HELABA LENDS TO POLONIA II

Helaba Landesbank Hessen-Thüringen has provided a €300m cross-border acquisition and term loan facility to the Polonia II real estate fund. The eight-year facility covers investments in major Central European markets, including Hungary, Poland, Slovakia and the Czech Republic.

Polonia Real Estate Fund II Limited is a €800m closed-end real estate fund managed by AIB PPM, a subsidiary of AIB Capital Markets. AIB is Ireland’s largest diversified financial service institution with a strong presence abroad. Fund II enables investors to take advantage of the growing opportunities in Poland and other CEE countries. Investments will be made through intermediate companies established in Luxembourg. Polonia II’s predecessor, Polonia I, the first Polish real estate investment opportunity run by AIB Capital Markets, is one of the most successful real estate funds in Poland. Since its establishment, it has invested in a portfolio of Polish and Hungarian properties with an estimated value of €469m.

In addition to Helaba’s established markets in the US, UK and France, the bank’s other target regions include Scandinavia and Central Europe. Since the start of its activities in North and Central Europe in 2006, Helaba has provided financing of more than €1.7bn, specializing particularly in acquisition financing and structured financing for international investors and investment funds.

HEITMAN SCORES IN SLOVAKIA

There are substantiated reports that Heitman has closed on a retail deal in a secondary city in Slovakia and made a forward purchase on another Slovak project. The first, not far from Slovakia, is nearly completely let and was purchased at a very good yield that is said to reflect some of the market adjustment that’s underway. The forward purchase is already three-quarters let. The centers are roughly 5,000 and 7,000 sqm assets that cost in the neighborhood of €15m a piece. The transaction closed right at the end of the year.

HUNGARIAN BORDER BETS ARE OFF

Euro Vegas is no more. According to a December 18 report in Hungarian daily Napi Gazdaság, municipal leaders in Bezenye have decided to transfer the development site to another investor. The 40 ha site, in western Hungary near the Austrian and Slovak borders, was handed over to Swiss-owned developer Silmo, which offered HUF 180m (€709,000) for the opportunity to build a multifunctional recreation center. Silmo also plans to rebuild and develop local infrastructure. Bezenye mayor Róbert Kammerhofer said Silmo had been picked because of its “careful” and “realistic” development plans.

But gamblers can take heart, as construction on Plaza Centers’ Dream Island casino project in Budapest is expected to go ahead this year. Dream Island, to be built north of the center over 347,000 sqm on the southern end of the Danube’s Obuda Island, will include eight to 10 four- and five-star hotels, four apartment hotels, a convention center, opera house, marina, a museum, retail and a 150-table Las Vega-style casino. Expected to take roughly six years to complete, the complex will cost about €1.06bn.

WARSAW EYESORE HOLDS ON

There seems to be no end in sight to the brawl between traders of the group Kupieckie Domy Towarowe (KDT) and Warsaw City Hall. KDT occupies an ugly metal building on one of Warsaw’s hottest locations, Plac Defilad. Last year, the city offered KDT a 30-year lease on another plot of land on the square, provided they move swiftly with construction of a brand-new building more in line with the overall plans for the area, plans which include Christian Kerez’ Museum of Modern Art. Perhaps more crucially, the plot now occupied by KDT is necessary for the city to kick off the construction of a much-needed second line of the metro.

According to reports in the Polish press, however, KDT is annoyed by delays in the closing of their promised lease deal. Now the group wants an extension of the lease on their current cumbersome location, possibly for up to six years. City hall is reportedly enraged with the proposition. “The new KDT building must be completed in two and a half years, maximum,” Andrzej Jakubiak, Warsaw’s deputy mayor, told the local edition of daily Gazeta Wyborcza. He also made it clear that the KDT problem would be definitely solved by February, though he wouldn’t provide any further information.

NEW RESIDENTIAL FOR ECHO

Poland’s Echo Investment has announced the acquisition of yet another plot to carry out a residential project. On December 18, the company finalized the purchase of a 3 ha property on Grota-Roweckiego Street in Wrocław.

Echo is planning a residential estate of about 19,000 sqm, with 2,000 sqm to be occupied by services, the remainder being flats. The company intends to finish the design stage and obtain a construction permit by end of the year. Construction proper is scheduled to kick off in the first quarter of 2009.

