As it was announced in April, JLL will soon transfer most of its existing business lines to iO Partners in Romania, the Czech Republic, Hungary and Slovakia. US-based real estate private equity fund manager Michael Stanton, Founder of iO Partners, talked to Property Forum about the details of the deal and shared the new company’s plans for the future.
What's the story of the deal? Why now?
Like any successful deal, both JLL and I were in the right place at the right time.
I am a joint US and Hungarian citizen, speak Hungarian and have lived for many years in both Austria and Hungary. My passion is real estate and building businesses. For almost 8 years, I was a Board Member of CA Immo, which is one of the leading property owners in the region. This opportunity is a natural convergence of my interests and objectives.
I started working in CEE in 1993 and have been involved in real estate most of my life – so when this opportunity came up, I was quick to move forward and register my interest in the transaction. I have worked on deals involving JLL for many years and transacted more than a billion dollars of real estate where JLL was an advisor, so I have a lot of experience working with JLL and have a tremendous amount of respect for them and their people.
JLL has over 100,000 employees globally but in these 4 countries (Czech Republic, Slovakia, Hungary and Romania) they have less than 200 people doing the businesses of Agency, Capital Markets, Valuation, Advisory and Project Development Services (PDS). JLL made a strategic decision to service this region through a preferred partnership arrangement and the way I look at the region, the 4 countries where JLL was active, adding the new markets of Austria, Serbia, Bulgaria and Croatia, it is a market of almost 75 million people in the heart of Europe – so the region is very substantial with enormous potential.
JLL has been in the region for over 27 years and built a great practice and team but because it was such a small part of JLL overall, the region did not benefit enough from the investment and attention that it deserved to achieve its full potential.
JLL has been great to work with. Even though we are sitting on opposite sides of the table in negotiating the deal, I like the professionalism and it is this professionalism that iO Partners will continue to deliver to our clients.
Why iO Partners?
Chapters can be written about how we got to the iO Partners as a brand and to this as our logo, but this is for another time maybe. The gist is that “we put more in, so you (our clients, our people, our communities and society) get more out”.
Why wasn't Poland included in the deal?
I think Poland is obviously a great market and I would have been thrilled to expand the transaction to include it, but JLL has a much larger presence in Poland including business support services for EMEA and were not looking to part with it. If JLL were willing to enter into such an arrangement regarding Poland, we would definitely be interested.
What will be the nature of iO's partnership with JLL in the long run? Will it be similar to what other international advisory firms such as C&W have in some countries like Romania or Bulgaria?
We have a preferred partnership agreement with JLL that allows us to team up in order to seamlessly provide best-in-class services to JLL clients in the region. We think we will have the best of both worlds of local talent and market knowledge coupled with global reach and knowledge. As one of our partners and country managers said, “Know global - Grow local”. JLL clients will have the comfort of knowing that they will be served locally in the same way they have always been.
Did you acquire the entire operations or did JLL remain shareholders in the new company?
The transaction was structured as an “asset purchase” deal which meant that we created new companies in each of the 4 countries and all the JLL staff in the business lines that were acquired (Agency, Capital Markets, Valuation, Advisory and Project Development Services), will transfer into the new entities called iO Partners. So, in some ways, it was like creating a brand-new company but on Day 1, the company will have all the same JLL people as before, sitting in the same offices they had before and working on the same laptops as before - so it will be a totally seamless transition – but with new business cards, new emails, and renewed vigour.
While JLL is not a shareholder in iO Partners, as part of our agreement, one of JLL’s top executives in Europe will be part of our Board with the purpose of supporting the relationship between JLL and iO Partners.
Also, the Country Managers are shareholders in the business, and it is our intention to build a large but cohesive and collegiate regional partnership hence the “Partners” in iO Partners.
What is the potential that you see in this venture? What is your vision of the advisory business in general?
My vision for iO Partners is for it to be the dominant regional real estate advisor. I am excited about the growth potential of the business as I see that the team is filled with smart entrepreneurial people who have lots of ideas to grow the business. We see lots of opportunities to grow the existing services as well as expand into new geographies and even new product lines.
What will change for clients?
Clients will work with the same teams they have known for years, at the same level of service with added entrepreneurship and more flexible operational, approval processes and communications. I see iO Partners as the place that empowers the country managers as well as every producer to think of each country or business as their own business. And give them the resources to grow that business while working together with other country managers to deliver the best outcomes in client service.
Will there be an executive overseeing the 4 countries?
We have a country manager in each market that has deep experience, and in some cases has been with JLL for over 15 years. Having said that, we would like to have a Group CEO who has the right mix of business acumen and relationships to carry forward the vision to be the leading market participant across the region.
Do you plan to enter other markets where JLL doesn't currently have operations (Serbia, Croatia, etc.)?
We are looking at several markets – and while we have agreed not to compete with JLL in markets where they operate, we have the ability to expand into quite a few countries including Austria, Bulgaria, Slovenia, Serbia, Croatia and, in the long run, even Ukraine.
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