Monthly Archives: October 2009

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.

(we welcome other comments by email, or in the comments section)

Orco fighting with Finep over Bubny

The Czech daily E15  reports (in Czech) that progress at the Bubny train station is being held up by disputes between two of Prague’s biggest devlopers, Orco and Finep. It quotes city councilor Martin Langmajer as saying that arguments between the two are preventing planning measure from proceeding. This is a serious issue since Orco owns roughly two-thirds of the zone, while Finep holds the rest.

“Navatyp is drawing ringroads through Orco’s land, while Orco is pushing to build a high capacity road parallel with Argentiska. They simply have to agree. Or we’d have to put a freeze on a third or two thirds of the zone,” says Langmajer.

There’s the whole question of money, of course, since a lot of it is necessary not just to build such a project, but even to get it through planning. And there’s just not a lot of extra cash lying around at the moment.

ProLogis re/leases 22,000 sqm in Wrocław region

ProLogis announced today that it has signed a lease agreement for approximately 2,700 sqm of warehouse space in the Wrocław region of Poland, plus a few lease extensions, totaling 19,000 sqm.

Existing ProLogis customers in the Wrocław region were joined by Max Fliz, the owner of the largest interior decoration outlet in the Kraków region, which leased 2,700 sqm of warehouse space in the second building of ProLogis Park Wrocław III, for local distribution purposes. In the lease agreement negotiations, ProLogis was represented by Glob Nieruchomości.

Four other companies extend their leases:

GEFCO Polska, a logistic operator in Central and Eastern Europe, will continue its operations in Building One at ProLogis Park Wrocław IV from a 9,750 sqm warehouse;

Rohlig Suus Logistics, a logistics operator specializing in advanced logistics solutions, will remain in Building 7 at ProLogis Park Wrocław and operate from a 5,000 sqm warehouse in a deal organized by  Colliers;

Silimpex, a foodstuffs distributor in the Wrocław and Opole regions, decided to expand its current lease agreement to 4,300 sqm within ProLogis Park Wrocław;

ProLogis has four distribution parks in the Wrocław area, made up of 14 buildings totaling 374,000 sqm.

IVG sells €470m in assets

IVG has disposed of five assets in return for €470m, properties located in Budapest, Milan, Paris, Luxembourg and Düsseldorf. With the sale, the company has managed to sell off even more than the €1bn it planned to this year. CEO Gerhard Niesslein told Bloomberg there had been a “dramatic” increase in investor interest.

Though not mentioned in the article, CIJ has learned that the Budapest building in question is the 9,865 sqm RiverPark in District IX, completed earlier this year. The purchaser was IVG Institutional Funds. IVG is still looking to unload two additional properties in Budapest, StefániaPark and Infopark Building E.