What role does Argo play in Romania’s real estate segment, and what’s your vision for the company’s future?

Argo is a hedge fund focused on distressed assets, converting debt into equity. Initially, we acquired shopping center debt across Eastern Europe, investing in six assets—five in Romania and one in Ukraine.

What’s Argo’s plan for the Romanian market?

We’re in an exit phase, managing shopping centers in Odessa, Suceava, and Oradea. The vision is to shift focus to residential and office segments for future investments, given the competitive and somewhat saturated retail market.

How do you define favorable market conditions for your exits?

Favorable conditions entail balanced yields and income growth potential. Currently, we’re preparing Suceava and Oradea assets for exit, undergoing improvements and debt restructuring. Considerations like adding a cinema in Oradea post-COVID-19 are also in progress.

How has COVID-19 affected operations in your Romanian malls?

Despite enforcing social distancing and sanitation measures, both malls showed resilience, experiencing around 15-17% reduced traffic between March and September compared to 2019. Tenant resilience varies based on their scale and business scope.

Is accessing capital easy for the real estate industry in Romania?

Banks have stringent lending criteria for development loans, offering around 60-65% of overall project costs. Large-scale project loans are limited. Major banks in Romania like Banca Transilvania, BCR, and BRD prefer safe, blue-chip investments. However, private funding supplements the banks’ cautious approach.

How does Romania compare to the region, and what are your investment plans?

We operate opportunistically and assess investments individually. Residential development currently appears most promising. There’s ongoing demand for office space in Bucharest despite new constructions. The market’s improved affordability, from 20 to 8 times the salary, signals opportunities for new buyers.

What’s your outlook for the office market in Romania?

Despite short-term challenges where tenants are downsizing, medium-term demand remains strong due to cost advantages and growing industries. Fewer constructions amid the pandemic suggest increased future demand. Our fund seeks high returns from strategic investments, eyeing unique angles in the Romanian market.