Orco books further losses after writedowns

Orco Property Group reported a net loss of EUR 250.6 mln in 2009 on revenues down 16% at EUR 251 mln. The decline reflected a 12% writedown of the real estate portfolio by EUR 232 mln to EUR 1.81 bn. Over the past two years, Orco has seen its portfolio decrease in value by more than 30%.

The company reported a sharp fall in its development and hospitality revenues, as well as its Endurance Fund management fees. The number of residential units sold fell to 437 compared with 764 units in 2008. In total, the company sold assets sold valued at EUR 66.6 mln in 2009, EUR 0.6 mln below valuation.

Orco said that the losses were largely generated in the first half of the year as revenues started to stabilize in the second half while operational expenses fell 21% year-on-year due to an ongoing cost-cutting plan. As a result, Orco booked a net operating gain of EUR 6 mln in the second half compared with a net loss of 260 mln in the first six months of the year.

The company has also presented a 10-year business plan aimed at refocusing the group's activities on its historic markets, improving cashflow and modernising the group's corporate governance.

'The schedule of bond repayments, initially concentrated at over 80% in 2013 and 2014, will be set back over the number of years estimated necessary for the execution of the projects,' the company said in a statement. The average maturity of the bonds will rise from three to less than eight years, reflecting an extension equivalent to a property development business cycle.

Orco is an investor, developer and asset manager in the Central European real estate and hospitality market. It manages assets of EUR 1.8 bn and is listed on Euronext Paris as well as Prague, Warsaw and Budapest. The company has been under court protection from creditors since March last year. The court protection was recently extended until 25 June. The company will hold its annual shareholders meeting later this month.