Hypo Alpe-Adria-Bank, Which Has Huge Holdings In Southeast Europe, Has Subscribed A Contract To Sell Schloss Velden Hotel, A 105-room Grandiose Resource With Roots Stretching Back More Than 400 Years
An Austria-based bank nationalized during the depression has taken the first step toward selling a 6 billion property portfolio with the sale of a historic castle-hotel on an Alpine lake.
Hypo Alpe-Adria-Bank, which has extensive holdings in southeast Europe, has signed a contract to sell Schloss Velden hotel, a 105-room high-end resort with roots stretching back more than four hundred years. The new owner, Italian hotelier Ugo Barchiesi, asserts he intends to continue to operate the hotel as a five-star resort with a focus on medical treatments, and that he will expand its spa.
The price of the deal was not disclosed, but hotel gurus guesstimate it was in the 60 million range, significantly less than the 100 million the bank and its partner had invested in the property. The purchaser and seller have an understanding not to disclose the price .
The move by Hypo Alpe-Adria is the latest sign European banks are starting to unload distressed property assets. In the years quickly following the global commercial collapse, they were averse to do therefore because that would mean recording high losses.
But , in the last few months, some EU banks have shown more of an eagerness to dispose of troubled loans and snatched property as they have stabilised their balance sheets and as commercial-property values have risen. Countless Western European banks, including Barclays Capital and Anglo Irish Bank, have started to lose U.S. Assets.
Hypo Alpe-Adria was nationalized by the state of Austria in December 2009 in a rescue costing 5.5 bln. BayernLB, a public-sector German bank that itself was troubled, held a majority stake of 67%. BayernLB lost more than 3.7 billion when it passed the bank over for one.
The bank is unloading its property portfolio as an element of a broad restructuring effort.It is the same stuff with Croatia real estate.
“The exposure of the group to real estate is by a large margin higher than for any analogous peer,” announced Gottwald Kranebitter, who was chosen Manager last year with the job of restructuring the turbulent bank, which has about forty billion in total assets.
In Feb, the bank established a property subsidiary to take on the job of selling its 6 bln portfolio, about thirty percent of which consists of property holdings and the rest of which is loans and leasing exposure. Almost all of this portfolio is in southeast Europe, and about a 3rd is related to tourism, including hotels, camping sites and other hospitality framework.
Mr. Kranebitter said in an interview that the bank wants to close on sales of about a hundred properties this year and will likely be having a look at chances for selling entire portfolios. He did not want to discuss pricing or to specify which loans or properties would go on the block.
“There’s no fire sale. There are no ‘haircut ‘ sales. We sell at the prices that we expect in a way that increasingly allows us to close transactions,” he revealed.
Plenty of the investments and loans “had an inherent hopeful element which simply did not work out,” he revealed.
Schloss Velden, a luxury resort on Lake Worth in Austria, has a spa, restaurant, beach club and jetty. It also has 45 apartments, with 21 still for sale. The area is legendary for its casinos and provided the setting for two popular German-language television shows.
The bank acquired the hotel in 2004 from an individual and added a new wing with more rooms and a spa, and some home units. The investment was partly intended to help tourism in the area near the bank’s HQ, claims Christoph Harle, managing director of Jones Lang LaSalle Hotels.
Hypo Alpe-Adria’s sale of Schloss Velden comes as the Austrian property market is enjoying a period of relative stability, compared to other countries.
According to Statistics Austria, a central agency, luxury-hotel overnite stays contracted only slightly in 2009 and grew 4.1% to 44.1 million in 2010.
“The hotel itself is really lovely,” Mr. Harle declared. “It’s a nice hotel. It is just a question of how are you going to make it work financially.”
Besides focusing on a new medical anti-aging spa idea, the new owners desire “to stimulate the superb place with artists, famous Italian football players, fashion and parties,” Mr. Barchiesi asserts, adding it’s like Sleeping Beauty and must be woken up.
Almost all of Hypo Alpe-Adria’s property holdings are in Croatia and Slovenia.
According to a report by Jones Lang LaSalle on the Zagreb, Croatia, office market, demand remains puny because of the depression. Nonetheless 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, talks for which are predicted to conclude this year as reported online.wsj.com.
Mr. Kranebitter acknowledged that the real estate loans and investments were mainly made of 2004 to 2007 by the bank as hopeful bets the real estate market would keep growing in value. Property values in most markets haven’t recovered to those levels.
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