Market madness brings realtor to career crossroads

It took Stefan Gheorghiu six months from when things started to look bleak for his company, Tegron Consulting, until he stopped activity and took the two-month vacation he felt he had deserved but hadn't taken in more than five years. Tegron, the firm he started in 2007 after working as country manager for investment fund Europolis and US developer Polimeni, had a good start as an owner-developer. Gheorghiu had worked on three development projects, one shopping center and two office projects. In the first year of activity, from consulting solely on those projects, the firm made EUR 500,000. He was planning to have 30 employees by the end of this year, and thought it was achievable with those three projects alone. But it all went downhill due to a series of bad decisions by his clients and unfortunate timing with the development of the market. For the shopping center, the owners who were working with Tegron and who had no previous experience of real estate, decided that although the land was bought, financing was available, a forward purchaser had been found and even a tenant was on the cards, they would wait to get a better selling price. The project, which was supposed to require EUR 100 million in total, land included, was planned for a provincial Romanian city. The owners would have made a 150 percent profit on equity in two years, according to Gheorghiu. After refusing that deal at the beginning of 2008, the foreign investors went back to get the financing, which towards the end of 2008 had become more expensive. However, the forward purchaser had halted all acquisitions and was no longer interested in the project. Now the owners are trying to build a smaller scheme and having difficulties in coming up with even less money for it. “If they had proceeded with the project as I had advised them, they would have had it 90 percent built, 80 percent leased and already sold by now,” says Gheorghiu. For him, it was another lesson – aside from the fact that he is still awaiting payment for the work he did. “I wouldn't accept compromises anymore, not even small ones. When I saw clients were not listening to me, I shouldn't have tried in vain for year and a half. I would focus on serious customers who understand what a professional brings to the business,” Gheorghiu tells Business Review. It was a frustrating experience he had had before, at all large firms he worked for. People hired to do a certain job should be listened to, he says. “For example, in December 2006 I told the Europolis board they should sell everything in Romania. But they said it was not company policy at the time so they refused,” Gheorghiu remembers. “I was looking at other markets that were settled, such as Amsterdam and London, and realized that the yield of 6.2 to 6.4 at the time was not going to get much lower. On the short term, I was wrong, because America House was sold at 5.8, but it was just the short term. […] I wasn't listened to,” he says. However, this was not why he left Europolis. “It was strictly personal. I wanted to grow; I didn't have room to grow in the firm and I wanted more action,” says the businessman. From that period, he remembers, after six months of staying in the shade, he managed to impose his views, but not as much as he would have wanted. Laid back and relaxed, in jeans and T-shirt, Stefan Gheorghiu now says he has three options for the future. “Either I get a job in Romania, but only doing something I believe in and where I have the chance to add something to the firm. I could also leave the country. I have worked abroad before – I am not afraid to go anywhere in the world and work in top management, I have already proved that. The third option is to give up on real estate, it hurts me to say, and focus on a different business. But I hope I will stay in real estate,” he adds. It is easy to become disgusted at some market practices, says Gheorghiu, and he is close to losing interest in what happens in the industry. “I see that the crisis didn't do what it was supposed to do, namely to get rid of unprofessionals and speculators from the market,” he says. For much of what happened in local real estate before the financial crisis, he lays some of the blame at the door of the financial media, which reported the plans many had to invest billions of euros in just a couple of years, which were not sustainable and which were thrown on the market much too easily.
corina.saceanu@business-review.ro