As a result of the protracted dispute, Consti is lowering its earnings outlook for the current year.
Arbitration has issued a decision on a dispute arising from the renovation contract for the luxury hotel St. George in Helsinki, says renovator Consti in a press release.
Consti and Kiinteistö oy Yrjönkatu 13, which renovated the property into a hotel, disagreed on the payments for the contract.
Consti says that the arbitration court ordered the hotel real estate company to compensate it for about 700,000 euros for the contract work and Consti to compensate the real estate company for delays and other compensation of about 900,000 euros. Interest on arrears will be added to the corrections.
Consti originally initiated the arbitration proceedings in 2018. In a protracted dispute, both parties demanded compensation from each other of more than ten million euros.
Read more: The construction of the luxury hotel St. George resulted in a dispute of 15 million
Consti records the costs related to the settlement in its second quarter results. The net receivable related to the renovation project in Consti’s balance sheet was approximately EUR 3 million at the end of the first quarter. The positive cash flow effect of the decision for the company is approximately two million euros.
As a result of the arbitration award, Consti lowers its assessment of this year’s outlook. The company now estimates that its full-year operating profit will be EUR 4–8 million. Previously, the company forecast an operating profit of EUR 7–11 million.
Consti renovated the St. George Hotel Building in 2015-2018. The hotel opened in 2018.
Behind Kiinteistö oy Yrjönkatu 13 is the private equity company Capman’s Nordic Real Estate fund.
The hotel, in turn, is operated by Kämp Collection Hotels, which Capman sold in 2019 to Norwegian billionaire Petter Stordalen Nordic Choice Hospitality Group.
Read more: The billionaire bought the legendary Kämp and nine other hotels in Helsinki