In what’s sure to be one of the top investment transactions on the European market, and the biggest-ever deal for Poland’s property market, the South African REIT Redefine Property took a 75 percent stake in Echo Investment’s standing portfolio for €1.2bn. The seller, Pimco-backed Griffin Real Estate is keeping its 25-percent share in the high-yield portfolio. “Keeping the 25-percent stake in the new company [to be called Echo Prime Properties] was crucial for this long-term strategy which aims to create the first REIT vehicle for the Polish market,” Krych says. He adds that Echo Prime Properties will first be listed on global stock markets before a possible listing on the Warsaw Stock Exchange. “Entering into partnership with Redefine gives us access to global core capital, as we’ve been using mostly opportunistic capital so far,” he adds.
It will also make a new share issuance possible. “Funds will be used to finance extensions of the Galaxy retail center and outlet project, both in Szczecin,” Krych said. The deal, which officially started coming together in October, still needs to be approved by the European Commission.
Michał Ćwikliśnki of Savills, who represented the seller, says South African investors are currently under pressure to allocate their capital abroad because of fears of devaluation on their home markets. “Poland’s ability to protect capital is quite high, because it’s no longer perceived as a developing market in the eyes of investors. It also provides the required stability while offering relatively high returns compared to Western European countries, such as France, Germany, to say nothing of the UK,” says Ćwikliśnki.
