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Deal 5: Madison International Realty’s Matthias Cordier on Cavatina Office Acquisition

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On September 21, CEE Legal Matters reported that Greenberg Traurig had advised Madison International Realty on its acquisition of an unspecified stake in Cavatina Office sp. z o.o., the owner of the Chmielna 89 office building in Warsaw, from Cavatina Holding S.A., as well as on its entry into a joint venture agreement with Cavatina Holding and the refinancing of the existing bank debt of Cavatina Office sp. z o.o. CEEIHM spoke with Madison International Realty Managing Director, Matthias Cordier, about the deal.

CEEIHM: To start, please tell us a few words about Madison International Realty.

Matthias: Madison International Realty is a leading liquidity provider to real estate investors worldwide. Madison provides equity capital for real estate owners and investors seeking to monetize embedded equity, to replace capital partners seeking an exit, and to recapitalize balance sheets. The firm provides equity for recapitalizations, partner buyouts, and capital infusions; and acquires joint ventures, limited partnerships, and co-investment interests as principals. Madison invests in direct secondary transactions and focuses on existing properties and portfolios in the U.S., U.K., and Europe. Madison has offices in New York, London, Amsterdam, Luxembourg, and Frankfurt. Warsaw is one of the firm’s target markets with closed transactions including Warsaw Spire, Capital Park, ELI, and Chmielna 89.

CEEIHM: What drove this deal from your side? What was it about the target that made it particularly attractive for you?

Matthias: Chmielna 89 is a brand-new landmark office property in Warsaw’s central business district, which is fully let on a long term lease to Poland’s largest and most well-known bank, PKO PB.  Warsaw continues to be a core target market for Madison with its positive economic outlook -- despite COVID-19 setbacks -- and solid real estate fundamentals. The transaction fits well with Madison’s strategy, whereby we find partners wishing to partially exit their investments in order to have capital available for other projects.

CEEIHM: Greenberg Traurig reported that the deal also involved a joint venture agreement with Cavatina Holding. What was the rationale/scope of the JV?

Matthias: The acquisition of a partial interest means that Cavatina continues to be our partner and local expert. Madison will rely on Cavatina for the day-to-day management of the asset as well as providing valuable market intel. The teams have negotiated a joint venture to govern the rights of both parties including reserved matters and control rights to ensure a successful partnership.

CEEIHM: What would you say was the most complex aspect of the deal from a legal perspective? Were there any unforeseen complications?

Matthias: The implications of COVID-19 are still unfolding as the situation continues to develop and change. We kept this in mind when working through the due diligence and structuring process of the deal. Joint venture documentation is always time-consuming as it is complex and crucial to get the right to have a successful and long term relationship with your partners.

CEEIHM: Why did you choose Greenberg Traurig to act as your advisor on this deal?

Matthias: Madison has successfully worked with Greenberg Traurig on numerous deals in the past and regard them as one of the market-leading law firms in Poland. We have built a trusted relationship with the team and they helped us navigate through the complexities of closing a deal in a post-COVID world. GT understands our structure, focus, and requirements, which makes the firm a strong partner for Madison.

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