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Failed company awarded valuable Budapest property
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Andrassy 21, a valuable piece of real estate in central Budapest has undergone several changes in ownership over the past years and was involved in plenty of controversy. The same company managed to buy the asset from the local municipality twice, ultimately, it would seem, considerably below market value.
Andrassy 21 is a prestigious palace building in downtown Budapest built in 1883. In 2004, the left-liberal MSZP-SZDSZ management of its host district sold the asset to Amelus Kft, or to be more precise traded it for another asset plus some cash. The deal was among the numerous scandalous transactions in the area that eventually led to several police investigations, charges of white-collar crimes against officials, and eventually, the court declared the deal null and void. Ownership of the property fell back to the municipality, but it remained under the control of Amelus, which filed a HUF 2 billion (€6.3 million) compensation suit against the local government for the failed transaction.
The local government, now under the control of the governing Fidesz party’s mayor decided in 2015 to pay HUF 733.4 million (€2.3 million) of the claim, but only on condition that they are able to sell Andrassy 21. The asset was put up for sale at a minimum price of HUF 1.368 billion (€4.3 million). Eventually, only one binding offer was submitted that of Amelus, which offered to pay above the minimum price. Although the company is the same, there was a change in ownership which occurred over the year past. What hasn’t changed, is that Amelus has produced mixed results recently to say the least, with the company accumulating considerable losses. Ultimately, the municipality decided to sell highly valuable property to a bidder known to be stuck in the red in terms of business results.
What is even more interesting is how the figures add up. Given that the municipality approved HUF 733.4 million of its compensation claims, and given the HUF 1.368 billion value of Andrassy 21, Amelus was actually awarded the building for HUF 634.6 million (€2 million), well below the originally determined market price.
We asked the local government about how this would work in practice. The answer stated that the tender was designed to exclude any external factors, meaning the successful bidder will have to pay the price of the building in full. Whether this changes the ultimate outcome in terms of the figures is a different matter.