An Austria-based bank nationalized during the depression has taken the first step toward selling a six bill property portfolio with the sale of an unprecedented castle-hotel on an Alpine lake.
Hypo Alpe-Adria-Bank, that has extensive holdings in southeast Europe, has agreed a contract to sell Schloss Velden hotel, a 105-room luxury resort with roots stretching back more than 400 years. The new owner, Italian hotelier Ugo Barchiesi, announces he plans to continue to operate the hotel as a five-star resort with a spotlight on treatments, and he will expand its spa.
The price of the deal was not divulged, but hotel professionals guess it was in the 60 million range, considerably less than the 100 million the bank and its partner had invested in the property. The buyer and seller have an agreement not to disclose the price .
The move by Hypo Alpe-Adria is the latest sign European banks are beginning to unload troubled property assets. In the years quickly following the world industrial collapse, they were averse to do so , because that would suggest recording high losses.
But , recently, some EU banks have shown more of a willingness to dump agitated loans and seized real-estate as they have stabilized their balance sheets and as commercial-property values have risen. Many European banks, including Barclays Capital and Anglo Irish Bank, have begun to dispose of U.S. Assets.
Hypo Alpe-Adria was nationalized by the state of Austria in December 2009 in a rescue costing 5.5 billion. BayernLB, a public-sector German bank that itself was disturbed, held a majority stake of 67%. BayernLB lost more than 3.7 bln when it passed the bank over for one.
The bank is dumping its real-estate portfolio as a part of a broad restructuring effort.It is similar things with Croatia real estate.
“The exposure of the group to real estate is by far higher than for any analogous peer,” said Gottwald Kranebitter, who was chosen chief executive last year with the job of restructuring the concerned bank, that has about forty bill in total assets.
In Feb, the bank established a real-estate subsidiary to take on the task of selling its six bill portfolio, about 30 percent of which is composed of property holdings and the rest of which is loans and leasing exposure. The majority of this portfolio is in southeast Europe, and about a third is related to tourism, including hotels, camping sites and other hospitality sub-structure.
Mr. Kranebitter related in an interview that the bank intends to close on sales of roughly 100 properties this year and will be taking a look at opportunities for selling complete portfolios. He did not want to discuss pricing or to indicate which loans or properties would go on the block.
“There’s no fire sale. There aren’t any ‘haircut ‘ sales. We sell at the prices that we expect in a way that increasingly permits us to close transactions,” he said.
Lots of the investments and loans “had an inherent speculative element which simply didn’t work out,” he announced.
Schloss Velden, a luxury resort on Lake Worth in Austria, has a spa, cafe, beach club and jetty. It has also got 45 residences, with twenty-one still for sale. The area is famous for its casinos and provided the setting for two well-liked German-language television shows.
The bank purchased the hotel in 2004 from an individual and added a new wing with more rooms and a spa, plus some home units. The investment was partly planned to help tourism in the area close to the bank’s HQ, asserts Christoph Harle, MD of Jones Lang LaSalle Hostels.
Hypo Alpe-Adria’s sale of Schloss Velden comes as the Austrian property market is enjoying a period of relative stability, compared with other states.
According to Stats Austria, a government agency, luxury-hotel overnight stays contracted only a little in 2009 and grew 4.1% to 44.1 million in 2010.
“The hotel itself is truly lovely,” Mr. Harle said. “It’s a nice hotel. It is just a question of how are you making it work financially.”
Besides targeting a new medical age defying spa concept, the new owners desire “to refresh the wonderful place with artists, famous Italian football players, fashion and parties,” Mr. Barchiesi announces, adding that it is like Sleeping Beauty and must be woken up.
The majority of Hypo Alpe-Adria’s real estate holdings are in Croatia and Slovenia.
According to a communication by Jones Lang LaSalle on the Zagreb, Croatia, office market, demand remains puny thanks to the depression. Nevertheless there was a slight uptick in investments this year, as well as more interest from foreign investors expecting market conditions will improve when Croatia gains membership to the European Union, negotiations for which are predicted to conclude this year as reported The Wall Street Journal.
Mr. Kranebitter recognized that the real estate loans and investments were mainly made of 2004 to 2007 by the bank as speculative bets that the property market would keep growing in value . Property values in most markets haven’t recovered to those levels.
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Tags: travel, destination, nature
