Redefine set to acquire 25% of €1bn Polish retail portfolio
LISTED Redefine Properties is to acquire a strategic 25 percent stake in a €1 billion (R16bn) retail portfolio in Poland.
Chief executive Andrew Konig said yesterday their equity contribution would €58 million, which would be funded through the recycling of capital.
Konig said Redefine had, in its 2017 financial year, recycled R3.5bn that was in access facilities and had raised R1.5bn this year through the disposal of two property assets.
“We have sufficient funding from the recycling of capital to deploy into this venture, which forms part of the company’s strategy to expand its presence in Poland through JSE-listed Echo Polska Properties (EPP) and directly,” he said.
The acquisition is to be executed with Pimco and Oaktree Capital Management, which will each own 37.5 percent of the portfolio acquired. It would significantly expand Redefine Properties’ offshore property platform.
Redefine was also strategic partners with Pimco and Oaktree in the acquisition of the initial EPP portfolio prior to its listing on the JSE a year ago.
Konig said it was expected that the transaction would be completed in the first half of the next calendar year, but said the identify of the sellers and the properties could not yet be disclosed.
He said the sale agreement was subject to conditions precedent and sensitive negotiations and the sellers did not want this information in the public domain, because they had to restructure a significant lease.
But Konig said the portfolio comprised 28 quality, established and well-located property assets in Poland. They include a shopping-centre portfolio of nine leading mid-market hypermarket-anchored shopping centres with a gross lettable area of 330 000m²; the Power Park portfolio of four smaller hypermarket-anchored “big-box” retail centres of 114 000m²; a portfolio of 12 hypermarkets with small line-shop retail components of 181 000m²; and a portfolio of three standalone DIY stores of 26 000m².
Konig said that, as part of this transaction, EPP would acquire 12 of the 28 properties being acquired once their income levels had been stabilised.
He said it was a much bigger transaction for EPP, because it had the potential, if it happened according to plan, to double, over three years, EPP’s retail presence by value in Poland and set them on the way to becoming a specialist retail fund.
Konig said geographic expansion was a key element of Redefine Properties’ risk diversification strategy.
Redefine Properties yesterday reported a 7 percent growth in distributions a share to 92 cents in the year to August. Distributable income grew 22.8 percent to R4.83bn from R3.95bn.
Total assets increased to R68.1bn from R56.3bn, with the group’s international real estate investments valued at R16bn.
Redefine declined 2.01 percent on the JSE yesterday to close at R10.71.