“The history of the past is but one long struggle upward to equality.” – Elizabeth Cady Stanton

If any one point in history should leave us ashamed, the Nazi led Holocaust during Second World War is it. The war itself was enough of a stain on our history with an estimated 60 million people dying in one of the world’s deadliest military conflict. World War II left nations torn; patriotism had ruined lives, dictator Adolf Hitler manipulated citizens and caused unforgivable torture to those who didn’t quite cut their audition into being good enough for the ‘master race’.

But the holocaust remains the most barbaric, gruesome and abhorrent element of a brutal conflict.

And for over the past 70 years it seemed that humanity has been striving to learn from a truly despicable act, to guarantee such a travesty should not occur again; from Remembrance Day to documentaries and movies, Holocaust history is mapped all over the school curriculum, to ensure it need not be forgotten and rewritten.

Yet in recent news, Poland earlier this year passed a controversial Bill which outlaws blaming Poland for any crimes committed during the Holocaust. If caught breaking the law and accusing the Polish state and its people of being involved or responsible for Nazi occupation during the war, you could face up to three years in prison, or a fine.

In Polish Parliament Patryk Jaki, a Deputy Justice Minister reportedly commented: “We have to send a clear signal to the world that we won’t allow for Poland to continue being insulted.” So, refrain yourself from saying ‘Polish death camps’, and replaced it with the obviously much more respected and polite version: ‘concentration camps’.

By making it illegal to accuse the Polish nation of complicity in crimes committed by Nazi Germany, some argue, this legislation is trying to amend or rewrite history and with Poland’s Jewish societies stating their communities feel unsafe[i], we ask why this Bill was ever passed.

And even though the ‘battleline between good and evil runs through the heart of every man’, Poland is focusing on the notion that good conquers evil. Many Poles helped the Jews, sheltering them from torture during the war, which in itself is a brave act of kindness[ii]. So when Obama uttered “Polish death camps” back in 2012[iii], altering the perceptions of the country’s stance in the war, a metaphorical dagger pierced through Poland’s heart.

Obama apologised, but the hurt remained.

"When someone says 'Polish death camps,' it is as if there were no Nazis, no German responsibility, as if there was no Hitler," Donald Tusk, Poland’s president at the time, said.

"That is why our Polish sensitivity in these situations is so much more than just simply a feeling of national pride."

But you can’t escape facts. There were 457 camp complexes[iv] and even though these camps were conquered by Nazi Germany, we cannot ignore that some would have helped or ‘handed over’ Jews to their deaths; an estimated 200,000 Jews were killed by Poles, either by handing them over to the Nazis or being extorted for money and murdered for not complying[v]. There were anti-Semitic pogroms[vi] during and after the war, one of which whereby 400 Jews were set on fire in a barn by their not so trusted neighbours.

By imprisoning those that attribute to “the Polish nation or state, publicly and despite facts, responsibility or co-responsibility for Nazi crimes committed by the German Third Reich…”, we are silencing the truth of what happened.

Israel has strongly criticized the law, claiming in inhibits free speech and will be used to repress and shift blame of Poles that had killed Jews in the War. Freedom of speech goes a long way, and muting the mouths of those that speak the honest truth can distort the present and thoroughly amend the future.

We could go back and forth on whether Poles were forced, or if they volunteered, but Jewish people were oppressed, discriminated against and tortured in Poland.

In an era where the alt-right has risen up once more in spite of history and Fake News is considered fact by too many, Holocaust deniers have new platforms to spread mistruths, this Bill seems a dangerous precedent for a country to set.  There is a palpable sense of dread, particularly among the Jewish communities, that a blueprint is forming to allow other countries to follow suit in an attempt to exonerate themselves through legislation.

The bill is certainly creating apprehension and fear in Poland’s remaining Jewish population, with many suggesting that it is time to leave a place they call home and that a change in the public perception of the holocaust and potential imprisonment for those who recognise the Polish contribution to it may be forced into exile: A worrying echo of events during the Second World War.

The ‘Holocaust Law’ has caused controversy: Holocaust survivors, governments and international media have voiced concern and castigation The legal system and its Law are here to regulate behaviour which thus has the power to shape politics, economics, history and society around us. Where legislation such as the aforementioned may silence history, what it cannot do, however, is refute it.

