Orco Property Group, the Luxembourg-based property company listed on several stock exchanges in Europe, has said its Endurance Fund business will grow at a slower rate than previously envisaged.
The Endurance Fund invests in real estate in Central Europe and parts of Eastern Europe via a series of sub-funds. It is currently raising four vehicles including Office 2, Health Care, Industrial and Logistics and Infrastructure. It also has plans for three more vehicles focusing on energy, retail and securities.
But in a sign of how the current credit crisis has impact on the asset management environment, Orco has predicted a slowdown for the division. “Our Endurance Fund business, which has recently registered new commitments, will (also) grow albeit it at a slower pace than originally forecasted,” a management statement said.
In the statement, Orco, which is listed on the Paris, Prague, Warsaw and Budapest stock exchanges, said it was focusing on its “three pillars” of leasing prime properties that is has developed in capital cities in Central Europe, developing “middle class residencies” and managing investment funds.
The company said that despite a challenging credit climate worldwide, financing was available to the group in its core markets. It pointed to the refinancing of a jointly-owned hospitality portfolio for €114.9 million ($177 million) during the second quarter of 2008.
It also said it did not expect to make any new real estate acquisitions except those made on behalf of its Endurance Funds. Orco added it would sell its logistics and industrial portfolio as well as several office properties to free up capital for investments offering the highest returns.
Orco’s statement follows first quarter results published last month in which the firm warned the credit crisis had led to delays in closing commitments resulting in no fees for the first quarter. At the time, Orco said: “Some consequences of the international crisis on the financial markets were felt at the corporate level, particularly in fund raising. However, we have seen no consequences on the physical real estate market in Central and Eastern Europe. This is because these markets continue to be fuelled by economic growth and driven by sound fundamentals of demand, most particularly in mid class residential and office space.”