Consolidation after aggressive expansion for biggest Romanian office owner

Romanian investor Liviu Tudor, one of the biggest property owners in Romania, says he has no new investment plans on the medium term, as he wants to consolidate his business before starting new developments. “In the next five years we are only interested in developing the two business parks in our portfolio, and only if and when our tenants ask us to. We are not looking for any new developments and acquisitions. After an aggressive development, which brought us to 150,000 sqm in the past years, we feel that we need some time to consolidate out team and our parks, before starting new developments, when the market will ask for it,” Liviu Tudor explains in an interview for Romania-Insider.com. A discrete investor, Liviu Tudor is running his business from a large office at the first floor of the JW Marriott Hotel in Bucharest, despite the fact that he owns two of the largest office parks in Romania, with a total of 150,000 sqm of gross leasable area. He jokes about it, saying he’s like the shoemaker with bad shoes, or like the tailor who doesn’t have time to make clothes for himself. “We’ve been focused on building offices for others, but we are currently working on a new headquarter for our firms, which should be ready in a few months,” he says. He considers the location of his office to be convenient, as it is somewhere in between the Novo Park compound in Pipera and the West Gate park in Militari, his two office properties. Plus, he has a garden on his balcony at Marriot, which he shows to all of his visitors. Not many entrepreneurs in Romania can boast to having their offices at the Marriott, which is one of the top five-star hotels in Bucharest, and those who do are usually very influential people in Romania. Liviu Tudor, an aeronautical engineer before 1989, is one of those influential people, as he’s also a Secretary General of the Romanian Association for the Club of Rome, which is presided by Romania’s National Bank Governor Mugur Isarescu. But how did the then 30-year old young engineer become one of the biggest property owners in Romania? “Through trials and difficult moments,” he says. “I haven’t heard of any successful self-made businessman who hasn’t gone through very hard challenges. Coming from a society with no business, we only knew about business from the TV series Dallas. I started off in this adventure immediately after the Revolution. I even went bankrupt in the ‘90s, when interest rates went up to 600%,” he recalls. He started with electronics imports from Singapore, then went to satellite communications and IT&C, but finally settled to construction and real estate, which better fit his risk-averse profile. He still owns a computer service company, IIRUC Service, and a building materials producer, Prefabricate Vest, but he prefers to talk about what he has managed to build in the past years, his property business. His two office compounds represent about 6.5% of the modern office spaces available in Bucharest, which amount to 2.3 million sqm. Liviu Tudor has invested some EUR 300 million in these business parks and in a student compound, which he developed with loans from local banks, on plots of land which he already owned in Bucharest, via his other companies. Each of his two office projects has a leasable area of 75,000 sqm. Novo Park is located in the busy Pipera area, the hottest area for offices in Bucharest right now, while the other one, West Gate is in Militari, in the Western Bucharest area. Both parks are fully let to multinationals such as HP, Mondelez, Sodexo, Luxoft, Infineon Technologies, UniCredit, Renault, Accenture, and Ericsson. Tudor doesn’t consider himself a real estate developer but a property owner. “I feel comfortable in the property industry. I’m not a developer who wants to build quickly, fill his offices and cash in the profit to move to the next project. I am a property owner who’s interested in having long-term contracts with good tenants that generate stable revenues. My vision is for at least ten years,” he explains. He says his main interest is not the fluctuation of his properties’ value, nor the small year-to-year fluctuation in revenues, but the quality of his tenants, the length of the contracts and the rent he gets per square meter. This is why he has his own facility management firm as well as security, cleaning and fire-fighting firms. “We have decided to develop these services in-house because our goal is to offer our tenants value for money. This also means an impressive number of people working for us,” Tudor says. He currently has a team of about 400 people working on his properties. The two parks plus the student compound bring him annual revenues of some EUR 33 million from rents and other services. Besides managing his properties, Liviu Tudor is also working on improving the standards in the Romanian property market, which is why he founded the Romanian Association of Building Owners (RABO). “RABO aims to be a professional organization through which the Romanian property owners can exchange ideas and learn from the European experience. Through our affiliation to the European Property Federation in Brussels we aim to bring know-how to the local market and show the other European members of the federation what we are doing in Romania,” Tudor explains. There are just a few professional property owners in Romania, who all know their business very well, but that the local property market still lacks many elements, according to Tudor. “For example, the fact that we don’t have a European legislation for real-estate brokers in Romania, and the intermediaries can take commissions from the tenants and the landlords as well is a minus for the local market,” he adds. However, he thinks that there is progress being made in terms of the developers’ relation with local authorities, who have become more efficient in solving the investor’s requests.