Polish property group Echo Polska Properties (EPP) is targeting a September listing on the Johannesburg bourse to entice South African investors to place a bet on the “stable and liquid” real estate market in Poland.
The group aims to list at a placement of €1.45 and raise some €100-million to fund the ambitious growth activities that can result in double-digit growth for the property firm in the short term.
Discussing the new company’s plans at a prelisting media briefing at the JSE this month, EPP CEO Hadley Dean said a Luxembourg Stock Exchange listing would occur in August, followed a month later by a listing on the main board of the JSE.
€1.4-billion PortfolioEPP, holding an expanded €1.4-billion portfolio, which comprises 70% retail and 30% office space spread across Poland, is 50%-owned by South Africa’s Redefine Properties, with the balance equally spread between Redefine’s selected co-investors and Poland’s Echo Investments.
EPP aims to accelerate its organic and acquisitive growth strategy, focused retail extensions, vacancy reduction, active asset management and strategic retail acquisitions and partnerships, topped off with strategic development opportunities.
“We are building a national champion in Poland,” he said.
With the right of first offer (ROFO) on the multimillion-euro development pipeline by Echo Investments, EPP is in the process of acquiring four of the ten developments under way.
EPP had entered into an ROFO agreement with Echo, in terms of which EPP paid some €23.4-million for a 25% share of the assets under development to secure either first offer rights or 25% of the development proceeds.
Further, its 110 000 m2 Warsaw retail development, in which it will hold a 70% interest on acquisition, is expected to further enhance the company’s negotiating ability with retailers across its entire portfolio and boost distribution and net asset value per share on completion in 2020.
In addition, some 22 200 m2 of extensions are being undertaken across existing retail centres.
The planned listings are expected to assist EPP in funding the acquisitions and the Warsaw development.
The prospects remain positive as economic activity in Poland continues to expand, driving the potential of the real estate market, with EPP positioned with a 7.5% forward yield in euros.
Growth Potential“This is the sector with the highest growth potential, and this has been confirmed by various recent economic indicators,” said recently appointed EPP independent nonexecutive director and former Poland Prime Minister and Finance Minister Dr Marek Belta.
Highlighting the benefits of investing in Poland, he pointed out that it was the only European country to avoid recession in 2009 and remains one of the continent’s fastest-growing economies, with the Organisation for Economic Cooperation and Development forecasting gross domestic product growth of 3% in 2016 and 3.5% in 2017.
Poland also boasts improving international rankings, including ranking 25th in the World Bank’s Ease of Doing Business index and 13th in the Global Real Estate Transparency Index and being the twentieth-largest receiver of foreign direct investment.