Mall deal on the cards

Peter Evans, vice-president of Meyer Bergman: We’re in the process of acquiring another shopping centre in the Czech Republic, but I cannot yet say exactly where. We’re now finalising the sale and purchase agreement stage and we’ve got exclusivity on the deal. It’s a medium-sized shopping centre with extension opportunities.

At the moment, you are present in Poland and the Czech Republic. Would you also be interested in acquiring retail assets in Slovakia and Hungary?

We’re looking at a number of opportunities across the region. We have been monitoring Slovakia and Hungary, but have not bought anything there yet due to a number of factors such as liquidity, the availability of bank debt, pricing and the quality of assets we have been presented with.

Hungary has been back on the radar for investors of late, hasn’t it?

We have to look at Hungary in the context of opportunities across the CEE region and Western Europe and to date we have not seen any opportunities to invest our capital there that would give us better returns than elsewhere.

What about further acquisitions in Poland?

In Poland we’re seeing historically low yields at the moment, which is due to the huge amount of capital in the market. It is difficult for us to buy in Poland now and make a satisfactory return over our investment period. Yields are at a historically low level in the Czech Republic as well, but it is a much smaller market with much less competition than in Poland, so the opportunities are a bit easier to find and work through. They’ve got a tighter planning regime down there – there is less risk of a new shopping centre or a new retail park popping up in the vicinity of one's investment and affecting the projected returns. Poland, however, has a much more open planning system.

Would you be interested in other asset classes in the CEE region then?

No, we’re a specialist retail organisation. Our mandate is retail or retail-led assets.

Who are your investors?

Pension funds from all over the world – we have investors from the US, Canada, Scandinavia, the Middle East, the Far East and the UK as well.

Do you have a defined amount of money that you can spend on CEE purchases over the next few years?

No, we’re purely opportunistic.

What’s the availability of prime retail assets in the region like at the moment?

We are looking for prime assets that we can add value to through repositioning, adding floor area and innovative asset management. This is quite a sought-after product and thus difficult to find in the region. We are prepared to enter projects earlier on, in the development phase (for example as we did with Galeria Katowicka, Forum Nová Karolina in Ostrava and Broadway Bradford).

For an international property investor such as yourself, is retail still an attractive asset class, compared with other real estate asset classes?

We have three funds that have invested all over Western Europe and the CEE region. We have a diverse portfolio comprising shopping centres, high streets, department stores and luxury arcades. Our strategy is to invest only in prime assets that will be able to defend themselves against fluctuations in markets through being in the best locations, having the highest quality tenants and secure income streams. Other classes of property investment cannot compete with the dynamic nature of the retail business – which continuously has to reinvent itself – and as such can become obsolete or unfashionable quite quickly.

Does the luxury retail property niche exist in the CEE region at all?

We’ve been looking for luxury retail property opportunities in the region, but they’re not easy to identify, especially in Poland, where, I think, luxury high streets have not yet established themselves. In Prague there are more opportunities for luxury retailers to acquire suitable property and there are more distinctly defined luxury retail streets. As with all luxury property investment, it can be difficult to acquire the right assets at the correct price.

What are the prospects for the CEE retail property market over the next few years?

While the 2013–2014 period was rather flat, for the last 18 months we have been seeing some fantastic growth in our shopping centres in the CEE region – in terms of both the footfall and the sales. We’re very pleased with our investment in the region. In Katowice, shortly after opening much of the city centre infrastructure underwent redevelopment and as such our stabilisation process had a slow start. However, after three years of operation we are now seeing fantastic (double digit) annual footfall, sales growth and a long waiting list of tenants wanting to enter the shopping centre.

Are there any specific CEE locations that you would like to enter in the near future?

We are looking for opportunities in the largest cities and the dominant locations within those cities. The asset needs to have the potential to be the dominant centre within its catchment area for us to invest our capital.