The evolution of the Griffin

Your company recently announced a name-change from Griffin Real Estate to Griffin Capital Partners, as well as a general branding. Where did the idea for these changes come from? And what significance do they have?

Maciej Dyjas, Managing Partner at Griffin Capital Partners: This was an important event in the history of Griffin and a good way to start a new year. But we are not suddenly changing our occupation and diving into a completely new business. This change has been happening gradually and the rebranding is just a way of underlining our strategic direction. Over the years, we have had a significant impact on the development of the Polish real estate sector. We can take credit for introducing multiple innovative concepts and performing major transactions, and this is the sector that we are the most associated with. However, from the very beginning, private equity was an important pillar of our business activity.

Nebil Senman, Managing Partner at Griffin Capital Partners: Our investment strategy keeps moving forward. In the past, there was a moment when we did a shift from real estate property by property transactions to creating platforms related to different types of real estate assets, such as office, logistics, residential for rent. This has been working very well, but we also started expanding our range of investments into pure private equity. In recent years we have been involved in acquisitions and became investors in: Proservice, a fintech platform; ITK-Avenga, an IT outsourcing company; and SMYK, a leading Central European child/family-oriented retailer and e-commerce business. Our recent purchase of a major stake in PAD-RES, a leading developer in the clean energy asset space in Poland, is a good example of the direction in which we are heading.

So there will be less of a focus on real estate and more on private equity now?

NS: No, on the contrary. This is a business that we know well and in which we have built a strong presence and competencies. We are going to continue and expand our activity in this sector. In recent years we used a private equity approach to our real estate investments. Over time we started to look for high-quality investment opportunities and companies outside the sector with solid business models that could reach their full potential with the help of a tailored strategy, additional capital and a strong management team. PAD-RES is good example of that. Creating leaders of the market is not something that happens overnight.

MD: We will continue to look for creative and outside-the-box ways for how to unlock and capitalise the value of a new business idea or company. We will for sure continue with projects in real estate sector, as we want to leverage our broad knowledge and investment intuition based on hard analytical work combined with collective experience and the track record of our team. We also started growing our business internationally, like in Germany, while keeping our strategic focus on Poland. We are skilled at finding capital and strategic partners who appreciate what we bring to the table – our team of experts and our experience in real estate and private equity. Together with them, we make strategic decisions about portfolio companies, managing the whole process – from the acquisition, through the value creation and, eventually, on to the exit.

How is the market right now as we (hopefully) come out of the pandemic? Is the wait-and-see period over and investment activity returning?

MD: Looking back at 2021, we can see that some sectors are coming out of the pandemic with better results than others. For example, the logistics market in Poland has reached over half of the whole volume of its investment activity! In Europe, we have seen strong investment activity continuing through the year. However, the focus of investors was not equal in all sectors. Logistics and residential remain at the forefront. I think in 2022 we should also finally observe more activity in the office segment and also to some extent in the retail sector. In 2021, we saw a transaction volume of almost EUR 1 bln, which was already much higher than in 2020. Investors are still prioritising smaller formats, but there have also been the first sales of large shopping centres since the outbreak of the pandemic – e.g. the M1 Marki sale by Chariot Group and one of our strategic partners’ planned investment into the M1 portfolio held by EPP.

NS: The Polish market has good forecasts in general, emerging from the pandemic in a better condition than other countries in Europe. This is one of the reasons why foreign investors have their eye on Poland as one of the preferred investment directions; the majority of the larger and leading institutional investors have been able to raise significantly more funding and liquidity and are now looking for attractive risk-adjusted return opportunities. In a way, (real estate) private equity can be a solution for the recovery of some companies with attractive business models but with balance sheet deficiencies incurred during the pandemic.

How active is Griffin at the moment – in terms of both the sale and acquisitions sides? Which of your platforms has been the most busy and which are you seeing has the greatest growth potential?

MD: We are, as always, super busy with current projects and new plans. The last year was equally challenging and successful, as we managed to achieve some milestones. We expanded our business activity to other European markets and set new records. Chariot Group concluded a major transaction of M1 Marki shopping centre sale to Redefine Europe. European Logistics Investment completed the sale of the Nexus portfolio, which was one of the largest transactions in terms of size and value on the Polish warehouse market in 2021. ELI has been a spectacular business from its inception in 2018. And last year, thanks to the continuing logistics boom, we saw some sharp increases that surpassed the expectations that we had for this company. The platform is fully committed to reaching its 1 mln sqm gla target. Already, our standing and under-construction projects amount to 737,000 sqm gla.

NS: Also, the residential sector is doing great, although there is fierce and increasing competition for land. Echo Investment, which is among the top three residential developers in Poland, managed to secure a promising landbank before the pandemic, so it can capitalise on the high demand. The PRS sector is still in its infancy, but undergoing growth in Poland and has still tremendous potential compared to more mature markets. It is still a novelty in Poland to choose to rent a flat from a specialised operator instead of purchasing. With a growing range of products offered by subscription gaining popularity among Polish people, I think soon they will also get used to the idea of apartments by subscription, as flat prices and the costs of servicing debt rise. Our Resi4Rent created in 2018 had a very successful year, when its portfolio of flexible housing almost doubled to around 2,500 fully-leased apartments, tailored to consumer needs. Our Student Depot chain of student houses is also fully-let, despite the pandemic, and we are targeting doubling its size to almost 10,000 beds within the next 3–4 years.

On a more personal note, with all the changes in your company, did you manage to go skiing or take a rest during the winter break? Or were you too busy for that?

MD: Yes, the beginning of the year was challenging, but we always make sure that we take the time to go on holiday with our families. I went with my wife and kids for a few days to Dubai during the Christmas break and later for some skiing in my favourite Lech area of Austria.

NS: We have a lot going on, with new projects are on table – but I agree that it’s important to take a break. This way we can come back energised and with new ideas for business! My family and I were skiing over the New Year in the French Alps and over the winter break we are planning to go diving with the kids – so we like to be active in our holidays as well.

Interview: Nathan North