Luštica Development has requested approval from the Montenegrin government to use its rights over the Luštica Bay marina and waterfront promenade as collateral for a €15 million loan from Belgrade-based Alta Bank, with the financing intended to support permanent working capital.
The request was reviewed during a government telephone session on 29 June 2026, but the cabinet’s decision had not been published by 26 July. It remains unclear whether the arrangement was approved, rejected or subject to additional conditions. The proposed loan carries a fixed interest rate of 8.5 per cent, a five-year maturity period and a 12-month grace period. The financing is not linked to a specific hotel, residential building or infrastructure project, but is intended for ongoing working-capital needs.
Marina rights proposed as collateral
The proposed security concerns Luštica Development’s contractual right to use the marina and adjacent waterfront facilities located on cadastral parcel 117/2 in Radovići. The company is not seeking to pledge ownership of state land. Instead, the collateral would cover rights connected with facilities developed on land leased from the Montenegrin state as part of the wider Luštica Bay project, which covers almost seven million square metres.
The arrangement places the government in multiple roles as landowner, contracting authority, regulator and minority shareholder in Luštica Development. Approval would not represent a state guarantee for the loan, but it would allow a private creditor to obtain enforceable rights over an operational tourism asset connected to public property.
The government’s Protector of Property and Legal Interests informed the Ministry of Spatial Planning, Urbanism and State Property on 18 June about risks related to the transaction. The institution left the final assessment to the government and recommended obtaining the position of the representative responsible for Montenegro’s equity stake in Luštica Development.
Financing terms imply significant debt servicing costs
At an annual interest rate of 8.5 per cent, the €15 million principal would generate approximately €1.275 million in annual interest before additional fees. If interest were paid during the grace period and the principal repaid through equal monthly instalments over the following four years, monthly debt service would reach approximately €370,000, or around €4.4 million annually. Total interest payments over five years would approach €4 million, resulting in aggregate payments of roughly €19 million.
The final repayment structure depends on the amortisation schedule, arrangement fees, prepayment terms and whether interest is paid or capitalised during the grace period.
The marina provides collateral value because it supports residential sales, hospitality operations, retail activity and other elements of the Luštica Bay resort. However, enforcement of rights over a functioning marina would require clear arrangements covering operation, maintenance, access, subleasing, concession obligations and the use of adjoining public areas.
Luštica Development reports lower profit despite higher revenue
Luštica Development’s 2025 financial results show revenue growth alongside higher operating and development costs. Revenue increased by approximately 12 per cent to €90.34 million, compared with around €79.96 million in 2024. Total expenses increased by almost 27 per cent to approximately €89.19 million.
Net profit declined from €9.13 million to approximately €570,000, while EBITDA decreased from €16.88 million to around €9.91 million. The proposed €15 million loan represents approximately 16.6 per cent of 2025 revenue, around 151 per cent of EBITDA and more than 26 times reported net profit. Total assets increased from €248.1 million to approximately €285.32 million in 2025, while equity rose from €65.43 million to €91.84 million. The implied equity ratio reached around 32 per cent.
Long-term liabilities stood at approximately €33.63 million, while short-term liabilities reached around €149.64 million. The company’s current liabilities include supplier obligations, customer advances and other project-related balances in addition to financing obligations. The proposed facility would equal about 5.3 per cent of total assets and 16.3 per cent of equity.
Previous Alta Bank and AIK Bank financing arrangements
The marina collateral request follows earlier security approvals involving Alta Bank. In 2024, the government approved a second-ranking out-of-court mortgage over The Chedi Luštica Bay hotel as security for a €3.5 million loan from Alta Bank.
A year later, another mortgage over the same hotel was approved in favour of Alta Bank for refinancing credit obligations, although the amount of the replacement facility was not disclosed. The new €15 million loan would expand Alta Bank’s collateral position from hotel property to marina and waterfront rights.
Alta Bank ended 2025 with approximately RSD194.1 billion, or about €1.65 billion, in assets, representing an increase of almost 60 per cent year-on-year. Customer loans reached around RSD75.8 billion, while net profit declined to RSD1.37 billion, approximately €11.7 million. Luštica Development has also arranged a separate €35 million loan with AIK Bank in Belgrade, under an agreement signed in December 2025.
The initial security package included blank promissory notes, mortgages over buildings under construction, pledges over receivables from property sales and a pledge over Orascom’s shares in Luštica Development. The government approved mortgages over buildings developed on leased state land and consented to the pledge over Orascom’s shares. Luštica Development later requested that the shareholder pledge be replaced with security over lease rights to 85,000 square metres of state land. The two publicly identified facilities amount to €50 million, excluding undisclosed refinancing arrangements and other obligations.
Luštica Bay project includes €1.1 billion development plan
Luštica Development has been developing Luštica Bay under a lease and construction agreement signed in 2009 and effective from December 2013. The project covers 6,923,260 square metres, or approximately 692 hectares, with around seven kilometres of coastline.
The master plan includes an investment programme of approximately €1.1 billion, comprising:
- Eight hotels with 3,310 rooms
- 1,250 residential units
- Two marinas
- An 18-hole golf course
- A conference centre
- Retail, restaurants, education, healthcare and year-round community facilities
Government information indicates that more than €700 million has already been invested.
The company pays annual land rent of approximately €1 million, along with a turnover-based component. When permitted residential property is sold together with previously leased land, the state receives €80 per square metre. Ownership of Luštica Development is held by Orascom Development with 90 per cent, while Montenegro owns 9.96 per cent.
During 2024, Luštica Bay recorded real-estate sales of CHF107.9 million, an increase of 22.8 per cent. The company sold 145 units at an average price of CHF7,728 per square metre and generated total revenue of CHF79.5 million under Orascom group reporting.
Independent investment review remains pending
The government has not yet appointed the independent controller required to assess whether Luštica Development has fulfilled minimum investment obligations. The government instructed the Ministry of Tourism to launch a new procurement process by the end of March 2026 for a company or internationally qualified accountant with significant tourism-sector experience. Six months after the requirement was identified, no controller had been appointed, and the procurement was reportedly not included in the ministry’s original 2026 purchasing plan. The government also instructed the Ministry of Spatial Planning to begin negotiations on an annex to the 2009 agreement after receiving the controller’s report.
The absence of the controller does not establish that Luštica Development has failed to meet its obligations, but it means the state lacks the independent assessment required before modifying contractual rights or approving additional encumbrances. A consolidated review of existing mortgages, pledges, receivables assignments, ranking agreements and other security arrangements would be required to assess the overall exposure connected with the project.
