New kid on the block

Investment & finance
It has been a busy time for the real estate consultancies. While the biggest international players are now joining forces, a newcomer has arrived in Poland for its own slice of the cake. “Prelios will not be a boutique company,” the head of advisory and asset management at Prelios Real Estate Advisory, Maja Biesiekierska, tells ‘Eurobuild CEE’

Ewa Andrzejewska, ‘Eurobuild CEE’: Your company used to be called Pirelli Real Estate, now it is Prelios. Is this just a change of name, or of strategy as well?

Maja Biesiekierska, head of advisory and asset management, Prelios Real Estate Advisory:

The name was changed a few years ago, but I think it wasn’t really noticed in Poland. Now we are changing the business profile. We have offices in Milan and Hamburg. Prelios, of which Pirelli is still one of the main shareholders, is a group of companies listed on the stock exchange in Milan providing consulting services for the real estate sector in Europe. Currently the group manages assets of over EUR 5 bln and offers the full range of real estate services, including support for distressed loans secured by real estate with big problems. This is nothing new for me, because this is exactly what I was responsible for at LNR Hattfield Philips in London, providing services for Lehman Brothers. This type of service offered by Prelios is not provided by any other major international agency in Poland.

But will other services be standard ones?

Yes. This is because the company has changed its business profile in Poland together with establishing Prelios Real Estate Advisory. We want to replicate our German model, where we provide the full range of real estate services, such as development/project management, property management, asset management, the repositioning of shopping centres, leasing, advice and assistance in the acquisition and sale of commercial real estate. For the time being, we will not deal with investment, even though such activities are also provided by the group in Europe. In a nutshell, we will provide services for the real estate market like other international companies operating in Poland, but in addition we want to offer our customers assistance in improving the condition of properties at risk and with problems. This service is addressed not only to the banks that granted the loans secured by such assets, but also to the owners of such properties. One should look for remedial programmes before there is no turning back and the only way out of debt is bankruptcy.

In 2008–2009, when the economy broke down in the West, banks sold off entire portfolios of distressed loans. Back then, I also started to look for commercial banks in Poland that were willing to give up liabilities of that type. At that time, however, it was repeated like a mantra that if the borrower sometimes violated certain provisions of the agreement, such as for example the loan–to-value ratio, but still kept repaying the loan instalments, the banks were doing everything possible to avoid a takeover of the property. Today the very same bankers call me because they want to get rid of bad debts secured by real estate. The problem is often not the real estate, but the core business of the borrower and the sale of assets becomes the only way to repay the debt. It sometimes happens that such properties are situated in very good locations, but not used in the best way. We can perform an analysis and suggest an alternative way of using the property or restructuring, reconstructing or rebuilding it.

Are there specific expansion plans – at least with respect to the employees in the new company?

Prelios employs 500 people in Europe and is one of the most active real estate companies on the Italian market. In Poland we also want to be a serious player offering services to institutional clients. Consolidation is currently in progress on the agency market. I think that in light of recent movements in the agency world, there will be many good specialists available.

The competition has been intensifying. Isn’t it getting harder and harder for smaller players to make their way?

That may be so, but we are not entering the market with a brand that needs to be promoted from scratch – and this is of crucial importance. We have an international company providing a wide range of services behind us. Your question gives me a feeling of déjà-vu. When, years ago, we quit Cushman with Chris Grzesik in order to bring King Sturge to the Polish market, everyone was extremely sceptical, suggesting that the market was already fragmented and there was no place for a new entity of this type. However, in a few years’ time we had grown into a company both the customers and the competition took note of. I believe there is still a place for Prelios in Poland as there is always room for good quality or services that others do not provide. We are part of the new trend for portfolio acquisitions – and that perfectly fits our business profile. In Italy, we service loans for lenders and we help borrowers get out of trouble. This is our speciality. It is also mine – I remember that the first project I managed in Poland at Hattfield Philips for Lehman Brothers was Wola Park. In 2004, I went to the shopping centre and saw crowds of disgruntled and embittered tenants in the nearly empty building and thought: it won’t be easy to succeed with this one. But still, we succeeded – by drawing up a good recovery programme, so that two years later the much-improved centre was sold to an institutional fund. I believe there is always a solution. You just need to find it.

Coming back to your plans for the next two to three years. Do you have any specific aims in terms of generating specific results, taking on a specific number of projects, employing people?

I would like the company to grow to the scale of the other large agencies. But really we want to succeed not through the number of people in the office, but through the quality of our services and the care with which we handle our clients. Certainly we do not want to be a niche company employing just 15 people, but we don’t feel pressured to hire, for example, 80 people at all costs over the next two or three years.

Is Poland, for you and others, now being treated as the back office for the Central European region?

In Warsaw our team has increased to ten people. Our Hamburg branch employs 60 people. Our aim is close cooperation, because we think that there are many investors for whom the consistency of services and their quality is important, so even if we still lack some specialists in Warsaw, there are specialists in the neighbouring branch who can be involved in a specific project. I am convinced that there is room for a company with a strong brand that has been recognisable on the European market for many years. I also think that the expansion of consulting firms on the Polish market will not stop with us. More and more investors and consultants are set to follow them.

You said that new investors are going to emerge. Will, for instance, Chinese institutions actually be making purchases in Poland? We have been hearing about them monitoring the market for a few years now.

I myself have one project in Warsaw that the Chinese were interested in, but apart from the initial interest there was no further activity from them.

And are there many interesting projects on the market?

The lack of offers in the prime real estate sector has led investors to switch to provincial markets, where more than 80 pct of all transactions in the first quarter of 2015 were closed. It should be noted that the volume of transactions in this period of app. EUR 800 mln shows a decline of over 40 pct in comparison to the same period last year, and more than 70 pct of the acquisitions were closed in amounts lower than EUR 100 mln due to the lack of large transactions and portfolio acquisitions. In Germany, the prime market is still hot, and the yields in prime locations are only about one percentage point below comparable properties in Poland. When an investor is faced with the dilemma of whether to buy something for 5–6 pct in Poland or 5–6 pct in Germany, they have a choice that was not open to them just a few years ago.

What about hotels? Are we going to see some new products?

Investors are declaring an interest in the possibility of building new facilities or expanding city hotels with more than 150 rooms in good locations in large cities in Poland. I was also instructed to sell a portfolio of ten hotels in Germany, Austria and the Czech Republic, so there is no stagnation in this sector either. However, the growing interest of funds in portfolio acquisitions of apartments for rent is a new phenomenon for me. This form of investing is gaining adherents in Poland as well.

No longer a lehman

Maja Biesiekierska joined Prelios in April 2015. She gained eighteen years of experience in commercial real estate providing investment advisory services in the real estate sector in Poland and in the UK working for British advisory companies such as Cushman & Wakefield, King Sturge, Hattfield Philips and Valad Property Group. Throughout her career she has managed assets worth over EUR 0.5 bln (including the special servicing of the distressed and non-performing assets of the Lehman Brothers’ portfolio in Poland and France). Maja graduated from the University of Warsaw and in 2007 became a member of the Royal Institution of Chartered Surveyors.