A wealthy investor (with a wealth of ambition)

Amnon Shiboleth is head of and spokesman for a group of international investors primarily from the US and Switzerland, including Albert Nasser and the Nakash brothers (owners of Jordashe empire), which took over
a 51% stake in the Reform Company (owner of the Reform Plaza office building and Reform Center, an unfinished shopping and entertainment complex, both located on Al. Jerozolimskie, Warsaw). These investors have real estate investment experience outside Poland, specialising
in office, residential, retail and leisure schemes.

- How long was the negotiation process between the investors and the owners of the Reform Company?
- Negotiations started over 2 years ago. Primarily we talked about the shopping mall (Reform Center), which will be called Blue City. At that time we signed agreements and granted loans for it's construction. We had the right to convert the loan amounts into shares in the Reform Company. We stated, right from the beginning, that we are not going to buy the shares until we found a bank to secure the finance for the malls completion. So, until we had an undertaking from a respectable bank to secure finances, we didn't want to do the deal with the ex-owners of Reform Company. We now have the finance in place to complete the centre.

- When did Reform Plaza feature in your negotiations?
- Much later, maybe nine months ago. The owners had previously been working on a deal with somebody else to purchase the building, but it didn't go through. We decided to buy Reform Plaza and use our expertise to convert it into one of the best office buildings in Warsaw. We will be turning it into a more prestigious structure, changing its name,  and giving it a whole new feel and image.

- What is the current situation?
- We concluded negotiations with the vendor and signed an agreement with them and BIG Bank Gdański for the finance. All of this is still subject to approval by the Minister of Interior Affairs. I hope we will get all the relevant permissions sometime around September. So officially we didn't buy Reform Company, but are managing it.

- Who did you buy your shares from?
- Sabri Bekdas and his family and Sait Büyükbayrak and his brothers. Once the Minister approves the deal, we will own 51% of Reform Plaza and Reform Center.

- How much did you pay for the shares?
- We can not disclose the exact amount. We have already put a lot of money into the Reform Center and are putting more in for its completion. We are paying money for Reform Plaza, but there is a certain formula that has to be worked out. This formula is based on liabilities the Reform Company has. The exact amount to be paid to the vendor depends on how much the company owes. We are currently paying off their debts.

- Did the Reform Company's dubious reputation put you off?
- I've heard some rumours about their reputation. We checked the vendor thoroughly, not just here, but in other countries, to make sure we knew who we were dealing with and found the rumours to be unfounded.

- What about the negative hype surrounding the Reform projects?
- I have dealt with this type of problem before, and it won't be the last time. I hope that the way to convince people would be to show them that we have a better building. People will come to Reform Plaza because it will be a good building. It will be the same case with the shopping mall. People will come because they want to buy things and be entertained.

- Can you tell us some more about your plans for Reform Plaza?
- We have a few alternatives, but I don't want to talk about them. We don't think we have a problem with the office space in this building, except maybe for the lack of lifts. We already have a building permit, however, so will be installing 3 lifts soon. I think we also need to think of different ways to utilise the space on the top floors. We are also thinking of bringing a health club to the lower levels. You're hearing a lot of ,maybes" from me, thats because we are still studying our options.
We also have retail space here, which we are addressing differently. We are currently in negotiations with a well-known restaurant operator who is not in Poland yet, and who we hope will bring a unique quality to the building. We also want to introduce a concierge service so when people enter they are treated in a more personal way.
A couple of weeks ago I had a meeting with one of our tenants, the President of Dresdner Bank. He told me: ,You bought the best office building in Warsaw." I asked how he knew this and he replied: ,We're Germans and we carried a very thorough check before we decided to move in. We had engineers come from Germany and look at 8 of the top buildings available in Warsaw. We received a written report which stated: you have to be in this building. And we are in this building."

- So why is the vacancy rate so high in Reform Plaza?
- At present Reform Plaza is 55% let. I hope that within 60 days we'll surprise the market by announcing new tenants.

- Will it be BIG Bank Gdański?
- I'm not authorised to say but we're clearly talking to them. They need more space and we have space available. We have also been talking to other companies and might be announcing another important tenant by the end of September. I think that you will soon see that vacancy rate in Reform Plaza dropping.

- How long will it take you to upgrade Reform Plaza and how much will it cost?
- Changing the lifts and turning downstairs into a health club or whatever - that will probably take 6 months. We're also going to change the lobby, the front and the downstairs. We have not decided yet what we're doing with floors 1 to 5 - the retail area. To bring this building to the level that we want to bring it to, will cost c. USD 5 - 10 mln.

- Who will finance it?
- We'll pay for the installation of the lifts ourselves. We will probably take the same approach with our other renovation plans but we may speak to our partner bank. After we signed the deal with BIG Bank Gdański, other banks approached us and said, ,talk to us." One of them was Dresdner Bank, our tenant.

- Will the rent increase after renovation?
- The price will clearly go up as it has done in other places around the world where we invested. If you add service and make the building prestigious - price definitely goes up.

- Which project is more challenging?
- Reform Center. We have a lot of changes to make. We have retained the world's leading experts in shopping and entertainment malls so that ours will be different from existing and future complexes. That's one of the reasons why we're calling it Blue City. City - it's not a mall. It's a city.

- What is the difference?
- The Blue City will comprise a hotel with c. 200 rooms. It will have entertainment facilities, which nobody else has and more stores than the other existing shopping centre in Warsaw. The City will also contain an office area, which will be offered in a separate part of the building. The idea is that when you come to the City everything starting from medical services, to a health club, beauty salon and entertainment is available. Our approach is: come and spend time here.

- When will construction start?
- I hope that you start seeing people on site in two weeks time. (The interview was conducted on 21st June)

- Do you have a general contractor?
- I'm not sure if we're going to have one. We signed a letter of intent and we're in a final stage of signing an agreement with Bovis for construction management. We are currently dealing with every sub-constructor who had problems with the ex-owners of the Reform Center. This will take time to sort out as we have some 40 companies with pending issues. We have also nearly resolved issue of the al. Jerozolimskie tunnel which is to link the street with the City's parking. This is the first task we will be undertaking. The entire project should be completed by the end of the next year.

- How much will the completion of Reform Center cost?
- We don't have final figure, as we don't have a final programme. But this project will probably cost over USD 50 mln. The investor will most likely cover between one third and one half of whatever will be invested.

- Who else have you appointed so far on these projects?
- Eddy Gehorsham has been appointed project manager at Blue City. As I mentioned we have also retained Bovis. We are talking to the structure expert who did the original plans as we think he has been very good. We also retained traffic engineer Tony Browne from DWP. Architect Ed Jenkins from the Dallas based Laguarda Low also joined the team. Ed Jenkins and his partner Pablo Laguarda designed Galeria Mokotów. We are negotiating with probably one of the best tenant mix experts from Canada. We are talking to Magic Corporation with respect to the entertainment section. In addition we are currently talking to the Metro Group about becoming the leasing agent. They would like to bring in some of their related companies like Real. In about 60 days we hope to announce the new president and CEO of our group.

- What about Reform Plaza?
- We have appointed EC Harris.

- What is the current value of both buildings?
- I have heard about 6 different opinions on what the value of Reform Plaza is. Some people say that it is something between USD 60 - 70 mln. I can not tell you what is the current value of Reform Center, because it is not complete yet. Total investment in this building would probably be c. USD 150 mln. So if I said that we are going to invest additional USD 50 mln, does this mean that today it is worth USD 100 mln? Maybe.