Springing out of Romania

Alex Hayes, ‘Eurobuild Central & Eastern Europe’: I hear that you’ve been travelling around Poland recently. Could you tell me what the locations are that you are interested in for your entry onto the Polish market and if you are close to finalising any deals?

Dimitris Raptis, deputy CEO, Globalworth: We are always working intensively to source new opportunities, to facilitate further growth – and the opportunities under consideration are located both in our core Romanian market as well as in the broader CEE/SEE regions, predominantly in Poland. In this country, which is our main focus for international expansion, we are looking at a number of opportunities in both Warsaw and other prime regional cities and we are searching for product that meets our investment criteria – class ‘A’ office buildings, occupied by both local and international high quality tenants.

What has prompted you to leave the relative safety of your home market and expand abroad?

Since the beginning, our mandate was to invest in the CEE/SEE region, with our primary focus on Romania. We believe that expanding in Poland is the natural step for us to take, as it is a sizeable country with attractive macro and real estate fundamentals. We are confident that its real estate market provides the right foundations for us to implement our strategy and to successfully replicate the model we have developed in Romania.

In what way is the Polish market similar to Romania and in what way is it different?

Compared to the Romanian market, the Polish one is first of all more mature. The real estate market in Poland received a significant boost due to country’s EU accession in 2004, with Romanian following in 2007. However, due to the financial crisis, the benefits for the Romanian market have only relatively recently been apparent. Moreover, the Polish market is much more liquid compared to the Romanian one and more recognisable to the international investor community. We believe combining our dominant position in the fast growing and dynamic Romanian market with a sizeable footprint in the larger, more mature and liquid market of Poland would offer our shareholders significant added value to their investment in our company.

My understanding of the formation of Globalworth back in 2013 is that it was originally created through the consolidation of the property investments of Ioannis Papalekas, mainly in order to be able to access financing from the AIM market of the London Stock Exchange. Is this a fair assessment of the reason for the creation of the company or has becoming incorporated brought other benefits?

The reasons why Ioannis Papalekas decided to create the company were undoubtedly different from the ones you mentioned. He saw the opportunities on the Romanian real estate market, as it started showing signs of recovery, and in the broader region CEE/SEE region and the growth potential existent on those markets. His vision and strategy was to create a leading publicly-listed real estate investment and development company to take advantage of such opportunities. Ioannis Papalekas pre-seeded certain investment prior to Globalworth’s IPO, as disclosed in the company’s IPO offering document, but Globalworth has expanded far more than the initial portfolio of eight investments identified at the time and currently holds a portfolio of app. EUR 1.1 bln and 17 investments.

In December, Growthpoint took a 26.9 pct stake in the company. What kind of support does this REIT offer? One of the reasons why Growthpoint stated that it had taken a stake in your company was that it was looking for a foothold in the CEE region. Is this one of the reasons for your current CEE expansion?

Growthpoint Properties became the largest shareholder in Globalworth, following its participation in the EUR 200 mln equity capital raise in December 2016, in which it invested app. EUR 186 mln. As a result of this transaction, Globalworth further strengthened its shareholder base with the addition of South Africa’s largest REIT as one of its anchor investors. Growthpoint’s presence further institutionalised Globalworth – they have an active role in our company, as they are represented on the board of directors, which is the ultimate decision making body for Globalworth, as well as all the other board committees. In addition, as a result of their investment, Globalworth instituted a formal annual dividend policy of 90 pct of FFO and has announced its first dividend for 2017. Given their significant size and excellent market reputation, Growthpoint’s investment has been seen as a major vote of confidence in Globalworth and the broader Romanian real estate market and it certainly helped a great deal in the highly successful conclusion of our recent EUR 550 mln corporate bond issue. Growthpoint’s interest in further investing in the Central and South Eastern Europe region is aligned with that of our company and as such is very supportive of our efforts to expand regionally and become a leading institutional real estate investor in the wider CEE/SEE region.

Since the formation of the company I’ve not personally heard of a single asset sale. Is this simply because you’re a young company or is it an

element of your strategy?

Our aim is to create a sustainable and recurring cash flow for our investors. In line with this strategy, in order to be able to deliver on this risk- adjusted return to our shareholders, we have been accumulating properties in our portfolio and have only sold our interests in one small project that did not meet our investment criteria.

We have not sold any other assets so far and we don’t have plans for such a transaction in the near future, as we believe the market has the potential for further capital appreciation – and only if an offer proves to be too attractive for us to refuse would we consider selling properties in our portfolio.

You have ve recently partnered with Elgan to build a new 47,000 sqm HQ for Renault in Bucharest. Could you tell us more about this? What would each party be bringing to the table?

Elgan Offices, a company joint-owned by Globalworth and the Elgan Group and represented by Simon Roth, will be developing Groupe Renault Romania’s new headquarters in Bucharest. Upon its completion, which is expected in Q1 2019, Groupe Renault will occupy the entire development, spanning over 47,000 sqm, for a minimum term of eleven years. This is the largest leasing transaction ever recorded on the Bucharest office market. The project is consistent with the company’s strategic focus on investing in premium buildings anchored by reputable tenants providing long term cash flows and meeting the highest standards of quality, energy efficiency and environmental protection. When it comes to the involvement of each party, the answer is quite simple – one party brought the transaction to the table and the other made it happen.

A man for all Europe

Dimitris Raptis joined Globalworth in November 2012 before its incorporation in February 2013. He has twenty years of experience in financial services and real estate investment, having spent 16 years employed by Deutsche Bank, the last twelve of which he spent as a senior member of RREEF, the real estate investment management group of Deutsche Bank’s asset and wealth management division. Between 2008 and 2012, Dimitris was the managing director and European head of portfolio management for ROI (RREEF Opportunistic Investments). In this role he was responsible for overseeing ROI’s acquisitions across Europe as well as managing ROI’s pan-European real estate investment portfolio consisting of 40 assets with a gross asset value in excess of EUR 6 bln. Between 2000 and 2008, Dimitris was a senior member of the team responsible for originating, structuring and executing real estate investments, with a main focus on the French, Italian and South-Eastern European markets, and with an enterprise value in excess of EUR 5.5 bln across all major asset classes.