Echo Polska Properties NV (EPP) and Echo Investment acquire Galeria Młociny in Warsaw from Rosehill Investments. The companies will approx. €42m for the project which is already under construction. EPP and Echo Investment will hold 70% and 30% shares in the new project respectively. Furthermore, after the completion of the construction work EPP will be the asset manager of Galeria Młociny and Echo Investment is to complete the construction work and it will be responsible for the commercialization and marketing. After Towarowa 22, it is the second joint project, which will be developed by those two companies in this formula.
The estimated cap rate of Galeria Młociny is app. 7.1%, however, partners expect higher profitability of the project after its completion.
Hadley Dean, CEO of EPP emphasizes that the acquisition provides EPP with an earlier entry into the underserviced Warsaw retail market, ahead of the completion of the Towarowa development.
“The acquisition of Galeria Młociny is in line with our stated strategy of investing in quality retail assets in strategic locations. Warsaw is underserved per 1000 inhabitant in terms of retail compared to other regional Polish cities. It is worth emphasizing that Galeria Młociny is located in a strategic transport hub, which includes tram terminals, bus stops and an underground station. Młociny is a district which has been systematically gaining new residential estates,” adds Hadley Dean.
“Galeria Młociny is another important step towards strengthening our position as a leading developer in retail sector and Echo’s experience in this division of real estate business. This acquisition is in line with our strategy of fast capital turnover. I’m very pleased that once again we have the opportunity to expand our long-term partnership with Echo Polska Properties.” says Nicklas Lindberg, CEO Echo Investment.
Galeria Młociny is a 81,900 m² mixed use development (of which 71,000 m² is retail, restaurant and entertainment space). In project we find modern cinema, a fitness centre, an extensive food court area, as well as a medical centre. It is located the north of Warsaw and after its opening it will service a rapidly growing residential area that lacks a modern and convenient shopping and entertainment offer.
The facility is located near the main public transport hub in northern Warsaw, which sees 40,000 daily commuters. Construction of the first phase commenced in October 2016, and is on track for completion in Q2 2019. The development is approximately 60% preleased, mainly in food court, entertainment area and among key fashion brands including Inditex, Van Graaf and H&M.
“This has been our seventh retail acquisition since our entry onto stock exchanges in Luxembourg and Johannesburg. Such strategy enables EPP to leverage our scale and provide tenants with a comprehensive and varied offer on the Polish market,” adds Dean.
