GE Capital Golub Europe

The US developer was one of the first to enter the central European market. It has recently moved into residential development and small-scale investment deals

GE Capital Golub Europe (GECGE) is a veteran private developer in central Europe and Russia. One of the most active in the region, it is a joint venture between US financial giant GE Capital and Chicago-based property company Golub.

Its pioneering projects include the Warsaw Financial Centre in Poland and St Petersburg’s Atrium in Russia. The company now has 120 staff, with offices in London, Prague, Budapest, Warsaw, Posnan and St Petersburg, and is opening a new office in Moscow.

“We’re bullish about Russia from the development and acquisition perspectives and are actively pursing both,” says Kenneth Munkacy, GECGE’s managing director. As the Moscow office opening indicates, GECGE is looking beyond its initial stamping ground of St Petersburg.

GE Capital, the company’s majority shareholder, brings financial firepower while Golub was one of the first western developers to go into central and eastern Europe, starting with Poland in 1989. GE Capital participated in some of Golub’s early developments, and the joint venture was formally set up in 1999.

In the US, Golub develops, owns and manages commercial and residential property on its own account, with partners and for clients.

GECGE’s early projects included the Warsaw Financial Center, a 33-storey office complex, which was backed by the European Bank of Construction and Redevelopment. The centre’s tenants include Bank Austria Creditanstalt and Ernst & Young. Another pioneering project was the office redevelopment of The Atrium, an historic building on St Petersburg’s prime Nevsky Prospect.

The company typically works with local partners and other equity providers – for example, investors in the Warsaw Financial Center included Northwestern Mutual Life Insurance and US real estate fund manager Heitman. GECGE is also working with Heitman to develop 15,000m2 of offices at Wisniowy Business Park in Warsaw.

GECGE also provides management and leasing services, overseeing a 300,000m2 portfolio of its own, its partnerships’ and third parties’ properties, including Heitman’s buildings in the BB Centrum in Warsaw and PGK Centrum in Posnan.

In the past, GECGE has concentrated on commercial property. “We like the concept of city-centre offices or suburban business parks, retail and warehouse/distribution centres,” says Munkacy.

GECGE branched out into residential development last year. It is building 700 flats at its Westgate project in the Nove Butovice area of Prague 5 and plans to build a 1,400-condominium project in a joint venture with Orco Property, as well as similar schemes in Warsaw and Bratislava.

Munkacy expects to expand housing to 60% of GECGE’s activities in all markets, targeting starter housing for middle-income buyers. “We are making a large move into residential,” he says. “Golub is big in US residential, with 40,000 units, and we want to export that capability here. There’s big demand.”

GECGE is also moving into investment. “We are targeting smaller deals, under €50m, or those where we can work out distressed assets and add value,” says Munkacy. However, as the company is mainly a developer and trader, it won’t hold on to investments for the long term, and is likely to sell them on to institutions.

Recent developments
Heitman has acted as a local partner in Warsaw
Location	Completed	Size m2	Type
Warsaw Financial Center	1998	70,000	Offices
International Business centre, Warsaw	2003	17,000 first phase, total 34,000	Offices, retail
Charles Square Center, Prague	2002	31,000	Offices
Warsaw Corporate Center	1993	10,000	Offices
Atrium, 25 Nevsky Prospect, St Petersburg	1997	Not available	Offices, retail
Current projects
Wisniowy Business Park, Warsaw		15,000	Offices
Westgate, Prague		400	Flats
Source: GE Capital Golub Europe