Chairman of the Management Board (CEO), Warimpex Finanz- und Beteiligungs AG
Börsepeople im Podcast S2/10: Franz Jurkowitsch
... Bank mein Name ist Christian drastil ich bin der Host dieses Podcasts und mein Zehnter Gast in Season 2 ist Franz jokovic er ist ...
About Franz Jurkowitsch
In a September 2022 podcast, Franz Jurkowitsch, CEO of Warimpex Finanz- und Beteiligungs, discussed the company's history and recent strategy. He noted that Warimpex sold nearly all of its hotels in a 2017 package deal, retaining only a few, which he said mitigated the negative impact of the subsequent downturn in the hotel industry. Jurkowitsch also stated that Warimpex would remain in Russia, citing a good local team and strong tenants, and argued that it was in shareholders' interest to continue operations there rather than withdraw. Reflecting on his long career, which began with the Warimpex group in 1973, Jurkowitsch recounted early challenges in financing hotel projects in Poland, which were resolved when the government allowed private ownership. He emphasized the importance of persistence, noting that decisions made too early can later prove correct, and encouraged pursuing goals when one has the desire and belief in success.
Transcript (54 segments)
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Christian Drastil0:29
Welcome back to the series 22 People, and Season 2 of the career and personality episodes, presented by Baader Bank. My name is Christian Drastil, I'm the host, and my tenth guest in Season 2 is Franz Jurkowitsch. He is CEO of the stock-listed Warimpex and has been with the Warimpex Group since 1973. Next year marks his 50th anniversary at the company and the 15th on the stock exchange. A warm welcome, Mr. Jurkowitsch, to my studio.
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Franz Jurkowitsch1:00
Thank you very much for the invitation.
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Christian Drastil1:02
I'm really looking forward to the next half hour, this career conversation with you. I want to say I didn't find you on LinkedIn, which for me is a particularly positive special situation to present your career, because the greater part of your career in building and development was at the Warimpex Group. Let me start with a point about the Vienna University of Economics and Business. We spoke about it in our preliminary conversation—that's where it all started. Please say a few words about what motivated you back then, what were the first steps, and who did you meet there?
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Franz Jurkowitsch1:43
Many things interested me, but I thought an economics degree might give me the greatest possibilities to shape something, as one imagines as a student. That motivated me to attend the Vienna University of Economics and Business. In one of the first lectures, I met my long-time business friend and partner, Georg Fohian. We studied together for many exams and kept in contact privately. Then his father, who together with the Landesmann family had founded Warimpex as a trading company, invited me to join and gave me the opportunity to take a small share. Warimpex was initially a trading company that increasingly moved into project activities. Projects had to be financed, and as was common in old Eastern trade, payment was often made with products. You had to build the facility, finance it, and find markets for the product being produced there, because you were paid in goods that had to be qualitatively suitable, and from that the loan was repaid.
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Christian Drastil3:21
Exciting. So Warimpex—I've read 'Export Import' in there, 'Handelswarengesellschaft.' The 'Ex' in Warimpex doesn't mean 'exemplar' but 'Warimpex.' And before you came to the company, you were at another stop—a stock-listed subsidiary of the Kreditanstalt, right?
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Franz Jurkowitsch3:42
Yes, my father-in-law told me I should spend some time in industry—that's where you learn something. I went to Hübner Pharma, a Kreditanstalt subsidiary, and was responsible for export and the domestic sector, following the German industrial standard. My main market was Germany, but also the Netherlands and Denmark. It was about industrial valves—not what we move when washing our hands, but large ones where gas, oil, or special products flow through.
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Christian Drastil4:21
Do those markets still exist today?
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Franz Jurkowitsch4:33
In the gas industry there are still API standards—the American standards. The manufacturer needs the right material selection regarding alloys, material thickness, and shaping. There are small differences, and the manufacturer must submit to tests from TÜV or similar bodies to produce according to that standard.
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Christian Drastil4:59
So you knew that, but I'd never heard of those markets. And what I also didn't know—
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Franz Jurkowitsch5:06
Actually, I'm historically a great friend of the theater at the stock exchange—very exciting. I really got started in '85, and I believe the dual listing had already taken place, but—
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Christian Drastil5:19
Exciting stuff. Let's come back to Warimpex. I believe Georg Fohian then contacted you—was that how it was?
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Franz Jurkowitsch5:30
We studied and learned together, and his father contacted me.
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Christian Drastil5:35
Okay, the father contacted you. Exactly, and the sons knew each other. Well, the Fohian sons—we'll come to them later today. So we're now in the '70s.
