ECM REI has frozen most new projects for next year

Prague - The real estate company ECM Real Estate Investments (ECM REI) has withdrawn from most of the yet-to-be-announced new projects for next year due to the financial crisis and unrest in the real estate market. These were future projects in countries such as the Czech Republic and Russia. Aside from one construction project in China, ECM will not initiate any new projects next year. This was stated by Kamil Ziegler, vice president of ECM REI for finance, at a press meeting today.
    "We have 'frozen' new projects; we are not considering any new projects for 2009 except for one project in China," Ziegler noted. "Some projects for which we had options, which were originally planned by the company, we have canceled and withdrawn from them," he added. However, the company reportedly does not currently plan to completely withdraw from any market. Besides the Czech Republic, ECM REI operates in Russia, Poland, and China.
    Even without the crisis, according to the financial vice president, it would not have been certain that each of the planned projects would come to fruition. "The reality would have been different; not all of them would have been realized," he pointed out.
    Other major development firms, such as Orco and ProLogis, have also opted for a temporary halt in acquiring new projects and freezing further expansion due to the financial crisis.
    ECM REI is currently prepared to sell two high-rise buildings in Prague at Pankrác, the Prague headquarters of the company CCS, and the office complex Varenská in Ostrava. According to Jiří Kašek from ECM, transactions involving some of these projects could take place by mid-next year. Everything, however, will supposedly depend primarily on the offer amount. "We are not in a situation where we need to desperately sell," said the company's vice president for corporate affairs, Antonín Jakubše.
    In the case of a good offer, however, according to Ziegler, the company is ready to negotiate the sale of additional projects, including those still in the preparation phase. Moreover, ECM is reportedly open to the entry of other partners in participating in individual projects.
    On Wednesday, ECM REI announced a loss of 22.15 million euros for the first three quarters of this year, approximately 555 million crowns. In 2007, it reported a net profit of 4.43 million euros for the same period. According to Ziegler, the loss was primarily caused by fluctuations in the exchange rate of the crown against the euro.
    Analysts estimate that Orco, which is the second major developer whose shares are traded on the Prague Stock Exchange alongside ECM REI, could also report a loss for this year's third quarter of up to 656 million crowns. Orco will announce its results for the first nine months today.
    Next year is not expected to be profitable for ECM either; the operational loss is also likely to be reported for 2009, the financial vice president stated. "In terms of operational results, we aim to reach breakeven at the operational level in 2010," he said. However, the actual outcome, according to Kašek, will also depend on the number of sold projects and their prices.
    As of the end of September, ECM REI's portfolio consisted of 13 development and nine investment projects, with a total area exceeding 518,000 square meters. In the Czech Republic, one of the main projects of the company is, for example, the office complex in Prague at Pankráci.