JSE-listed EPP, Poland’s largest owner of shopping centres, has urged the Polish government to introduce REIT (real estate investment trust) legislation for the country.

Rafał Kwiatkowski, Chief Operating Officer of EPP, says, “The property sector is an excellent avenue for creating wealth and should be more open to investors in the country. It would be a great vehicle for people to invest their retirement savings.”

EPP already operates as a REIT in the retail commercial property sector. It has, however, been limited in terms of attracting investors due to the lack of this critical legislation.

By being quoted on the main board of the JSE in South Africa, EPP has witnessed the benefits of REIT legislation on a country first-hand. After South Africa’s property sector actively campaigned for it, SA REIT legislation became a reality in the country on 1 May 2013.

The SA REIT ensures the vehicle for the monetising and listing of property assets in South Africa is consistent with REIT structures internationally, making the sector more attractive for both local and international investors.

The South African listed property sector has seen market capitalisation soar over the past two decades, rising from roughly R6 billion in 2000 to R300 billion currently. Today there are 32 SA REITs for investors to choose from, including diversified, retail, residential, office and industrial, and speciality REITs. An increasing number of these now have property holdings in international markets.

Polish citizens can’t invest in REITs because there isn’t any legislation allowing for it. “This would be simple legislation for the government to pass and would have a positive effect on the economy, especially now that Poland has now been rated among most developed countries list on the S&P for a fully year and, like the rest of the world, will have to deal with economic fallout from trade wars and slowdowns in our neighbours’ economies,” points out Kwiatkowski.

Poland is still among the nations that are best poised to avoid negative growth or a recession. “While the Polish government has room to make adjustments in debt levels and is taking actions to stimulate consumer spending, there is some simple legislation that would have a very positive effect that it could do right now – REIT legislation,” says Kwiatkowski.

The REIT, simply put, is a way that everyday investors can invest in commercial real estate. When an investor buys shares in a REIT, they are getting small portions of real estate held in a portfolio managed by a corporation that is publicly traded. It allows investors to own a share in investment-grade properties on the same basis as if they had bought the properties directly with the added benefit of value created through active, professional management.

“As a Polish company we would like to be more accessible to the Polish investors,” says Kwiatkowski. “Looking at the massive benefits that REITs provide to both professional investment companies and private citizens across a nation, we have to wonder why we don’t already have this legislation.”

HENDERSON PARK ENTERS POLISH MARKET WITH ACQUISITION OF 70% STAKE IN 105,000 SQM OFFICE PORTFOLIO AND FORMS NEW JOINT VENTURE WITH EPP5

Henderson Park, (the ‘Company’), the pan-European private equity real estate platform, announces that it has completed the acquisition of a 70% interest in a portfolio of 11 newly built office buildings located in tier one cities in Poland from EPP, a leading Polish real estate investor which is listed on the Johannesburg Stock Exchange (JSE).  EPP will retain a 30% stake in the portfolio and continue to manage the assets, in partnership with Henderson Park’s experienced asset management team.

This transaction provides Henderson Park with strategic exposure to the Polish market at an attractive entry price, via an established local platform with a strong track record of operating in the country.

The fully-let portfolio comprises 105,000 sqm of primarily brand new Grade A office space across 11 buildings, which are located in three of Poland’s top five largest cities:

• O3 Business Campus in Kraków, Poland’s second largest city, comprising three 11-storey buildings totalling 55,765 sqm and 1,205 parking spaces;
• Malta Office Park in Poznań, Poland’s fifth largest city, comprising six individual buildings of five to six storeys totalling 29,065 sqm and 599 parking spaces, and;
• Symetris Business Park in Łódź, Poland’s third largest city, comprising two ten-storey buildings totalling 19,287 sqm and 383 parking spaces.

All the assets hold a BREEAM Very Good rating, offering flexible floor plates and high-quality finishes. The portfolio benefits from a diversified income base from more than 40 international and domestic tenants dominated by strong covenants such as McKinsey, Philips, Nordea Bank and Grant Thornton, with an average office area of 2,500 sqm per occupier.  Each asset occupies a strategic city centre location within its respective regional market and benefits from excellent visibility and access to a range of public transportation options.

While continuing to deliver solid growth, with GDP rising 5.1% in 2018, Poland is also one of Europe’s most stable economies and presents compelling macro fundamentals with strong prospects. Coupled with a low unemployment rate and high levels of disposable income, Poland is attracting rising investment volumes while the growing presence of major international corporates has contributed towards establishing the market as a high-performing service-driven economy.

Nick Weber, Founding Partner of Henderson Park, commented: “This transaction marks our entry into the Polish market, where we see great potential, and at an attractive entry level. Structuring this deal alongside a listed company fits well with our ethos of finding unique and innovative ways to access real estate investment opportunities on behalf of our investors. We look forward to both working alongside EPP, an experienced blue chip company, to manage these institutional quality office assets, and expanding our partnership in the years to come.”

Hadley Dean, CEO of EPP, said: “This partnership will allow Henderson Park and our office tenants to benefit from our know-how and experience as they continue to enjoy office management services of unparalleled quality. At the same time, it allows us to focus on our stated strategic goals involving developing and populating our retail portfolio in one of Europe’s most dynamic markets. We believe this is the best solution for our tenants and our shareholders”.

The legal advisers involved in the transaction included Linklaters (Henderson Park) and Dentons (EPP), while EPP’s commercial adviser was Colliers.