Echo deal gives it Warsaw presence

In a watershed deal Echo Polska Properties has acquired a 70% stake in Galeria Mlociny in Warsaw for €29m from Rosehill Investments. Until now Echo, the Polish shopping mall and office owner, has lacked a retail presence in Warsaw, Poland’s capital city.

In a watershed deal Echo Polska Properties (EPP) has acquired a 70% stake in Galeria Mlociny in Warsaw for €29m from Rosehill Investments.

Until now EPP, the Polish shopping mall and office owner, has lacked a retail presence in Warsaw, Poland’s capital city.

The mixed-use development, which includes a mall, was expected to be accretive to EPP, on completion.

CEO Hadley Dean said the acquisition would provide EPP with an earlier entry into the “under-serviced Warsaw retail market”, ahead of the completion of EPP’s Towarowa mixed use 110,000m² development.

“The acquisition is in line with our stated strategy of investing in quality retail assets in strategic locations.

“Warsaw is underserved per 1,000 inhabitants in terms of retail compared with other regional Polish cities.

“Notably Galeria Mlociny is also a strategic transport hub for trams, buses and the metro, in the middle of a large growing residential district,” he said.

Galeria Mlociny is 81,900m² in size, of which 71,050m² is retail in northern Warsaw.

The shopping centre was set to service a rapidly growing residential area that lacks a modern fashionable retail offering and is located next to northern Warsaw’s main public transport hub.

Construction of the first phase began in October 2016 and is on track for completion in the second quarter of 2019. The development is about 50% preleased to anchor tenants.

Echo Investment SA will develop Galeria Mlociny and will acquire the remaining 30% of the equity in Rosehill.

“This is our seventh retail acquisition since our initial public offering in September 2016 and further enables EPP to leverage our scale and influence to give retailers a much-needed alternative choice in Poland,” said Dean.

Meago Asset Management executive director Jay Padayatchi said that the deal appeared strong, given current information.

“The asset certainly looks attractive from a yield and tenant perspective, but we will need to get a better feel of the area after we visit the site,” Padayatchi said.

EPP owns assets worth about €1.4bn and aspires to own €3.5bn worth of assets by 2022.