ORCO

Orco Property Group

Type	Public (PSE: ORCO, Euronext: ORC, WSE: OPG, BSE: ORC )
Industry	real estate development
Founded	1991
Founder	Bernard Gauthier Jean-François Ott
Headquarters	Capellen, Luxembourg
Key people	Bernard Gauthier Jean-François Ott, CEO
Revenue	145.9 million EUR (2013)[1]
Net income	-253.5 million EUR (2013)[1]
Total assets	1171.8 million EUR (2013)[1]
Number of employees	474 (2013)[1]
Website	www.orcogroup.com

Orco Property Group S.A. (ORCO Group, ORCO) is a French real estate development company founded by Bernard Gauthier together with Jean-François Ott, owned mainly by ORCO Holding and, for tax reasons, based in Luxembourg, Parc d'Activités Capellen.

Structure, operations

ORCO operates, through its subsidiaries, mainly in Central and Eastern European (CEE). It develops real estate markets of Croatia, Czech Republic, Germany (Berlin, Duisburg, Düsseldorf, Frankfurt am Main, Hamburg and Munich, expanding the groups' focus also into ripe markets of Western Germany, Berlin fitting into the CEE strategy), Hungary, Poland, Russia, and Slovakia.

The company was established in Luxemburg and started its activities in the Czech Republic in 1991. In 1999 its expansion to other countries began by investing in Budapest. Since 2000 the company is listed on Euronext, Prague, Budapest and Warsaw Stock Exchange, next to Paris (main listing) and Frankfurt.

Ownership

In 2007, according to company report, the major shareholders were Orco Holding S.A. (11.15%), Bernard Gauthier (4.33%) and Jardenne Corporation S.a.r.l. (4.22%); 80.3% of shares were on free float.^[1]

In 2008 the stake of Jean-François Ott, owned through his Ott & Co, decreased to 1.6% on a compulsory sale due to his liquidity problems. The once majority holder – at the IPO in 2001 his stake was 94%, since then gradually declining – became the fourth-largest shareholder in Orco. According to the company report, the US private equity fund European Investors became the new biggest shareholder with 5.4%. Bernard Gauthier and Jardenne Corp. held 2.5% each; the rest, some 88 percent, were on free float.^[2]

In the beginning of 2009 the Czech-based investment fund Prosperita became the largest shareholder with over 5%, closely followed by European Investors fund with 4.7%, a subsidiary of B with 4.2%, Bernard Gauthier with 1.9%, and Ott & Co, the investment vehicle of Jean-François Ott, holding on his 1.6%.^[3]

Also in the beginning of 2009 SOS Orco an association of minority shareholders (claiming in mid-2009 to represent some 14% of shares) was established in Prague, aiming to join together interest of investors from the Czech Republic, France, Austria and other countries.^[3]

Property value, bubble crash of 2007/08

ORCO Group valuated its property portfolio to EUR 2.7 billion in the first half of 2008,^[4] down from 2,95 million EUR reported in 2007.^[1] As of June 2009 ORCO's real estate portfolio value fell to EUR 1.83 billion from EUR 2.13 billion in the previous period according to the company's report.^[5]

ČTK's sources say further that "Orco struggles a high degree of indebtedness ... Orco's debts total as much as some EUR 1.6 bn ... under a six-month court protection against creditors, with management expecting a possible extension by several weeks ... at the same time in talks about capital investment with US firm Colony Capital and is undergoing restructuring. Orco said ... to focus its future activities on Prague and Berlin."^[5]

In 2008 and 2009, after the latest (as of 2009) real estate bubble crash, Czech Business Weekly (CBW) reported problems within the Czech subsidiary – in June 2009 Orco being "still on the verge of bankruptcy and, despite being under protection of a Paris court, might not survive the year without a capital increase from a new investor" and about Jean-François Ott's "talks on a capital increase with U. S.-based investment fund Colony Capital".^[6][7]

Czech Republic

In 2003, ORCO, through its Czech subsidiary, purchased the Czech leading property group IPB Real.^[8]

Germany

ORCO Germany S.A., with some 200 employees, and listed at the Frankfurt Stock Exchange, has been founded by Rainer Bormann^[9] and operating in Germany since 2004. Its main business areas are commercial property, asset management and project development. In 2006 ORCO Germany acquired Viterra Development and its activities and property in Berlin, Düsseldorf, Frankfurt, Hamburg and Munich. In June 2007 ORCO Germany overtook the Gewerbesiedlungs-Gesellschaft (GSG) of Berlin, as ORCO-GSG expanding its real estate managed assets to over 1 million square metres of developed and undeveloped space there, with 44 commercial areas and centres and 235 residential units.^[4]

In the beginning of 2009, ORCO owned 56.8% of ORCO Germany, which issued a statement of being "no more dependent on the ORCO Group after a successful restructuring during the last year".^[10] Shortly after in April 2009, ORCO Germany dimished slightly the personal role of Jean-François Ott, replacing him by his Ott & Co. and inviting to its board Steven Davis and Aleš Vobruba, Prague members of the ORCO Group board.^[11]

Investment fund

In 2005 ORCO founded its own privately owned closed end property (fonds commun de placement - fonds d'investissement spécialisé) fund, the Endurance Real Estate Fund (Endurance Fund), with (in 2009) six sub-funds for each area and/or region of interest. It is structured (or schemed) as a regulated Luxembourg Fonds with RBC Dexia Investor Services Bank as a custodian bank.^[12]

References