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Franz Jurkowitsch5:46
In the '70s, yes.
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Christian Drastil5:50
How did things progress with Warimpex? You and Georg Fohian as a duo—when did more people join? And you still work together today, which is truly great. What were the first steps and how did the company's first growth happen?
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Franz Jurkowitsch6:06
I didn't actually want to take over an existing business. I knew a little about plant construction from selling valves—you don't sell to consumers but start with the planner. These were large companies like Linde and Lurgi submitting tenders for refineries in Kuwait or other countries. If you were involved in planning beforehand, you had a good chance of delivering. Through that I gained experience I could apply in Hungary, where there was a large, newly created foreign trade company called Chemocomplex. I was responsible for refinery, gas, and aluminum industries. Hungary's only raw material was bauxite—they were and still are very good at producing aluminum at all processing stages.
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Christian Drastil7:29
More things learned! Did growth then happen concentrically in terms of market expansion? I'm thinking of Czechoslovakia—how did growth happen geographically?
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Franz Jurkowitsch7:40
On one hand, it went from pure goods trading to projects. The Eastern European countries increasingly needed financing and experience to assemble complex plants—not within the difficult five-year plans, but to find someone who could deliver turnkey. Very often payment was partly made with the product produced there. Through this we took on new functions—we had partners for complex plant construction deliveries, and we sought partners who would take the products long-term so we could finance everything. That's how we got into financing and joint ventures. Hungary in the '80s was one of the first countries to introduce joint ventures.
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Christian Drastil8:41
Hungary was one of the first countries to introduce joint ventures. And when did—everyone knows Warimpex for real estate, for hotels—when did these business areas come into play? Did it take a while, or was that already a topic in the '70s?
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Franz Jurkowitsch8:58
It was already a topic in the '70s. One of the first major projects was within a $300 million credit line negotiated between Kreisky and Kádár in exchange for border opening and visa elimination. The Hungarians said they needed hotels because all the Austrians would be coming. We built two hotels as general contractors—a Novotel of the Accor Group and a Penta Hotel. Then in Czechoslovakia, the Austrian trade attaché contacted us, having seen our success in Hungary. We first didn't win a hotel contract in competition but became subcontractors for the technical part of a Yugoslav group that won based on clearing dollars—a mutually offset currency evaluated as cheaper for the Czechoslovaks. The Western technology had to be delivered for real dollars, and that was us. From that, a full hotel project emerged where we were general contractors. We worked very closely with the most important Austrian banks in foreign trade. I must say there were never any defaults—all projects were always paid on time.
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Christian Drastil12:09
Slovakia and Yugoslavia—that was simply a different time, of course. And you were already, in my perception in this conversation, an exciting stock exchange candidate back then. But the real estate industry only really came to the stock exchange in the early 2000s, with the big companies. Was that perhaps already a topic—shall we get capital from the stock exchange?
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Franz Jurkowitsch12:35
Yes, we actually considered an IPO in 1990 with the Kreditanstalt. We were relatively far along, with geopolitical tailwinds. But the first two or three years were very difficult—banks loved financing joint ventures where the majority partner, a state firm, guaranteed it with a direct state guarantee. When that disappeared, it was hard to replace. The markets didn't develop dramatically upward from day one. It was a relatively long development that showed positive results only in the second half of the '80s and the '90s. We were afraid we might be too early with an IPO, and then things turned out differently. We only went public in 2007.
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Christian Drastil13:14
Exciting. Let me bring up the sons. With Georg Fohian, you worked together for years. His son Alexander and Georg Fohian's son Daniel are both in leadership positions. When did that start?
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Franz Jurkowitsch13:32
It happened naturally. Both came before the IPO. My son has a very strong affinity for construction and the entire technical area of development and design. We developed our own hotel brands—the Handels and later the Angelo Hotel. The Handels was the first design hotel in Eastern Europe, and the Angelo was a variation. We developed those ourselves with great success. As we grew and went to the stock exchange, there was also a need for financial oversight. Daniel joined us, which was a very good step. I believe we are very well positioned with the younger generation.
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Christian Drastil14:42
I love stories like that. Family matters always please me very much. We've mentioned several times—1990 was not the IPO, it was 2007. I want to let that stand, but briefly to bridge the time—the millennium and so on—what were the milestones from the '80s until the IPO? What are the big memories? And of course, the Eastern opening.
