German funds itching to travel again

You’re allowed to practice both in Poland and in Germany. How much does working in real estate law differ in what are, after all, very different countries?

Radomił Charzyński, partner, Greenberg Traurig: Currently both countries are dominated by UK and US law firms and their typical cursory approach of quickly presenting the problem and proposing a solution. A few years ago, the Anglo-Saxon influence on Germany wasn’t so strong. Law as it used to be practised in Germany was a very learned affair and what was written for the client would always contain exact references to legal precedents and opinions in legal doctrine. This has all changed. We started to use simple language and get straight to the point and so business lawyers are all now focused on solutions.

Is this better?

Definitely. Involving the client, who generally knows nothing about the law, in discussions about legal opinions doesn’t make the slightest sense. An abridged communiqué that is to the point is a more effective way of working. How lawyers work in Poland and Germany is currently very similar. As is the way contracts are drawn up, because Anglo-Saxon practices dominate in this field too. Of course, I’m talking about large international institutional law practices and transactions.

But how do these markets differ?

In Germany there are very few issues that are not settled by legal precedent and doctrine. Unfortunately, there are few such precedents in Poland and so judgements by the same court will often contradict each other. That’s why in Polish legal practice insignificant risks due to legal loopholes cannot be mitigated in any other way than being covered by what’s called ‘title insurance’. Although things are slowly changing, the practice of Polish law is still very chaotic when compared to Germany. This certainly has something to do with Poland’s communist past, when for several decades private transactions didn’t even exist. Our case law leaves a lot to be desired, too. For this reason practising law in Germany seems much simpler.

What’s the situation with German investment funds? How has the pandemic affected their financial standing and their desire to invest?

The pandemic, contrary to appearances, hasn’t had much of an impact on the finances of German funds. They still generally have too much liquidity and a huge appetite for investment. If we’re talking about the investment process itself, this has become much more limited and has slowed down, due to such factors as the travel limitations that have been imposed. This has resulted in German funds looking more to their home markets; but in my opinion, once the restrictions on international travel have been lifted, German funds will start reinvesting in the Polish market.

What kind of properties or portfolios will German funds want to invest in?

Offices and hotels were the main focus of German funds and before that it was retail. However, what we are now seeing is interest in warehousing real estate. We can see that even those funds that have never operated in this sector before have suddenly started investing in logistics. The logistics market in Poland is developing very rapidly. However, I’m convinced that the office market is set to recover and investment interest is again going to intensify.

You have a lot of mergers and acquisitions experience. Which deals stick out most in your memory?

All the transactions that have taken place since 2020 and the outbreak of the pandemic have been interesting for me. A good example is one that was postponed for more than one and a half years. The preliminary transaction was signed in October 2019 and was meant to be concluded a few months later, in February. The outbreak of the pandemic, however, put an end to such hopes and so the preliminary contract had to be extended eight times. Nobody believed that the deal would ever go through. We finally managed to finalise it, but not until the beginning of this year. The buyer even received financing for the purchase. Another transaction I remember very well was the sale of a majority stake in Capital Park in 2018. This was an unusual deal for the opposite reason. We had to close it at lightning speed in just three months. And it wasn’t just due diligence on one building that we had to do in such a short period of time, but on a whole portfolio.

I hear you’re a bit of a history buff and interested in ancient Rome and the Vikings. What can a modern day lawyer learn from Viking warriors or legionaries?

I’ve been fascinated by the ancient world and the early middle ages since my childhood, when at the age of nine I watched the serial ‘I Claudius’. I’ve read a lot on this subject and I also studied archaeology part time. I’ve taken part in historical Viking reconstructions and these days I’m involved in a reconstruction of the Legio Rapax XXI legion. The determination to achieve one’s goals and the ability to learn from defeat are certainly things that a lawyer can learn from the Vikings. The organisation and discipline as well as the strategic and tactical thinking in the Roman army, despite the soldiers not having a great physique, meant that in their day they were able to defeat almost any adversary. Such organisational principles and team spirit can be very helpful in the everyday organisation of one’s work and in transaction management.

Interview: Anna Korólczyk-Lewandowska