On February 28, 2018, CEE Legal Matters reported that NEPI Rockcastle PLC had taken over a commercial building in the city center of Sibiu, Romania, for shopping mall development. We reached out to Robert Ionita, Head of Legal at NEPI Rockcastle, to get his perspective on the deal.
CEELM: What was the most challenging aspect of the acquisition?
R.I: Our cooperation with the sellers has been stellar. However, given that this was an acquisition of a future retail development, there are multiple variables that need to be accounted for: market studies, catchment, discussions with future tenants, permitting, and construction. This leads to complicated transaction structures which need to take into account many variables and potential scenarios that the parties and their lawyers have to addressed contractually. The more variables you have, the more aspects and scenarios that the parties have to negotiate, agree upon, and regulate in the transaction documentation.
CEELM: Why did you select Reff & Associates as external counsel on the deal?
R.I: NEPI Rockcastle has a longstanding relation with Reff & Associates which goes back more than ten years. They have assisted us in many landmark and record breaking deals. This translates into excellent communication and understanding on their side of our approach and objectives. On the other hand, in our turn we know their team very well – not only due to our longstanding client-lawyer relationship but also due to the fact that several of our in-house lawyers, including myself, were at various moments in their career members of Reff & Associates.
I think that at the top level of the game it is difficult to objectively differentiate the players based on technical skills or even credentials. The key ingredient of successful and productive client-lawyer relations is compatibility between the client and the lawyer assisting him. In addition, we also take into account the compatibility of the lawyer with the deal at hand and the contracting party. Pragmatism, creativity, a business-minded approach, proactiveness, and quick turnaround time are the main qualities we look for in our lawyers assisting us across CEE.
CEELM: According to a Reff & Associates press release, the plans for construction of the mall existed since 2008. What does that mean, exactly? Why was there a delay in getting the commercial center actually built?
R.I: A shopping mall development is a complex endeavor. A series of factors are at play, including timing and access to financing. While we don’t know the full extent of reasons that Festival was on hold since 2008, we can assume that the financial crisis put a stop to many good real estate projects. However, over the last years, in light of the [region's] economic growth, we have been experiencing a strong appetite from tenants and consumers for good retail projects.
CEELM: Is the commercial center fully leased yet?
R.I: Key international tenants are secured: Kaufland (with its first hypermarket integrated in a shopping center in Romania), Inditex (with several brands, including Zara), H&M, and a cinema operator. We expect the scheme to be fully leased by its target opening at the end of 2019. We are very confident about the quality of the tenant mix.
CEELM: Is Reff & Associates helping you in that process as well?
R.I: No. Reff & Associates provides us with legal assistance when required. Commercial matters such as leasing are mostly done in-house.