Speaking to Aleksandra Kowalik, a Polish lawyer based in the UK, she explains how the law does not express the most mature approach to such a situation: “1^st February 2018 remains a milestone in collapsing of Polish honour and painting drew by the previous generation which fought for the free, independent and open- minded country during WWII.

“[The Bill] constituted a great stain of a shame on Polish image due to the Institute of a National Remembrance Act amendment which has been ruled by the government at 2am.”

“Where the intention of penalising war crimes and protecting innocents is a laudable idea, falsification of the history certifies immaturity and a lack of understanding the importance of the past and its’ consequences.”

And at the end of the day, history remains to move us all when we remember it, speak about it and are open to its flaws, in order to prevent such an event occurring again.

As Aleksandra continues: “It must be strongly underlined those facts have taken place and it is a high time for us as a nation to admit history in order we could mentally move forward and create a new quality and open-minded society which will avoid repeating a past.”

And even though the law was approved by the Polish parliament and signed by President Andrzej Duda, the Polish Justice Ministry said it wouldn’t enforce the legislation until it is reviewed by Poland’s Constitutional Court.

Sources:

[i] https://edition.cnn.com/2018/02/20/europe/poland-holocaust-law-jewish-community-intl/index.html

[ii] https://sprawiedliwi.org.pl/en/about-the-righteous/who-are-the-righteous/the-attitudes-of-poles-towards-jews-during-the-holocaust

[iii] https://www.nytimes.com/2012/05/31/world/europe/poland-bristles-as-obama-says-polish-death-camps.html

[iv] https://en.wikipedia.org/wiki/German_camps_in_occupied_Poland_during_World_War_II

[v] https://www.haaretz.com/world-news/MAGAZINE-orgy-of-murder-the-poles-who-hunted-jews-and-turned-them-in-1.5430977

https://www.theguardian.com/world/2018/feb/10/polands-jews-fear-future-under-new-holocaust-law-nazi-atrocities

[vi] https://en.wikipedia.org/wiki/Anti-Jewish_violence_in_Poland,_1944%E2%80%931946

Democrats released an intelligence memo Saturday defending an FBI investigation into Russian meddling in rebuttal to a Republican memo that was issued three weeks ago, accusing the FBI of abusing its power. But NewsHour Weekend Special Correspondent Jeff Greenfield from Santa Barbara, California, tells Hari Sreenivasan that the back and forth is a distraction from what investigators have already found.

As the world becomes ever more polarised along the political party lines, has politics permeated the workplace to such a degree that if your views oppose your employers you could find yourself ostracised, discriminated against, or even out of a job?

Politics. The mere sound of the word can cause problems prior to even delving into the topics at hand, yet, it is what most nations are built on. You can choose to ignore the topic, claim your views are independent from the left and right wing, but you will fall somewhere on the spectrum. And in the age of social media where hard line opinions are freely expressed largely without recrimination it’s likely that wherever you land, there is someone on the opposing end waiting to jump at you.

Nonetheless in the developed world, we stand strong on the notion that we have a right to freedom of speech, but are we shackled to a post that will only let us stretch so far?

But could that freedom of speech cause more issues in the modern age, and in the workplace?

To kickstart 2018 the right way, James Damore, former employee at Google, filed a lawsuit to sue his old workplace for firing him for being ‘intolerant of white male conservatives’. This was followed from the leaked memo where Damore stated that women are more ‘neurotic’ and argued that psychological gender differences could explain why 80% of Google’s engineers, and most of the company’s leaders, are men.  A viewpoint that has received some support is from controversial psychologist Jordan B Peterson.

A small snippet of the memo, to spark some thought: “I’m simply stating that the distribution of preferences and abilities of men and women differ in part due to biological causes and that these differences may explain why we don’t see equal representation of women in tech and leadership”, wrote Damore.

Google waved goodbye to Damore on the basis that he was advancing ‘harmful gender stereotypes in the workplace’ and following being adopted by right-wing media as a victim of Silicon Valley’s liberal bias, Damore retaliated on the basis that white, male conservative employees at Google are ‘ostracized, belittled, and punished’. So, was Google right in firing Damore, should he have kept his controversial opinion to himself, and are we entering a new era where politics can result in dismissals?

Was Damore discriminated against?

