Future unclear for promised investments in former SCD Balaton portfolio

Deals

The future of billions of forints of developments earlier planned by developer SCD Group around Lake Balaton is unclear after the company sold its holdings around the lake to Turisztika Hungária.

SCD purchased many of the properties in its former Lake Balaton portfolio on the condition it make investments on them.

When asked by MTI whether the buyer of the portfolio would make the combined HUF 16.4 billion of investments promised -- or pay sizable indemnities – SCD declined to answer, citing business confidentiality.

Turisztika Hungária owner and managing director Gábor Nagy also declined to answer when asked by MTI, but he did say the company can and wants to fulfill the investment obligations.

SCD group promised to make HUF 6.8 billion of investments at Zalatour by 2013 when it purchased the company in 2005. A 10% indemnity must be paid if the investments are not made.

SCD promised to invest HUF 9.7 billion at Balatontourist by 2013 when it bought the company. The indemnity for that investment is 15%.

SCD Group chairman Gellért Jászai announced on July 2 the company was selling the Balaton-Fejlesztesi Program, the long-term lease and operating rights for FlyBalaton airport and the company that owns an option for Hunguest Hotel to Turisztika Hungária. At the same time, Gellért said SCD Group would concentrate on developments in Budapest and list SCD real estate investment trust (REIT) papers on the Budapest Stock exchange next year.

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