"I believe in this project, and I've supported it from the beginning. Main Street will put Inventech is a completely different place, and will give it the opportunity of extraordinary growth and profits. It will also ensure a yield for the bondholders," said Inventech Central Hotels Ltd. (TASE: IVTC) controlling shareholder Yuli Ofer following the company's large land deal in Budapest.
Last Friday, Inventech signed a deal to buy a fifth property on Vorosmarty Square in the heart of the Hungarian capital. Inventech and its local partner will build a hotel, commercial, and office complex in Budapest's 5th District at a total investment of €190 million.
Inventech will invest €6.9 million and own 25% of the project. Its partner is Csipak Acquisition, owned by president and Péter Csipak. Ofer said, "I know the developer and his capabilities personally, and subject to obtaining all the necessary guarantees, I think that there is no similar project to this one, or a project more suited for investment in the downtown area of any major city in Europe today."
Hungary is in deep crisis, and everyone is wary. Bank credit will only be granted in stages, and is conditional on Budapest Municipality permits and Inventech conditioned its investment on guarantees. The low price tag for the deal reflects more than any other factor the negative sentiment about the Hungarian economy, which suffers from a 10% unemployment rate and which may yet need international aid. The country has a population of ten million and a negative migration rate.
Yuli Ofer's Central European Estates NV (CEE) (TASE:CNERO.B1) owns 80% of Inventech. Inventech's share price rose 1.2% today to NIS 1.75, giving a market cap of NIS 66 million.
Published by Globes [online], Israel business news - www.globes-online.com - on August 4, 2010
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