Olimpia Real Estate Holdings Ltd. (TASE: OLMP) has transferred ownership of part of a lot in Kiev between subsidiaries.
Nanette Real Estate Group NV (AIM:NAT; TASE:NANT.B1), controlled by Olimpia Holdings and Meshulam Levinstein Contracting and Engineering Ltd. (TASE:LEVI) has bought 15% in Olimpia Real Estate LLC from sister company Olimpia Euro Construction BV for $6 million. With this purchase, Nanette doubled its holding in Olimpia Real Estate to 30%. The deal was approved by Nanette's independent directors.
The deal is essentially at the same value as in March 2008, despite the severe economic crisis in Ukraine.
Olimpia Real Estate owns a 118,000-square meter lot in downtown Kiev, on which it plans to build a 370,000-square meter residential, commercial, and office complex. Nanette's total investment in the project is now $12 million, made through shareholders' loans. Following the deal, Olimpia Euro owns 64% of Olimpia Real Estate, and Ukrainian partners own 6%.
Olimpia Holdings chairman and Nanette CEO Oskar Katznelson noted, "Nanette had first refusal rights if Olimpia Real Estate wanted to bring in a third party, and Nanette believes that this is a good project."
"Globes": Why didn’t the price fall despite the crisis in Ukraine?
Katznelson: "The price should rise even if the price per square meter falls because the project has additional building rights. In addition, although the Ukraine currency has lost value, most of the deal was made in dollars or euros."
Where will funding for the project come from?
"We'll begin construction only when we obtain financing, and we'll do it in stages.
What's the real estate condition in Ukraine?
"Prices are falling because the banks have stopped giving mortgages. On the other hand, buyers have no confidence in the banks, and prefer investing in real estate, which is why companies with finished apartments have sales."
Nanette's share closed yesterday at ₤0.275, after falling 68% last year. Olimpia's share price fell from NIS 28.80 to NIS 1.90 last year. The share rose 8.3% in morning trading today.
Published by Globes [online], Israel business news - www.globes-online.com - on January 1, 2009
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