2023-08-12 11:07:26
The luxury real estate developer Euroboden is the next victim of the real estate crisis. The managing directors of the company from Munich’s posh suburb of Grünwald filed for bankruptcy on Friday, Euroboden announced.
The company justified the bankruptcy application by saying that the emergency sale of several properties, which should have brought in an amount in the double-digit millions, had failed or become improbable. The subscribers to two bonds with a total volume of 115 million euros are threatened with massive losses. The Düsseldorf project developer Development Partner and the Centrum Group had previously filed for insolvency.
Environment deteriorated drastically
Euroboden, founded in 1999, had proposed extending the bonds running until 2024 and 2025 by three years and reducing the interest rate from 5.5 to 2.5 percent and announced that most of the properties would be sold within the next two to four years. The creditors’ meetings have been canceled, Euroboden said.
“The market environment has deteriorated drastically,” said Managing Director Martin Moll at the end of July. Interest on construction projects has risen massively due to inflation, which has led to a slump in demand for ongoing projects and increased financing costs.
The increased construction costs put pressure on the margins. Valuation adjustments on the projects reduced equity to EUR 43.4 million at the end of March, and further write-downs threaten to use it up completely by the end of the financial year (end of September). Only three projects already under construction near the Munich trade fair, in the municipality of Berg am Starnberger See and in Berlin should continue to operate.
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Resistance had already been raised against the bond restructuring. The restructuring consultants from One Square Advisory, the law firm Heuking Kühn and the Protection Association of Investors (SdK) criticized the plans as disadvantageous for the bondholders. The owners, on the other hand, are not prepared to make concessions. “From SdK’s point of view, it is also questionable why the company is completely abandoning its business model and is going into a state of liquidation,” it said in a statement. Real estate developers will also be needed in the future.
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