An appetite that comes with the eating

Anna Pakulniewicz, ‘Eurobuild CEE’: So, now we can finally talk about the transaction you tantalisingly hinted at during our conversation at the Mapic fair in Cannes last November.

Agata Brzezińska, Central and Eastern Europe director, Pradera: Yes, finally there is something to talk about. The acquisition of 25 retail facilities for EUR 900 mln in eight European countries is the consequence of Pradera’s strategic activities. It allows Pradera to carry out its strategy of geographic diversification. After the second tranche of the deal is transacted, the value of the facilities managed by Pradera will increase by 33 pct. I am personally pleased that Polish properties make up such a large part of this transaction. Pradera has bought four parks here. In terms of retail space they constitute almost 30 pct of the entire portfolio acquired.

What about the Ikea stores that form an integral part of the retail parks you have bought?

The situation is clear. The transaction includes retail parks purchased from Ikea Centres, which are located in the direct proximity of Ikea stores. The stores do not form part of the transaction. They will carry on operating unchanged. The retail parks and the Ikea stores together have a fantastic synergy and impact on this market, which we appreciate.

What will Pradera’s entire portfolio be like after the transaction?

There are no surprises for us – we are prepared for development, we have been consistently implementing a plan that forms part of the long-term strategy worked out by the company. I should also point out that 2016 was a breakthrough year for us because of two events. In H1 2016, LJ Partnership bought a significant minority stake in Pradera, one result of which was the portfolio acquisition that has just taken place. Another important event was the launch of the company’s operations on Asian markets. The establishment of Pradera Retail Asia provides us with a new experience and reference point, which helps us get to know better the retail market and its future development directions.

It seems more like it is the Asians who are shopping in the West. Is it easy for Western companies to invest over there?

From an investor’s point of view, every investment product is good provided it has the potential to generate a suitable return. Each investment step is preceded by in-depth analyses and research. This was the case with our deal; it is also the case with our management of the properties acquired. The fact that we have been present here for a long time gives us local experience and an excellent understanding of the market. We have built relations with investors, tenants and clients, all of whom we have been working closely with to adapt in the best way possible to the changing trends and a dynamically evolving market. Our current analysis of what we should do with the portfolio is being carried out on several levels. The owner’s main goal is growing the value of the portfolio and creating value for the investors. Meanwhile, other aspects, such as the property management, the leasing and looking for ways to increase the assets’ value, are part of a process that had started long before the deal was closed. We have chosen BNP Paribas Real Estate to manage the facilities. Now we have to evaluate the assets further, even though we know them to a certain extent already. We have got to fully understand the specificity of their location, and now we are at a very significant stage – the rebranding. The properties are – or are almost 100 pct commercialised. We already have some working names and are working on the visual and corporate identification. The next few months will be marked by extensive and multi-level analysis of our recipients – that is, the customers as well as the partners, tenants, and the various organisations and companies that provide us with their services. But I will not provide any further details at this time. We need a few months to implement this process.

Could you at least tell us some of the working names?

The working names are: Targówek Park, Janki Park, Franowo Park and Rawa Park. We have also set up temporary websites that correspond to these names – a separate one for each park.

And will there be any changes in terms of tenants?

The purchase of these facilities was motivated by the fact that they are well established on their local markets and that they themselves have been developing their own locations for many years, enjoying popularity with customers and becoming an important element in their tenants’ development strategies. For us it is of key importance to build good relations with tenants and the acquisition of such a huge portfolio provides us with excellent opportunities in terms of developing joint strategies with them. We have such a large global portfolio, we are able to offer a development path that will go hand-in-hand with their global expectations. It is a wonderful advantage on the modern market for the owner of a shopping centre to be able to cooperate with retail chains to such a broad extent.

What will the rebranding involve?

There are no revolutionary changes that we want to make. We want to increase the value of the assets through professional management at each level of operations, both through the facility management as well as the commercialisation of the retail space and tenant mix.

So nothing is being ruled out?

We have only just started down this road, so we have a lot of time to develop the right approaches. We are not ruling anything out, as long as we ultimately come to the conclusion that the operation in question is necessary and ideal for the park to function more effectively. That is why we are working with experienced consultancy companies, with Cushman & Wakefield esponsible for the leasing of the facilities.

In Poland – or for the entire portfolio?

We are still in negotiations, but our intention is for broader cooperation. For me the cooperation we already have with the C&W team in Poland is of key importance. A number of people who have been appointed to work on this portfolio have already started working and are in touch with the tenants. And we are already preparing our development strategy. Consultations are now taking place with the tenants.

Is this transaction focused on the future sale of the assets or the long-term income from renting them?

We have only just set out on this road. As I have mentioned, Pradera is an investor with a long-term approach. We want to achieve the long-term optimisation of this portfolio.

Considering the huge amount of work to be done, you are not likely to be looking at buying other properties, are you?

We are very open to new acquisitions. Our purchase of a portfolio of 25 retail parks was in line with our development strategy, so it will not be our last move. The purchase proves that we have the necessary resources for taking over large portfolios of properties and we are able to use our experience in the best possible way. We have the potential for growth and we have investors interested in cooperating with us and entrusting us with property and fund management.

What, apart from Asia, is your target?

Because we have relations with many different investors, their expectations regarding the specificity of properties also differ – in terms of their size, location, value or position on the market. Their expectations of their life-cycles may also vary. There are investors who focus on extensions or revitalisations. We always do research into the possibility of joining, dividing and optimising, to generate even better results for the park. We are not ruling out any investment products if they guarantee opportunities for obtaining the required returns. We are looking at individual assets that could generate value for our investors. But we are also looking at portfolios that would enable us to achieve a scale effect.

From GTC through Neinver to Pradera

Agata Brzezińska, the CEE head of Pradera, joined the company in 2014 as head of asset management in Poland and was promoted to the head of Poland in 2016 and CEE head in 2017. She is responsible for all aspects of Pradera’s operations in Poland and the Czech Republic. She was earlier the country manager and retail director of Neinver Polska. With her extensive knowledge of the Polish retail property market, such as with outlet centres, Agata has been active in the Polish and CEE real estate markets since 2000, including a stint at GTC. Agata graduated in economics from PWSBiA in Warsaw.