An integral aspect of UK labour law is that it is unlawful to discriminate against a person based on their age, disability, gender reassignment, marriage and civil partnership, race, religion or belief, sex, and sexual orientation. It does not mention freedom of speech, however, The Human Rights Act (HRA) specifies that individuals should have the right to freedom of expression, but there are limitations.

The Employment Equality (Religion or Belief) Regulations also provide protection for individuals against any unfair treatment or abuse due to their “religion, religious belief or similar philosophical belief”.

Interestingly, during test cases, the aforementioned legislations were not enough to cover extreme right-wing views[1].

Hannah Cottam, Group Director of recruitment firm Sellick Partnership enlightens us: “Companies must ensure they are not standing in the way of free speech amongst their employees. Not only does it display that they have an opinion on important matters, but it also shows they have a strong character and are not afraid to speak up, which is important for me when looking for candidates that are the right culture fit.

“I would however stress to all candidates that they need to be careful, and advise against airing any extreme viewpoints on open platforms that may go against the values and morals of their place of work.”

Freedom of speech

So, aside from perceived sexism, generalising and stereotyping the sexes, Damore didn’t really do anything that wrong to get him fired; he has the right to freedom of speech.

It is a similar situation for those in the US, too. In the US The First Amendment (Amendment I) is often associated with freedom of speech, but ‘Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech… or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.’[2], does not extend to speech protections in the workplace; it addresses actions by the government to impede speech and does not relate to the private sector.

Federal laws prevent employers from firing employees for the same reasons as the UK Labour law, and again, does not imply any protection for political viewpoints; however, there are a few states that make it illegal to discriminate an employee based on their political activity, unless it interferes with company values and the functions of its business.

Unpopular opinions can cause rage, but it also provokes thought. How any society tolerates disfavoured notions reflects where we are at in progressing forward, and by firing him, Google are acknowledging that women are just as capable as men, and staying true to their values…or did Google buckle under the pressure that Damore expressed arguably sexist views, so out of fear of public retaliation, they chose to fire him and avoid a negative backlash on their business? We could go back and forth and debate on this all day long, but what we really want to know more about is who has the stronger leg to stand on? Legally, by only slightly delving into this issue, it does seems like Damore’s is far weaker.

“Employers must be very careful when using the personal viewpoints of employees as grounds for dismissal, and ensure that whatever they uphold are in line with their company values. Whatever these values may be, it is important for companies to uphold their policies across the board and stay true to these morals.”, explains Hannah.

Which they did, as the CEO Sundar Pichai stated, without an ounce of regret, that their decision to fire Damore was not based on his political view: "I regret that people misunderstand that we may have made this [decision] for a political position one way or another," Pichai said in an interview.

According to Pichai, Damore was fired because his memo violated Google's code of conduct, and that it was “not okay” to “advance harmful gender stereotypes in our workplace.".

As Hannah stated: “Only when these values and morals are put in jeopardy can a company investigate and take action, however action should only be taken if the company feels their reputation or employer brand is at stake. Companies should set out a clear set of values, and a code of conduct championed by the Senior Management Team that is readily available to all current and prospective candidates that details what is and is not appropriate. This should be enforced across the organisation, and any instances where the origination feels these have not been met should be formally investigated.”

Damore will argue that Google has violated Californian law, by singling out, mistreating and terminating employees that expressed views deviating from the majority view.

Nonetheless, the lawsuit has been filled for by Dhillon Law Group[3], who aims to represent: “all employees of Google discriminated against (i) due to their perceived conservative political views” in the last four years, “due to their male gender” and/or “due to their Caucasian race” in the last year”.

It is an interesting case for us to keep our eyes on, but what is certain is that there is now a chance you could get fired for your strong political views. If you would like to keep your job, perhaps keeping strong, ‘controversial’ (sexist, racist, or anything demeaning and derogatory) opinions to yourself in the workplace, is the smarter way to go, because legally you are unlikely to succeed in convincing the courts that being a conservative cost you your job.

