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Dexus Group Finalizes CPG Rehabilitation Project, Sets Its Own Development Plans, Forecasts Expansion Abroad

Published: December 17, 2012 | 7:01 pm
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Discover the Best New Year Gifts from Dexus Development!

The COMMERCIAL TIMES

Dexus Group, the first and only business group focused on distressed asset management, is half way through Center Point Group (CPG) rehabilitation project. As a reliable developer with a large-scale portfolio of success stories, among which the top prominent one is the CPG case, Dexus Group sets its own development plans. For future perspective, the company forecasts expansion abroad.

CPG turnaround plan

Dexus Group plans to agree the maximum term of additional two-year period with the Rcheulishvilis (CPG owners) and fully complete the rehabilitation project by the deadline term.

The company had announced the three-year CPG turnaround plan, according to which the distressed asset would be led out of crisis by the end of 2013 and the process of finalizing constructions could last for additional two years.

Interim results announced by Dexus Group in September, which reflected the activities conducted by the company since it took CPG under management with the aim of the group’s recovery, showed that the developer already managed to fulfill obligations to circa 1/3 of 6200 CPG customers and in total, the dispute with around 4 000 CPG customers (2/3) has been solved.

“As for the remaining 1/3 of CPG customers, Dexus Group will start fulfilling obligations to them in 2013. We plan to start negotiations with the Rcheulishvilis and use the additional two-year term to fully complete CPG turnaround plan,” Irakli Kilauridze, Managing Partner of Dexus Group, told The COMMERCIAL TIMES.

In his words, the conditions offered by Dexus Group to CPG customers were based on the situation they faced there. “Internal financial resources were not enough to solve the problem, the solution was not found in fulfilling the customers’ demands through sales either,” declared Kilauridze. “Dexus Group managed to define the deficit and cleared up the picture. Customers were asked to provide additional 20% funding, which would be enough to complete constructions. However, not everyone had to pay same amount. If someone has paid high price we do not demand additional funding from them. Some had to pay 15% extra, others-10% or even as little as 5% but nobody paid more than the market price and more than 20%, it’s the maximum ceiling amount.”

At first, CPG customers did not welcome the initiative by Dexus asking them to provide additional funding. However, the company assured the customers that it was a profitable deal for them.

During the past two-year period, which is 2/3 of the three-year turnaround agreement term, Dexus Group has managed to settle issues with 2/3 of CPG customers.

As Managing Partner of Dexus Group explained, those who agreed first with the conditions offered were satisfied first: “The projects where we had 80% agreement we started right away and lots of CPG customers have already moved in their new apartments or have sold or rented them.”

The major problem, as Kilauridze noted, was the trust issue: “It took time for part of CPG customers to rely on us. Now, when they see completed constructions, they’re confident that Dexus Group is here to help them out. Sooner or later everyone will be satisfied.”

Dexus Group has invested GEL 33 million in CPG turnaround project in 2011 only, the total budget of which reaches GEL 90-95 million. According to the company, preliminary volume of the investments provided in 2012 will be over GEL 33 million, higher numbers are forecasted for 2013.

Starting from next year Dexus Group will revive 3-4 more CPG constructions. The company will also launch new projects; concrete details are kept confidential till the negotiations are over.

Kilauridze  claimed that the company will never get engaged in projects, which do not look promising to be completed in accordance with contract terms: “It’s wrong to get down to business and leave it for completion to a third person. It’s important to have a guarantee of prolonging a contract term. It does not concern the projects that Dexus Group starts next year and completes the same year. In that case, we forecast 80% completion even without contract prolongation.”

New Year Campaign

Just recently Dexus Development has launched an attractive New Year campaign. The income received from the holiday campaign sales will be invested in completing CPG.turnaround project.

Customers who purchase apartments at Dexus projects in Tbilisi, Batumi and Bakuriani, will get respective New Year gifts. This concerns the following 4 facilities: Marijani, Mioni, Sanisle and Magnolia.

