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The construction of the Sava Center lasted only three years, including the Intercontinental Hotel (now Crown Plaza). With the sale of this symbol of Belgrade, things are not going so well.
Photo: FoNet / Aleksandar BardaThe Belgrade City Council announced a competition for the sale of the Sava Center on October 19, and on Friday the news came that the offer had been submitted by Delta Holding, which has been the main candidate for the takeover of this center of congresses, built by order of Josip Broz Tito. it could organize a conference on European security and cooperation.
In 2016, the city of Belgrade announced a tender for the establishment of a joint venture in which the city will include the Sava Center and the partner’s money for the reconstruction of the facility, then the minimum was 15 million euros. The city would retain 51 percent of the shares and the partner 49 percent, although he would be in charge of management.
In addition to Delta, a surprising and occasional consortium of state-owned companies (Belgrade Airport, Belgrade Fair and Energoprojekt) also entered the tender.
The tender failed because no one responded in the second round when bids were due. In March 2018, the same tender, only with the obligation of the partner to invest 12.5 million euros, received an offer, which the City Council rejected as not being adequate, announced the then Deputy Mayor Goran Vesić. That only offer was Delta.
Meanwhile, the Sava Center is suffering losses, the state covers electricity costs and tax debts are mounting. At that point, two things are obvious. One is that it is not in the city ‘s interest to postpone the sale, and the other is that the only serious, albeit unwanted, buyer is Delta, as its once Intercontinental and physically connected to SC Crown Plaza hotel is nearby. from your other Holiday Inn hotel. and they plan to build a new Intercontinental right next door and can benefit from the Sava Center like no one else can.
After that, the city changes strategy and decides to sell the Sava Center.
In the first tender, at the starting price of 27 million euros and the obligation to invest at least 50 million euros in the next five years, no one will appear. Not even in the repeated tender with the starting price of 21.7 million, the same case.
Only when the price fell to 17.5 million euros, in this, the third tender, Delta submitted an offer.
“The price envisaged by the Belgrade city tender is extremely high and we believe this is the reason why no interested investor has submitted an application during the entire sale procedure except our company,” said Zivorad Vasic, Senior Vice President of Delta Holding.
While the obligation under the call for tenders is a € 50 million investment, Delta notes that consultants estimate that at least € 60 million is needed to develop a truly modern and energy efficient congress center.
When asked how much the Sava Center in Delta could attract visitors per year, they did not want to estimate the time of the epidemic, but pointed out that meetings with five to six thousand participants can be arranged in SC.
“We are aware that the profitability of this investment will last more than 20 years, but we decided to make an offer because we believe that the Sava Center is symbolically and commercially vital for Belgrade.”
Reimbursement is related to the synergy of Delta’s businesses. We have two active hotels in Belgrade: Crown Plaza and Holiday Inn, soon we will have an Indigo hotel and hopefully the most luxurious, the Intercontinental.
By filling those hotel capacities, we can achieve business results. Sava Center itself is not profitable as an individual, and it is precisely by including it in Delta’s system that it can make a profit and we believe this is why Delta is actually the only seriously interested customer all the time. The following example speaks better about the profitability of the Sava Center. The building has about 16,000 square meters of space for rent.
If the future owner reaches a price of 10 euros per square meter, he contributes 160,000 euros per month, or less than two million euros per year. And it is about income, not profit ”, they point out in this company.
According to the 2019 financial report, the highest income of the PE Sava Center comes from the lease: 257 million dinars or about 2.2 million euros. About 135.5 million dinars or 1.1 million euros are income from the sale of services, that is, the organization of events. This past year (like previous ones) was not enough for SC to pay for electricity, so the city paid 59.4 million dinars in subsidies to pay for electricity.
Again, a loss of 212 million dinars (1.8 million euros) was shown. Grants in 2018 amounted to 85.6 million dinars, but the loss is somewhat less, 152 million dinars.
The city’s budget is also at a disadvantage because SC has not paid property tax since 2014, so 638 million dinars of debt for principal and 265 million for interest have also accumulated there. As things stand, the Sava Center cannot function without the help of the state.
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