On September 22, 2016, CEELM reported that CA Immo had purchased the Millenium Towers office complex in Budapest in what was described as the biggest real estate transaction of this year in Hungary. CA Immo’s Group Head of Legal Affairs Ingo Steinwender agreed to elaborate on the acquisition.
CEELM: This is reportedly one of the largest, if not the largest, standalone acquisition made by CA Immo. What were the strategic rationales behind the investment?
I.S: Expanding our Hungarian property portfolio by acquiring this modern office complex with a strong cash-flow will make an important contribution to the recurring earnings of CA Immo. The acquisition will further strengthen our international income producing portfolio which already has a high occupancy rate of 92% and is a perfect addition to our high-growth development activities in Germany.
CEELM: Although the acquisition was in Budapest, lawyers in Austria, the Czech Republic, UK, and Cyprus were also involved. What aspects prompted the need to involve expertise from other jurisdictions?
I.S: Due to several applicable laws resulting from Cypriot sellers, an Austrian buyer, and an English law W&I policy, we involved lawyers from the respective jurisdictions.
CEELM: CA Immo was advised by CHSH, Patrikious Pavlou & Associates, and Hogan Lovells on this transaction. Why did you choose these three firms specifically?
I.S: In the last two years CHSH advised us to our fullest satisfaction in the sale of the BBC office building and the M1 logistic center, both in Budapest. It was logical to continue our successful cooperation in this landmark deal with Vienna-based lead Partner Mark Krenn and local Hungarian Partner Wilhelm Stettner. Patrikious Pavlou & Associates were chosen as they are members — like CHSH — in the lex mundi network and Hogan Lovells was recommended to me due to their expertise in W&I insurance issues.
CEELM: What assignments specifically did you delegate to the respective external counsel teams and what aspects of the deal were handled in-house?
I.S: We assigned CHSH to work on the legal due diligence, drafting, and co-negotiation of the SPA, various W&I insurance matters, and post-closing work. In particular in counsel to counsel matters such as contract negotiations we were very happy to rely on the “punch” of CHSH and Mark Krenn, in particular. CHSH was closely led by me in defining the legal structure of the transaction and the strategy in contract negotiations as well as in finalizing the W&I insurance. In addition the legal in-house team, lead by me, took care of the corporate and capital market matters. Apart from legal aspects, we undertook the commercial and financial due diligence reviews in-house.
CEELM: About a year ago, Poland, the Czech Republic, and, to some extent, Hungary, were reporting the highest buzz in the RE sector. As far as you can see, is that still the case? What other markets, if any, should people be on the look out for?
I.S: What we see at the moment is an extremely positive dynamic in the Budapest as well as the Bucharest office market. As for Warsaw, we’re watching the real estate market quite cautiously – there’s a lot of development activity going on with the vacancy rates likely to rise. Czech Republic is quite stable with our investment properties 94% occupied.