- Led by former minister László Palkovics, the Széchenyi University Group from Győr announced in late August that they were moving into the Villányi Gardens office building in Budapest.
- The completely renovated 2,500 square meter building was leased in its entirety for 5+5 years by companies under the supervision of the former Minister of Technology and Industry.
- The property was leased out by a newly established company, Gardens Property 2023 Ltd. The company didn’t even have ownership of the building at the time of the contract being signed.
- Gardens Property was formed by people from Fidesz-aligned business circles, including the former vice president of Fidesz youth wing Fidelitas, the father of Győr University’s president, and a former close business partner of (forint) billionaire Attila Paár.
- Lőrinc Mészáros’ MBH BANK provided over two billion forints in loans to purchase the office building.
- According to calculations by 24.hu, the loan will be fully paid off in the form of rental fees by the taxpayer-financed companies.
NER-aligned business circles and former minister László Palkovics’s Széchenyi University Group have found each other in an exceptional real estate deal, as revealed by 24.hu. (NER, the ‘System of National Cooperation’, is the informal network of Fidesz-friendly political and business entities, regarded by critics as a vehicle of corruption.)
The leadership of the Széchenyi István Egyetemért Alapítvány (hereafter referred to as the Széchenyi István University Foundation) passed to former Minister of Innovation and Technology László Palkovics last year, shortly after his resignation from the ministerial seat. The organization is one of the 35 asset management foundations created by the government in 2020-2021 as a means of outsourcing state-related tasks; trillions of forints have been allocated to these foundations since.
The takeover of Palkovics entailed more than a mere change in leadership. The foundation also acquired ownership of several valuable state-owned companies that had previously been part of his ministerial portfolio. For example, the Széchenyi University Group acquired HUMDA Hungarian Mobility Development Agency Plc., a company originally established by the Palkovics-led ministry with the aim of strengthening Hungary’s position in motorsports. The foundation also received stakes in high-value companies like Rába Automotive Holding Plc. and Győr-Pér Airport Ltd.
The group announced in late august that the foundation and several of its associated companies had moved to a new, shared headquarters in Budapest. The press release quoted László Palkovics, who discussed choosing the Villányi Gardens office building as the location for the group’s Budapest campus. As they wrote, along with the foundation, the District 11 building on Dávid Ferenc Street will also host
- HUMDA Plc.,
- HUMDA Pro Ltd.,
- HUMDA Lab Nonprofit Ltd.,
- Techtra Plc.,
- ZalaZone Plc.,
- and Széchenyi Holding Plc.
Additionally, N7 Holding National Defence Industry Innovation Plc., supervised by the Ministry of Defence, moved into the building as well – another company taken over by Palkovics after his resignation, for a gross monthly salary of five million forints.
The 2,500 square meter, five-story Villányi Gardens building, completely renovated by 2023, is leased in its entirety by the listed companies. A remarkable circumstance is that the relocation announcement was only made more than five months after HUMDA Plc., the main lessee of the building, had signed the leasing agreement. The reason for this delay is not known, but it is certain that the
Risky relocation
At the time of signing the lease agreement, the owner of the office building located in downtown Újbuda (Budapest’s District 11) near Lake Feneketlen, was Horizon1 Real Estate Development Investment Fund, part of corporate group Horizon Development. This company had also developed, among others, the Eiffel Palace, which had previously been purchased and subsequently resold by the Hungarian National Bank. However, it was not Horizon group that HUMDA Plc. entered into contract with, but a newly formed company that intended to purchase the property.
Gardens Property 2023 Ltd., established in February 2023, had submitted its application for the registration of ownership rights in March, but as of early September this year, the company’s ownership rights had still not been recorded in the property’s register. HUMDA Plc. entered into a lease agreement with Gardens Property 2023 Ltd. in March, but despite our request, the company did not provide us with a copy of the lease agreement. HUMDA withholds the agreement despite the fact that the asset management foundation operating Széchenyi István University – and its affiliated companies, including HUMDA – are financed by taxpayer money.
However, after several requests, the Széchenyi István University Foundation eventually sent us the lease agreement it concluded with HUMDA Plc. as a sub-lessee. Among other things, it became clear from the agreement that the university group’s relocation move was not without risks. According to the contract, in the “unlikely event” that Gardens Property 2023 Ltd. is unable to acquire ownership rights to the office building by December 31 of this year, the parties can withdraw from the agreement. This could even mean that the group would be forced to vacate the property. It took a relatively long time for this acquisition to happen, as even the property register requested on September 5 featured only Gardens Property Ltd.’s application for registration of ownership rights. In the end, the company ultimately managed to purchase the property.
Familiar Faces
The building’s new owner, Gardens Property 2023 Ltd., was founded in mid-February this year with a capital of three million forints. The company consists of individuals associated with Fidesz-affiliated business circles. As we have recently covered, the company’s primary owner, Ideona Plc. was an indirect beneficiary of resources meant for the Veszprém-Balaton 2023 European Capital of Culture event series. The leadership of the company managing assets worth several billion forints involves individuals associated with Fidelitas Veszprém and Minister of Regional Development Tibor Navracsics. One of the leaders of Ideona Plc. is Péter Mihalovics, former vice president of Fidelitas, who had also served as chief of staff for Navracsics and former Minister of Development Miklós Seszták.
