Apollo's view from the Tower

American developer and investor, Apollo-Rida Poland has decided not to change the name of Warsaw Trade Tower, their new office block. They are very reticent, however, to talk about any other plans they have for the building. An Austrian investment fund apparently participated in the recent deal and in December, one of the banks which had financed the construction of WTT recouped the funds they'd invested

Apollo-Rida have begun looking for tenants for their building but, since there are still 20,000 sqm vacant in this 33,000 sqm giant, it doesn't look as if they're faced with an easy task (by Autumn 2002 tenants were occupying around 9,000 sqm). How is the company going to tackle this problem? "We're optimistic" says spokesman Rafał Nowicki. He claims that more details will be divulged during the next few weeks when negotiations with the first prospective tenants come to an end. The company actually began talks with them a few months ago when Dae-Pol was still the owner of WTT. "We are aiming mainly at large tenants," says Nowicki. These will presumably be companies which are already doing business with Apollo-Rida in other markets.

The old name
How is the company going to attract tenants to a building which has largely stood empty for several years? Rafał Nowiciki considers any technological upgrading of the building as unnecessary since: "WTT is still the most modern office building in Warsaw and at the most, it might get a gentle facelift. At the same time, we are looking to extend its retail and catering capacity and a restaurant will be opening in the near future. Renaming the building was also considered, to revive its image, but it was finally decided that the original name should stay. Soon we'll be announcing which real estate agency will be finding tenants for us".

Apollo and...
Although the media report Warsaw Trade Tower's sole buyer to be Apollo-Rida, we know from reliable sources that an Austrian investment fund were involved in the deal and are to be co-owner of the building. Europolis Invest and Ca Immo are currently the only Austrian funds investing in real estate in Poland but the former denied taking part in any such deal and Eurobuild didn't succeed in contacting the latter. It's worth noting however, that Ca Immo were involved with Apollo-Rida in last year's sale of Renaissance Tower in Warsaw and that, although Apollo-Rida operates mainly as a developer in Poland, one of its mother companies is, strictly-speaking, an investment firm.

High tower, low rent?
Could rents which are substantially lower than those offered by the competition be a magnet for tenants? Some suggest Apollo-Rida will only be charging USD 18 sqm plus service charges, a significant drop from the initial USD 40 per sqm. Rafał Nowicki refutes such rumours and insists that rents will be determined by the market. However, even when rates fell to USD 28 per sqm and USD 6.5 per sqm for service charges, prospective tenants refused to sign agreements. Why was that? A location which is not strictly central, competition from buildings which are and rumours of the structure's instability have been given as reasons, among others.

Rents = debts + tenants
Rents in WTT will almost certainly be influenced by how much Apollo-Rida paid for the building, something David Mitzner, President of Apollo-Rida Poland, won't reveal. We know that the former owner of the building went into debt in order to complete this investment. Will Apollo-Rida be forced to pay back Dae-Pol's debts once they take over the tower? Bank Rozwoju Eksportu and Bank Zachodni-WBK, which financed the construction, refused to say whether Dae-Pol and Apollo-Rida still have outstanding loans. We have discovered, however, that in December 2002, BPH PBK regained all the funds employed in the financing of the building along with interest and is no longer either Dae-Pol or Apollo-Rida's creditor. "All reserves opened on this loan have also been closed," said Anna Jablonska of BPH PBK.
It seems that whatever Apollo-Rida paid for WTT, it was significantly lower than the USD 120 mln originally spent to construct it by Dae-Pol. At the same time it is commonly known that in the case of investment products such as office buildings, prices are largely determined by what is contained in tenancy agreements, which is where the tallest and most modern building in Warsaw is perceived as most vulnerable.