ECM sells off City Empiria
The building fetched a price of €71.5m (CZK 1.8bn), all but €12m of which, however, will go towards paying off debts associated with it. The price represents a yield of 7.5 percent, which market observers consider aggressive, but not shocking if the buyer does turns out to be so closely associated with the vendor. Immorent's Gemini office complex fetched a yield of 7.25 percent while ECM's own City Tower came in at 7 percent. Both were sold in the fourth quarter of 2009. ECM also sold its City Court project last month to Skanska Central Europe Holding for CZK 200m (€7.87m). In that transaction, after covering the debt associated with the 17,000 sqm office project, ECM walked away with CZK 138.5m (€5.3m). While the City Court transaction appears to have been to an arm's length buyer, if it turns out that the sale of City Empiria was concluded with the PPF-Generali Fund (more specifically, according to some sources, it was sold to its subsidiary, Česká pojišťovna), it would mark what appears to be a pattern. There's a widely-held belief that the sale of City Tower was completed with a Slovak company which 39 also enjoys useful connections to the PPF group.
ECM reduced its losses in 2009 to €62.3m (CZK 1.6bn) from €92.1 m in 2008, but has lost €6m in the first quarter of 2010. Its indebtedness by the end of 2009 had reached 80 percent of its assets, a fact which has sparked some nervousness among bondholders, but which ECM is blaming on depressed property values. Despite the current turmoil, ECM says it is continuing with construction on City Deco, a 21,000 sqm building it started in April in Pankrác-Prague 4. The Meridian Spa wellness center is set take one-third of the space in this CZK 3.5bn scheme.
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