A €300 mln agreement for an office portfolio said to be the largest ever in Romania is in danger of collapse, with coronavirus being a significant factor in the breakdown.
The buyer, Africa Israel Properties (AFI Europe), went into exclusivity to buy the package from Nepi Rockcastle as long ago as July 2019 and entered into a purchase agreement in December 2019, with completion due to take place on 31 March.
However, the parties have now both admitted the transaction failed to complete on Tuesday.
AFI Europe sees its position as wishing to put on hold the transaction by requesting a postponement from Nepi Rockcastle, invoking the state of emergency in Romania and the high number of restrictions imposed by the authorities amid the coronavirus outbreak.
However, Nepi Rockcastle alleges that while it managed to fulfil its contractual obligations despite the practical difficulties, the buyer had not. This in turn gave it the right to terminate the transaction and claim the guarantee, it said.
In a statement, the company explained the transaction was dependent upon unconditional approval of the Romanian Competition Council and the successful conclusion of formalities with Trade Registry, which it said has occurred within the contractual timeline agreed.
‘Current restrictions due to the situation generated by covid-19 did not prevent completion, as the authorities involved in processing the share transfer were open to the public, and the contractual mechanism allowed for electronic completion.
‘Moreover, legislation recently passed specifically requires public authorities and professionals, including law firms and notaries, to continue exercising their functions and providing services, while observing the precautionary measures imposed by the authorities.
‘This permitted also in-person completion, using, if needed, power of attorney.
‘Following its legal assessment, the company’s stand is that the sellers have duly fulfilled their contractual obligations, while also considering the emergency orders issued by the authorities in Romania.
Nepi Rockcastle added, ‘Discussions on extending the completion date included both parties proposing terms, and the company’s recent announcement noted an estimated postponement until April; however, consensus on those terms was not reached. The sellers are currently assessing a suitable course of action in accordance with the contractual mechanisms in place and claiming the contractual guarantee provided by the purchaser regarding the closing procedures.’