Sparkassen Immobilien Writes Down CEE Property Portfolio, Says Sofia/Bucharest Malls on Track

“The continuing disappointing performance of our markets – in particular the higher yields expected by investors from property investments in Eastern Europe and the consequent decline in property valuations – had no effect on cash flows but meant that valuations had to be revised downwards, resulting in an accounting loss,” Holger Schmidtmayr, member of Sparkassen Immobilien’s managing board, said in a statement posted on the group's website.

The group turned to a loss of 71.6 million euro through September from a consolidated net profit of 11.7 million euro in the same period last year, company figures showed.

“The market environment continues to be difficult, but on all our projects construction is proceeding to plan,” board member Friedrich Wachernig said in the statement.

The company said its shopping mall in Bulgarian capital Sofia – Serdika Centre, and its Sun Plaza mall scheme in Bucharest will be opening in early 2010, and both have pre-letting ratios of roughly 90%.

The Serdika Centre is being developed in partnership with ECE Projektmanagement, a European developer of inner-city shopping malls. Total investment is seen at 210 million euro.

In the first three quarters of 2009 the group’s property portfolio grew to 1.839 billion euro. Sparkassen Immobilien AG’s property portfolio comprised 260 properties with total lettable space of 1,515,100 square metres as of September 30.

In southeast Europe, the company is also developing an office scheme in Croatia.

($=0.6679 euro)