On February 16, 2017, CEELM reported that GTC Real Estate Development had sold the Sasad Resort, an almost-completed residential project in Budapest, to Futureal, the largest real estate developer in Hungary. We reached out to Viktoria Molnar, Legal Counsel at GTC Hungary, for information about the deal.
CEELM: Robert Snow, the CEO of GTC Hungary, has said that “GTC is no longer involved with residential development projects.” When and why did GTC change its strategic focus?
V.M: It is mainly related to the change in the corporate structure of GTC group. Lone Star Funds became a shareholder of GTC Poland in 2013 and in 2015 raised its stake within the group by becoming the majority shareholder of the Polish company. The main investor of the group is more involved in commercial projects than in residential, therefore, the main focus of GTC group simply adapted.
CEELM: Why did GTC decide to sell the Sasad Resort rather than continue to manage the project?
V.M: The reason is mainly the change of focus I mentioned. GTC decided to sell Sasad Resort to the very reputable Futureal Group, an acknowledged actor of residential business, therefore, GTC wanted to make sure to leave its project in good hands.
CEELM: What aspects of structuring the sale agreement required most of your attention and time?
V.M: The sale and purchase agreement itself was mainly drafted and structured by Dentons, GTC’s outside counsel. I had a managerial position during the transaction, keeping an eye on the whole process to lead it smoothly, so I was the link between Dentons and CMS, which advised the buyer Futureal. We worked closely together on CPs, on transaction documents, and also on closing. I was also responsible for drafting and executing the property sale and purchase agreements within the Sasad project.
CEELM: What external counsel selection system does GTC apply? Did you have full discretion to choose your counsel personally? Why was Dentons selected?
V.M: Selecting Dentons was a mutual decision made together with the management. GTC has often involved Dentons in real estate transactions, and GTC has trust in Dentons’ real estate team, which is led by Judit Kovari, who is no doubt one of the most experienced transactional lawyers in the market. Thus, Dentons was chosen this time as well, after having examined of course proposals from other reputable law firms.
CEELM: What implications does the change in GTC's focus have for the workload/type of tasks for your legal team?
V.M: I joined GTC when rather commercial real estate projects had already become common. I believe commercial projects brought three main new aspects: First of all, although in residential business the main purpose is the sale of properties, in the commercial market it is more the leasing of the properties, which obviously brings in drafting of lease agreements and negotiation of such deals. Thus, besides representing GTC during the deals, I make efforts to find the middle way to hear future tenants’ requests as well, because it is in GTC’s interest to conclude deals which make its clients happy to be able to create and maintain a prosperous and long term business relationship with them. Second, with commercial real estate projects I work closely with reputable agencies, so drafting of agency agreements and negotiating the deals also form an integral part of my work. Finally, commercial projects involve construction agreements, so many different requirements need to be taken into consideration during the drafting work.