[1] https://www.thehrbooth.co.uk/blog/hr-news/is-there-really-freedom-of-speech-in-the-workplace

[2] https://www.law.cornell.edu/constitution/first_amendment

[3] https://techcrunch.com/2018/01/08/james-damore-just-filed-a-class-action-lawsuit-against-google-saying-it-discriminates-against-white-male-conservatives/?ncid=rss

Over the past decade, we have seen nations fall in love with Brazil; the country’s natural beauty has not been their only asset, with the World Cup and Olympics showing the world what talent Brazil truly has. Alongside their flair for gaining international attraction, their M&A and investment scope has also thoroughly developed. We speak with Martim Machado, an experienced corporate legal expert, on how Brazil has developed in the M&A world and what he expects in the near future.

You have practised law for over 20 years, both in Brazil and abroad (in New York and Washington, DC). How have you seen Brazil developed in regard to the M&A legal practice?

Brazil has been adversely affected by many “plagues” during its recent history (economic crisis, political instability, corruption scandals). And these “plagues” tend to cloud our judgment and prevent us from seeing what the country has been able to accomplish in many different areas (social, economic, political) over the past 20 years.

Brazil has a consolidated democracy, with strong institutions (that have been recently tested and have withstood the pressure), a very large economy (one of the largest in the world), and a society that, in spite of dwelling with urban violence, has been spared from terrorist acts, civil wars and regional conflicts, and is better educated, less unequal and more vigilant and conscious about its rights and roles. Without a doubt, Brazil is a much better country now than it used to be 20 years ago. And the same may be said to its M&A legal practice.

Generally speaking, laws and regulations have evolved, best practices have been adopted (in how we approach, conduct and document M&A transactions), alternative dispute resolution methods – notably arbitration – have provided M&A players with a more efficient way to settle their differences without having to resort to the not always reliable Brazilian judicial system, and the legal market has become more mature, competitive and prepared to handle sophisticated transactions (mainly with the flourishing of new, highly qualified local law firms). More specifically, our legal M&A market has been strongly (and positively) influenced by the constant interactions between Brazilian and non-Brazilian lawyers since the late 90’s, which were fostered by an increasing number of international transactions involving Brazil. These interactions, among other benefits, resulted in the introduction of New York/English style M&A documents – nowadays the market standard – to the local market, sparked young Brazilian lawyers to seek knowledge and experiences in the US and Europe, gave international law firms an opportunity to set up shops in Brazil (in spite of some initial resistance from the local Bar), and contributed to an information and best practices sharing that has added certainty to M&A transactions and has improved the M&A legal practice.

How have you seen the M&A investment change over the years? Have international opportunities, such as the Olympics, helped the country to further progress? And what to expect from the near future?

Many in Brazil dispute the benefits of the 2014 Soccer World Cup and the 2016 Summer Olympics. Critics claim that the World Cup and the Olympics drained public funds from areas where they were more needed and provided corrupt politicians and businessmen one more opportunity – and what an opportunity – to profit. But, despite the criticism, these two world class events, without a doubt, put Brazil in the spotlight and have helped foreign investors to see the country as a viable investment option.

The M&A market had been active for decades before the World Cup and the Olympics took place. But the wave of optimism generated by the choice of Brazil as a venue for these two events (a wave that began to roll out years before the events actually happened), coupled with what at the time appeared to be sound and promising economic/social indicators, boosted foreign direct investment and M&A transactions for at least 5 years beginning in 2010.

The current crisis and the uncertainties that followed it have clearly affected the M&A market. 2015 and 2016 were difficult years. 2017 sees signs of recovery, but the Brazilian economy is too big to ignore, too large to crash. Even in a slower pace economy, there will be M&A opportunities for strategic multinational players with a long-term view, for competitors weakened by the crisis to consolidate their operations, and for international investors with a higher appetitive for risk to find the potential of big returns in distressed assets or good bargains.

2018 will see presidential elections again. The election process should bring more political stability to the country. And depending on which political forces prevail at the election (the scenario is still uncertain), the Brazilian economy should be positively impacted by the greater political stability. So, after years of recession and low growth, Brazil may see another period of boom beginning in 2019 and 2020.

Aside from effective due diligence, what else do you think accounts towards a successful M&A transaction? What challenges do you often witness along the way?

Every M&A transaction is different. No matter how experienced one might be, there is always something new to learn from and deal with in an M&A transaction. And this is particularly true in Brazil. The size of the deal is not often commensurate to the challenges it presents. Smaller deals involving targets which are medium-sized, family-owned companies tend to be much more complicated than high profile transactions between sophisticated players.

