Ablon freezes development projects in Romania

Real estate developer Ablon has announced to freeze six projects in Romania and go ahead with only three principal development projects, two in Budapest and one in Prague.

Ablon, controlled by Austria's Volksbank and Israeli businessman Uri Heller, announced it would continue three development projects and shut down six in Romania. The ones it continues to progress with are:

Airport City Phase 2 (Budapest) - The second building of 9,400 sqm is almost completed. The company is still to sign a lease contract for this stage of the development.

Blaha Center (Budapest) - Mixed-use, hotel and retail project - construction ongoing. Completion expected by the year end.

Viva Residence (Prague) - Residential project of 162 units - construction ongoing. Completion expected by the year end. A total of 28 units have been sold already.

The Board of Directors of Ablon has decided to put all other development projects on hold until a general improvement in the market.

"Values across the real estate market in Central and Eastern Europe have continued to come under pressure. Against a backdrop of uncertainty in both the financial and real estate markets, Ablon continues to experience a correction across its portfolio. As is well documented, the availability of credit facilities has all but dried up and transactional volumes have slowed quite considerably. Ablon is not immune from these events, hence the valuation decline and strategic pausing of developments," the company said in a statement.

"Until the time comes that credit lines from the banks are reinstated, we will only undertake minor refurbishment and design projects," said Chairman Dennis Twining.

Ablon has an existing 13 completed and income generating properties and claims to have a strong balance sheet with relatively low gearing that should put Ablon in a favourable position going forward, he added.

"We will concentrate our efforts on maintaining income and only undertake capital expenditure project when necessary."

For the six months ended 30June 2008, Ablon's gross assets were valued at EUR 654.2 m. Gross assets under management, as at 31 December 2008, stood at EUR 593 m, representing a 9.4% reduction in total.

Romanian scene

Ablon, listed on the London Stock Exchange and traded on AIM, owns in Bucharest and in its neighbourhood (Otopeni, Mogosoaia, Voluntari) some plots of land with a 34-ha area, on which it announced it would invest around EUR 800 m to develop over 4,000 housing units, office and commercial spaces, Romanian daily Ziarul Financiar said.

The representatives of Ablon's office in Bucharest chose not to make any statements about its employees' activities domestically. The project in the most advanced stage of development was Sunset Residences housing complex of Drumul Taberei, where the firm had started construction works last year, planning to develop ten blocks with around 2,000 housing units, in the wake of investments worth EUR 160-170 m. Works were halted as early as last year.

The company's biggest project was due to be developed on a 13.3-ha plot of land in Otopeni, where Ablon wanted to invest EUR 280 m in a business park.

Ablon's portfolio also includes two plots of land with a 7.3-ha area in Pipera, to be used for some housing projects, a plot in Mogosoaia for a villa project and a smaller plot in Bucharest, in Tepes Voda Street, for the construction of an office building.

portfolio.hu