Kraków Business Park 100: buyers wanted, urgently

When Kraków Business Park opened in March 2001, majority shareholder Pia Piasecki was one of Poland's biggest construction companies. At the moment, the Kielce-based firm is doing its best just to repay its debts and not go bankrupt. They hope selling the KBP 100 office building will help.

Great expectations ...
The plans were as follows: ten office buildings, (total area of around 100,000 sqm.), on a plot of 14,4 hs near Kraków and a railway station, for employees commuting from the city, would be built and the main tenants would be high technology companies. The first building - KBP 100 -(9,425 thousand sqm.) was to be built for USD 15 million in the first quarter of 2002.

...and harsh reality
Where do they stand now? The building has been delivered, but has only attracted one big tenant: The Polished Group, (a subsidiary of Prokom Software), which occupies two floors. It was announced in spring this year that Regus would move into the building, but as yet it has not.
Pia Piasecki Inwestycje's (owner of 57% of the shares), circumstances have changed dramatically since then. Its mother company has severe financial problems and needs to raise money by virtually any legal means, so that it can pay off its debts and any money from the sale of the office building would help. One of Warsaw's big real estate companies, spent some time looking for a buyer for KBP 100 on behalf of the company.

We are negotiating
"We have indeed been in negotiations concerning the building since April this year, and they are at a very advanced stage," Michal Kubicki of Pia Piasecki told us. ,We are discussing the sale with a big Polish company whose name we will be allowed to disclose in October. That, however, does not mean that an agreement will be signed immediately."
Kubicki denied that Prokom Investments is a potential buyer. He also stated that his company wanted to sell its shares in KBP 100 regardless of what other shareholders do, and that it was determined to keep to the asking price.

Sell an empty office building?
Interestingly, Brian Burgess (leasing director at KBP) had not been informed of Pia Piasecki's plans. In his opinion, selling the building would only make sense if it was fully-leased.
"We are in advanced negotiations with a potential tenant and in my opinion KBP 100 will be 75% leased by the end of October. I also believe that it will be fully leased by the end of the year."

The agents in Warsaw and Kraków, however, are sceptical about the sale's chances. ,It's not a good location, because the building is quite far away from Kraków, [12 km away from the city centre], and it is difficult for staff to get to. It would of course be different if there was a railway station," says one agent from Warsaw. ,Anyway, there are better locations in Kraków that are less expensive."
Her opinion is confirmed by an agent in Kraków. ,The starting rent at KBP will be USD 19,5/sqm. for usable space and USD 3/sqm. for shared space. I am involved in the leasing of an office building in the centre of Kraków, for example, where rents are lower."

What will happen?
It is difficult to see from all this, how KBP can become fully leased by the end of the year and how Pia Piasecki will receive a satisfactory price for its shares.