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Franz Jurkowitsch15:09
Quite clearly the Eastern opening. Our focus was on hotels, shaped by very positive experiences in Hungary. We saw Prague as an interesting destination, but Slovakia wasn't as open with joint ventures, and hotels were more in five-year plans. Prague was also difficult to travel to with visas. We created one of the very first joint ventures in Czechoslovakia for hotels. There were people in leadership interested in tourism and modern capital market forms. We did a management venture with several hotels. Then the change came in '89, and from then on we only invested without state partners, buying companies where we could acquire state shares at reasonable prices, or selling where that wasn't the case.
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Christian Drastil16:56
Sounds totally exciting. When did things start in Poland? That was also a key part of the equity story at the IPO, with the dual listing in Vienna and Warsaw.
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Franz Jurkowitsch17:04
We started in Poland in the second half of the '80s. The Eastern Europe head of a large international group for whom we were a supplier kept asking me to come to Poland. But that was very difficult—Poland was insolvent in both the Paris and London Clubs, and financing was nearly impossible. I was very hesitant because one year of a project means many costs. He was very insistent, and I said there's only one chance: if we're owners, because as owners we're not in the queue of state firms that become insolvent. The government then allowed ownership again, and we built the first hotel, the Holiday Inn, in Warimpex ownership in Poland. With the new law, Strabag followed with a Marriott, and the French built a Mercure hotel.
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Christian Drastil18:28
In their long history, Strabag also always worked with stock-listed companies. From my perception as a journalist, Creditanstalt and UBM are recurring partners in Warimpex's history. Is that right?
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Franz Jurkowitsch18:58
Good relationships with both. With UBM, in the beginning we had the commercial ideas but not such strong technical teams. We often did joint ventures with UBM—they handled technical execution, and on equity we usually did fifty-fifty. With Creditanstalt, we went to Russia—a market with greater risk. CA was always interested in entering that market, especially our Airport City St. Petersburg. Together with UBM, we made investments there.
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Christian Drastil19:46
Always warms my heart as an Austrian stock exchange journalist. Just briefly—when was the entry into Russia?
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Franz Jurkowitsch19:50
It happened relatively early. The Wall fell in Russia not in '89 but in '91. We started with an Austrian joint venture partner who had good contacts to St. Petersburg through the then-mayor. We began a joint venture, but it took a long time because the airport project didn't yet have the critical passenger volume to justify a hotel. We had rights to the land plots, so it took several years until it made sense to build. We've been there since the early '90s.
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Christian Drastil20:52
I didn't know before our conversation that a 1990 IPO was a topic. That would have been the perfect equity story. It became 2007 with the IPO. You chose a dual listing in Vienna and Warsaw. Why exactly these two stock exchanges?
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Franz Jurkowitsch21:22
Poland was the first Central European new market economy to build a relatively strong capital market. Balcerowicz was the star finance minister, implementing a tough but quickly stabilizing program. He introduced modern capital market instruments like pension funds, which other countries only did much later. These funds also invested. Poland was our strongest market, so a dual listing there was natural. The Kreditanstalt Investmentbank accompanied us at the IPO, also very strong in Poland at the time.
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Christian Drastil22:23
We have 2007 with the IPO. In 2008 the financial crisis hit, then Lehman. How did you perceive that so soon after the IPO, and what impact did it have on the Warimpex Group?
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Franz Jurkowitsch22:46
It was very difficult. Before the IPO, to give you a scale, we had six hotels in Prague with a GOP—Gross Operating Profit, similar to EBITDA—of about €18.5 million. In the first year after Lehman, we had an EBITDA of about €4.5 million. There were no aid programs like during COVID, so it hit us hard. The Czech Republic has very little domestic business—Czech guests were in the low single digits of the Prague hotel market. Foreign guests, especially in our five-star and design hotels, were mainly from the Anglosaxon world. You can't get those back quickly. It took four to five years to recover volume, but room rates came back much later. In comparison, Poland had a strong domestic market—always 45-50 percent domestic tourism even in the upper hotel segment. Together with UBM we developed the InterContinental and always had about half the domestic tourism market, which hardly collapsed. We survived much better in Poland.
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Christian Drastil24:48
In the Prague market, currency effects play a stronger role. Perhaps a brief story about currency effects that have sometimes positively and sometimes negatively surprised you?
