Orco paying renewed attention to German operations
It’s a long time since we’ve heard any substantial news from ORCO Germany, let alone good news – there was a time when ORCO seemed to have a hand in nearly every substantial project development in the bustling German capital, but within a few years it had all gone pear-shaped for the German subsidiary of the international group, which is listed on the Paris exchange Euronext, and on the Prague and Warsaw stock exchanges – reflecting its central European business bias.
The German business has just made its first real estate buy since the heady days of 2007, buying a piece of land with development potential in the centre of Berlin (Voltastrasse 29-30). The land is close by to other commercial buildings the group owns, and includes a storage and workshop building with 1.300 sqm of usable space.
Orco is still the owner of GSG Gewerbesiedlungs-Gesellschaft, a profitable provider of light production, office, storage and commercial space based around the city, often in renovated business and industrial parks. GSG has 40 such sites with 850,000 sqm of lettable space, housing 1,600 startups and SMEs with more than 15,000 employees.
The parent Orco Property Group was hit heavily in the course of the financial crisis and has been plagued by boardroom battles ever since. The company’s turbulence effectively bled the German operations of any funding over the last seven years, but Orco Germany is now benefiting from a €36m reserved capital increase to buy its latest asset. According to Orco Germany’s deputy CEO Nicolas Tommasini in a stock market filing, “This purchase is the start of our agreed expansion course for 2014. The cashflow resulting from Orco Germany’s capital increase will enable further acquisitions in Berlin and emphasises the importance and value of the Berlin portfolio.”
Insiders say that the recent reserved share sale was taken up by a company associated with OPG founder Jean-Francois Ott, but that Orco Germany plans itself to raise a further €36m with an additional sale open to most of its shareholders, similar to a share sale last year which was taken up by Czech investor Radovan Vitek. Well-known in Czech investing circles, Vitek is Orco Group’s largest shareholder since buying into the company in 2012, and his most recent battles include the ousting in January of board members representing two US funds in a disagreement over strategy.
It does indeed look as if Orco’s German operations are embracing a new era; Ott and his deputy Tommasini are both leaving their executive positions at the group, although both will stay on the supervisory board. Vitek is replacing them with Czechs Martin Nemecek as CEO and Tomas Salajka as his deputy, with Salajka also taking on the role of group CEO. With the parent group still losing money (€142m net loss for the first three quarters of 2013 fiscal year), it looks as if the new regime is making a renewed thrust to establish a fresh foothold in Germany.