Chariot Top Group BV, a company incorporated in the Netherlands, co-managed by Griffin Real Estate, through its subsidiaries, signed a preliminary agreement related to an acquisition of a portfolio of 28 retail properties from funds managed by Ares Management L.P., AXA Investment Managers – Real Assets and Apollo Rida. The value of the deal is around €1bn. Following the closing of the transaction, under a separate agreement, the consortium will re-sell a part of the portfolio to EPP, which, upon the completion of the deal, will become the largest retail property owner in the region.
Under the first agreement, Chariot Top Group will acquire a portfolio of 28 real estate assets consisting of 9 M1 shopping centres, 12 hypermarkets, 4 power parks and 3 stand-alone DIY stores. The portfolio has a total GLA of about 704,000 m². The acquisition will be partially financed with approx. €635m bank debt.
The deal with EPP will be divided into three phases. As a result of the first phase, EPP will acquire 4 M1 centres: in Czeladź (52,800m² of GLA), Cracow (49,600m²), Zabrze (52,800m² of GLA) and in Łódź (38,400m² of GLA). The takeover of the four properties will be completed simultaneously with the acquisition of the portfolio by the consortium.
The second phase which shall be completed within 1.5 years, will cover 3 more M1 centers: in Radom (37,000m² of GLA), Częstochowa (29,900m² of GLA), Bytom (28,200m² of GLA) and 3 power parks: in Kielce (35,700m² of GLA), Olsztyn (32,500m² of GLA) and in Opole (20,700m² of GLA).
Two additional assets - M1 centre in Poznań (45,400m² of GLA) and a power park in Tychy (22,700m² of GLA) - will be acquired as part of the third tranche of the deal by the middle of 2020.
All individual properties enjoy a long history of strong trading performance in their respective markets. In addition, the portfolio is characterized by a significant growth potential due to ca 285 ha of land, enabling value-accretive extensions of the assets.
“We had a unique opportunity to acquire a highly diversified and attractive portfolio of assets,” says Maciej Dyjas, the managing partner at Griffin Real Estate. “On the other hand managing and further developing the assets – without making any adjustments to the composition of the portfolio – would represent an enormous challenge due to their non-uniform nature. The transaction was however structured in such a way, that we had no choice but to acquire the entire package.”
Hence the decision to divide it and to sell a part of it to EPP – an investment company focused on retail properties. “This is a ‘win-win’ situation. The consortium can focus on managing the remaining assets in the portfolio”, added Mr. Dyjas. "EPP buys high-quality assets and is not exposed to the assets which, from EPP’s point of view, are non-core ones. The acquisition by EPP is also scheduled to take place over an extended period of time, which would enable EPP to optimally manage its capital needs."
“The acquisition is perfectly in line with our long-term strategy: to build a national retail champion,” says Hadley Dean, Chief Executive Officer of EPP, commenting on the deal. “This deal trebles our portfolio catchment area and increases our annual footfall by 61%.”
Mr. Dean added that the acquisition of the entire portfolio by EPP would not make much sense. “We have acquired all of the shopping centres. The remaining assets are single retail units and therefore they do not fit our investment strategy.”
Upon the completion of the deal, the portfolio of commercial properties owned by EPP will be valued at ca.€2.4bn.
„The volume of this transaction once again shows the high attractiveness of Poland and its economy”, says Rafał Nowicki of Apollo Rida commenting on the deal. “The outstanding fundamentals, the stability and the size make Poland the leading economy in the CEE region, while its real estate market still offers high yields and growth potential”.