impossible that his government will survive. You’ll note that the city of Prague has done its reputation no favors at all in this growing scandal, but this will come as no surprise to Czechs or to long-term veterans of the market.
We’ll wait until things become a bit clearer, as we don’t really have time to follow the blow by blow unraveling of the story (the NYT has a pretty good summary). Suffice it to say that anti-corruption detectives seem to have mapped out how large flows of public money were being siphoned off and divided among Parliamentary deputies, government ministry officials, state-owned companies, city of Prague politicians and lobbyists (i.e. underworld power brokers). It’s nothing short of breathtaking. If there’s an upside to it, it’s that the police are actually free enough to carry out such an investigation in the first place. More cynical commentators (and by that we mean well-informed ones) are saying it simply demonstrates the incompetence of the primary actors, and their inability to control the situation.
Update: Fun “fact” from the country’s least reliable newspaper, Blesk: Police raided 31 homes and recovered CZK 150 million in cashs along with 10 kilograms of gold.
The recent flooding in Prague was big on drama, but surprisingly light on damage. People in this part of the world seem to be allergic to admitting that the state has gotten something right, but to a large degree, the flood control measures implemented and built after the horrendous 2002 deluge seem to have done the trick.
That being said, the post-event analysis will no doubt turn out lots of problems and shortcomings. One of the issues will be that new flood barriers definitely did the business as far as fighting a 2002-style event, but it turns out that each flood is different (shocking, isn’t it?). This time, with the rain advancing quickly from the north, the local creeks accounted for much of the local flood damage that occurred.
By now, most people will have seen the rather depressing aerial pictures of Crestyl’s DOCK project, a view that made things at the ongoing project look grim indeed. These fears seem to have been overblown. Crestyl’s director Omar Koleilat is quite relaxed about sending pictures from the site, and is even inviting us for a visit. Which we’ll of course take him up on. He explains that while there was obviously water in the underground portions of the scheme, the rest of the damage was thankfully quite minimal. We’ll go see for ourselves and report back. For now, you can check out the pictures.
These two shots are from last week, the day after the flood.
And these shots are from yesterday:
Does anybody really know where Amazon is going? The Czech industrial sector hasn’t been getting much sleep lately, what with everyone’s falling over themselves to woo the world’s largest on-line retailer. The site will have to be ready to go almost immediately, and with 30 ha rumored to be needed, there can’t be that much choice.
You’d think that choice would be made simpler depending on exactly which market is supposed to be served by the huge shed (rumored at 100,000 sqm). Will it service CEE and Austria? Then Brno would make sense (and might explain some recruitment sounding letters going out to students there). Will it serve Germany? Then surely, it will have to be placed west of Prague. But it will need quite a lot of people as well, so it’s unlikely to be a remote site.
If you have a hint, or a clue, drop us a line. Anonymous tips are always welcome in the tip box.
The New York Times has picked up on a story that’s been doing the rounds in Prague for some time now: the Czech banks are doing just fine. As in, they’re profitable – earning dividends for their western owners – and their level of non-performing loans has dropped from 6.4% to less than 6%. It attributes their stability to their having stuck to the rather more boringly traditional activities of banks, like lending money to people and companies, rather than seeking super-profits in the sexier areas of investment banking.
“The industry is in good shape; the sector is stable and has not needed any assistance in the recent crisis,” said Jiri Busek, an analyst with the Czech Banking Association. “It’s quite a unique position in Europe, and we are grateful for it. We are stable, healthy and profitable.”
Now, anyone who knows anything about the way things went down here knows that Czech banks have their share of issues in the property sector. Nobody came out of the boom smelling like roses. The Czech economy is currently in its longest recession and isn’t exactly galloping back to growth.
Does the name Ambrose Evans-Pritchard ring any bells? He’s the (self-acclaimed) prophet at the Daily Telegraph who back in 2009 tried to wreck all faith in this region’s banking sector by warning that western banks had billions of euro of exposure in the sewer of CEE. “Failure to save East Europe will lead to worldwide meltdown” (that’s the actual headline) made for thrilling, shiver-inspiring reading at the time. Reading the it today makes clear the dangers of quoting adrenalin-induced predictions of economists and doomsday headlines. Remember, this is 2009:
“A failure rate of 10pc would lead to the collapse of the Austrian financial sector,” reported Der Standard in Vienna. Unfortunately, that is about to happen.
The European Bank for Reconstruction and Development (EBRD) says bad debts will top 10pc and may reach 20pc. The Vienna press said Bank Austria and its Italian owner Unicredit face a “monetary Stalingrad” in the East.
The implications are obvious. Berlin is not going to rescue Ireland, Spain, Greece and Portugal as the collapse of their credit bubbles leads to rising defaults, or rescue Italy by accepting plans for EU “union bonds” should the debt markets take fright at the rocketing trajectory of Italy’s public debt (hitting 112pc of GDP next year, just revised up from 101pc – big change), or rescue Austria from its Habsburg adventurism.
So we watch and wait as the lethal brush fires move closer.
If one spark jumps across the eurozone line, we will have global systemic crisis within days. Are the firemen ready?
Yet another developer/property owner has dodged a bullet, after no one was killed in the latest roof collapse. This one took place in a multiplex theater in Pilsen at the Plaza shopping center. Five people were injured in the accident, with one woman requiring hospital care after, but thankfully, luckily, no one was killed. It’s hard not to think back to another shopping center in Poland last year that saw a roof cave in, and to the the stunning collapse of a roof in Bratislava, without asking just what’s going wrong?
These days it’s popular to scoff at the endless due diligence process going on, and brush off complaints about CEE developers/ construction companies / investors skimping on quality. This kind of near-disaster, though, is a stark reminder of just how much is at stake. Waiting for the police to complete their usual 8 month investigation that turns up nothing specific is an effective PR strategy, because the shock wears off and people forget. But it’s certainly not good enough.
We missed this little piece of news from the beginning of the week. It seems Mr Vitek is making quite the property play this year. Along with a suspected fight for control of Orco, the Czech billionaire increased his holding in the developer Ablon near the beginning of the month to 15.52%, before taking an even bigger slice:
ABLON Group Limited (“ABLON” or the “Company”), a leading real estate owner and developer in Central Europe, was informed today that Mr. Radovan Vítek, a Czeck national private person, owner of CPI Group, has increased his total holding in ABLON from 21,250,954 or 15.52% of the issued share capital, to 30,443,938 shares, equalling 22.23% of the issued shares and voting rights in the Company.
Ablon is holding an extraordinary general meeting on February 1st.