VILNIUS - Hanner, a leading Lithuanian property developer, announced that it has sold its stake in a Ukrainian venture worth $100 million and would sell two more assets in the country due to the increasingly unstable political situation.
Hanner said it had sold a 40 percent stake in Yudzhin, a firm created to build the Olympic Plaza shopping and entertainment mall in Kiev. The project was reportedly valued at $100 million.
The plaza project was frozen after the Ukrainian Football Association complained that the complex could hinder escape routes from the nearby Olympiysky football stadium.
Hanner owner Arvydas Avulis said in a statement that the company had pulled out of the project. "We have sold the shares at a profit. We will stick to our strategy of reducing our investment in that politically unstable market," he said, adding that the stake was sold to the Kapital Grupp, a local company.
It is the second project in Ukraine that Hanner has withdrawn from so far this year. It also sold a 50 percent stake in Nest-Hanner in April. What's more, the company said it intended to sell two more projects.
Hanner, which is also a major coal trader, has been active in foreign markets in recent years, though the investments have yet to bear fruit, according to company reports.
Hanner is involved in 10 projects in Ukraine: eight in Odessa, one in Kiev and one in Crimea, the company said.
In May Hanner announced the start of operations in Russia with plans to create a $100 million logistics center in St. Petersburg. The group's Russian subsidiary, Hanner SPB Development, said it also wanted to build business centers in Moscow and St. Petersburg.
The Hanner group comprises 33 companies in Lithuania, Latvia, Romania, Russia and Ukraine. The company, which claims to have a real estate portfolio worth 1 billion euros as of 2006, has projected revenues of 300 million litas (86.9 million euros) for 2007, twice last year's figure.
Earlier this month the company admitted that its foreign operations have been underperforming.
In Ukraine, the Hanner group posted losses of 11.5 million litas in 2006, while losses in Latvia reached 869,000 litas and in Romania 64,000 litas. Still, the group managed to post earnings of 75 million litas for the year on revenues of 150 million litas thanks to a reappraisal of investment assets.
Earlier this year Hanner announced that it wanted to invest 301 million litas in Ukraine, particularly on residential projects. For several months the political situation in Ukraine has been paralyzed due to a stand-off between the pro-Western president, Viktor Yushchenko and the pro-Russia prime minister, Viktor Yanukovych. The two sides have agreed to hold extraordinary parliamentary elections in September to resolve the crisis. o