PHN extends its reach

Maciej Jankiewicz, president of PHN: In November 2017, we published the results of our activities for the previous year and a half. Over this period we achieved our lowest vacancy rate in the six-year history of the PHN group, which came to 14.6 pct in October 2017 – a 43 pct decline on January 2016 (25.7 pct). We also optimised our administration, as a result of which the ratio of our administrative costs to investment assets came to 1.2 whereas in 2015 it was 1.6 – our goal is to reach a 0.7 ratio by 2023.

The group has recently announced its plans to acquire construction company Doraco. What does PHN need a contractor for?

We want to strengthen our construction capabilities due to the scale of the projects we have planned in the office and residential sectors as well as because of growing construction costs and difficulties with access to labour. First of all, our key commercial and residential projects, which we presented in the PHN group strategy for 2017-2023, alone represent a total capex of around PLN 1 bln and we are going to have many more projects. With such an intensive investment programme we would end up giving away a margin in the tens of millions of zloty to general contractors from outside the group. Having a general contractor within PHN will make it possible to keep this money within the group and will speed up our investments. A lot of companies on the market operate on a similar basis such as Griffin, Skanska, Hochtief and, most recently, Murapol, which has taken control of general contractor Awbud. Secondly, we are starting to offer project management services to other companies, such as to Chopin Airport Development for the construction of the Marriott Moxy hotel in Poznań and we are also going to be involved in other projects. Having our own general contractor will be an additional asset. Thirdly, the company we are hoping to purchase is a renowned contractor and also profitable, which can only contribute to the growth in the value of the PHN group. Our deadline for agreeing on the transaction terms and obtaining the approval of the Office of Competition and Consumer Protection as well as all the corporate consents is February 9th 2018.

What are PHN’s plans for purchasing new properties?

In our strategy, we have allocated PLN 700 mln for acquisitions. Importantly, the buildings should be fully commercialised with a minimum average leasing period of 5 years. A good location is equally important to us – we are mostly focusing on large regional cities because we have our own land for developing projects in Warsaw. However, there are still cities such as Wrocław and Kraków that we need to enter – mostly on the office property market.

PHN has signed a letter of intent to develop land near Warsaw’s Chopin Airport. What stage is the project at?

Both we and Chopin Airport Development are developing a number of projects on which we could start collaborating – and I’m not just thinking about plots in Warsaw’s Okęcie district. The area near the airport is very interesting, particularly when you consider that Warsaw still doesn’t have adequate congress and conference facilities. The area seems ideal for such development. However, you have to bear in mind that there’s an ongoing discussion about the Central Transport Port and the future of Okęcie has to be considered in this light. There are a number of different scenarios. If they completely give up on the airport there, a very large area would be released for development, which could include residential as well as retail projects.

When can we expect the project at ul. Świętokrzyska 36 in Warsaw to be launched? What is the skyscraper that is to replace the demolished office building going to look like?

The final design will be very similar to what we’ve been presenting in the visualisations so far. Of course, work is still in progress on the details. We are still trying to buy the neighbouring plots as well as extend the area of the planned skyscraper. We have a final building permit for the connection to the metro and we’re waiting to be granted the permit to construct the building. I believe it should come through soon. Negotiations with potential tenants are also underway. We are planning for the project to be constructed in two stages: In the first, the lower section of around 10,000 sqm is to be constructed and soon after that we’ll launch the construction of the skyscraper. The project will have a total area of around 40,000 sqm and the first tenants will be able to move in 2021.

This isn’t PHN’s only office project in Warsaw...

We are currently designing an office building at al. Prymasa Tysiąclecia 83 in Warsaw. The office building will have an area of around 14,700 sqm. We expect to be granted the building permit in Q4 2018. We are also working on an office building at al. Wilanowska 372. Our next project in Warsaw is Intraco Prime. We are also at the design stage on this and we are hoping to be granted the building permit within a year. The project will deliver a total class ‘A’ office area of around 13,000 sqm and it is to be completed in 2020.