Written by: Klára Smolová
Photo by: Vladimír Weiss
The founder and majority owner of developer Passerinvest is currently enjoying the success of BB Centrum, yet within business circles seems something of an anomaly. Meet a man with a distinguished reputation who found belief through faith.
An entrepreneur who doesn’t have an extensive project behind him and starts an enormous development project such as BB Centrum seems very courageous – or a bit of a megalomaniac. In what does your success lie?
I have never been a megalomaniac, but I have always believed in logical thinking. We listened to many experts, we collected information, we learned the conditions under which these buildings could be rented and we made calculations – how much the total investment would be, under which conditions it could be financed, and expected yields from rent. In other words, if basic mistakes are not made in such calculations, these types of projects can work.
When it is completed, the total capacity of BB Centrum should be 330,000 m2 of commercial and residential space. What figures will investment reach?
It all represents an investment of more than CZK 15 billion, with more than CZK 3.5 billion having already been invested.
How is such an enormous project financed?
It must be done in individual stages, and there are several factors that influence it. Market demand is always the most important. In my opinion, each larger stage should be initiated at the time when a significant percentage is pre-leased. The second factor is the developer’s financial power and the readiness of the banks to finance the project. I think that the market for office space is quite stable in Prague, and the price for real estate should slightly increase, which the banks consider a good sign.
Without sufficient personal assets in the beginning, you had to approach the banks. At that time, this was very complicated, as the Czech banks were unwilling to lend money. How did you convince them that your project would be successful?
We went to all three major Czech banks. At the time, none of them had the kind of professionals needed to negotiate such projects. Then we discovered that foreign banks might perceive us as a serious partner. Of course, if we didn’t have finished some projects at the time, it wouldn’t have been so simple. It was imperative that the bank [Vereinsbank] believed we were able to realize the project in cooperation with our partner, PSJ and on the basis of what we had already accomplished.
Hewlett-Packard was the first tenant. How did you manage to convince them to trust you, and close a contract with you, when there wasn’t even a building yet?
Hewlett-Packard was in a situation where its negotiations had already been unsuccessful twice, so it was in the market for a third time. We had already worked with (real estate brokers) Jones Lang for, I think, two years and together we were able to convince Hewlett-Packard that we were a reliable partner. The land was in our name, building decisions had been made and the construction costs were more or less clear. When Vereinsbank undertook to finance the project, Hewlett-Packard trusted us enough to close a contract.
What share of market is controlled by Passerinvest?
The partial answer to your question is that Prague now has one million square meters of high-quality office space, and so far we have built 72 thousand square meters. If at some time,BB Centrum has 300 thousand square meters and there is 3-4 million in all of Prague, then our share would be close to 10%. But as developers we are unable to keep such a large amount of office space under our ownership.
BB Centrum has changed the face of Prague 4. What is your vision about how should Prague develop in the future from an urban point of view?
Many offices that were rebuilt from residential housing at the beginning of the nineties came into being because there wasn’t any other high quality office space available. I think that as new offices are built, historically residential housing will be converted back to apartment projects or other lodging facilities. Certainly, many new office locations will be built in Prague. Prague 4, with BB Centrum, will most likely be the most important area outside the center. Pankrác will also be important, and there is a very interesting project originating in Chodov. Prague 8 will be an excellent and formidable competitor, as well as Smíchov in Prague 5.
It seems that there is a lot of office space in Prague. Will our market allow for all these offices to be leased?
Many experts in the field use one key number: today, Prague has about one million square meters of high quality office space. Comparable European cities have several times more, and Prague will continue to gain on these cities. So I think there will be constant demand for offices here as the service sector develops, more investment flows in, and we get closer to entering the European Union.
You have a reputation for being a very serious businessman, a straight-forward person who keeps his word. You have a spotless image, which is rare in a country full of corruption. How do you do it?
I’m not a saint, in any case. I think the compliments are due to the fact that I believe in such aphorisms as “only make promises you can keep”. In order to do this, your thinking should be realistic. In the Bible, Jesus Christ says, “Do unto others as you would have them do unto you.” If you adapt your behavior to this idea – and I don’t think that I’m always fully capable of doing it – then it follows that partners will have a favorable experience with you.
You speak candidly about believing in God, and this is clear from looking at your company’s brochures. Does it also influence your business practices? For example, how do your partners react to your openly Christian ideals?
I have never encountered a negative reaction. I think that they perceive me in the same way I used to perceive believers before I became one myself. I told myself, these people are aware that a God exists who knows their conscience and their ideas. So they have a responsibility not only to themselves and the people close to them, but also to God. Such a person has more of a problem doing something bad.
Not too many people know that you support charity intensively. In what projects are you involved? Are they purely private activities or are they connected with your firm?
Religion should be separated from politics and, to a certain degree, from business activities too. One of the things I get through the humanitarian organization Adra is the chance to help children in the poorest countries of the world. We [ed: together with his wife] are engaged in these activities privately through the Seventh Day Adventist Church, of which we are members. The church participates in various humanitarian events and nourishment programs. We have three children in Bangladesh who we financially assist to attend Christian school. If they are orphans, they can also live there and receive food and basic clothing. As for the firm, we are currently helping three people who are handicapped and need daily care.
Do you consider yourself rich? Can you specify your assets?
There are two levels, material and spiritual. On the spiritual level, a ten year old boy in Bangladesh who has learned about the imperishable wealth given to us by God through Jesus Christ can be a lot richer than a billionaire. From a material point of view, I have no right to complain, and it wouldn’t be fair if I said I don’t consider myself to be rich.
What will you be doing in ten years?
Once again I must refer to the Bible. Jesus Christ says, “The end will not come until the gospel has been preached to every nation, every tribe, every race and every language.” So I believe that in ten years I will be able to support the preaching of evangelia about God’s Kingdom. I believe we will realize further development projects and I will live a satisfying life with my family.
How would you characterize yourself in three words?
God-fearing, rational and trusting.