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.
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?
Telecom pain has arrived in the Czech Republic, with news that the biggest employers, Telefonica and T-Mobile both announcing that layoffs are on the way. That’s good news for exactly nobody, including office developers and owners, given the size of the real estate needs these companies have. You have to wonder at times like this how flexible their lease contracts are.
For what it’s worth, Vodafone claims not be planning to fire anyone at the moment.
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.
Mint Investments has completed its purchase of Olomouc City in a transaction made possible by a forced auction, led by the Naxos auction agency. One of the conditions of the purchase was that the buyer pay for the asset within 30 days, and with this condition cleared, the transactions has been closed.
Mint Investments partner Sebastien Dejanovski said he’d been pleased his company had been able to pick up the shopping center at what he called an interesting price (CZK 373m/€15m). “At the moment, there are quality tenants in the center. What’s more, we’re certain Olomouc City has great potential for further development. However, for us, what’s crucial is that it fits in perfectly with our retail property portfolio.” The company owns Laugaricio in Trencin, OC Rynovka in Jablonec, Cestlice Retail Park, and its newest center, Breda & Weinstein, is about to open in Opava.