Biding his time

Leszek Czarnecki, one of Poland\'s wealthiest businessmen, is becoming a major real estate operator. He is identified most closely with the city of Wrocław, where he is planning a development worth at least EUR 300 mln

It has often been claimed that Leszek Czarnecki would soon be picking up a multimillionaire\'s pension, and this was especially true when he sold his European Leasing Fund to Credit Agricole. This gossip was proved false when Czarnecki came up with some new ideas, including the metamorphosis of his youngest baby - the LC Corp company. A few years ago, this business was involved with investments on the Eastern European financial markets, but was transformed in 2004 into a development company entrusted with the project for Arkady Wrocławskie. This shopping and office centre was only the first modest step in Czarnecki\'s property operations.

Poltegor and the golden steps
In late January this year, LC Corp purchased an old office building together with a 2.7 ha plot on ul. Powstanców ¦l±skich, near Wrocław city centre, from the Poltegor-Projekt company. Neither of the parties are revealing any details about the value of the deal, but it is rumoured to be between EUR 15 to 20 mln.
Poltegor was built in 1982 and is low down the ranking list of local office buildings, though it has won fame as the venue of the European staircase running championships - \'The Poltegor\'s Golden Steps\'. The office building has 24 storeys and an area of almost 20,000 sqm, but has not undergone repairs in the past 14 years, and so it does not meet many of the construction and technical standards. Małgorzata Danek, the LC Corp president, reveals that: "Only a few weeks have passed since the building was bought, so we still don\'t know what to do with it. Only when a specialist analysis has been performed on it will we decide whether it would be more profitable to repair it or if instead we should put up a new building." This decision will be taken in the next few months. It is already known that Leszek Czarnecki is planning several investments on the remaining part of the plot: an apartment building, an office block, as well as a hotel and a shopping/entertainment complex. The investment process will take 3 years and cost at least EUR 200 to 300 mln.   Construction work will begin in 2007, an so will overlap with the completion of Arkady Wrocławskie.

Southern Centre the next step?
Apart from Poltegor, the Wrocław tycoon has developed a fancy for the remaining section of the so-called Southern Centre, a 4.5-ha plot belongs to the city and neighbours on to Poltegor. Wrocław\'s city authorities have been looking for some time for an investor to finance their vision for a local Manhattan-style city business centre.
In December 2005 the City Council approved a local spatial development plan permitting buildings more than 20 metres high to stand on this land. No restrictions are set as to their maximum height - except for buildings along ul. Powstanców Slaskich, which may be no more than 24 metres tall. The whole area has been designated for shopping investments, offices, hotels and cultural developments. We learned in the city press office that the tender for the sale of the plot is planned for this autumn, with the city expecting to obtain at least 80 to PLN 100 mln in his way, although detailed value appraisals will be made immediately prior to the tender. Małgorzata Danek restricted herself to the single statement that: "We shall probably take part in the tender if the company can find sufficient means." Ms Danek was equally tight-lipped when we asked her about LC Corp\'s stock exchange intentions and whether it will be looking for the cash for all those projects in share issues. All we were told was: "LC Corp will make its appearance on the Warsaw Stock Exchange by the end of the year."

Arkady now taking shape
Decisions are currently being made behind the scenes concerning LC Corp\'s entry on to the stock exchange, on developing Poltegor and participating in the Southern Centre tender, but even so Leszek Czarnecki\'s flagship project remains Arkady Wrocławskie. The corner stone for this office and shopping centre was laid last May, on an almost 2-ha plot in the quarter lying within ul. Powstańców ¦l±skich, ul. Swobodna, ul. Komandorska and ul. Nasypowa. This will hold a 14-storey office building of around 8,000 sqm rentable space to be occupied by Czarnecki\'s Getin Holding companies, while the shopping and entertainment section will be 30,000 sqm and has already been 80 pct leased. The total project is expected to cost EUR 100 mln.
Arkady will be opening for business in Q1 of 2007 on a very competitive market, where Czarnecki\'s project will be fighting for customers with Pasaż Grunwaldzki of Echo Investment (51,000 sqm. rentable space), Galeria Legnicka of the Rednis company (65,000 sqm) and ECE Projektmanagement\'s Galeria Dominikańska  (30,000 sqm).
LC Corp will have to face up to competition in the office sector against Ghelamco, which last autumn started work on the development of the Bema Plaza office building (33,000 sqm, 25,000 of which is for office purposes) on pl. Bema. Globe Trade Centre will also probably start work this year on its Globis office building (12-14,000 sqm), for which the developer already holds the site development conditions and will be applying for a building licence. Skanska Property Poland has also bought a plot for EUR 1.5 mln on pl. Grunwaldzka, where it is planning an office project of around 20,000 sqm by the end of 2008.

An appetite for more
Leszek Czarnecki, a native of Wrocław, feels quite at home on his home town\'s investment market, but the person who heads LC Corp has not the slightest intention of remaining within the city. She comments: "As any developer worth the name, we intend to do good business whenever the opportunity arises, and it is quite immaterial whether the project is in Wrocław or in any other city."
Clearly appetite increases with the eating.

Ewa Andrzejewska