AIB Capital Markets (ABICM) has announced that it will raise €100 to €150 million for an investment opportunity aimed at purchasing property in the Polish market. The capital raised will be leveraged on a 3:1 basis which will provide an estimated total acquisition finance of €600 million.
The investment strategy will cover a diversified range of asset classes such as prime quality commercial, retail, warehouse logistics, residential and development opportunities and may also include investment in joint ventures and co-investment with large strategic investors. However, clearly defined investment parameters will be pre-agreed and followed with strong corporate governance. AIBCM will look to purchase high quality properties located in Warsaw and the regional cities of Poland and will also examine some diversification opportunities in other Central European countries such as Hungary, the Czech Republic, Slovakia, Slovenia and the Baltic States as part of their investment mix.
The minimum investment will be €150,000 for pension funds and €250,000 for private investors. The investment period will run for at least seven years with an option to extend for an additional two years. At the end of the life of the investment, AIBCM expects to dispose of the properties acquired through direct sales to local pension funds/life assurance companies or a trade sale. This is the second Polish property investment opportunity run by AIB Capital Markets, following the success of Polonia I which raised €101 million in equity and was leveraged to €390 million.
Assets purchased by Polonia I include well-known Polish properties such as the Warsaw Distribution Centre, the Diamond Business Park in Lodz, the Atrium Plaza and Atrium Centrum in Warsaw and the Poznan Financial Centre. As of the end of December 2006, following external valuations by Colliers in Hungary and Jones Lang La Salle in Poland, the portfolio measured at fair value stood substantially above acquisition cost. Polonia I was also short listed for the 'Investor of the Year Award' at the recent 2006 Central and Eastern European Quality Awards.
According to Michael O'Hara, President and Chief Executive of AIB PPM sp. zo.o, a 100% owned Polish subsidiary of AIBCM, the property market in Poland represents an excellent investment opportunity. "Looking at the various macroeconomic factors at play in Poland, we believe there are significant returns to be generated through another property investment opportunity there. We will look to build on the success of Polonia I and target the many investment grade properties that are readily available in the Polish market at present. We will also be examining any new developments and investment opportunities that come on line. We will aim to capture good secured cash flows with rising rents combined with increased occupancy in a landlord market. Added to this is the added value of strong asset management with the ability to anticipate and capture new supply in this maturing market through a strong presence on the ground."
"Polonia I has provided us with an excellent track record in this area and we have already received significant interest from pension funds and private investors for a similar investment opportunity. As with Polonia I we will look to ensure that we secure properties at the top end of the market with the emphasis on medium term capital appreciation. We expect that this strategy will provide excellent investment returns and good yields for all our investors," he concluded.
Details of how the new investment opportunity will be structured are yet to be finalised pending completion of taxation, legal and regulatory analysis.
AIB Investment Managers and Goodbody Stockbrokers will be appointed to distribute the investment opportunity. It is expected that the closing date for investment in this opportunity will be 31st May 2007.