One of the managing directors of Gardens Property 2023 Ltd. is Gábor Vermes, who was previously the vice president of Fidelitas’ Veszprém chapter. The other managing director is Csaba Pápai, who, as an associate of Attila Paár‘s construction enterprise West Hungária Bau (WHB) since 2019, has been leading the company that is responsible for the asset management of the Alice Hotel on Andrássy Avenue in Budapest and was previously owned by István Tiborcz, the son-in-law of Prime Minister Viktor Orbán.
One of Gardens Property’s two minority owners is Excidit Investment Ltd., owned by András Khaut, who is also a stakeholder in Fertődi Építő Plc., a cooperating partner of WHB. Furthermore, Bodajk Castle, formerly owned by István Tiborcz, also belongs to Khaut. The company was founded by Luxembourg-based lawyer and tax advisor, Gábor Kacsóh, who has been involved in deals associated with Zsolt Borkai, the former mayor of Győr and Deputy Prime Minister Zsolt Semjén.
The other minority owner is Trifi EU21 Consultancy Ltd., belonging to Nyíregyháza-based university professor Gyula Filep. Gyula Filep is the father of Bálint Filep, the president of Széchenyi István University – meaning that the institution’s financial maintainer is moving into an office building partially owned by the university president’s father.
“We saw no moral issues”
The president of the Győr-based university wrote:
The economic companies and technological ventures owned by the Széchenyi István University Foundation are operating in venues in both Budapest and Zalaegerszeg. In order to facilitate the efficient functioning of the corporate group and the exercising of ownership rights, it is essential for the members of the corporate group and their Budapest-based subsidiaries to be physically close to each other. That’s why the group’s member company HUMDA Plc. sought in the capital a campus-like, outstandingly located building complex, including parking facilities, where other companies within the group can also each obtain separate headquarters. HUMDA collected several market-based offers to find the right property, and based on these, the Villányi Gardens Office Building was chosen.
He added that the resulting leasing arrangement complies with all legal requirements and that there were no conflicts of interest involved. The university’s leadership and employees were not part of the market research, evaluation, or decision-making process. The university itself does not lease any office space in the building.
We managed to reach the university’s president by phone. He told us that it was him who recommended the foundation to consider the Villányi Gardens office complex due to its favourable characteristics. In his view, the decision was completely independent, and, in his words, they saw no ethical or moral obstacles to it.
The ownership circle was familiar
– he said. When asked, he told us no more details about where he knew the owners apart from his father.
Mészáros to lend, public funds to pay
As mentioned, the ownership registration request of Gardens Property 2023 Ltd. had been added to the Villányi Gardens’ property register in March, but the company was registered as the owner only
in September – retrospectively. The purchase price of Villányi Gardens is unknown, and the company did not disclose it in response to our inquiries.
Péter Mihalovics, the representative of the company’s primary owner, stated the following in response to our questions:
For years, Ideona group has been making its business decisions in line with its strategy conceived at its establishment. One of the main goals is the continuous optimization and organic development of its real estate portfolio. It was in alignment with this that the board of directors decided on the investment, the details of which, like all similar acquisitions worldwide, are considered a business secret.
However, it is evident that Lőrinc Mészáros’ MBH Bank provided the loan for the purchase. According to the Credit Collateral Registry of the Hungarian Chamber of Civil Law Notaries, Gardens Property 2023 Ltd., which started with a capital of only three million forints,
With this, the credit institution had not only mortgage rights listed for the property, but also the right of pre-emption. The amount put down by the purchasers as down payment, however, remains unknown.
The building is leased by seven companies in total. The main lessee is HUMDA Plc., while the sub-lessees are the Széchenyi István University Foundation and its companies, as well as the Palkovics-led N7 Holding National Defence Industry Innovation Plc. We have requested each company to provide the respective lease agreement, but only the foundation and N7 complied, the latter omitting a range of information referring to national security reasons. Although, to be fair, the majority of the companies did tell us the size of their respective leased areas, along with the price per square meter.
Based on the received lease agreements, it is apparent that the lessees entered into a contract of 5+5 years.
- The sub-lessees are paying a monthly rental fee of 18.87 EUR (7,340 HUF) per square meter, while the main lessee HUMDA Plc. is paying 18.5 euros, corresponding to about 7200 forints.
- Moreover, the lessees are to pay operational fees as well, which is about a little over 14 euros, roughly 5500 forints, per month.
- Furthermore, parking spaces are rented separately, with a monthly fee of 102 euros per spot – around 40 thousand forints. There are 91 parking spots, only this corresponds to a monthly income of 3.6 million HUF, and in a ten-year perspective, the amount is 436 million forints.
As N7 Holding has omitted the size of its respective rental area, we can only estimate this information – partially from the number of parking spots rented by the company, and partially from the difference between the size of the other companies’ rental areas and the building’s total available area.
Based on the above, 24.hu calculates that over the total lifespan of the 5+5-year contracts,
Estimated rental income from the lessees could be at least 2 billion forints over 10 years, in addition to the 436 million HUF in parking fees. The income from the operating expenses could be around another 1.5 billion Hungarian forints.
It’s important to note that these calculations do not take into account any indexation clauses specified in the contracts. Indexation clauses allow for the unilateral adjustment of rental fees based on predefined conditions related to market value movements without the need for written contract modifications.
In summary, it appears that the deal’s basic formula is that a newly established, NER-affiliated company purchased the property partially using a loan from Lőrinc Mészáros’ bank, which will be repaid, as usual, by taxpayers in the form of rental fees: the mentioned foundation led by Palkovics, as well as the other companies that moved into the building – along with their lease agreements – are financed by public funds.
Machine translation revised by Frigyes Harmath.
