As JSE-listed Redefine Properties implements several small incremental adjustments to withstand the current economic headwinds, the real estate investment trust (Reit) is in the midst of concluding a strategic acquisition that will expand its international footprint further.

Redefine will buy a 25% stake in an undisclosed €1-billion retail portfolio in Poland, while partners Pimco and Oaktree Capital Management will each acquire 37.5% of the portfolio, with expectations that the deal, subject to “sensitive negotiations”, will conclude by February.

While many details remain undisclosed owing to confidentiality agreements, Redefine confirms that the portfolio comprises 28 quality, established and well-located assets spread across Warsaw, Krakow and Silesia, besides others.

The Reit anticipates a yield of 7.7% and a pretax return on equity of 15%.

“This portfolio benefits from strong retail fundamentals and, together with value-add opportunities, presents Redefine with an opportunity for above-market returns,” Redefine CEO Andrew Konig said on Monday.

Geographic expansion and the strengthening of its partnership with Pimco and Oaktree remain key factors in the company’s risk diversification strategy.

Currently, 30% of Redefine’s international portfolio is spread across Poland through its 39.6% stake in Echo Polska Properties (EPP), which its acquired last year in partnership with Pimco and Oaktree.

Redefine’s share of direct assets in Poland is valued at R10.5-billion.

Now the company has set its sights on further expansion with a portfolio it believes holds a number of value-add opportunities, including the redevelopment or extension of about 60 000 m² of space.

Overall, the 28 retail properties comprise a shopping centre portfolio that includes nine midmarket hypermarket-anchored shopping centres with a total gross leasable area of 383 000 m², as well as the 114 000 m² power park portfolio that includes four smaller hypermarket-anchored big-box retail centres.

It also includes a hypermarket portfolio of 12 hypermarkets with small line shop retail components comprising 181 000 m² and a do-it-yourself (DIY) portfolio of three standalone DIY stores spanning 26 000 m².

“As the [latest Poland] portfolio could only be acquired in its entirety, agreement was reached between the consortium and EPP that EPP would acquire the 12 premium assets that met their investment criteria in three yearly tranches, with the first tranche to be acquired as part of the initial acquisition,” explained Konig.

The consortium will remain the owners of the hypermarket portfolio, as well as the DIY portfolio.