16th May crucial for TK and FORAS

16th May crucial for TK and FORAS

In 1999 Danish investor FORAS Holdings acquired the right to take over 4 of TK Polska Operations' retail centres in Poland - Reduta and Targówek in Warsaw, Plejada Bytom and Plejada Sosnowiec in Silesia. Whereas the first two deals are about to be closed, purchase of the second two may be postponed, first and foremost because of insufficient leases.

The time-consuming and complicated process of taking over the Reduta and Targówek retail centres in Warsaw from TK Polska Operations (the Polish subsidiary of TK Development) is almost finished, says Ib Bundgaard, MD of FORAS Management Polska. After the legalities are completed, FORAS, which already manages the centres, will assume ownership. The same will happen to TK's two other projects in Poland; Plejada Bytom and Plejada Sosnowiec. But first the agreement terms signed by the two companies must be met.

Where the problem appears

Under the agreement signed with TK Polska Operations, FORAS Holding undertook to take over retail centres owned by TK, provided that certain conditions were met. One of key conditions was that the centres must be 80% leased 18 months after opening with appropriately strong lease deals. Reduta and Targówek have already met the conditions and ownership will soon be transferred through a EUR 87.5 loan financed by Eurohypo (which will also cover the Bytom purchase). But while TK has until May 2003 to reach the required level of occupancy for Sosnowiec, the deadline - May 16th - is looming for Bytom.

May 16th

In its ,Annual Financial Statements", published on the 12 December 2001, FORAS wrote that TK had announced that Bytom was 80.5% leased and therefore ready for takeover. An initial review by FORAS Holding of the centre's lease contracts, however, gave rise to fundamental objections concerning the lease contracts. ,If the terms and conditions for taking over the shopping centre have not been met by 16th May 2002, FORAS Holding will be entitled to step down from the deal," it said. Later the document said that FORAS will concentrate on the purchase and management of the 4 centres, but ,to the extent that the contracted shopping centres are not taken over, FORAS Holding will seek alternative shopping centre investments." Despite these statements, Ib Bungaard said that it is still not possible to confirm whether Plejada Bytom will be able to meet FORAS's requirements and stressed that co-operation with TK Polska Operations was still very positive. Negotiations, he said, were being handled at the top level.

What for the future?

If FORAS does take over Plejada Bytom and, eventually, Plejada Sosnowiec, they will not be the company's last investments in Poland, claims Sondgaard, who says the company will look to further penetrate the Polish market. This could either be with TK Development or with other strong retailers. Another possibility, he says, is to develop the company's retail management activities. This field of expertise, believes Sondgaard, is lacking in Poland, and with more investors expected to purchase retail centres here he believes there will be plenty of retail management opportunities.