You stepped down from your position in Poland where you led Hines. It means you’re not just touring the region; you want to play an active role here?
Absolutely. Several years ago, I realized that I needed to reinvent myself. The team in Poland has matured with people who have worked with me for over 20 years; and what’s really fantastic about Hines is when you have a bit of a wild idea, like I had, the firm is receptive. I argued that there are intelligent and hard-working people to run the business in Poland if I were gone, therefore I’d like to do something else. Jeff Hines and my boss Lee Timmins didn’t say “Calm down, keep doing what you are doing.” Instead, they said “OK, so how do you see it?”
I proposed a general plan for expansion based on my several years of previous work on the markets outside of Poland. And I asked Hines to support me for two years, focusing first on the most promising markets of CE outside of Poland, primarily Czech Republic. Jeff and Lee agreed. In fact, were very supportive. Soon after, I was fortunate to find the right man to work with, Stewart Thomson, who needs no introduction in Prague. Working together with Stewart since mid-2020, we have built the foundations for the Czech business and I hope we can make it a truly stable one over the next several years. After that, I might be looking at some other countries within the region.
That means my remit is to be the new business and expansion man for Hines in this part of Europe, focusing on the Czech Republic for now. I like that because I’m a bit of a pioneer at heart. It became a little too repetitive in Poland after 20-plus years, even though business kept evolving and changing. I just didn’t have the energy to continue in the same environment for another ten years. Some people change jobs by going to other organizations. I was fortunate that Hines allowed me to change my scope of responsibility. Of course I continue to be responsible for certain part of Polish business as I owe a duty of care to the investors and will continue in this role, aside my responsibility for the Czech business, until the specific assets in Poland are successfully liquidated.
It took you about a year to close your first deal in Prague. Is that roughly what you expected?
In reality, it’s up to our investors what and when we do things. We need to understand what they want to do and why. We guide them in the market and in the asset classes, we encourage them or warn them but primarily we need to understand their requirements. For the investors, they need to trust you, they need to be sure you know what you’re doing. Therefore you need to invest time and energy to understand the market first. Usually, it takes about that long to be able to tell the investors and our fund managers with conviction that this is the right time, the right product, and explain why. That there’s an opportunity, and what the risks are. Then, they understand that you know what you’re talking about. So yes, we did expect it may take some time to do the first deal.
More importantly, the Czech market is one that promises Hines a long-term presence. Hines doesn’t go to new markets because of just one appealing project. We want to believe that anything we do is the beginning of something else. Hines manages multiple funds for our investors, and we’ve already done two deals in the Czech Republic, so, we believe in the prospects for our long-term presence here. I have no doubt Prague is a very strong market. It’s not a huge one but Prague’s real estate market will be growing more rapidly than a lot of well-established Western European cities.
City logistics was your first transaction, but I understand that you’re open to most sectors. Knowing the market fairly well now, where do you see your next steps?
Technically, we can do nearly anything in the real estate domain. Hines is incredibly flexible and nimble despite being huge and multinational. But we need to be realistic, too. We need to look at how many people we have on the ground, how strong we are in execution at a given point in time. At this point, we’ll probably be more focused on buying existing assets. It doesn’t have to be just income producing product — there might be a redevelopment or development component. But I don’t honestly see us as a large developer in the Czech Republic in the next year. There’s a lot of competition from established, strong players. To believe we could find great locations and do great projects that they didn’t know about would be very naïve. We’re a huge company globally, but we’re still at an early stage of development in the Czech Republic. Things can change quickly though. Entering a JV with a big local business or identifying a large and complex project may change our plans and expedite things.
We always need to be mindful of the underwriting process. We may be open to leverage strong local players who may want an international partner. We bring financial strength and our skills and knowledge from other sectors and locations from over the world, they bring their local knowledge and projects. This can work as it has in other countries. As I keep repeating, Hines is a private company, so we are flexible, we don’t have the limitations that some institutions do. We can work as a co-developer, as a supervising developer or just as a supervising investor. I would argue that’s the way we’re different: we’re big, we’re international, but when it comes to acting in a given market, we can be as flexible as a family business.
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