The ruling Center Party is strapped for cash and forced to sell its headquarters on Tallinn’s Toom-Rüütli street. While businessman Kristjan-Thor Vähi has expressed interest in the building, the transaction, that should have been concluded a fortnight ago, has stopped short.
Head of real estate bureau Invego, described as one of the most aggressive and successful in Estonia, Kristjan-Thor Vähi remains tight-lipped. “I’ve looked things over, and I will analyze the situation. That is all I have to say,” the entrepreneur said.
The sale of the building is made difficult by the fact the party only owns half of it, while the other half belongs to the city of Tallinn. The city council will discuss a proposal to sell the city’s half for €1.137 million at a public auction tomorrow.
Why couldn’t the city strike a deal with the Center Party, put the entire house up for auction, and split the proceeds, several realtors who talked to Postimees wondered. It would come off far more transparent. Experts put the value of the property at €2.5-3 million, while a probable deal is estimated to land in the vicinity of €2.7 million.
The building is not likely to make Vähi or any other potential buyer happy. A recent assessment of the building’s technical condition would make any real estate businessman cautious: an alteration from a decade ago was handled cheaply and incompetently. The contractor has lacked an image of the whole and basically just poured concrete, installed basic heating and new wiring.
“Now it would be necessary to tear it all down; however, fixing things often proves more expensive than building from scratch. In some ways, the building’s condition is even worse than it would have been had it been old, dilapidated, and nothing had been done with it,” said a person acquainted with the building. “It is difficult to explain to someone who at first only sees a new floor, heating system, and electrical wires.”
What could be the significance of the facts that Vähi has other developments next to the property and that the party is looking for a quick transaction and fast cash on the eve of local elections? Vähi dismisses the claims in cold blood: “The fact that someone might be looking to sell fast does not interest me. We are only looking at the figures and the rational side of things. We have no emotional interest in the object. It is a property like any other,” Vähi said.
City to sell its part separately
The city council will discuss a potential sale tomorrow. This means the city is going down its own path, making the decision to buy the party’s half riskier for anyone. “When the city finally sells its half it will do so at a public auction, meaning that whoever buys the first half has to keep in mind that anyone could end up with the second. This makes it impossible to forecast the price asked for the other half,” one real estate expert said.
Another said that it would be fair for the city and party to come to an accord and put the entire property up for auction and split the proceeds - both sellers would get what’s theirs.
“Were the city and the party looking to sell the building in a transparent fashion, they would simply hold an auction for a 50:50 holding barring all manner of special conditions. One cannot give an immovable with a plan additional value in the Old Town. That would translate into a fair market price,” the expert said.
“No matter who ends up buying the building, they must realize they will be in Center’s pocket for as long as the party remains in power in the capital. Had we a mayor from the Reform Party or the social democrats, it is likely Center would not be selling its building today.”
Former secretary general of the Center Party, now Minister of State Administration Jaak Aab, who has been in charge of the sale so far, said yesterday that there is still no clarity. “I cannot tell you anything until we have signatures on paper; we are currently talking about a preliminary contract. Negotiations are underway, and I cannot even tell you the name of the person we’re talking to,” Aab said, refusing to confirm Vähi as the interested party. “There will be an agreement once there is an agreement.”
Assets needed urgently
Aab promised to have news in the near future, and that incoming secretary general Mihhail Korb is set to take over and meet with the potential buyer in the coming days. Why can’t the ruling Center Party come to an agreement with the city it runs to sell the building together?
“It is not a matter of agreement. Rather it is one of time. Because we can sell our half separately, as can the city, the deciding factor is time. Municipal procedures take a very long time. Were we to join the city’s auction, the sale would probably stretch well into fall,” Aab said.
In other words, the party urgently needs cash for the fall election?
“Yes, to be frank,” Aab said, but added that the party is still weighing its options and does not have a final solution at this time.