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edition 6 (231)
June 2018
Investment & finance

Poland – the obvious choice

Interviewer Tomasz Szpyt-Grzegórski

Poland – the obvious choice
Dimitris Raptis, the deputy CEO and the chief investment officer of Globalworth Real Estate Investments

Why did Globalworth decide to invest in Poland and why in Griffin Premium Real Estate (GPRE) in particular?

Dimitris Raptis, deputy CEO, CIO, Globalworth Real Estate Investments: We already had extensive experience from Romania, where we became the largest player in the office real estate market. We wanted to repeat this success outside the Romanian market and become the leading office investor in the region. If you want to invest in Central and Eastern Europe, Poland is the obvious choice because of its scale, liquidity and the attractiveness of the market. The office market comprises 10 mln sqm, not only in Warsaw but also in strong regional centres. By comparison, there are 3 mln sqm of offices in Romania, 90 pct of which is in Bucharest. The last twelve months have been successful for us on the international financial markets – we raised more than EUR 1.5 bln from bonds and equity for real estate investment. Poland is a better known and more liquid market than Romania for many investors and also provides us with diversification.

But why GPRE?

When we made the strategic decision to enter Poland, we were convinced that we needed a local presence, local structures and people who knew the market from the inside-out. Too many investors have failed while managing their ventures remotely. We did not want to buy individual buildings – it takes too much time. We wanted to take over a platform that held real estate and, perhaps even more importantly, had an experienced team. On the market there weren’t that many companies that were focused mainly on offices, such as GPRE was. And since we are a long term investor, we were interested in acquiring a large portfolio that would bring us long term cash flows.

How long term?

We don’t have a fixed investment horizon. Our investors expect a long term growing dividend from the funds they invest. So we act a bit like a REIT, although we are not one legally speaking. Considering these factors, GPRE was the obvious choice.

Globalworth has recently invested EUR 139 mln in a large office complex in Kraków. Are there any further acquisitions in the pipeline?

We have already spent more than EUR 500 mln in Poland, including EUR 150 mln on the acquisition of GPRE. Together with the bonds we placed in March, we have almost EUR 700 mln for investment purposes – most of which is destined for Poland. Our last purchase brings us closer to becoming the largest owner of office buildings in Poland. We are also working on finalising a purchase in Warsaw, in a deal worth around EUR 100 mln, and we have a very strong pipeline of further opportunities under review.

Does Globalworth intend to invest more in Poland or have you come to the end of your spending?

Of course we are still buying. Today Poland is 40 pct of our portfolio and Romania is 60 pct. This year Poland will probably exceed Romania in this respect and we intend to remain active in Poland for the next few years –we are going to allocate more than 60 pct of our resources here in the near future.

Politics has recently become a hot topic both in Poland and Romania...

However, one must distinguish between the political turmoil and the real economy. In this part of the world [Central and Eastern Europe – editor’s note] politics has so far left the economic fundamentals unaffected.

Returning to your Polish activities. When will the construction of the skyscraper on ul. E. Plater in Warsaw be launched?

Right now the project is in due diligence. Technically, it’s not yet a Globalworth Poland project.

But the company is interested in it...?

Of course. This will be a prestigious undertaking.

Is this going to be Globalworths only development project in Poland?

No, it’s not. We are looking for similar projects in Warsaw as well as in the regional cities. We are most likely going to go into partnerships with local or international developers. We could, of course, develop such projects on our own – we have the experience having already constructed over 1 mln sqm in Romania. However, our first office building in Poland is most likely to go ahead in partnership with a local developer.

Are there any dark clouds on the investment horizon in Poland?

They don’t look very threatening so far. Obviously, we expect a correction, at some stage. When? I don’t know. However, I can say that we have a long term perspective and this is what sets us apart from other investors. As long as you have long term lease agreements at sustainable market rents, you can keep your leverage low and you do not have to sell – you can keep the property for five or ten years and it’s not a problem.

What kind of leverage do you have at Globalworth?

Our corporate policy is to stick to an LTV of around 35 pct. However, our Polish debt may be lowered through refinancing.

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