CEE developer HB Reavis is currently engaged in raising equity for its second fund vehicle, the company’s CEO Pavel Trenka told EuroProperty in an exclusive interview in the latest edition of PropertyEU's weekly edition.
The new vehicle will be structured as a closed-end fund and is targeting a volume of between €270-300 mln with a projected return of at least 8%. Depending on the mix of the portfolio and investor appetite, a listed vehicle structure may be used, Trenka added. ‘It’s not definite but we are considering how to provide investors with the benefits of a REIT type of structure.’
He added that the goal is to close the fund in early 2018. The fund is open exclusively to institutional investors and Trenka hopes to attract pan-European and US players as well as regional investors from CEE.
The new equity raising initiative follows the launch of the company’s first fund in 2011 which, Trenka said, has consistently generated dividends of around 5-6% and IRRs ranging between 9-12%. The company’s first fund is a Luxembourg-based open-ended vehicle and includes a mix of Czech and Slovakian pension funds and insurance companies as well as high net worth individuals investing via private banks.
The first vehicle only targeted regional investors in CEE, but the broader scope of the second fund is a measure of HB Reavis’ growing international recognition, Trenka said. ‘Five years ago, we weren’t that well known outside our home region.’
The second fund will be seeded by three assets including West Station in Warsaw, which has the Polish Railways PKP as the anchor tenant; Metronom in Prague which has SAP as a tenant; and one of the Twin City offices in Bratislava with Swiss Re as a tenant.
The gross value of the company’s development portfolio currently stands at around €5.7 bn, but it is currently working on projects totalling in excess of €4 bn. Trenka makes a distinction between projects under construction and those still in the planning phase. In total, the company has 1.1 million m2 under development or preparation, including roughly 425,000 m2 GLA under construction and another 675,000 m2 under preparation across its home markets in CEE – Bratislava, Warsaw, Budapest and Prague – as well as London. HB Reavis aims to secure around 20% of the company’s debt requirements via the bond market, with project financing making up the remaining 80%.
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HB Reavis is working on a number of landmark projects across CEE and London
In Warsaw, it is developing Varso Place which is set to become the tallest tower in the city. In its home base Bratislava, it is working on Twin City which it claims is part of the biggest regeneration project in Central Europe. In Budapest, construction work has begun on Agora Budapest, a mixed-use complex comprising 136,000 m2 of modern office and retail spaces. In the City of London, it recently completed 33 Central which provides 21,000 m2 of Grade A office space over nine floors. On London's Southbank, HB Reavis recently purchased the Elizabeth House site for a figure rumoured to be in excess of £250 mln (€295 mln) from London & Regional and Chelsfield. The site has detailed planning consent to deliver a major 1.4 million ft2 (130,000 m2) mixed-use scheme combining commercial and residential components.
