Echo Polska to offload office portfolio to fund acquisitions
CEO Hadley Dean says the disposal is in line with EPP’s retail property strategy
JSE-listed Polish real estate group Echo Polska Properties (EPP) is set to dispose of an office portfolio for €160m to fund further retail acquisitions.
CEO Hadley Dean said that the disposal was in line with EPP retail property strategy.
"We are planning to become a pure retail property fund within the next three years and this transaction helps fuel our growth in retail acquisitions."
Poland is one of Europe’s fastest-growing economies and its encouraging macroeconomic situation supports growth in consumer spending, which in turn is driving the retail market.
"Our goal is to consolidate the fragmented Polish retail market by building EPP into a national champion," Dean said.
EPP’s retail-focused portfolio consists of 13 retail properties.
The assets being disposed of include Tryton Business House in Gdansk, A4 Business Park in Katowice and West Gate in Wroclaw. The buyer is Griffin Premium RE.
"The acquisition is another step to implement our strategy of building the leading institutional office property investor in Poland," said Malgorzata Turek, CEO of Griffin Premium RE.
Dean said the sale provided EPP with additional capital to invest in expanding its retail portfolio and "negates the need of a public capital raise".
Anas Madhi, a director at Meago Asset Management, said the deal was expected "as the company has indicated for some time their desire to be a retail-focused fund.
"The portfolio appears to have been disposed at an attractive yield, albeit rental guarantees on some of the assets for an extended period may dampen investor enthusiasm.
"Key going forward will be for the company to demonstrate how the cash realised will be utilised in earning-enhancing acquisitions and that the relationship with its Polish private equity investor, Griffin Real Estate, is mutually beneficial."
Evan Robins of Old Mutual Investment Group said EPP was meeting its promises. "They had already told the market they would sell offices to fund other capital requirements."