Now, investors have the opportunity to acquire even the entire real estate portfolio of a fund that is ending its activity at once. The value of the buildings is in the billions of crowns.
They are offered for sale by the Nova Real Estate fund managed by the investment company Redside. By the end of June, she wants to choose the winner of the tender with whom she would sign an exclusivity contract."The sales process is proceeding according to the original time schedule and it is still true that the goal is to sell the portfolio as a whole," commented Rudolf Vrešťál, CEO and founder of Redside, on the transaction.
Advisors from Savills, who are in charge of the sale, approached over 90 potential buyers from the Czech Republic and abroad, and according to Vřešťál, dozens of them showed interest. However, how many binding offers Savills is currently evaluating, neither Vřešťál nor representatives of the consulting company want to comment.
"Among the main interested parties will be Czech investment groups that can manage and further optimize the relatively diverse portfolio of this fund," says Josef Karas, head of the investment department of the Knight Frank consulting company.
What is for sale
Nova Real Estate has investments in two real estate segments: offices and retail. "The office properties of this fund are mainly located in attractive locations with sufficient services and are also suitable for conversion for other purposes. Retail real estate in the portfolio is represented by grocery stores and hobby markets, these types of real estate are also attractive to investors," adds Karas.
Attractive properties include several office complexes in Prague's Anděl, including Smíchov Gate. One of the buildings now houses the pharmaceutical company Pfizer and the Internet giant Google. The fund also owns stores of the Obi chain of DIY stores, Penny stores or, for example, the Orlice Park Shopping center in Hradec Králové.
The fund holds a total of 16 properties, of which five are office complexes in Prague and the rest are retail parks and properties in various parts of the Czech Republic with a total book value of over 200 million euros, i.e. around five billion crowns.
"There is quite a lot of interest in the portfolio from investors. Some investors target the office part, others the retail part, however several investment groups are interested in the whole. Therefore, I see the sale of the entire portfolio to one new owner as completely realistic," says Karas.
The intention to sell the real estate portfolio as a whole can thus succeed for Redside. "I believe that if everything goes well, we could settle the sale at the end of the year and pay the investors after the New Year," adds Vřešťál, adding that he cannot comment on the details of the sales process.
Role of bankrupt Arca Investments
However, the fund is not selling real estate at the best of times, as real estate funds in both the US and Europe are under pressure and often have to revalue their assets downward. However, the fund was forced to monetize the real estate by the circumstances surrounding the collapse of the investment group Arca Investments, which is the largest investor in the fund.
“Of course, I thought that we would manage the fund 'forever', but we would not affect the reality in the market, as well as what happened in the Arca group, which was the largest investor in the fund. And therefore not even when we sell real estate. We have to deal with it now," assesses Vřešťál.
The management of Redside has already stated that it will similarly want to liquidate and cancel other funds – such as Nova Green Energy or Nova Money Market – and will eventually terminate the activity of the management company Redside itself.
The current sale is therefore also closely watched by the insolvency administrator of the bankrupt Arca Investments Lee Loud. Arca and its entities are among the fund's largest investors, controlling over half of all investment shares. The largest share, over 30 percent, is held by the parent group Arca Investments, smaller shares are controlled by the Slovak branch Arca Capital Slovakia and also by the Arca Capital CEE fund.
Arca Investments' equity stake in Nova Real Estate is encumbered by a lien, which was transferred from J&T Bank to the Natland group. In the course of last year, Tomáš Raška's group took over the complete creditor position of J&T Banka in the case.In the Czech Republic, Natland's claim for Arca Investments is 20 million euros, almost 500 million crowns.
"This is a significant asset that should bring satisfaction of the secured claim and, at the same time, fulfillment for the unsecured creditors of the AI group, which is partly represented by the Financial Market and Receivables Fund (FFTP), in which the Natland investment group is an investor," says Hana Filipová, spokeswoman for the Natland group .
The insolvency administrator of the Arca Investments group, Lee Louda, also has similar expectations.“Given that the asset base includes non-voting investment shares, it is incumbent upon Redside to monetize the portfolio in a quality manner for the benefit of shareholders. We communicated with Redside throughout the insolvency proceedings, and we continue to communicate issues related to the development of the situation in the fund," says Louda.
