Allianz linked to ING RE’s Allee

Allee, Budapest’s latest shopping mall (and the only such project to be completed in the city this year) officially opened earlier today in District XI. At the gala event last night, attended by what seemed to be Budapest’s entire real estate community, the chatter in the crowd focused not only on the extravagant party, heavy security and the army of eye-catching hostesses, but also on a likely buyer for the 46,000 sqm development.

According to multiple sources, German investor Allianz is more than a little interested in the property. Talks are said to be well-advanced with Jones Lang LaSalle representing Allianz and Cushman & Wakefield working with ING. Further details remain under wraps, though both parties reportedly hope to have the deal settled in the next few weeks. No one actually involved in the deal is talking about it, however, so confirmation will have to wait, as will guidance on pricing.

The 140 units at Allee have apparently all been let, though a handful still remained closed off and anonymous as of last night’s festivities. Major retailers at the new mall include Zara, H&M, C&A, Electro World, Interspar, Apple and Van Graaf, which is opening its first Hungarian outlet.

Guardian: Hungary’s (and CEE’s) rude awakening

“What we’ve learned is that a good reputation takes a long time to build, and can be ruined almost overnight.” This is roughly what a Hungarian property market analyst told us a couple days ago over the phone. This reputation is less important for the various rental markets, but it’s vital for investor confidence.

The Guardian has published a depressing, but thoughtful piece on the current plight of the region’s people and it’s the Hungarians and Latvians that come out as the biggest losers. It’s clear that the optimistic CEE narrative  that drove yields down and further down for the past decade has ended. Hungary, and the rest of the region, needs to start creating a new one, before things can really begin to shift, or else these sorts of stories will continue to dominate the minds of editors and readers.

The financial and economic crisis was made in the west, but has hit hardest in the east. After years of growth far outstripping rates in the west, governments in Hungary, Latvia, and Romania have fallen, economies have slumped, and leaders have had to call in the salvage squads from the International Monetary Fund, whose tens of billions in bail-out funds are conditioned on swingeing budget cuts.

Paris market still showing signs of life

After London, it’s the Paris market that’s been giving the biggest and most promising signs of life. The WSJ is reporting that Tishman Speyers is expected to announce today it’s purchased an office building that houses AXA Corporate Services for $95m. The deal is thought to have been done by TS’s European Core Fund.

CIJ Awards Poland 2009 — and the winners are…

On Wednesday, November 3, CIJ held the eighth annual CIJ Awards Poland gala at the Warsaw InterContinental hotel. A great evening with food and entertainment was highlighted by the presentation of the awards. Congratulations to the winners!

Best Residential Development — Atelier Residence (SRF)

Best Office Development– Atrium City/Deloitte House (Skanska Property Poland)

Best Shopping Center Development — Galeria Jurajska (GTC)

Best Warehouse/Logistics Development — Panattoni Park Mysłowice (Panattoni Europe)

Best Hotel Development — andel’s Hotel Łódź (Warimpex)

Best Overall Development — andel’s Hotel Łódź (Warimpex)

Law Firm of the Year — Clifford Chance

Property Management Team of the Year — Colliers International

Developer of the Year — Skanska Property Poland

Personality of the Year — Robert Dobrzycki (Panattoni Europe)

Best Real Estate Agency — Colliers International

This year’s edition of CIJ Awards Poland was sponsored by Ghelamco, Panattoni Europe, Point Park Propeties, and Eurohypo.

CBRE: Prague and Warsaw office could outperform Europe

In a new piece of research from CB Richard Ellis, Prague and Warsaw come out as the two most promising CEE office markets for investors over the mid-term. While Prague has higher than comfortable vacancy at the moment, supply has been shut off. Warsaw, on the other hand, enjoys not only low vacancy but a still-robust Polish economy as well. Bratislava and Budapest are seen as market with higher vacancy levels where the pipeline continues to be added to.

In the run-up to the credit crisis, writes CBRE, the risk premium for investing in CEE fell to a mere 25 bps. This has since returned to what it describes as a more sustainable 100 bps. Intriguingly, the analysts say that the spread between CE weighted average prime yield and the 10-year Germany government bond “has reached levels not seen since 2005, making real estate more interesting as an asset class.”

With Western European yields bottoming out and the risk premium re-established, CBRE sees a situation where buyers and sellers can start talking again.

Unilever making Romanian investment

Unilever is reported to have taken a 30,000 sqm lease in Ploiesti West Park, according to FoodBizDaily. The facility will be used to cover the company’s distribution requirements for Ploiesti and Bucharest, with the 220 ha park located on what’s planned to be the motorway linking the Romanian and Hungarian capitals. Regular readers will remember that Unilever recently announced it would be closing up shop in the Czech Republic. There have been rumors that the company would not be vacating its offices on Thamova Street in Prague in a building recently sold to private Slovak investors.

Building permit in place for PointPark Mszczonów

PointPark Properties Poland has obtained a building permit for buildings DC4 and DC5 in PointPark Mszczonów, which will extend the project in total to 66,000 sqm. The company’s CEO Ian Worboys says his team will continue to look for new development opportunities in Poland and across Europe, despite the current tough times. PointPark Properties currently has more than 900,000 sqm of assets under management, across a total of 54 distribution building in eight countries.

