The time, the place... and a lot of money

Przemysław Krych, the president of the board of Griffin Group: We have just closed a debt fund worth EUR 200 mln, which will start operating soon. A well-known manager from the real estate financing sector has been employed to be in charge of it. However, it will not be a mezzanine fund. We are interested in granting typical debt financing and will compete against the banks in this field and plan to be more aggressive in terms of LTV ratios and the speed of decision making. We will be able to finance anything – from the purchase of land to development projects, to the refinancing of real estate.

And what about Griffin’s own projects? When is the Koszyki project in Warsaw starting?

Preparation work for the launch of the project is still in progress. We are at the final stage of selecting the general contractor for the construction of Hala Koszyki and are finalising negotiations over the bank financing. We have already managed to reach agreements with future tenants for app. 30 pct of the retail space. The leasing of the office section is at a similar stage. Construction work is to start this summer and the project should be completed in spring 2016.

There will also be quite a lot going on in Warsaw’s Wola district… Griffin has bought more than 4 ha in this part of the city.

We have bought some attractive plots in the district. (A property at ul. Towarowa 22, where the Jupiter shopping centre is currently located, as well as two neighbouring plots on ul. Pańska and ul. Miedziana, including the ‘Dom Słowa Polskiego’ printing house – editorial note.) I have not ruled out buying more land in the direct vicinity. We are currently analysing the investment possibilities of these parcels, but it is too early to express any hard opinions on this topic. The construction of a retail facility on the site is one option, after all it is a location with such a tradition. However, as we have already announced, the tenants of the Jupiter shopping centre will be able to operate their current businesses there until 2017.

How is the construction of Supersam in Katowice progressing?

Already around 70 pct of the space has been leased and the construction should be completed in autumn 2015. We will soon be able to announce the signing of a large contract with another tenant. So we are happy with the implementation of this project.

Is this your only project in Katowice?

So far it is.

Is Griffin planning more property purchases in the near future?

We will certainly be extending our portfolio of office buildings – to more than the ten that we have now. Two buildings could be bought outside Warsaw, and we are currently in the negotiation stage for these transactions. I can disclose that these are buildings with areas of 20,000 sqm and 10,000 sqm. We are also carrying out the due diligence for a shopping centre in a regional city. This is a 60,000 sqm facility. Apart from that we are in negotiations over the acquisition of a number of companies that operate in the real estate market.

Which companies?

I can only say that we are analysing a large real estate transaction outside Poland. But we can still see many opportunities in this country. This year we have invested EUR 75 mln of own assets. We still have PLN 175 mln left from the Griffin Topco III fund. Our investors are signalling that they would be interested in investing in Topco IV.

Who are these investors?

These are mainly institutional investors from the US and the UK, but also individual and institutional investors from the Persian Gulf countries.

They are putting their faith in the Polish real estate market?

Griffin is an investor that is different from the others: we look for opportunities and make our money from inefficiency on the market. Our success in the last few years has been mainly due to the fact that we were in the right place, at the right time and with a suitable amount of money. We are currently in an interesting moment. The retail market is doing quite well. The office market is competitive, but this could change in a year’s time. First of all, the supply of offices will not be as high as it is believed. I think that only half of the space currently considered as being under construction will eventually be completed. The residential market might get better and better – with the exception of the luxury segment, which is still too expensive for Polish conditions. There is a very strange situation on the logistics and warehouse market. Such an acceleration in investment cannot be rationally explained. If there are any problems ahead, they will most probably emerge in this sector first.