Czech billionaire Radovan Vitek plans to buy two real estate funds with assets valued at about 500 million euros ($652 million) in central and eastern Europe this year as part of a push to expand outside his home market.
“It would be silly to have all my eggs in one basket, so the expansion abroad is a logical step as there are some interesting opportunities now,” Vitek, 42, said in an interview yesterday at the Prague headquarters of his flagship company, Czech Property Investments AS. “I’m the sole decision maker and we can move fast, unlike our peers in the region.”
Vitek said this month he’ll complete the purchase of Hungarian developer Ablon Group Ltd. for 30.8 million pounds ($47 million). He declined to identify the real estate funds. He bought a 30 percent stake in Luxembourg-registered Orco Property Group in November, becoming its largest shareholder weeks after the developer finished a bond-for-equity swap to overhaul debt.
Vitek said he’s also monitoring five other companies for possible purchase that have been in a distressed situation similar to Ablon, which is listed on the London Stock Exchange.
CPI had acceptances to buy almost 93 percent of Ablon shares on April 3, the company said in an e-mailed statement. After the takeover is completed, Ablon will be de-listed and merged with CPI, said Vitek, who declined to provide further details on any transactions.
Both Ablon and Orco, which has one of the largest housing portfolios in Berlin as well as a 60-acre residential project in Prague, complement CPI’s business, Vitek said. Orco shares gained 2.9 percent to trade at 51.45 koruna at 10:45 a.m in Prague, following five days of losses.
Raising his stake in Orco currently isn’t an option he’d consider, Vitek said. Orco’s gross asset value still needs to be lowered by as much as 200 million euros from the current 1.3 billion euros to be “realistic,” he said. The developer needs to streamline operations, cut costs and sell some unprofitable assets, Vitek said.
According to Luxembourg’s regulatory rules, any shareholder crossing the 33.3 percent threshold in a company has to make a bid for the rest of the shares.
Vitek also plans to continue investing in the Cote d’Azur and Courchevel in France as well as Switzerland’s Crans Montana. Vitek, who bought the Palais Maeterlinck in Nice to develop luxury apartments, estimates his holdings of similar prime projects are valued at 250 million euros.
Vitek started his first venture, importing blankets from Germany, as an economics student soon after the collapse of communism in 1989. He set up a fund called Investicni Privatizacni Fond Boleslavsko AS in 1991 and renamed it CPI in 1998, when it began to focus solely on real estate.
CPI owns retail and logistic properties, office buildings, hotels, and land valued at 64.7 billion koruna ($3.3 billion), CPI said. The company’s 12,700 apartments make it the second-largest provider of rental accommodation in the Czech Republic. It generated total rental income of 2.8 billion koruna in 2012, unaudited data show.
CPI has been the most active player on the Czech market, where it spent at least 950 million euros in past five years, Pavel Krchnak, a Prague-based analyst at DTZ Holdings Plc, a real estate consultancy, wrote in reply to e-mailed questions. It’s a “logical” step for the company to now expand abroad, Krchnak said.
“Right now I’m sitting on 5 billion euros of assets, rental income of 250 million euros and an enormous land bank,” Vitek said. “All that gives us development opportunities for at least 30 years and will also take us some time to consolidate.”
Vitek wouldn’t rule out taking his holdings to the market in the medium term.
“After all that work is done, and if market sentiment improves, I may consider it,” he said.