Johannesburg - 5
Redefine continues expansion drive into fast-paced Polish
market with EUR 185.8
million logistics deal and priority right to pipeline of 24 new
JSE-listed diversified real estate investment trust Redefine
Properties continues to expand into the exciting Polish market with the
acquisition of a 95% share for EUR 185.8 million
(R2.9 billion) in a portfolio of nine operating logistics properties
located throughout Poland. It has also entered into a five year exclusive
priority right for a pipeline of 24 new warehousing and logistics
developments with Panattoni, a market leader in the leasing and
development of logistics properties in Europe.
The developed properties are in established logistics
locations and were bought from a fund managed by one of the largest
United States global asset management companies. The properties have a
gross leasable area of 313,507 square metres, are 98% occupied and have a
weighted average lease expiry of 3.5 years. Griffin Real Estate, which
sourced the transaction, will own the other 5%.
The well-located, modern, high specification portfolio has
attracted sought after tenants such as Kaufland, Carrefour, Saint Gobain,
Hellmann, Terg (Media Expert), Eurocash, CEVA, BRANDBQ and DSV to name
just a few.
Panattoni has to date developed 35% of the modern industrial
facilities in Poland and developed the nine operating properties that
have been acquired.
The development pipeline consists of 24 identified
development opportunities, which total gross leasable area of 1.9 million
square meters. Redefine will have the right but not the obligation to
acquire and develop these assets.
"This move into the rapidly expanding Polish logistics
sector is an exciting opportunity to expand our European brand by
building a significant logistics platform," says Redefine CEO,
The developed assets being bought have an initial income
yield 7.1%, while interest rate and currency volatility has been
mitigated through full hedging.
"We accessed offshore funding at competitive pricing and
productively deployed a portion of recycled offshore capital, while there
is no additional burden to Redefine's resource base. Incremental
distributable income will be applied towards our stated intention of
phasing out non-recurring income," says Konig.
The Polish industrial market, which has a total supply of
13.9 million square meters of modern industrial and logistics space, is
benefiting from a significant increase in demand for logistics space on
the back of robust retail growth. National vacancies were at historical
lows of 4.8% at the end of the first quarter in 2018.
The sector is also underpinned by strong long-term
fundamentals due to recently introduced limitations on agricultural land
trades, which is slowing down the development pipeline and increasing the
value of zoned land holdings. An increase in construction costs of about
20% during the past year has increased market rentals and is expected to
improve the re-letting potential of current supply.
Redefine late last year acquired a strategic 25% stake in
Chariot Top Group for R907.9 million, giving it direct access to a retail
portfolio of 28 quality, established and well-located assets across
Poland. Prior to this Redefine had acquired a majority interest in EPP on
1 June 2016, marking the largest ever real estate investment transaction
in Poland, as well as the largest ever single South African transaction
of income generating real estate assets in Central Eastern Europe.
"This transaction enhances the geographic and sectoral
diversification of our portfolio as we continue to invest strategically
in exciting geographies, engage talent, optimise capital, operate
efficiently and grow our reputation," concludes Konig.