Griffin ready to sink its teeth

The value of the properties bought by the fund now exceeds EUR 880 mln. But it hasn't finished yet - Griffin's appetite has since grown. "This year we are planning to invest a further EUR 150 mln - and it is not out of the question that it could even be EUR 200 mln," declares Przemysław Krych, who is the president of the management board of Griffin Group. Along with the aforementioned Abu Dhabi Investment Council, Oaktree Capital Management is another institutional fund investing in Griffin Group. Private investors are also paying in, such as Elliott Bernerd, Sir Stuart Lipton and the family of Sheikh Olayan.

A chance in the crisis

The crisis has given Przemysław Krych greater opportunities for buying properties from companies experiencing financial problems or from official receivers. "We are not a developer. We are an opportunistic fund. Our strategy involves making the most money for our investors as quickly as possible. We are not attached to one business model. Our strength lies in our flexibility - this is Griffin's motto," claims Mr Krych. There are a lot of interesting properties in the portfolio of the company today, such as the historic Hala Koszykowa in Warsaw, some of Meble Emilia's former properties and the Renoma department store in Wrocław, which was bought from Centrum Development & Investment for EUR 117.6 mln. Its portfolio has recently been extended by a couple of office buildings in Warsaw - the Batory Office Building and Philips House, to add to Prima Court and the former headquarters of publishing house Dom Książki that had been bought earlier. "To generate some revenue for our portfolio we will keep the buildings which are being leased out. Meanwhile, in the case of projects such as Hala Koszykowa, we will be busy with the construction and leasing processes," explains Przemysław Krych. Some of the projects are to be carried out by joint venture companies. The company's natural partner is Immobel, which Griffin has already bought land with (on a 50:50 basis). The head of Griffin announces that he is also interested in properties from the office and shopping centre sectors, as well as residential plots. "We are not interested in warehouses or hotels," says the president of Griffin Group. One of the company's flagship projects is the construction of a skyscraper on the site of the Emilia pavilion building - an office tower that could have a total area of as much as 41,000 sqm and have a similar height as the neighbouring InterContinental hotel (app. 164m). The construction costs are estimated at app. EUR 60-70 mln. "We have four different designs prepared for this project - from 26,000 sqm to 41,000 sqm. One of these is a spiral building, because we wanted to start a discussion about the quality of the architecture in this neighbourhood," says Przemysław Krych. It's not clear which design is to be given the go-ahead. The company has recently overcome one of the major obstacles in the way of the development of the area. The pavilion was initially included on the city's list of historic buildings, but has now been de-listed, opening up the way to its demolition.

Time for a residential champion

The residential market is currently at a low ebb. So why is Griffin investing in such projects? "We are using the current situation to build a land bank. Besides, the market in Poland is very fragmented. There are no nationwide developers that have more than a 3 pct market share. The situation is different on more developed markets, perhaps with the exception of Spain, but this is not a good point of reference," says Przemysław Krych. "A player with a 20 pct market share is perceived totally differently. Such a champion has the chance to negotiate completely different rates with construction companies, material suppliers and local councils. And in this business everything depends on the construction costs," explains Przemysław Krych. The sites Griffin chooses are often sold at bargain prices. "We buy land and projects from developers that are experiencing problems. Plots have also been bought from the official receiver, such as one in Warsaw's Bemowo district and 37 ha in Powsin on the southern outskirts of the city. We also have some land in Gdańsk and are closing a transaction in Kraków to buy 4.5 ha, also from the receiver. These are major projects with valid site development conditions decisions or covered by local zoning plans," says Mr Krych.

Looking for niches

Griffin is also on the lookout for new niches. The company bought the Polonez hotel in Poznań from the Orbis hotel group in a deal amounting to PLN 23 mln. "We are converting it into a university hall of residence in a pilot project. We will see how this works out. If it is successful, perhaps we will invest in more such projects. Our investor - Oaktree Capital Management - specialises in such projects in Great Britain and is very successful in this field," Przemysław Krych informs us. The plan seems to be simple. Griffin wants to offer a monthly rate of PLN 500 per single room with a bathroom plus free of charge internet access. The head of Griffin emphasises that opportunities count at every stage. And there should be no shortage of these this year. "The banks, which used to extend and roll loans, are running out of patience. There will be more and more of such situations. And we will certainly use them," says Przemysław Krych.