In the biggest financing deal this year in Romania, Atterbury Europe and its local Romanian partner, Iulius, raised funding of 410 million euro from a banking syndicate against its existing retail centres in four Romania cities. Atterbury Europe CEO Henk Deist shares the background.

What is the significance of this deal for Atterbury Europe and its partners Iulius? How does it fit into the strategic planning for the Romanian portfolio?
We have a substantial development pipeline in Romania, the most significant one being the more than half-a-billion euro mixed-use project in Cluj-Napoca for which we needed equity. Various options were considered – this included, selling existing assets, selling off a portion of the project and financing via the capital markets. In the end a banking consortium came to the table re-gearing our existing income-producing assets that were underleveraged, and this created the surplus we needed as equity for the Cluj-Napoca project.

The timing of the deal – just before war broke out in Ukraine – must have almost scuppered the entire process. How was this extraordinary challenge overcome?
Indeed. The “term sheet” was originally signed in December 2021 and in February 2022 the war in Ukraine started. The problem with an external shock event such as this, is that nobody knows what the impact will be, so the natural reaction is to freeze –  just do nothing and wait. But, fortunately, the fear that a Third World War would be triggered soon subsided and apart from agreeing to relatively minor amendments to the agreed terms, the deal could proceed. It did however result in the process taking a few months longer, and it was only finally concluded in September 2022.

What can you share about your new financing partners – what are the benefits and challenges (if any) of having this particular group as a financier?
They are financial institutions  – and those are by their very nature always challenging and risk adverse! But at least borrower and lender can have a conversation, there is an ongoing relationship through the ups and downs. That remains the biggest disadvantage of the capital markets which are often seen as quicker, cheaper and more flexible compared to banks. But during difficult times the banks remain there, whereas capital markets can seem to open and close on a whim.

What is the outlook in the Romanian market post Covid in terms of appetite for new retail developments?
We remain extremely optimistic with Romania as an investment destination and with local Romanian business partners. The post-Covid recovery in our portfolio and the anticipated results for 2022 are very pleasing and have exceeded our expectations, with the growth potential remaining significant. The Ukraine war was the catalyst for the change in European macro-economic conditions in the form of energy price hikes, inflation and rising interest rates. This of course puts a damper and tempers our expectations for 2023, but that is the reality of economic cycles.

What are you most looking forward to businesswise for the rest of the year?
We don’t expect significant changes and are looking forward to “business as usual” in the last quarter of the financial year, which is always a very busy time as we close off 2022 and plan for 2023.