On January 18, 2017, CEELM reported that CBRE Global Investors had sold its significant CEE retail portfolio to the CPI Property Group. On April 12th, we published an interview with the General Counsel at CPI, and now we present the perspective of Roland Bebcak, the Head of Divestments CEE at CBRE Global Investors.
CEELM: Your external counsel on the deal, Clifford Chance, described the deal as“the biggest retail real-estate transaction ever to have been completed in the region.” What legal and regulatory complexities did the deal entail and how did you manage to solve them?
R.B: I believe this is the most complex pure, predominantly retail, real-estate transaction to have been completed in the relatively short history of commercial real estate in the CEE region. The entire transaction was initiated a year ago with the preparation of the international tender. The portfolio's assets are located in four different jurisdictions and the sellers are based in a further two jurisdictions. All assets were sold in the form of share deals, meaning that the deal transcended real estate law to also concern the sale of company shares. This in turn required complex due diligence of the SPVs involved. We had to seek antimonopoly clearance in the Czech Republic and Hungary, and the buyer had to arrange for full W&I and title insurance. Financing for the transaction was provided by one syndicate of four banks, another club of two banks and two stand-alone refinancing.
CEELM: Clifford Chance described you as "the deal manager putting the deal together." Did your in-house team provide any other assistance on the matter, or was all work outsourced to Clifford Chance?
R.B: I enlisted our in-house counsel to assist me with all matters of internal compliance and a review of all binding sale documents and internal documentation. I outsourced all other legal work to Clifford Chance, who assisted me by providing their expertise in all fields of law and all of the jurisdictions mentioned above. I really enjoyed cooperating with Emil Holub and Aneta Sosnovcova, who lead Clifford Chance's legal advisory team.
CEELM: Who was responsible for selecting the external counsel on this matter? Why was Clifford Chance chosen?
R.B: I launched an international legal tender soliciting the assistance of top-tier legal advisors who could offer a sufficiently broad range of services and vast expertise, combined with an on-the-ground presence in each jurisdiction, either through a local branch or a proven affiliated local law firm. The offer submitted by Clifford Chance ticked all the boxes and the firm's proven track record was the decisive factor in making me recommend Clifford Chance as the front-runner for this task.
CEELM: What impact is this divestment expected to have on the operations of CBRE Global Investors?
R.B: The portfolio belonged to two investment vehicles with a focus on the CEE region. These investment funds were founded in 2004 and 2006, and reached their end-of-life and redemption date, respectively. By decision of the investors, I started the project of divesting the vast majority of the assets in these funds in early 2015. The volume of assets to be divested totalled EUR 1.5 billion. This sale is a part of the activity planned for the CEE region this year and we will be active on both the buy and sell side going forward.
CEELM: Were you personally involved in the negotiations with the buyer? What were the most challenging aspects of the negotiations?
R.B: I took part in all negotiations from day one of the project. Aside from the deal's very competitive bidding stage, which was structured into three elimination phases, I found the most crucial and complex part of the deal to be the due diligence process and the negotiations surrounding the transfer documentation. We had to conduct the due diligence process simultaneously in four countries concerning eleven assets, with all due diligence processes covering legal, commercial, tax, financial, technical, environmental and other matters. We provided tens of thousands of documents and had to respond to thousands of questions as part of the regular Q&A, while at the same time having to stay on top of the overall impact such disclosure of information had on the deal. I must admit that, looking back, I am enormously grateful to the buyer's team, which was always on top of the issues being discussed and were able to set priorities and maintain a reasonable approach. In addition, I would again like to warmly thank the team led by Tomas Salajka on the side of CPI. Closing this complex cross-border real-estate transaction in such a short period of time has been a genuine achievement on the part of the internal teams and external advisors across the CEE region, as well as in Luxembourg and the Netherlands, and I would like to express my sincere gratitude to everyone involved. Special thanks go to Aneta Sosnovcova at Clifford Chance for the tremendous effort she put in managing the cooperation across all six jurisdictions on our side, and for the intense cooperation with the buyer's lawyers to get all documents in on time.