UniCredit and City Mall negotiate reimbursement of a 40m-euro loan expiring in a few weeks

Australian investment fund APN/UKA, owner of Bucharest's City Mall shopping centre, announced it cannot fully repay an around 40 million-euro loan to Bank Austria (acquired in the meantime by UniCredit, with the loan, whose repayment deadline is in November of this year, being rated as "in default" "In respect of the City Mall property, negotiations are continuing with the financier to agree on satisfactory terms to extend the facility. These discussions remain incomplete as at the date of this report. In the event that mutually acceptable terms are not agreed, the facility is likely to incur default interest during the period from when the facility expires to the date the asset is sold," reads the report of the investment fund that announced at the beginning of this year its willingness to relinquish the mall to another investor.

The financial situation of the shopping centre has worsened dramatically this year, with operating income falling by 90%, from 3.1 million euros to 308,000 euros, as a result of the lower occupancy rate of the mall and of lower rent for remaining tenants. Under the circumstances, the market value of the project went down even further to 35.4 million euros (compared with 51.6 million euros a year ago and over 100 million euros, the price paid for the acquisition in November 2006), taking the "loan to value ratio" indicator to 116%, even though the limit accepted by the bank is 65%.