From December 1 through January 15, anyone, who purchases an apartment priced at up to $50 000, will get a full package of electrical goods of the superior quality that will include the 13 most necessary household pieces (TV, refrigerator, washing machine, kitchen range, laptop, cooker hood, dish washer, blender, vacuum cleaner, toaster, mixer, microwave oven). All the New Year gifts will be of superior quality and premium brands (BOSCH, GORENJE, SAMSUNG, HP, etc.).

In case of purchasing an apartment priced at up to $100 000, customers will get GEL 12 000 Dexus Shopping Card, made especially for them, which the holders can use at any shopping mall.

In case of purchasing an apartment priced at more than $100 000, Dexus will give this customer the main New Year gift – the car Kia Rio.

According to Kilauridze, such campaigns significantly boost sales. The company plans to run incentive campaigns in spring as well.

Other Turnaround Projects

In addition to CPG, Dexus Group has other turnaround projects as well. “Just like we did with Isnis Savane, which is an absolutely different project from CPG, we work out a business plan for distressed assets, present concrete estimations needed for the project rehabilitation. The devil is in the detail and we know how to make the construction cost less possible and build it on time. Our team has ten-year experience in this field,” said the Managing Partner of Dexus Group.

Dexus Group has a client base of around 10 000 people who are offered the company’s products automatically and drives sales.

Valencia turnaround project, in particular its residential complex Isnis Savane is under construction for the several months already and is planned to be completed by the end of 2013.

Dexus Starts Its Own Development Projects

Along with dealing with distressed asset management, Dexus Group plans to launch large-scale high-class development projects of its own. The segment will be medium and high income people. Mainly, the company will be constructing residential and commercial property. Attracting finances for the project is planned to be over by the first quarter of 2013.

In respect to residential property, first the company will start construction activities in Tbilisi Center and will also move to suburbs where will be built Gated Communities- residential complexes for high income population willing to live away from city noise.

As for commercial property line, in the frame of Tbilisi Eastern and Western Railway Stations project, Dexus Group will construct medium size trade centers (5-7 thousand sq.m) at both stations as the company regards them to be attractive locations for commercial activities because of big traffic. Dexus Group does not intend to sell the property; the company- as the owner will get profit from its leasing. Dexus Group itself has leased the area with 49-year term.

“Leasing process has started; we’ve finished negotiations on 1/3 of the space already.

According to the new rail infrastructure (Bypass project), Tbilisi central railway station will stop its operations by the end of 2013 and two terminal railway stations will provide rail transportation services to the Capital: West Station (Didube) and East Station (Navtlughi).

The development of the Navtlughi station in the eastern region of the city will be completed by September, 2013, carrying the investments of about GEL 8 million. The development of the Didube station in the west will be finalized by 2014. For both stations the development plan encompasses development of trade centers adjacent to both stations as well as their further operation.

Dexus Group is strongly committed to activate its own development business line next year. 2013 is a kind of transaction year for the company, the year for finalizing CPG constructions, starting own development projects and meanwhile launching other turnaround plans.

“Successful completion of CPG turnaround plan will be a huge step for Dexus Group as of a reliable developer known for quality and timely constructions,” said Kilauridze. “Till now, we were associated with a distressed asset management company only. Dealing with such business line is not that simple. We’re completing works started by others and face a number of limitations during the construction process; still we make the best out of it. At Dexus Group we do our best to have a good image. In today’s world of business, brand is number one value and only then comes money.”

Expansion Abroad

After strengthening its positions on the local market, Dexus Group plans to expand to the Black Sea region in a long term perspective. “We see expansion abroad could be a topic of discussion in about a five-year prospect. Most probably we’ll be looking at the neighboring countries: Armenia, Azerbaijan, and Turkey. Asian market looks also very attractive. However, first we have to be concentrated at establishing ourselves at the local market decently.

 

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