A portfolio of 12 retail properties in Poland being acquired by JSE-listed Echo Polska Properties (EPP), offers “substantial” expansion opportunities, says EPP CEO Hadley Dean.

EPP in October announced that it would acquire the 12 properties, which includes eight shopping centres and four retail parks, with more than 620 stores, for €692-million.

The acquisition will enlarge EPP’s portfolio to at least 27 shopping centres, comprising a combined gross lettable area (GLA) of nearly one-million square metres by 2020.

Dean on Thursday said EPP would take advantage of the expansion opportunities over time, which would strengthen each property’s competitive position.

All the properties, which are being acquired in three tranches, are single level and fully leased, grocery anchored and are situated on large motorway fronting sites. The centres are anchored by Auchan Hypermarkets as well as a variety of international and domestic brands. 

The average rental rate across the portfolio is a low €9.10/m² a month and the average rent to sales ratio is below 9%.
 
“This deal is based on a 'up to 30-minute drive time' measurement, which will treble our portfolio catchment to 34% of Poland's total population, increasing to 39% after Młociny in Warsaw is opened,” said Dean.

The transaction will also boost EPP’s yearly portfolio footfall by 61% from 76-million to 122-million.

The first tranche acquisition will be concluded by January 2018, with the second tranche to be concluded between June and July 2019 and the third between June and July 2020.
 
Tranche one is being financed by way of 62% debt and the redeployment of some of the capital to be received on the sale of offices, as well as the subscription by funds managed by Oaktree and LVS II Luxembourg for €112.5-million of EPP shares at €1.27 a share.

“As a result, there will be no need for EPP to raise capital from the market.”