TrizecHahn sells TriIDM stake to management
Canadian real estate giant TrizecHahn announced last week that it would immediately pull out of its Warsaw-based venture TriIDM and sell its stake to the company's management.
TrizecHahn, which set up TriIDM in 1999 as a springboard to developing a number of urban shopping malls around the country, decided to sell a large part of its real estate portfolio worldwide and re-direct investment into other ventures including e-commerce, said Martin Carr, senior vice president of TrizecHahn Europe.
The real estate assets to be sold include businesses in a couple of European countries such as Poland, Carr said.
TrizecHahn plans to sell its stake in TriIDM to four managers of the subsidiary. "The management will take ownership of the business," he said. TriIDM's Polish holdings include a 47,800 square-meter site in Wroclaw where the company plans to develop a 30,000 square-meter retail development, and a letter of intent to purchase up to 15 hectares of land for a similar development in Warsaw's Wilanow district.
TrizecHahn said that for the time being it would continue to support the projects financially. "Our ownership has been transferred into debt," said Carr, adding that the company expects to get its money back when TriIDM's management brings in new investors. "The management will continue to act as a developer," he said.
The managers and new owners of TriIDM Christopher Milam, managing director; Jeff Utterback, development director; Sean Briggs, leasing director; and Scott Dwyer, finance director emphasized that TrizecHahn's pullout wouldn't stop TriIDM developments in Poland. "The focus of the business will remain the same," Utterback said.
TriIDM, which has already applied for a construction permit for its retail center in Wroclaw, plans to start building later this year and to complete the project by the end of 2001.
TriIDM also has an option to buy up to 15 hectares of land from Prokom's Ryszard Krauze, who owns 170 hectares of land in Wilanow. TriIDM has been looking to build 95,000 square meters of retail space near the suburb's planned Swiatynia Opatrznosci (Temple of Providence). The shopping center is still in the early stages of development.
TriIDM is hoping to attract new investors to those projects. If so, the investors will be expected to spend "tens millions of dollars" to buy into the projects, said Sean Briggs. Briggs added that $37 million will be needed to complete the company's shopping center in Wroclaw.
Norway House for sale
Norwegian developer Interscandia plans to sell its Norway House office building in Warsaw later this year, said Knight Frank Nieruchomosci, the property consulting firm representing the landlord in the sale.
Interscandia is looking to sell the building at an initial capitalization rate (yield) of 11% or $20 million-$25 million for the building, said Monika Debska, president of Knight Frank.
Norway House has 9,000 square meters of gross space including 6,000 square meters net office space and two levels of underground parking. "We're marketing the building to funds that are (already) active in Poland as well as those not present here yet," Debska said.
Located on ulica Koszykowa, the seven-story Norway House is 85% leased to a handful of tenants including the Clifford Chance law firm, which occupies three stories totaling more than 2,000 square meters of retail space. The landlord is still trying to lease two floors for $29-$30 per square meter a month, Knight Frank said.
However, leasing the remaining space isn't necessary before selling the building to institutional investors, Debska said.
Knight Frank said it started to market the building in April. "The interest is significant," said Joseph Borowski, vice president of Knight Frank.
Norway House is among other centrally located office buildings that are eyeing sales to institutional investors, Borowski said. The other buildings include Wisniowy Business Park, Sienna Center and Warsaw Towers.
Until now, major sales of office buildings to institutional investors have included: Wisniowy Business Park's building A to insurer Commercial Union for $14.5 million, Atrium to the Pricoa real estate fund for $40 million, and Focus Filtrowa's development to German insurance company Hamburg-Mannheimer for an estimated $100 million.
Wspolna lands first tenants
The Wspolna office building in central Warsaw, which was developed by Germany's Mahler Project International, closed its first tenant deals last month.
Royal PBK, an insurance company, took 1,065 square meters while the software firm Novell took 500 square meters in the 7,200 square-meter office building, planned to open this month.
The seven-story Wspolna building is located close to the intersection of ulica Wspolna and ulica Marszalkowska.
In April, the developer ceased cooperation with the DTZ agency, which had been the building's sole representative, and invited all agents (including DTZ) to help bring tenants to the building.
"This marketing change led to an increase of interest in the building," said Andrzej Mikolajczyk, marketing manager at Mahler. DTZ, despite losing its exclusivity in the project, still managed to broker a deal with Royal PBK, while Novell gained Knight Frank Nieruchomosci as its agent, Mikolajczyk said.
Mahler hopes to fully lease the building's remaining 5,600 square meters of office space by the end of this year to financial and IT companies, Mikolajczyk said. The asking rent in Wspolna is $28 per square meter a month, he said.
More housing investment
Total investment in new construction in the residential sector reached zl. 14 billion ($3.5 billion) in 1999, 9% higher than in the previous year, according to a May report from the Housing and Urban Development Office.
The vast majority (68%) of last year's investment still came in the form of cash provided by individuals building homes or buying apartments, the report stated. The banks that financed residential construction contributed to just 15% of 1999's total investment in the sector, which roughly equals the investment committed by public budgets, according to the report.
The share of banks is steadily increasing, however. In 1998, banks' contribution to total investment in the residential sector was only 9%, the report stated.
Despite higher investment in the housing sector in 1999 as compared with the year before, the number of apartments completed (77,400) was 4% lower than in 1998.
Nevertheless, the higher investment resulted in a larger number of start-up residential developments. In 1999, the number of apartments started reached 45,000 units, 21% more than in 1998.
In brief:
Eurobuild Poland is organizing the "Residential Market in Poland" conference at the Hotel Bristol in Warsaw on June 16.
Promocja Nieruchomosci will organize the "Polish Property Market 2000" conference June 18-20 at Hotel Golebiewski in the Mikolajki resort.
Property agency DTZ opened a new office in Katowice. The office is located in the offices of the construction team that is building the Chorzowska 50 office building, which is planned for completion early next year. DTZ is marketing office space there.