Taxes, labour and environmental issues are usually the villains in every Brazilian deal, but the lack of proper accounting controls and systems, the unreliability of financial statements and other difficult-to-believe-problems that not even a very keen investor is able to anticipate (and, trust me, these problems exist) also play an important role in “killing” transactions.

I believe that more important than effective due diligence (and I am not diminishing the importance of good due diligence being exercised), having a good understanding of the parties’ goals (including the adverse party’s goals) and the ability, knowledge and experience to properly deal with the issues that a thorough due diligence exercise will uncover, is very key to a successful M&A transaction. Spotting the issues is not always the problem (although they hide well sometimes); however, not knowing how to address the issues in a sensible and mutually acceptable way, is.

Martim Machado

Partner

T: + 55 11 2394 8960 l + 55 11 2394 8900 l M: +55 11 9 9246 8484

Av. Brig. Faria Lima, 1.663 – 5º andar l 01452-001 l São Paulo, SP l Brazil

martim.machado@cgmlaw.com.br l www.cgmlaw.com.br

Martim Machado is one of the founders of CGM Advogados, a leading Brazilian firm with a full-service practice based in São Paulo, Brazil’s most populous and important city. CGM represents clients from different sizes and industry sectors (including international companies doing business in Brazil) on a variety of legal matters. A marathon runner and a long distance road biker in his free time, Martim is an experienced corporate/M&A Partner who has been “enduring” in the challenging Brazilian market for over 20 years. He has been involved in a number of M&A transactions representing both sellers and buyers.

We speak with Dr Geza Toth-Feher about Brexit and the real estate market. He explains: “Brexit will not prompt the final sell-out of the UK, this process began many years ago. Therefore, I believe the UK will provide ample opportunity for foreign investors to buy opportunistically for the next eighteen to twenty-four months.”

In this insightful interview, he reveals what the impact of Brexit has been on the investment market and what the future looks like for transactions and FDI in the upcoming months.   

What is the immediate impact of the referendum?

Last spring no member of the investment or financial community expected the people to ‘vote leave’. The referendum campaign was fought on the shallowest of levels, on both sides of the campaign trail. The arguments that were exchanged were ill-prepared to absurd, and the notion of an entire country plunging itself voluntarily into the abyss was just unthinkable. The representatives of the leave campaigns were perceived by many people in the finance and investment community as clowns, thriving on a neo-populist wave that rallies against everything that is modern and foreign and somehow not tightly controlled. Against this background, the decision truly came as a shock.

Therefore, the immediate aftermath of the referendum decision was dominated by turmoil in the financial markets and a major political crisis, which in my opinion, is still ongoing. To exacerbate matters, there was a legal vacuum. No one seemed to have thought this through or was prepared to show leadership. The public were confronted with details of the process only after the event and even then, the information given was scarce at best, often wrong, intellectually on mickey-mouse level.

The decision, ultimately born out of a Tory political backbencher quarrel that David Cameron simply could not quell, has thrown open largely unprecedented challenges, and it will take the United Kingdom some decades to overcome all of those. The technicalities of the referendum outcome and next steps are unclear, so are the solutions.

The UK negotiators, who will have to be trained first, are under massive pressure due to an ever-tighter timetable, set in motion by the article 50 notice. The fact that the 8 June 2017 election may have produced a minority government does not make this task easier.  As a result, uncertainty about prevailing market conditions, as well as uncertainty about the political spectrum, as it now presents itself after the general election on the 8 of June 2017, prevail and affect investor sentiment.

How does the currency market affect real estate investments?

A prudent real estate investor will look at an investment not only with regard to its sector fundamentals, but also with regard to the currency in which the transaction is done, especially if the repatriation of returns (such as rental income or refinancing proceeds or sales proceeds) occurs into a currency other than sterling. For example, the famous (and fully let) Gherkin Tower had to enter receivership because it was financed in a multi-currency-structure, mainly made up of Swiss Francs Tranches. When in 2013/2014 the Swiss Franc rose, the loan amounted to roughly £644m, versus its original value of £396m.

The dramatic drop of the sterling against the two other relevant currencies (sterling came down from almost €1.35 to below €1.10, and from almost $1.45 to below $1.25) in the weeks and months following the referendum decision has sparked substantial trading activity on the currency markets. Furthermore, the US dollar and EUR property buyers are beginning to take advantage of the correction of the sterling value, which they perceive as being temporary.

