On February 25, 2022, CEE Legal Matters reported that Clifford Chance had advised Commerz Real on its sale of Charles Square Center to a closed-end European real estate fund represented by KGAL Investment Management. CEE In-House Matters spoke with Dirk Schilo, Senior Legal Counsel at Commerz Real to learn more about the deal.
CEEIHM: To begin, tell our readers a few words about Commerz Real.
Schilo: Commerz Real is a subsidiary of Commerzbank AG with 50 years of market experience and approximately EUR 35 billion in assets under management. We combine comprehensive know-how in asset management and broad-based structuring expertise to deliver our signature range of services of fund products focused on tangibles and bespoke financing solutions. Our fund spectrum includes the open-ended real estate fund Hausinvest, Germany’s first retail impact fund for real assets Klimavest, institutional investment products as well as entrepreneurial participation in real estate, aircraft, regenerative energy, and ships. In our role as the leasing company of Commerzbank Group, we also offer tailored equipment leasing concepts.
CEEIHM: Clifford Chance recently advised you on the sale of the Charles Square Center to a closed-end European real estate fund. What do you believe made the target particularly attractive?
Schilo: The Charles Square Center offers the opportunity to participate in Prague's dynamic economic development. The inner-city office and commercial complex with a total of almost 20,000 square meters of lettable space has a number of international, well-known tenants, including Cisco Systems, Dior, Raiffeisenbank, and Commerzbank. In addition to the central location on Charles Square with optimal transport connections, the property offers further advantages such as the spacious and light-flooded floor areas, sufficient parking spaces, and a broad user mix including gastronomy, fitness, and shopping.
CEEIHM: What was the most complex aspect of this transaction?
Schilo: The share deal involved a multitude of legal and commercial aspects raised in the due diligence and in the negotiations phases. Cutting through that complexity was challenging but worked out well. One particularly demanding issue was the tailoring of purchase price adjustments depending on future occupancy, indexation, and reletting costs.
CEEIHM: How was the legal work split between your in-house team and your external advisors?
Schilo: First of all, we shared our tasks along with the laws involved, geography, and knowledge. Clifford Chance took care of all aspects of Czech law including drafting, liaising with Czech lawyers, administrations, courts, etc. as well as hosting the signing and closing in Prague. The German in-house counsel dealt with German legal aspects and formalities gave input stemming from the history of the asset as well as from internal conditions and took the client role when it came to legal decisions.
Regarding the process of getting the negotiated commercial content into the documentation, I would not speak of a split of work, but of close cooperation between Clifford Chance, Commerz Real´s transaction manager Frank Haubner, and myself working hand in hand in a constant process of shaping and reshaping.
CEEIHM: Lastly, why did you choose Clifford Chance to advise you on this deal?
Schilo: We invited CC to pitch as they are well-known in the market. Aneta Disman and Emil Holub convinced us with already thinking on the merits during the pitching phase and gave the impression of being very competent whilst having a commercial insight into the market and a flexible, responsive, and easy working approach – which turned out to be the case, indeed!
