Crossing the Carpathians

The directors of Penta are hoping to announce their first property purchase by the end of this year. "We have been monitoring the Warsaw market since last year. I know that a lot of projects had been looked at before I joined the local branch a few weeks ago. However, none of them fulfilled our criteria, so no transactions came out of this. We are now planning to focus on office projects in the centre of Warsaw, while approaching other districts such as Mokotów cautiously," declares Damian Grzywacz, the business development manager of Penta Investments, who gained his professional experience in companies including PointPark Properties, AIG/Lincoln and King Sturge. Now he is facing the challenge of building the Polish arm of the property group.

Added value is the key
According to Damian Grzywacz, Poland (in fact, Warsaw) was the next natural step following Penta's growth in Slovakia and the Czech Republic. The investment group, which is known in Poland for such transactions as the purchases of Żabka and EM&F Group, began its operations on the property market in 2005. Its first investment was the Digital Park office complex in Bratislava. This was followed by its entry into the neighbouring market of the Czech Republic. Now the fund is divided between corporate buy-outs and real estate divisions in a ratio of 82:18, but the company plans to increase the real estate share to 30 pct. For the implementation of this strategy Penta is planning to invest EUR 1.1 bln in the sector. The funds are to be spent on the three above-mentioned markets by 2018, increasing its property portfolio more than threefold from app. 150,000 sqm to 580,000 sqm. The company currently manages 14 projects, the most valuable of which include Digital Park, Bory and Bory Mall in Bratislava, as well as Waltrovka and Florentinum in Prague. The company has recently obtained financing for the last of these properties. A consortium of banks made up of UniCredit Bank Czech Republic, Komerční Banka and Raiffeisenlandesbank Oberösterreich has provided a loan of EUR 110 mln for this enterprise, the construction costs of which will come to EUR 160 mln. When Florentinum was unveiled to the market at the beginning of 2012, it was promoted as the largest office project in the Czech Republic, having an office area of 49,000 sqm under one roof (plus a retail area of 7,500 sqm). Slovakian development company HB Reavis entered Poland with a similar flourish by building 48,000 sqm under one roof in Warsaw's Mokotów district (Konstruktorska Business Center, which was finished a few months ago). Will Penta, now a Central European group but that also has Slovakian roots, also go down the same road? "We are aiming at projects with a minimum leasable area of 15,000 sqm and are interested in projects at every stage of development, except for finished projects. We are focusing on the possibility of adding value and this is best done when you develop such a project from the beginning," explains Damian Grzywacz.

Two-way development
Last year was marked by corporate purchases. Clar System was added to the group, a company that specialises in services on the fringes of the property market, for example, facility management. Is this a coincidence or a signal of its willingness to create synergies between the companies in the group? "The acquisition of Clar System is part of a strategy that involves developing our facility operations in Poland and Slovakia, and marks the starting point for their further development. Our strategy will go in two key directions: organic development in the field of cleaning and asset protection services, as well as acquisitions of companies that specialise in the technical administration of buildings," explains Zuzana Wobořilová, the spokesperson for AB Facility (the Penta subsidiary that owns Clar System). When announcing its audited financial profits for 2012, Penta Investments, which was established in 1994, revealed that the net value of its assets amounted to EUR 1.425 bln, while its net profit last year was EUR 147 mln. Companies in the portfolio of the group employ over 33,000 people.