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Franz Jurkowitsch25:10
The currencies that fluctuated most were the ruble. We began investments when it was at 45-50 per euro and had phases where it exceeded 100. When you have a particular date in the financial statements, it hits you and you can't remove it from the balance sheet. The zloty also depreciated—from about 4.10 to roughly 4.70. For Poland, commercial real estate is still largely financed and leased in euros, while residential is in local currency. In Russia, we had euro or dollar leases until the mid-2010s, and only later did pressure come to switch to local currency—a gradual process since you should sensibly also switch the financing, which can't happen synchronously.
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Christian Drastil26:56
Keyword financing—declining interest rates were a huge topic in the last decade. That surely played into your cards?
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Franz Jurkowitsch27:17
We need to distinguish between types. Under 'real estate' are very different products. We develop for ourselves—for our own portfolio—so we have a longer value creation chain and our interest rate sensitivity is not quite as high as for a real estate group that buys from the market, where the value creation chain already lies with the developer. The cap rate at which you buy and refinance has a much greater effect in that case.
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Christian Drastil28:07
I'd like to briefly stop at COVID. March 2020 shook our world. What were the immediate impacts for the Warimpex Group?
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Franz Jurkowitsch28:19
I must preface this by saying that in 2017, in a portfolio deal, we sold almost all our hotels. Only a few remained. Therefore the hotel world impact wasn't so negative for us. Regarding offices, we kept hearing banks' fears about empty offices and reduced leases. That didn't materialize for us. We're relatively strong in offices in Poland and Russia and saw no impact there. Two years ago we introduced a Flex Office concept—not individual workspaces for months, but companies taking five to ten workstations for half a year or a year. That's worked very positively. We first developed this in Kraków—we're full with a waiting list. We've now introduced it in Wrocław too. We can countersteer with this—if companies give back space due to inflation, we have the chance to lease it short-term at value with this flexible instrument.
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Christian Drastil30:13
That totally fits the trend. I need to address the current big topic—you're strongly active in Russia, we have the Ukraine conflict and sanctions. I don't want to spend too long, but please say a few words about the current situation.
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Franz Jurkowitsch30:34
The situation is difficult, but we've been there since the early '90s. We experienced the wild Yeltsin years and the years after. We're relatively steady in our investments. We will remain in Russia. We have a good team unchanged in efficiency, and very good tenants. I believe it's in all shareholders' interests not to run away but simply to continue.
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Christian Drastil31:22
That brings me to my next question. I ask all my guests whether they invest real money. I don't need to ask you since you have to report insider trades—and just last week you reported purchases in the FMA database. Are you also active as a private investor in other companies, or is Warimpex your main investment?
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Franz Jurkowitsch31:51
Investment number one, but I also invest in other companies and have a portfolio of predominantly Austrian stocks.
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Christian Drastil32:03
That pleases me. And you don't just buy stocks—you're also a collector of good painters and artists.
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Franz Jurkowitsch32:09
I started with Austrian painter Georg Geißler, got to know him personally, became friends, and have many of his pictures. Through my work in Poland, I also came across living Polish artists and bought relatively many Polish contemporary works, especially in the '80s and '90s. I'm currently renovating to get better storage for the pictures. My son has inherited this collecting passion and has started collecting Czech and Polish artists as well—it gives him great pleasure.
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Christian Drastil33:19
My closing question is always—with the second and third generation at your company—what do you advise young people about jobs in the capital market environment? Is it exciting? What education do you need? Or just jump in with an initiative application?
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Franz Jurkowitsch33:58
It always depends on the person. I always looked for something where I could decide for myself, where nobody tells me what to do. Not everyone is like that—some want security. But I believe the capital market is certainly interesting, and entrepreneurship involves mistakes. Everyone makes them. You should own up to them and learn from them. What's difficult is when someone makes the same mistakes repeatedly. But you shouldn't stop because of a wrong decision—it might on the timeline have been the right one, just too early. I can only advise people to do something if they have the desire or believe they can create something—then they should do it.
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Christian Drastil35:16
A perfect closing word. Dear Mr. Jurkowitsch, thank you so much for being in my studio. I've learned an incredible amount, and the great thing is I could do this almost ad hoc, reaching the important points instead of just going through a question catalog. Thank you for the generous time budget you gave me and the listeners.
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Franz Jurkowitsch35:40
I thank you for the invitation, and I'm happy that you're so committed to the stock exchange and capital market. I believe there's still great potential in Austria where more can be done.
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Christian Drastil35:56
Thank you for that. We try our best, and I must say it's not just a job—it's really fun. You can see it, because I believe you're only good when it's fun. So bye and until the next one.
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Franz Jurkowitsch36:05
Thank you too.