Autumn reveille

The acquisitions of Mokotów Business Park (USD 287 mln), Warsaw Trade Tower EUR 150 mln), Wola Park shopping centre (EUR 140 mln) and the Simon Ivanhoe property portfolio (EUR 232 mln) are only a few of the largest transactions finalized on the Polish property market since the latest Expo Real trade fair. Looking at the market through the eyes of a regular visitor to the Munich event is often surprising

This year’s 10th meeting of the Expo Real International Investment Properties Trade Fair in Munich serves as a good opportunity to take a closer look at the investment transactions and investors active in Poland. Last year was anything but boring, although the early optimism has now turned into a cool realism.

This February, Michał Ćwikliński of King Sturge predicted that investments would keep on surging upwards, when he then remarking that: “It is difficult to forecast whether investment transaction will be of a greater value than in 2006, though I feel this will be the case.” But a mere six months later. another expert, Radosław Wawrzyniak of CB Richard Ellis, said: “A substantial slump in the number of concluded transactions was recorded in the first quarter of 2007. This has caused some dejection, since it suggests that activity in the latter part of the year will be very slow.”

The attraction of offices

The biggest transaction in terms of office space was the sale of the Mokotów Business Park office complex in Warsaw to the Heitman fund by Globe Trade Centre. GTC pocketed USD 287 mln for its 107,000 sqm flagship investment.

ING Real Estate also did some solid shopping by adding several properties obtained from Ghelamco the Belgian developer to its ING Property Fund Central and Eastern Europe. The transaction was for the 20,500 sqm Warsaw Prosta Office Centre office building and two office buildings in the Trinity II Mokotów complex (24,000 sqm). The contract came to EUR 167 mln. The Akron group of Austria holds a top ranking spot among the most acquisition-addicted companies. After buying the Warsaw Trade Tower office building from Apollo-Rida for EUR 150 mln, its hunger was still not satisfied, and so it went on to acquire the Europlex building on ul. Puławska, which once belonged to Kinomaks, for EUR 60 mln.

The AXA Immoselect investment fund managed by AXA Investments Managers Deutschland got off the mark and made a definite impression in Warsaw. Its pioneering purchase was the take-over from the European Reconstruction and Development Bank and Investkredit of 49 pct of the shares in its Warsaw properties portfolio. The fund became joint owner of Saski Point, Saski Crescent, Warsaw Towers, Sienna Center and the Bitwy Warszawskiej Office Center for EUR 149 mln. John Verpeleti, head of AXA REIM Central Europe KFT, declared in ‘Eurobuild Poland’ this January that: “Our acquisitions stem from the attraction of a given transaction. Poland is one of our target locations, one of our ‘class 1’ locations. We distinguish these into 3 or 4 classes depending on maturity and what risks are to be expected.”

DEGI (Deutschland Gesellshaft fur Immobilienfonds) - another German fund -took over the Focus Filtrowa Warsaw office building which opened in 2000 from Sachsenfonds and LHI Leasing. The transaction was valued at around EUR 122 mln. Deutsche Bank Polska, BRE Bank Hipoteczny, GlaxoSmithKline Healthcare and BMW Polska have opened their branch office in this building designed by the Stefan Kuryłowicz
architectural studio.

Caution pays

In July this year Michael Atwell, a partner of the Cushman & Wakefield agency, spoke of the number of investors adopting a conservative policy. He highlighted German funds, which continue to invest in high quality, low risk assets and still expect a slight drop in capitalization rates. A good example of this was the investment of Deka Immobilien of Germany in two Kredyt Bank buildings in Warsaw on ul. Giełdowa and the Kasprzak building for EUR 40 mln,

Immoeast also decided to purchase two buildings, one of which is an office building project. The Rondo building (20,000 sqm) became a portfolio item, and will be located on the Rondo Jazdy Polskiej roundabout - a project taken over from Pirelli Pekao Real Estate. The second office building acquired was Passat (115,000 sqm), developed by Karimpol and situated on al. Jerozolimskie. The value of these purchases topped EUR 32 mln.

In Łódź, Echo Investment divested itself of its propertiesin the city. Catalyst Capital purchased the Business Centre buildings on ul. Piłsudskiego from the Kielce-based company for around EUR 12 mln and the Orion building for around EUR 13 mln. Changes in ownership also took place in Kraków, where the C.I.T. Group took over from the ZEI Invesco Real Estate managed fund the Euromarket Business centre at the junction of ul. Radzikowskiego and ul. Jasnogórska. The transaction was valued at EUR 32 mln. Euromarket has 13,000 sqm of office space with additional land allowing the building to be extended by 4,500 sqm. The tenants include BP Polska and Fortis Bank Polska.

