Yet another roof collapse

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.

The fight for Orco

Game on! That, at least, is the word from Bloomberg, which reports that Orco Property Group founder JF Ott is buying shares in the company. (Not a secret, by the way, since it’s also confirmed on Orco’s website here) The reason, it’s speculated, is that he’s fighting with the Czech business mogul Radovan Vitek for control of the company.

Orco has gained 76 percent in the past three months after a bond-for-equity swap cut indebtedness and sent the stock price to a record low on Sept. 12, attracting new investors. Vitek, owner of Czech Property Investments AS, who bought a 30 percent stake, has proposed to become board member and cut the company’s share capital by 51 percent without cancellation of shares at a Feb. 4 shareholder meeting. Ott bought 8.4 percent last week, raising his stake to 8.9 percent, Orco said yesterday.
“We see CEO Ott’s increased stake as part of a fight for control over Orco,” analyst Josef Novotny at Erste Group Bank AG’s Prague-based unit wrote in a report to clients today.

I heart developers

Let’s just say the Czech public is a bit skeptical about property developers. This is a bit of political satire: a New Year’s greeting card for 2011 – 2014 from the “Prague coalition” of the Social Democrats and the ODS party…signed at the bottom “With the support of developers”. Of course, it’s as much a statement about the Czech view of politics and politicians as it is about the activities developers.

TGIF.

Crestyl to lead reorganization of ECM REI

The 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.”

Ales Vobruba and Ott & Co. SA resign from Orco board

At the same time Orco Property Group’s board of directors welcomed new board members David Ummels (Astin Capital Management) and Benjamin Colas (MTone), it was bidding adieu to OPG veteran Ales Vobruba as well as to Ott & Co. SA.

“The board thanked them for their decision and validated the cooptation,” read the statement.

Ott & Co. is the personal holding company of Jean-Francois Ott, who stays on as president of the board.

Ales Vobruba is to stay on as deputy CEO and MD of Orco in Central Europe, and the company has vigorously denied any validity to reports that he was no longer at the company at all.

Ummels and Colas have won their seats as part of the deleveraging process at Orco, as bonds were traded in for equity. The shift in the structure of the board, says Orco, reflects the shift in structure of the shareholders. Mtone for example currently holds 9.8% of Orco (9.9% in voting rights). Orco also revealed that Credit Suisse Securities now holds a 4.2% stake in the company. Ott & Co. SA currently controls just 0.7% of OPG. (details here)

The make-up of the 12 member board now is:

-J.F. Ott, Nicolas Tommasini who are described as “executive members representing the management of the Company”.

-5 “independent members” (Silvano Pedretti, Guy Wallier, Bernard Kleiner, Alexis Juan and Robert Coucke)

-And 5 non-executive members “representing the shareholders” (Bertrand Des Pallieres, Gabriel Lahyani, Richard Lonsdale-Hands, Benjamin Colas and David Ummels)

AkzoNobel takes 700 sqm at Building Beta – BB Centrum

AkzoNobel is moving its Czech headquarters to Building Beta in BB Centrum in Prague 4. CBRE worked with the landlord (CBRE Global Investors) on the transaction, the company is due to move in on June 1. “AkzoNobel have taken advantage of the landlord´s current keen interest on leasing the available office space at Beta and have as such been able to lease good quality office space in a BREEAM certified building,” says Bert Hesselink, head of Office Agency at CBRE. Other tenants at the beginning include Marks&Spencer, Goodyear Dunlop Tires, Areva, Spar, Česká obchodní společnost and others.”

Galeria Neptun’s construction permit in place

Galeria Neptun, located in Stargard Gdanski, has secured the building permit it needs to move forward, meaning construction should begin in April. Completion of the 25,000 sqm GLA project is expected by spring of 2014. Cushman & Wakefield will be the exclusive leasing agency for the project. It’s also been retained to prepare needed zoning planning changes and the completion of a comprehensive building permit design.

UniCredit to finance AFI Business Park Cotroceni

AFI Europe has picked up €13.4m in financing from UniCredit Bank Austria, which it needed to get construction going on AFI Business Park Cotroceni in Bucharest. AFI Business 1 is the first of five class A office buildings the developer hopes to build that would add 70,000 sqm to Bucharest’s office stock. “We are impressed with the bank´s responsiveness and their ability to deliver the financing under the current tough market conditions,” said AFI’s CEO David Hay.

PPF objects to management changes at ECM

PPF has filed an injunction against potential changes to the board of directors at the failed developer ECM. A Prague court was due to decide whether to accept a proposal under which top board members in ECM would be replaced by three people from the Prague developer Crestyl. There’s a great deal at stake, with interests as diverse as the creditors of EMC themselves, so that someone has filed an official complaint should come as little surprise.

Warimpex operating result improves

It’s a mixed bag for Warimpex in its QIII results filing. It concentrates on the improvement in operations, which rose 18% to €13.5m thanks largely to better performance of its hotels (Warimpex now runs 20 hotels). Not only was Warimpex able to benefit from an upturn in tourism over the period, but it managed to exit its 25% share in the Sobieski hotel (with a profit of €2.3m). EBITDA rose 15% to €17.7m over the same period. However, some writedowns on assets that took effect in September helped produce  a loss over the period of €2.8m. Total revenues of the group rose 8% to €81m.

“The outlook for the fourth quarter on the transaction market is quite positive. We are currently in the midst of promising negotiations, one of which is in its final stage, and we are confident that we will have good news to report in the coming days,” said Warimpex CEO Franz Jurkowitsch.

ILD buys R6 plot from Skanska Property CZ

The Belgian developer ILD has provided Skanska Property Czech Republic with an exit from part of its R6 Logistics Park development site. The transaction involved a 20,800 sqm plot on the R6 highway located five minutes from Prague’s international airport. Skanska Property’s decision to sell is part of a wider strategy of divesting itself from the R6 scheme in order to concentrate on the development of LEED-certified office buildings. Last year, it sold 75,000 sqm of the park to an Austrian-based logistics company.

Crestyl to lead ECM out of bankruptcy?

The Czech developer ECM is reported to have been taken out bankruptcy and placed in a temporary legal limbo zone as a Prague court decides whether to accept a re-organization arrangement suggested by the company. The idea apparently is for ECM to relinquish board positions to representatives of the Prague-based developer Crestyl. Its director Omar Koleilat would become chairman of the board. One of the other options that had been in play earlier this week reportedly envisioned Anton Hopfgartner (Property Solutions) filling that role.

The liquidator in charge of ECM until now, Ivo Hala believes a re-organization isn’t feasible, as it would require an influx of new money to the company. “Bankruptcy proceedings seem to be more advantageous because they offer greater satisfaction for the creditors in a shorter time horizon,” he wrote, according to court materials cited by CTK.

However, some of ECM’s creditors seem to be leaning the other way, including Astin Capital Management, which is representing bond holders with CZK 3.1bn. The decision on re-organization now lies with the courts. (As ever, public comments or private emails on the issue are more than welcome)