On June 4, 2021, CEE Legal Matters reported that Zavisin Semiz & Partneri and the Budapest office of Dentons advised GTC on the Serbian legal aspects of the deal. CEE In-House Matters spoke with Klara Bujdoso, Group Legal Counsel at GTC, to learn more about the sale.
CEEIHM: Tell our readers a bit about GTC
Bujdoso: The GTC Group is a leading real estate investor and developer focusing on Poland and capital cities in Central and Eastern Europe. During 25 years of its activity, GTC has developed 76 high-standard, modern office and retail properties with a total area of over 1.3 million square meters through Central and Eastern Europe.
GTC now actively manages a commercial real estate portfolio of 54 commercial buildings providing approximately 854,000 square meters of lettable office and retail space in Poland, Hungary, Bucharest, Belgrade, Zagreb, and Sofia. In addition, GTC has a development pipeline of 420,000 square meters of retail and office properties in capital cities of Central and Eastern Europe, of which 54,000 square meters are currently under construction.
GTC is focused on sustainable development and, to present its approach to environmental, social and governance issues, in 2021, GTC issued its first ESG report, covering the group’s activity across 6 CEE markets.
GTC S.A. is listed on the Warsaw Stock Exchange (since 2004) and inward listed on the Johannesburg Stock Exchange (since 2016).
CEEIHM: Your company recently sold its Belgrade real estate portfolio to the Indotek Group. What was it about the assets that made them particularly attractive in your view?
Bujdoso: Intending to optimize its operations in Serbia, GTC has signed a sale and purchase agreement for the sale of 11 premium quality, recognizable office buildings within 5 business parks – Green Heart, FortyOne, Belgrade Business Center, 19 Avenue, and GTC House – occupying over 122,000 square meters in the business heart of Belgrade. The buildings have been showing very high occupancy rates and enjoy great interest from the best known international and local businesses since their development. This is a unique portfolio, which is one of kind in terms of the size but also quality and tenants base – that is what makes it so interesting.
CEEIHM: And what were the business drivers behind the sale?
Bujdoso: We were not actively looking to sell the whole Serbian portfolio, however, we dispose of assets from time to time to recycle capital.
The sale of 11 premium class office buildings in Belgrade is a bold move that will allow us to complete our development cycle in Serbia and start a fundamentally different chapter on this market. This is a benchmark transaction in Belgrade demonstrating liquidity post-Covid. Selling some of our assets and relocating the free cash flow for the development of brand-new, ambitious projects in Serbia and other markets of CEE is truly an “exit on a strong note,” which will drive GTC forward. The funds from the sale of the assets in Belgrade will be reinvested in the countries with a higher rating, including Poland and Hungary.
CEEIHM: What were some of the legal complexities of this deal and how were they handled?
Bujdoso: This deal is one of a kind for the Serbian real estate market due to its size, complexity, and cross-border nature. It also marks the largest as well as one of the first secondary-market transactions in the Belgrade office market and also involves the largest Serbian commercial real estate financing package to date. The deal involved a complex interplay of real estate, corporate, and financing aspects. For many issues faced during the negotiations, there was no customary or market standard solution that the parties could turn to, and both lawyers and business people needed to find alternative solutions. A particular challenge was to coordinate negotiations and sale of a number of project companies in two jurisdictions, all while juggling pre-completion activities and putting together very substantial cross-border bank financing.
CEEIHM: Why did you choose ZSP and Dentons as your advisor?
Bujdoso: To deal with all these issues and challenges, the expertise of experienced legal teams was vital. ZSP is our long-standing Serbian counsel and, besides having very valuable experience and knowledge with the development and operation of the projects now being sold, they also provide great transaction advice. Dentons is our go-to counsel in Hungary and elsewhere in CEE, especially when it comes to complex transactions requiring a business-minded and solution-oriented approach, working with very tight timeframes. Dentons and ZSP worked very well together and provided us with seamless support throughout all challenges of the deal (and there were a lot of them!)