Warsaw-listed GTC plans asset buys, spin-offs to cut debt

Polski Holding Nieruchomosci SA

20/03/2014 14:49

WARSAW, March 20 (Reuters) - Warsaw-listed developer GTC GTCP.WA  said on Thursday it planned to buy distressed real-estate assets around the region rather then develop new ones, after portfolio revaluation widened its net loss by half last year. "We begin to roll out a new strategy that will include acquisitions and selective developments, while funding ourselves further through non-core asset sales," GTC Chief Executive Alain Ickovics said.     GTC took a hammering from the weak European economy, which has dragged some real-estate prices in southeast Europe down by 40 percent since 2008.  The company's value fell nearly a half over the last five years, prompting the Warsaw bourse to drop GTC from its blue chip WIG20 index  .WIG20  from next week. "The region has changed. It's no longer about lack of supply and commercial space," he added. "It's now cheaper to acquire buildings than develop new ones. The policy is now to acquire distressed property and use our skills to turn it around."    The company moved to cut debt and sell off assets, while its top shareholder Kardan  KARD.AS  sold its 28-percent GTC stake for 160 million euros ($223 million) to private equity fund Lone Star, known for snapping up distressed portfolios. ID:nL5N0J20FR  GTC develops property in 10 Eastern European countries and the Balkans. It closed last year with a net loss of 147 million zlotys ($49 million), after it booked a 190 million zloty loss on portfolio revaluation.     Even though it cut its debt by 18 percent to just under 1 billion zlotys last year, its loans equalled 55 percent of its real estate value - two percentage points more than in 2012. A fifth of its debt is due this year.  ID:nL6N0M80UB  However, its cash flow from operations rose by 75 percent to 28 million euros, and the group expects to spin off assets - mostly in Ukraine, Russia and Slovakia, worth up to 50 million euros to finance acquisitions. "We find Lone Star's strategy applicable in the region, where we see a lot of distressed portfolios," Ickovics said. "We plan to buy distressed asset portfolios worth 70-100 million euros in the region." The CEO added that a controlling stake in its Polish state-controlled rival PHN  PHN.WA , would be too big for GTC to buy. ($1 = 0.7189 Euros) ($1 = 3.0181 Polish Zlotys) (Reporting by Adrian Krajewski; Editing by Stephen Powell) ((adrian.krajewski@thomsonreuters.com)(+48 22 653 97 09)(Reuters Messaging: adrian.krajewski.thomsonreuters.com@reuters.net)) Keywords: POLAND GTC/