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Dexus Group Sets Ambitious Development Plans, Prides with CPG Turnaround Interim Results

Published: September 17, 2012 | 10:38 am
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Managing Partner: “Dealing with distressed asset management is our core business. Center Point Group Turnaround Interim results show we’re good at it. I believe, it’s time to prove that Dexus Group, as a developer, is an unchallengeable leader of the market.

The COMMERCIAL TIMES

Dexus Group, the first and only business group focused on distressed asset management, plans to start its own projects. Having satisfied 1/3 of the Center Point Group (CPG) customers, according to interim results, Dexus Group says the company is ready to activate its own development business. The COMMERCIAL TIMES interviewed Irakli Kilauridze, Managing Partner of Dexus Group, regarding the challenges the company has overcome and the new tasks set for future accomplishment.

- Resumed construction of 23 buildings, 13 projects completed and fulfilled obligations to 2190 consumers – these are the interim results of Center Point Group Turnaround as of the beginning of the 3rd quarter 2012. How satisfied are you with the results and what are your expectations for future?

- The interim results reflect the activities conducted by Dexus Group since we took Center Point Group under management with the aim of the group’s recovery. It’s been two years already that the process has started, including the first 6 months of preparatory works. I dare say interim results look good. We’ve already managed to fulfill obligations to circa 1/3 of 6200 CPG customers and their number will increase by 1800 when the ongoing constructions are completed. In total, we can say that dispute with around 4 000 CPG customers (2/3) has been solved. This process is irreversible.

As for the remaining 1/3 of CPG customers, Dexus Group will start fulfilling obligations to them next year. We’re planning to revive several large-scale projects by spring-summer, 2013 and put an end to the CPG recovery process.

We announced the three-year CPG turnaround plan, according to which the company will be led out of crisis by the end of 2013. However, CPG customers are aware that the process of finalizing constructions might last for additional two years. That’s a maximum term. I believe, CPG recovery project will be over by the end of 2014.

Dexus Group has invested GEL 33 million in CPG Turnaround project in 2011 only, the total budget of which reaches GEL 90-95 million.

- What are the conditions offered by Dexus Group to CPG customers and what are the options offered to those who are not willing to cooperate?

- CPG customers have invested in the projects that were not completed, meaning the money has been lost or frozen for a while till the projects are revived. We tell them to provide additional investments in return to getting their apartments or commercial property constructed.

However, there is a minority group of people, who refuse to accept the conditions offered by Dexus Group. The only alternative we can offer to this circa 5% of CPG customers is to sell their assets. Part of the money, that is necessary for completing the construction, will remain with Dexus Group and the rest will be returned to the CPG customers.

- In respect to distressed asset management line, what are your plans about other clients?

- Dexus Group started business with Center Point Group Turnaround project. Due to our fruitful activities during the last two years, the company managed to establish a good reputation on the local market. Different companies, groups of people refer us for help, saying they’re ready to provide additional investments in return to completed constructions, which are terminated currently.

In addition to Center Point Group, Dexus Group has also been working on Valencia turnaround project, in particular on its residential complex Isnis Savane. We worked out a business plan for them, presented concrete estimations needed for the project rehabilitation, which envisioned USD100-120 per sq.m additional investment from the customers. As a result, it’s the third months already that construction works of Isnis Savane are ongoing.

Currently, we’re also holding negotiations with several large-scale development companies, who are almost bankrupt, to manage their recovery.

- Dexus is a business group focused on distressed asset management, property development, construction and property management. Would you say distressed asset management line is the main priority for the company? How risky is it?

- Dexus Group is the first and only company in Georgia dealing with distressed real estate asset management. This is our core business. It’s well probed on international markets, but had no precedent in Georgia. Our team comes with a rich experience in real estate business. However, dealing with distressed asset management in practice was something new to us. Still, we had a theoretical knowledge in this field gained through seminars that my partners and I attended at leading international business schools.

Yes, distressed asset management is something new on the local market and yes it is a risky business. Despite all that, our team managed to be a success thanks to the hard work and professional attitude to the subject.

- Who is the team behind Dexus Group? How experienced are they?

- Dexus Group considers its human capital as its major asset. The company employs highly skilled managers with extensive real estate experience and consistently invests in their skill development. The company was founded by three persons- Giorgi Kananashvili, Ivane Tsaguria and me. From the very beginning we agreed that human resources should be the backbone of our business. Later, Giorgi Asatiani, Levan Gvaramadze and Zaza Baiadze,  good-experienced professionals in real estate field joined us in this endeavor and became the partner. This is our vision, our team members are not only hired employees as we give them an opportunity to become partners.

 

- How ambitious are the plans of Dexus Group in terms of development line?

- Dexus Group plans to launch large-scale high-class development projects of its own. Our segment will be medium and high income people. Mainly, we’ll be constructing residential and commercial property.

In respect to residential property, first we’ll start construction activities in Tbilisi Center and will also move to suburbs where we’ll build Gated Communities- residential complexes for high income population willing to live away from city noise. To make it happen we need to arrange a good infrastructure there so that the entire community area looks nice.

As for commercial property line, in the frame of Tbilisi Eastern and Western Railway Stations project, we’ll construct medium size trade centers (5-7 thousand sq.m) at both stations as we regard them to be attractive locations for commercial activities because of big traffic. Dexus Group does not intend to sell the property; we- the owners will get profit from its leasing.

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 mid of 2013, carrying the investments of about GEL 8 million. The development of the Didube station in the west will start in the end of 2013 and put into operation in two years period. For both stations the development plan encompasses development of trade centers adjacent to both stations as well as their further operation.

Would you say that all the projects that are under construction currently will be completed on time?

- Accomplishing a construction project exactly on time cannot be 100% guaranteed by a developer. Construction is a complex process and it depends on different aspects. However, delay period must not last long. We divide project completion into three major phases: first it’s the completion of construction, second- organization of public services and amenities and third- settling legal issues.

- Do you keep responsibility over accomplished projects?

- Property Management is one of the constituent parts of our development business. We’re committed to provide full maintenance of the projects constructed by Dexus Group. Unfortunately, this service cannot be spread on Centre Point Group projects, excluding Magnolia, which is a hotel-type complex in progress to be exploited next summer. Another Centre Point Group associated project where we also intend to keep full maintenance is the Complex of Bakuriani, which is under construction currently.

 

 

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