Monthly Archives: August 2012

The Euro can wait

Great quote care of Reuters from Hungary’s Minister of Economics, which at first reminded us of that incredibly forthright admission from the country’s former prime minister that the ruling class had been lying for years, and that it couldn’t go on. It would have been daring, of course, had he said it to the public, but if memory serves, it was taped secretly and leaked spinelessly to the press. Still, it’s one of those rare moments in which you see politicians actually behaving self-critically.

In his most recent column in a Hungarian weekly publication, Minister of Economics Gyorgy Matolcsy is making the case that Hungary should can the idea of joining the Euro for the next couple decades. And in a remarkable display of chutzpah, he chides the European Union for its economic mismanagement. Seems like you could substitute the word Hungary for Eurozone here quite easily.

The euro zone faces a protracted financial and economic crisis because it grasped too much and aimed too high

Is he saying that Hungary doesn’t face a protracted financial and economic crisis because it bit off a bit more than it could chew? One can imagine him penning these thoughts in the car, as he’s whisked off to the latest round of bailout talks with the IMF.

While we’re at it, if anybody knows what this means, we would love to get our hands on an English translation:

Hungarian policy can follow a multi-step strategy which strengthens the economy without the euro in the next two wartime decades and enters the euro zone following a new peace.

But maybe this is purely intended for local consumption, and is part of a campaign to prepare citizens for what’s to come. No doubt Hungary can get its economy back on track, and it’s entirely possible that a frank admission that membership in the Eurozone isn’t going to happen in the near future is a healthy step. Now all it needs to do is to quit frightening off foreign investors for long enough for some deals to go through and we can start talking about progress.


Hints of change?

Is the Basel effect finally kicking in?

After talking quite with a variety of people around the region, it certainly seems as if there’s a shift afoot. It’s become so fashionable to talk about banks doing The Ostrich over the past few years, that it would be easy to miss the signs of a changing market place.

In fact, whether it’s the Basel III effect, the cumulative effect of loans coming up for renewal or the realization that holding on to real estate assets eventually requires capital expenses, the big freeze seems to be thawing just a bit. There are lots of signs of this, whether you look at the appointment pages, the creation of new funds, the collection of equity for debt funds or the willingness of banks to call it a day with some sponsors.

It’s still but a fraction of what it was, and the geniuses in Brussels look no closer to making any hard decisions. But as we’ll be discussing in the September issue of CIJ, there does appear to be a greater willingness, at last, to start just getting on with it. If you disagree violently, make sure to let us know.

Klaus will be missed?!?

The days of constant criticism of the European Union from the office of the Czech president are coming to a close, as the CTK news agency says that none of the candidates to replace the eccentric Euro skeptic Vaclav Klaus next March is nearly so virulently opposed to the grouping.

In fact, that’s putting it mildly. Not surprisingly, the only candidate with anything that borders on an interesting or unique view of things is former prime minister Miloš Zeman. He envisions greater cooperation between the less powerful voices in the EU sticking together more to avoid domination from the big countries. Fight the man…At least it’s a decent premise.

But things go downhill from there. Another former PM Jan Fischer says that Czech national interests shouldn’t oppose EU interests, saying that security and economic prosperity are the most important issues.


And it doesn’t get any better.

Foreign minister Karel Schwarzenberg’s patriotism goes only as far as the rather obvious goal of preserving the Czech nation and language, and he performs logical somersaults by insisting that EU membership is the only way to achieve this. Meanwhile, the non-descript Premysl Sobotka espouses an unintelligible belief in controlling the national economy and foreign policy, in coordination with EU partners. This kind of inane babble  makes watching paint dry on a wall sound exciting. Or vote for this guy.

In other words, as difficult as it is to say: Klaus will be missed (at least by journalists), and the era of interesting Czech presidents looks to be over. Which is perhaps as it should be.

GTC RO refutes rumors

So, we noticed an article on a Romanian site that claimed GTC was considering closing down some of its mall in Romania. That’s hardly unprecedented, when you think that Immofinanz is currently doing just that in Arad with one of the disasters it inherited from Immoeast when that company imploded (more on that in the Sept. issue of CIJ). But that’s not only a difficult process, time -consuming and sensitive, and it’s not really something one speculates idly about in an earnings report.

The news seemed to be related GTC’s release of financial data for the second quarter, in which it’s pretty up front about the fact that it’s rough in Romania at the moment (its portfolio there took a €14m valuation hit, apparently the victim of Romania’s it’d-be-funny-if-it-weren’t-so-serious political squabbles (hopefully over, now?) But closing malls seemed a bit extreme, and there wasn’t much hint of such a move when we last spoke with GTC.

So when we got through to them  headquarters in Bucharest, they weren’t any too thrilled by what they called rumors, nor could they figure out where they were coming from (outside of the usual suspects). In any case, while admitting that times are indeed difficult in regional Romania, CEO Shimon Galon derided the reports, calling them nonsense and saying there are no plans to close anything.

Nokia dials Budapest, hangs up on Vienna

Is this part of the cost-cutting switch over to CEE people have been warning about, for what seems like years now? Nokia says it’s going to be closing its Vienna-based headquarters for Central Europe and moving 60 jobs to Budapest. Those willing to follow the jobs two hours down the M1 are allegedly welcome to do so, but would they really be the same jobs (i.e. at the same salaries)? Wonder who’s looking for the office space for Nokai…

It doesn’t mean the company’s workforce at its factory in Savar can breathe easier, though, as half of the plant’s workforce are being given pink slips.

Warsaw Financial Center sold to Allianz and Curzon Capital Partners III

It’s tough to think of many more important transactions that could take place in Central Europe than one involving the Warsaw Financial Center. And that’s exactly what was announced today, with co-owners CA Immo and Pramerica Real Estate Investors agreeing provisionally to selling the asset to Allianz and Curzon Capital Partners III, a fund managed by Tristan Capital. JLL and Colliers advised the vendors on the deal, who acquired the building originally in 2005. The two held 50% shares each in the 50,000 sqm asset, but in the new arrangement, Allianz will hold 87.5%. The sale price was announced to have been €210m.

“Our investment strategy calls for 7-10 % of the overall portfolio to be sold every year in order to take maximum advantage of positive market phases and generate profits,” says  Bruno Ettenauer, Chief Executive Officer of CA Immo. “Capital released in this way is earmarked for debt reduction and the realisation of current development projects. We are looking forward to the successful sale of the Warsaw Financial Center, which has now been agreed. This transaction will have a significantly positive impact on the annual result for 2012.”

Prologis records 615,000 sqm in leasing in Q2

Prologis Park Budapest/Sziget

Prologis announced that its European operations produced 615,000 sqm in leasing activity, including a 17,500 sqm new lease in Prologis Park Pilsen-Stenovice to an existing 18,000 sqm client, a 20,400 square meter build-to-suit expansion at Prologis Park Hunxe in Germany, and a 20,500 sqmlease extension with UTi Hungary Logistics LLC at Prologis Park Budapest/Sziget.

Worldwide, the company leased 3.3 million sqm of space and beat expectations by finishing June with a 92.4% occupancy rate (details here). Same-store net operating income rose 0.4% over the same period in 2011.