In a way, the currency disaster provided some relief. It took some of the heat out of the Central London property market. The ‘Brexiteers’ never became tired of selling the currency development as a success.

However, the currency impact is of course relative, especially in commercial property investments, at least as long as rental income and other proceeds will be received in the same currency as the acquisition currency. Hence, real estate transactions will have an element of hedging and speculative currency trading as part of their normal risk profile. This uncertainty will eventually drive prices down.

It is unclear, what the long-term impact on sterling figures will be with: the Eurozone regrouping and reforming; France and Germany apparently able to defeat the ghosts of populism and isolationist politics, and the notion of parity between sterling and the EUR – and we have been close before – seems to becomes quite a likely scenario.

Has the referendum result sparked transactional activity?

It almost certainly has. Now, almost twelve months down the road from the original referendum decision, transactional activity has picked up and the paralysis that was seen in the days and weeks following the Brexit decision has lifted to some extent. The key element of uncertainty is the exact shape such Brexit is going to take. Is it a ‘soft’ or ‘hard’ Brexit, with additional uncertainty as to what exactly these terms mean.

It is difficult to have a comprehensive analysis of Foreign Direct Investment (FDI) into the UK, but Ernst & Young have compiled a report (EY’s UK Attractiveness Survey 2017: Time to Act) which is published on www.ey.com.

Looking at the statistics in that report, the UK has retained its top spot for FDI performance, ahead of Germany, with a 7% rise in total projects (1,144), the highest figure on record. It is also Europe’s leading beneficiary of FDI-related jobs, with a 2% rise to 44,665. However, this development was far outpaced by the increase across Europe as a whole, meaning that the UK’s market share of all FDI projects in Europe fell from 21% to 19%.

Aside from these numbers, the impression of most market participants is that there are lot of large-scale investors “kicking the tyres” on large deals in the UK. There are a number of very substantial property transactions under negotiation or under offer. One cannot help but feel that the interested buyers are more of the opportunistic, bargain-hunting nature, and that this is a first sign of an impending downturn, not from a healthy and functioning property market. We should not forget that the sector also suffers from the UK’s own home-grown problems, in particular the notorious shortage of affordable housing and the somewhat paralysed UK mortgage market.

Will the UK become a tax haven for offshore investments?

In the months following the referendum, it appeared that this might be the direction the government would take. By the end of 2016 it was widely expected and reported in the press that we would see a regime of falling corporate income and dividend taxation and a general relaxation of investment rules, the traditional cures for low activity and productivity.

Strangely, the government in its 8 June 2017 election campaign led by Theresa May, seemed to try to embrace a socio-economic approach, very contrary to what a stronger chancellor would be able to propose. With Philip Hammond gagged, the Tory party was suddenly becoming the champion of traditional new labour values. During the election campaign Theresa May refused to rule out tax rises.

With the result of the general election being as it is, the chancellor’s hand appears strengthened again. At this stage, no one can exclude yet another U-turn in this never-ending tale of political miscalculations.

Of course, the reality is that the United Kingdom, and with that one means the Greater London area, the commuter belt with good transport links to London, and maybe the powerhouses in the North, still provides investors with an investment market of considerable breadth and depth. Taxation is one factor an investor should consider but it cannot or at least should not be the main investment driver.

What is the impact of the referendum results on the fund and hedge fund industry?

The fund industry dislikes change. The hedge fund industry usually thrives on it. Change prompts transactional activity and returns. Of course it brings risks – a lack of certainty in the fields of taxation, of cross border dividends post Brexit, the absence of a unified approach to the regulation of the industry, and a drain on the UK based pool of human capital and talent.

Where the immediate impact of the referendum, at least legally speaking, is non-existent, during the Brexit negotiations the funds regulation will have to change and quite fundamentally. This applies not only to funds, but also to financial services, insurance and other regulated industries.

It is entirely unclear which regulator regulates what in the future. As an example - if a fund is located in Luxembourg, within the EU, but does investments in the United Kingdom, will there be a double layer of regulation, one coming from Brussels and one from Westminster? These questions need answering and fast.

How have you adjusted your investment strategies?

