Redefine Properties has bought nine warehouses in Poland in eastern Europe for about R3bn, marking its entry into that country’s logistics market.
The fourth-largest JSE-listed real estate investment trust wants to earn more of its annual income from rent to maintain distribution growth, which is competitive against other listed property funds.
Redefine, which first invested in eastern Europe’s largest and most developed economy in 2016, will acquire a 95% share in a portfolio of nine operating logistics properties located throughout the country for €185.8m.
These assets will be bought at an initial income yield of 7.1%.
Redefine said interest rate and currency volatility was mitigated through full hedging.
The properties were bought from a fund managed by a large US-based asset manager.
The properties have a gross leasable area of 313,507m², are 98% occupied and have a weighted average lease expiry of 3.5 years.
Griffin Real Estate, which found the transaction for Redefine Properties, will own 5% of the portfolio and the portfolio’s tenants include Carrefour, Kaufland, Saint Gobain, Terg, Hellman and Eurocash.
Redefine CEO Andrew Konig said the acquisition would help the company make more of its income come from "recurring sources", which better suited the company’s investors.
The property group has also entered into a five-year exclusive priority right agreement for a pipeline of 24 new warehousing and logistics developments with European industrial space developer Panattoni, which will assist with the leasing and development of logistics properties in Poland.
Panattoni has developed 35% of modern industrial facilities in Poland and developed the nine operating properties that have been acquired.
Garreth Elston, a portfolio manager at Reitway Global, said Redefine’s acquisition was a positive development.
"The pan-European logistics sector is seeing strong demand for good quality facilities.
"The new developments offer positive optionality on the Polish economy going forward, and it is highly likely that they will be strongly accretive to Redefine’s Polish operations going forward," he said.
Elston said that while "we remain wary of the current political issues in Poland, we remain positive on the Polish economy and the potential for ongoing economic growth and development in the country".
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