The Grota-Roweckiego project will be Echo’s second residential project in Wroc³aw, a city of almost 700,000. Last November, the company bought its first property in the city for €5.1m – a 7,400 sqm plot on Jedności Narodowej. The land will be used for a project of 200 flats totaling 12,000 sqm, to be developed starting this year once Echo receives its construction permit.

VYSOČANY LAND DEAL COULD RUN TO CZK 1BN

The former Pragovka complex in Prague’s Vysočany area is up for sale again. The 22 ha zone is being offered by DTZ and Knight Frank. Seeing as the expected price for the land is around CZK 1bn (€37.8m), it could end up being one of the largest land transactions in the past few years. Czech daily Hospodářské noviny (HN) reported last month that Creviston, backed by the Rothschild Bank, originally purchased the land for CZK 300m (€11m).

The land of the former factory is part of an enormous development zone where a collection of developers like Codeco, Finep, AFI and IMOS are all working on projects. Up to 1,000 flats could be built on the site, along with 55,000 sqm of office, retail and storage space. The area enjoys excellent road access, as well as tram connections and the access to the metro’s B line. In the report, HN speculated that developers like ECM and Orco Property Group could be interested in the land. Sekyra Group has adopted a ‘wait and see’ approach. Spokesman Radek Polák said the two protected buildings on the site, along with partial contamination, reduce the land’s value. Passerinvest’s Zbyněk Passer also commented that the price seemed too high, adding that he hoped artificially high land prices in Prague would come down again. “Land prices have to change if the buying frenzy of developers is to calm down.”

ConvergenCE TO TACKLE SLOVAK RETAIL

Fresh from the success of the completion of Park One (CiJ Awards winner for Best Overall Development) in Bratislava, Europa Capital and ConvergenCE have announced a deal that’s been whispered about for some time now – the acquisition of a 3.6 ha site near the center of the Slovak town of Prešov. The idea is to create a 30,000 sqm shopping center, despite the ability of the plot to absorb up to 50,000 sqm of development. The site is the former home of the ZPA Križik complex, where electrical measuring devices were once manufactured. Permit documentation is now being prepared in a hurry — the idea is to begin construction by the spring, in order to be open by the fall of 2009. It’s also been revealed that architects Aukett Fitzroy Robinson have been employed for the project, which will likely be a two-level mix of retail and leisure. Alan Vincent, managing director of ConvergenCE, added: “This project will broaden the retail and leisure offer available in central Prešov, in a central location to which many customers are already drawn by the existing retail facilities of Tesco, BauMax and Nay electronics.” Europa Capital is the exclusive adviser to the Europa Fund II.

RUSSIAN ACTIVIST MURDERED

Dmitry Troyan, a civic activist defending the rights of property owners along the planned route of the St. Petersburg Western High Speed Diameter (WHSD) expressway died in the hospital a week before Christmas after being beaten by anonymous attackers. Trojan was well-known for helping land owners along the route of the future highway file legal claims for fair compensation for their property, which is to be expropriated to make space for the WHSD. He managed to win several court cases against the city, in which the land owners were given the right to compensation of RUB 150,000 (€4,200), a several-fold increase on previous offers from city authorities. Troyan’s colleagues are speculating the murder might be connected with his involvement in the compensation claims regarding the WHSD.

The USD 3bn (€2.1bn) expressway, due in 2011, is regarded as a strategic investment by the Russian authorities and will involve the construction of  45 km of eight-lane roads linking the city with existing highways to Helsinki and Moscow. The European Bank for Reconstruction and Development, the World Bank Group and other multilateral lenders have expressed interest in financing the project.

Tatyana Skrodenis of the Save Yuntolovo environmental initiative told local press that there were “serious doubts” that Troyan’s murder was a mere coincidence. “The Russian authorities do not hesitate to use illegal methods to prevent people from participation in decision-making,” she said. “We had hoped that the presence of international lending institutions would guarantee some legitimate treatment of the people affected by the project.” Disputed property claims aren’t the only problem connected with the new expressway. The environmental movement has complained about the highway’s harm to vulnerable natural areas such as the Yuntolovsky nature reserve, the Gulf of Finland and the delta of the Neva river, all in the vicinity of the planned road.