We are generally opportunistic in our approach, as are our investors. We, therefore, see opportunity, not without challenge, in these difficult market conditions. The main issue for us is not so much the worsening of the general outlook but the extreme volatility. Market sentiments and economic outlook on the world, post Brexit, change on an almost weekly basis, with a few U-turns here and there.

As a result of our fluid outlook, we at CBE Trapp & Co. have adjusted and solidified our investment strategy. We continue looking at the investment fundamentals. The market conditions are what prompts the activity that promote a transaction and pressure points. However, we try not to fall into the trap of doing a deal just because of that.

We look for those deals where a good asset is caught in a market-driven special situation and is therefore, artificially and temporarily, undervalued. We prefer solid and tangible value, capital growth and income growth in defendable positions, but not necessarily with a long-term view.

Investments have become larger and the composition of investors has changed. We see large institutional amounts piling into the UK and we are now, more than before, keen to secure large scale portfolios or platform transactions, where the assets will be worked on by an experienced management team.

How concerned are you that organisations will move to cities such as Paris or Frankfurt?

Banks and financial institutions have always been toing and froing between Frankfurt and London. In my personal career, which I started in Germany, Frankfurt became a boom town for some years in the 90s, then the sentiment swung towards London, then back again. A new phenomenon of the post Brexit area is the wooing, with Paris and Berlin sending clear – almost shameless – signals to the talent pools in the UK to try and attract them away from London. This may work well for the start-up industries (and generally for ‘hipsters’ working on ‘projects’) in Berlin, and for natural sciences in France. However, people forget that London is a metropolitan city with enormous attractivity for families and young professionals, and they do not – and often simply cannot - just move over night.

I believe that talent will always seek the best place of employment and opportunity, and we will see more people commuting between London and Paris. In a way, these two cities have almost merged into one Pan-European unit.

I am also convinced that Paris will have political difficulties in offering ‘sweetheart’ deals for bankers, this may be different for other talent such as technological, pharmaceutical or the academia.

How is the banking and lending market affected by the referendum results?

The banking and lending market reacted as all institutional markets first did, with paralyses. Lending became scarce and the availability of debt finance for commercial and real estate transaction was limited. The markets have since relaxed a little bit and we now find bankers, if not bullish, but at least willing to participate in the natural course of business.

The hurdles for any bank to make a lending decision have become higher. Once the decision in principle has been made, lending values, LTV and repayment terms are just as aggressive as they were ten years ago.

The European banks, in particularly those with a license to issue German Pfandbrief as a means of refinancing, are taking a large share of the markets, together with their US counterparts, who now benefit from a massive competitive advantage in that the US is beginning to deregulate its banking system under the Trump administration.

What is your prognosis for the future of the real estate market in the UK?

As I said before, the UK remains a property market with quite considerable breadth and depth. I would firmly expect to see a temporary correction, with a lot of influx of foreign investment capital into the UK, and I would not be surprised if some of the landmark buildings around town and some prized companies and infrastructure assets were changing hands.

Mini Questionnaire – ‘Food for Thought’:

What do you want to achieve in 2017?

We would like to achieve further growth in our property portfolio and we would also like to add more partners to the firm.

Do you have a mantra or motto you live by when it comes to helping your clients?

Nice and simple: focus.

How do you measure your success?

On the returns achieved for us and for our investors.

My name is Geza Toth-Feher. I am the Managing Partner of CBE Trapp & Co Ltd., London, a multi-family office with German, Swiss, Austrian and UK investors and co-investors. The firm acts as lead investor and operating partner for multinational private equity transactions. Additionally, we provide advisory support, usually in special situations, restructurings and/or recapitalisations. The firm invests in commercial real estate in the UK, Germany, Austria and Italy with prime emphasis on special situations or particularly complicated structures. The firm has recently been involved in one of the largest commercial real estate transactions post Brexit in 2016. We co-arranged the sale of a property portfolio of Marks & Spencer retail outlets to Fortress and funds managed by Fortress, Los Angeles.

Dr. Geza Toth-Feher Lord of Kennal

Managing Partner of CBE Trapp & Co Ltd.

4 St James's Place

London SW1A 1NP

United Kingdom

Tel: +44 2074 994 596

E-Mail: gtf@cbetrapp.com