ProLogis fund mulls €60m share issue

The ProLogis European Properties fund is considering tapping capital markets for €60m in preferred convertible shares as it continues to fight its way out of the financial hole it found itself in at the end of last year. It was just a year ago that share prices in ProLogis (which owns 25% of PEPR) tumbled as fear over the deepening credit crisis punished its high level of debt. The company has frozen new developments and embarked on a debt reduction regime that’s included a freezing of dividend payments. The new shares could be issued by the end of the year. Those interested in the company’s third quarter results can look here.

The worst now behind us?

Jones Lang LaSalle is calling the bottom of the market, saying that property markets are on the mend, albeit slowly. The situation will improve gradually in Asia and Europe, with JLL predicting that €60bn in property transactions should take place in Europe this year. However, the United States, at the epicenter of the financial earthquake that hit the global economy last year, will continue to face problems.

“U.S. commercial property continues to struggle under the weight of weak corporate demand, concerns about the size of potential loan losses and worries over the willingness of lenders to recognise asset value declines”

It predicts that banks in Europe and the U.S. will seek longl-term solutions to problematic property holdings, leading to major portfolio restructuring.

We’ll all hope this is generally true. But if the report reads somewhat cautiously, it’s likely because of articles like this one in Bloomberg.

Investors in the first U.K. commercial mortgage bonds to be liquidated since the financial crisis began may lose as much as 1 billion pounds ($1.6 billion) after values of properties backing the two deals collapsed.

Epic (Industrious) Plc issued bonds on 1,500 warehouses, which fetched 44 percent of their peak value in sales that completed this month. White Tower 2006-3 Plc packaged bonds against nine London office buildings owned by Simon Halabi, six of which went into administration this week.

Banks, insurers and pension funds that hold the bonds face losses from the 35 billion euros ($52 billion) in European commercial mortgage-backed securities that are set to expire over the next three years. Bank lenders have been willing to extend loans to help borrowers avoid default, while commercial mortgage bond issuers must repay investors by a set deadline.

Land registries still far from perfect

The Slovak Spectator ran an interesting story about the fight for a bottling plant, and the land it sits on. Here it is in brief: Company A was annulled, a town outside Trenčín claimed it should be made owner, a claim the local land registry eventually recognized. The town sold the land to Company B, which built a bottling factory on it. Company A’s owner then managed to have his firm reinstated in the business registry and successfully fought in court to regain ownership of the land, and the factory that was on it.

The moral of the story, which you can read in full here, is that just because you bought land from a city doesn’t mean you couldn’t still lose everything (including your investment) thanks to a title challenge. CIJ Blog asked a quartet of experts in the field for a quick reaction / analysis of the story.

Robert Danis (Wilson & Partners)

In the absence of details we are not able to comment on the arguments and facts discussed in the article. However, as in other countries of the CEE region the lists of titles in Slovakia do not provide conclusive proof of a good title to the property, and we have seen similar cases where title transfers have not been properly done in the past and have later been declared void later on.

We usually check acquisition titles of the previous owners over the last 10 years  in order to ascertain whether the current owner can claim acquisition of asset by adverse possession should there be some defect in acquisition titles in more remote history of the property. The investor could have of course also sought title insurance in order to shift its title risks to insurance company and recover part of its losses more efficiently, which has probably not the case.’

Olga Humlova (Salans)

Without knowing the facts of the discussed case, it is true that both in the Czech and Slovak Republics the legal system does not provide protection for persons who are registered as the owner in the cadastral register. The registration of title has to be changed if the factual situation differs from the registration and if someone can prove that the registration is not correct.

That is why it is of utmost importance to pay attention to proper due diligence on the real estate title history during the last ten years, at least. An owner who acquired real estate in good faith and holds it in good faith that he is the owner can acquire the ownership title through prescription. The ten-year period includes the holding, in good faith, of legal predecessors to the current owner. The burden of proof that the current registered owner is not the real owner lies with the person claiming the ownership title.

As to the costs for investment, the original/new owner has to reimburse the last/registered owner for such costs as it would represent unjustified enrichment on his side.

Zdenek Valka (Stewart Title)

This case is not a surprise for us as title insurer and should be not a surprise for any lawyer either. Ownership rights are unlimitedly protected according to Slovak Civil Code (the same applies for Czech Republic too) and from our experience we are aware of few cases when legal successors of a historical owner won a case in front of Slovak court 60 years after expropriation took place. We believe that title insurance which covers risks on title that can not be discovered despite any thorough due diligence can be the solution.

Andrew Jackson (First Title)

This case further highlights the issue with the Land Registry systems in most CEE countries – they do not provide a state guarantee of title and hence conclusive proof of ownership to land and buildings. This leaves the Title open to a third party challenge, which we have often seen can arise from the invalidity of a historical transaction. Such historical transactions may not be easily discoverable from traditional due diligence. If the land and buildings had been protected by a title insurance policy, which is often available for a relatively low one-off premium, then the considerable costs of defending the title would have been passed from the owner’s balance sheet to the Title Insurer with the added peace of mind that if the defence proves unsuccessful the title insurer will compensate the insured for their losses. It makes sense to guarantee asset certainty and liquidity by buying a title insurance policy as part of your risk management strategy.

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