On November 24, 2017, CEELM reported that Austrian real estate developer WM Group had sold its six retail parks in Slovakia to Immofinanz AG, designed to expand the latter's STOP SHOP brand. Michael Wakolbinger, Managing Director of WM Slovakia, who also acts as a General Counsel to the senior owner of the WM/MID Group, agreed to comment on the sale.
CEELM: Why did you opt to use both CHSH and bpv as counsel on the deal when both firms have teams in both Austria and Slovakia?
M.W: My choice was driven very much by lawyer’s personality and not so much by law firm.
As I always tend to rely on personality, I opted in both countries for the lawyers I know best and trust most. This was without any doubt Johannes Aehrenthal from CHSH in Vienna as the leading over-all partner and Igor Augustinic with bpv Braun in Bratislava for local work. Igor was working for CHSH a long time and was in this role already involved in the development of the real estate projects we sold [in this deal]. This was a big advantage and saved a lot of time and coordination efforts.
CEELM: Since lawyers from both jurisdictions were involved, did the two parties of the deal opt to have Slovak or Austrian law govern the agreement? What was the rationale for the choice?
M.W: The situation was quite specific and we decided (and in fact were also forced) to mix up:
Two Austrian based holding-companies were discussing a real estate portfolio deal in Slovakia, with assets and both buyer and seller under Slovak jurisdiction. Therefore details of deal (including the ownership transfer of the properties) were [required to be] under Slovakian law. But for the big guidelines and the remaining legal issues (including representations and warranties) we all wanted to act in German language and under Austrian law, which is a lot more familiar to people acting on both sides.
CEELM: In what way, if at all, is negotiating on an agreement that involves a portfolio such as this different than transactions involving individual assets?
M.W: As matter of fact, a portfolio always is (a bit) more than the sum of its single assets. This makes things easier on the one hand and more complicated on the other. Talking about similar projects within one single portfolio deal allows both parties to compensate for disadvantages within one project with advantages in another. Therefore some details might be not as crucial as in one single deal. On the other hand within a portfolio transaction all single projects are somehow interlinked and interdependent. At the end of the day, this could have meant that the total deal would have to be cancelled because of one project alone not meeting all requirements for closing. This “take-all-or-leave-all-principle” must always be kept in mind to avoid fundamental frustration.
CEELM: Were you or your legal team involved in the negotiations themselves, or did you externalize that side to your legal counsel?
M.W: In general I do negotiations on my own, representing the owner of my group and executing his ideas. During these negotiations I love to have one of my external counsels at my side, while purely legal things are handled solely by lawyers. I have been working with Johannes Aehrenthal now for more than a decade and we know very well how each other ticks. This shared and silent understanding is crucial for me to do my job well, and Johannes is the perfect companion during (sometimes tough) negotiations.
CEELM: To the extent you can provide some insight on this for our readers, what were the trickier aspects of the agreement in terms of reaching a compromise with the buyer?
M.W: As already mentioned, the “take-all-or-leave-all-principle” is sometimes a bit tricky as the default of one project (out of six) could kill the whole deal. However, the most demanding issue was to bring together the interests of a big listed buyer and of a small family-owned seller in terms of structuring, pricing, and even timing. This took quite a bit of time, especially as far as the structure of the deal(s) was concerned and gave my owner some reason for irritation. But as soon as common ground was reached in the main issues, everything went well in a constructive atmosphere.