Waiting till
the time was ripe

There have been major changes also on the retail market. An eagerly awaited item of information was the identity of the purchaser of the Ahold hypermarket chain.. The Carrefour Group proved to be the buyer, taking over 15 Hypernova hypermarkets and 179 Albert supermarkets for EUR 375 mln. The total area of the outlets changing hands is 180,000 sqm. The Oppenheim Immobilien-Kapitalanlagegesellschaft investment fund also decided it would invest in Polish hypermarkets. It took over a portfolio of 3 properties in Gdańsk, Sosnowiec and Zabrze (together with an 11,300 sqm shopping gallery) from GE Real Estate for EUR 132 mln. The total space of these hypermarkets is 55,300 sqm.

Who’s going

to give more

Simon Ivanhoe, which owns the Arkadia shopping centre, last October announced that it is negotiating the sale of several other properties in its portfolio. In January it emerged that 5 shopping centres were the subject of negotiations: Turzyn in Szczecin (26,600 sqm total space), Borek in Wrocław (32,700 sqm), Zakopianka in Kraków (28,300 sqm) Dąbrówka in Katowice (23,200 sqm) and Arena in Gliwice (25,000 sqm). Macquarie Global Property Advisors of Australia turned out to be the new owner, investing EUR 232 mln in these Polish centres.

Wola Park shopping centre in Warsaw also got a new owner. The IXIS AEW fund of Luxembourg bought the property from PBW II Real Estate for more than EUR 140 mln. Wola Park boasts 40,000 sqm shopping space, 3,300 sqm office space and 4,000 parking lots. The principal tenants are Auchan, H&M, Zara and KappAhl. Deka Imobilien, the German investor, also decided to splash out EUR 128 mln for the 46,000 sqm Forum Gliwice shopping centre. Its tenants are such retailers as Carrefour, Zara, Carry and H&M. The mall’s developers were Braaten+Pedersen and Quinlan Private Golub – with the latter having financed the project together with the Scandinavian Borgestad group. The Pestka shopping centre under construction in Poznań has also changed hands. It has now been taken over from Walther Beheer by the PBW II Real Estate Fund, managed by Curzon IXIS AEW Europe, for EUR 85 mln. The whole mall, to open next year, will contain around 80 retail outlets over 40,000 sqm. The approximate construction costs come to EUR 50 mln.

ING Real Estate Management was the largest investor on the Polish market, spending EUR 329 mln between October 2006 and October 2007. It supplemented its transactions on the office market with the purchase from the King Cross Group of the King Cross Shopping Centre Praga on ul. Jubilerska in Warsaw. The new owner handed over around EUR 40 mln for the 6,500 sqm mall. ING RE also became the owner of 50 pct of the shares in the Warsaw department stores Wars, Sawa and Junior, as well as paying EUR 41 mln for the Piast shopping centre (28,000 sqm) in Szczecin.

Warehouses attract

few customers

Nothing spectacular has happened on the warehouse market. First Property Group was the largest purchaser, buying the Krakowska Distribution Park on ul. Szyszkowa in Warsaw from Ghelamco. The investment comprises 8,700 sqm of storage space and 2,300 sqm of office space. First Property Group has also become the owner of the Bałdowska production and storage object in Tczew on ul. Bałdowska, bought for around EUR 6.5 mln from CF Plus.

Heitman discarded its Diamond Business Park in Raszyn, outside Warsaw. This is a warehouse complex of two buildings with a surface area of 31,700 sqm, and which has now been acquired by Teesland iOG of the UK. Ożarów Business Centre also changed hands, purchased by the Orco Retail Fund from the receiver of the bankrupt estate complex (it had earlier belonged to TKG).

CBO is a storage and distribution centre measuring 35,500 sqm.

Dreaming of diamonds

Little has also happened on the hotel market. Warimpex displayed the greatest activity in this sector. The Europa Fund II investment fund managed by Europa Capital and also Warimpex Finanz und Beteiligungs AG purchased all the shares in the Jan III Sobieski company which owns the hotel of the same name, as well as a 6,000 sqm office building.

Warimpex Finanz und Beteiligungs in conjunction with UBM Realitatenentwicklung, each bought 16.67 pct of the shares in the InterContinental hotel Warsaw (both companies had earlier been shareholders in the property). As a result of this transaction, the companies now possess 100 pct of the hotel’s shares (50 pct each).

Warimpex also bought a building from Apsys which belongs to the Łódź-based Manufaktura complex. The four-star Andel’s hotel with 168 rooms will be constructed within it, the expected cost of this being EUR 25 mln. Swedish real estate companies have also been coming to Poland. Cebo Konsult purchased for EUR 6.1 mln the Jastrzębska Tourist Agency, which owns 7 hotels, 3 rest centres and a ski lift. The Swedish company has set itself an acquisitions target of 15-20 hotel properties, which will be known as JAT Diament.

End of the fever?

Market analysts feel the acquisitions fever is now going to subside somewhat. Developers are now finding it difficult to supply enough new product to satisfy demand, while investors are often being forced to hold on to properties in their portfolios for longer periods.

n

Zuzanna Wiak