Redefine buys 75 pct stake in Echo portfolio
Investment & financeThe remaining 25 pct of shares in the company will belong to Echo Investment. The transaction is still subject to European Commission approval. The deal, which is to be financed via debt and equity at a proposed 60 pct gearing at the property level, is reportedly the largest ever single transaction of income generating real estate assets in the CEE region and the largest ever real estate investment transaction in Poland.
The Echo Prime Properties portfolio is comprised of ten office projects and eight retail assets. They include A4 Business Park in Katowice (the first and second stages), Astra Park in Kielce, Malta Office Park in Poznań, Oxygen in Szczecin, Park Rozwoju in Warsaw (the first and second stages), West Gate in Wrocław, Amber in Kalisz, Galaxy in Szczecin, Galeria Echo in Kielce, Galeria Olimpia in Bełchatów, Outlet Park Szczecin in Szczecin, Pasaż Grunwaldzki in Wrocław, Centrum Handlowe Echo in Przemyśl, Galeria Sudecka in Jelenia Góra, Galeria Veneda in Łomża and Centrum Handlowe Echo in Bełchatów. The property portfolio generates net operating income of EUR 71 mln, according to Redefine.
“It significantly advances our international strategy – it has the scale, the right partners and the ability for growth to take a major part of our business to the next level. The 18 properties tick all the boxes from an investment perspective and allow us to take advantage of what will be positive yield carry,” says Marc Wainer, Redefine’s executive chairman. “These are all high quality properties with an average portfolio occupancy rate of 95 pct and a large share of modern and sizeable properties,” he adds.
A REIT-like fund focused on properties located in Poland will be created between Echo Investment, Griffin and Redefine as part of the deal. The owner of the controlling stake in Echo Investment is Echo BV, which is jointly controlled by Pimco and Oaktree and managed by Griffin Real Estate.
According to the agreement, within the next three years the new entity will have the exclusive right to make the first offer on the office and retail assets that are currently being developed or planned by Echo Investment, with more than 80 pct of the projects expected to be delivered within the next two years. This could allow the fund to take over a total of EUR 1.7 bln of assets.
The transaction was made after Echo took the strategic decision to split its high yielding platform from its development and residential business and to find a buyer for the commercial real estate platform.
"This is yet another global investor who has put its trust in us. The third global fund, after Oaktree and Pimco, whose assets are to be under our management. Combined with our plans to further acquire equity on one or a few major stock exchanges, the move gives us entirely new investment opportunities,” said Przemysław Krych, the president of the board of Griffin Real Estate.
"We have worked on the transaction for many months. During the negotiations we have created with our partners a plan for the further development of the company, based on the newly-acquired equity. Our goal is to set up a leading Polish investment fund focused on office and retail properties,” added Maciej Dyjas, co-CEO of Griffin Real Estate.
JLL and UBS advised Echo on the transaction, along with Weil, Gotshal & Manges, EY, Linklaters, Gleeds, Hill, WSP and CBRE. The buyer was advised by Savills.
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