Over the summer, Fio investiční společnost acquired Garbe Park Chomutov from the developer for €33 million. ThePrime spoke Martin Polák with Garbe’s MD for Central & Eastern Europe
How did GARBE Park Chomutov come about?
We started construction in 2022, just before all that massive inflation, which meant we benefited from the old construction prices. It took longer than expected due to some design changes, but we completed it at the end of 2023 and put it on the market in February. Since it’s a 15-year lease, it was quite easy to find the exit. In the end, we had three offers.
Three buyers for a distribution center with a 15-year lease doesn’t strike me as huge number. If this had been 2021, the line would have been a dozen deep.
I actually only need one buyer. I don’t need to sell to more people, do I?
Sure, but do you really know the price if you received just one bid?
The price is what one buyer offers and what you accept. In theory, there is a buyer for everything, and one buyer is enough if you accept his offer. Of course, in 2021, we might have had more bidders. But still, it’s Chomutov…it’s not Pilsen, Prague, Brno, or Ostrava.
In fact, I like the Chomutov sub-market, which is why we also have a second project there and possibly a third one. It’s become a comfort zone for me. Another asset traded nearby, there are enough leasing comparables, the bank financing is available and the tenants are good. But when it comes to exiting, we don’t have the international buyers for such small tickets. Initially, we wanted to package together some projects or phases. That’s where the market was in 2021. Now, when the most active buyers are Czech and tickets of €80 million – €100 million are big for them, we’re selling projects one-by-one.
You must be pretty clear about the price before you start the sale process.
I having some basic price expectations from the beginning, and I can do a deal with the first offer that hits it. If it’s close enough, I can make a deal. Because I know that as soon as the money arrives from the sale, it can be redeployed in a different project and used for production.
That’s why my advice when dealing with us is to be reasonable and to listen to what we are saying. Don’t play games, because we’ve seen how the people who talk loudly about where yields should be don’t end up doing deals.
Luck is no accident
What’s your feeling about the current market environment? You’re still comfortable making new projects?
You can’t just invest in the good times. I think you need to invest constantly, even if sometimes you’ll do a deal that isn’t as good as the last one. It’s like the stock market: if you find a stock you like, buy €100 of it every month. If you do that for 40 years, then you’ll see.
There are better times and worse times in real estate just like any other market. If you want to get somewhere on a train, you don’t get on and off all the time. Because you’ll end up watching the train go by. That’s why a few people dominate the market here — because they are constantly active. In 2021, everybody wanted to get into industrial and now suddenly in 2024 people are surprised that it’s not so good as its was three years ago.
So, have you continued to buy new land for development? There are lots of complaints about how so little is available at the moment.
We’ve been going after zoned land plots. I think we’ve managed well enough since we now have a 400,000 square meter pipeline. It seems like we’ve sourced enough.
The sale of Chomutov to Fio must be an important signal to Garbe headquarters that you can complete the full development cycle here. A sort of a proof of concept.
Exactly. The circle closed for them. First, they learned that we can lease everything we build and that there’s demand. Then when we sold the first Slovak asset and the first Czech asset, we proved that there’s liquidity here and interest in our assets as an investment product.
You’ve also done it at a time when there are no foreign investors. These aren’t ideal times for selling but domestic capital is still active.
In bad times, I think each source of capital prefers its own domestic market, the one it knows best. That’s what Czech capital has been doing. Now, you can see they’re going more often to Poland and maybe they’ll even try Germany. I think what Czech capital is doing is quite wise and it’s good for the economy. But we can sell all of our projects because of our proactive approach. I believe luck follows hard-working people. If you’re proactive, you’ll exit in line with your expectations. It’s all about your network, your name, your brand, and your proactivity. Sitting somewhere and having brokers come by for a coffee once in a while won’t get anything sold.
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