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

21.10.2010, 23:53 22

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


The financial situation of the shopping centre has worseneddramatically this year, with operating income falling by 90%, from3.1 million euros to 308,000 euros, as a result of the loweroccupancy rate of the mall and of lower rent for remaining tenants.Under the circumstances, the market value of the project went downeven further to 35.4 million euros (compared with 51.6 millioneuros a year ago and over 100 million euros, the price paid for theacquisition in November 2006), taking the "loan to value ratio"indicator to 116%, even though the limit accepted by the bank is65%.

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