Are you sure?

Orco Property developer plans to pay record dividend

Orco Property Group SA, a real estate developer focusing on eastern Europe, plans to raise its dividend to a record after demand for luxury housing boosted sales.

„I expect that a moderate increase of the dividend will be approved again,” Ales Vobruba, Orco Property Group SA's senior vice-president, said in an interview in Prague. The payment from 2006 profit will be between 90 cents and 1 euro per share, he said. The Luxembourg-based company paid a dividend of 80 cents from 2005 profit. Orco entered eastern Europe in 1991 to benefit from booming property prices after the fall of communism.

The company's real estate holdings amounted to €1.31 billion ($1.69 billion) at the end of 2006, up 78% from a year before, though Orco cut its revenue forecast because of possible delays to Czech projects. Sales in 2007 will be about €223 million, the company said a week ago. Vobruba said sales in 2008 „will grow moderately compared with 2007.” In 2009, they „can jump again much higher” because of the completion of Zlota, a high-rise with 251 apartments in Warsaw, he said on January 26.

Residential development, which will account for 74% of Orco's sales this year, probably won't drop significantly in 2008 even as debate continues over which new properties in the Czech Republic will be subject to higher valued-added tax, Vobruba said. The developer is „watching” opportunities in Romania and Bulgaria, the two newest members of the European Union, Vobruba said. Vobruba said it would invest there in „its traditional way,” by investing in either „some commercial project or a hotel which could be either finished or before completion.”

„We will also look at other territories in the east, which means in Moscow,” Vobruba said. Orco plans to open a hotel in Moscow in the second quarter and „we believe it will not be the last one” there, he said. Orco's shares, which are traded in Prague and Paris and have gained 22% already this year, rose 1% to 3,333 koruna in Prague yesterday. The company has a stock market value of 28 billion koruna ($1.28 billion). (Bloomberg)