Immofinanz closes €412m Polish sale, starts new project

Immofinanz has finalised the €412 mln sale of Silesia City Center in Katowice, Poland to an international consortium of investors led by Allianz Real Estate, in the largest Polish deal so far this year.

According to well-informed market sources, German institutional investor Allianz Real Estate teamed up with a Chinese party to take a majority interest in the major regional scheme, which is fully let with nearly 360 shops.

Silesia City Center is the first shopping centre investment in Poland carried out by Allianz Real Estate, and is part of the group’s strategy to focus on large and dominant malls across Europe. Retail specialist ECE Projektmanagement is also taking part in the acquisition with a ‘healthy equity stake’ and will retain the management of the mall, sources said.

All parties kept details of the acquisition structure confidential.

According to Immofinanz, the purchase price of €412 mln exceeds the book value. Immofinanz CEO Eduard Zehetner said Silesia City Center is one of Immofinanz's most notable success stories to date in the retail sector. The shopping mall was bought by the group’s former CEE unit Immoeast in 2005 from Hungarian developer Trigranit.

According to PropertyEU data, Immoeast forked out €170 mln for the project, which opened its doors in 2006. A strong trading performance prompted the group to extend the scheme by another 20,000 m2 a few years later. The new retail space, opened in 2011, was fully pre-let and involved a development cost of €50 mln. The scheme is currently one of the five largest malls in Poland with some 89,000 m2 of selling space.

Having spent some €220 mln on the asset, developer Immofinanz is making a €190 mln gain from the sale of the centre. ‘The Silesia sale underscores the start of recovery in the investment market in Eastern Europe, and further confirms our valuations in Eastern Europe,’ commented Zehetner.

The company will use the proceeds to finance new developments in its core markets including Poland, where it just announced the construction of a new shopping centre with 30,000 m2 in Stalowa Wola. The investment is expected to come to €50 mln.

Construction is planned to start during the first half of 2014, with completion scheduled for the first half of 2015. 'For the 2013/14 financial year, we have set a goal to significantly increase our development activities. Poland is one of our core markets and a key location for our currently work on projects in the office, retail and residential sectors,' explained Zehetner.

The new shopping centre will be realised together with development partner Acteeum Group, which is taking a 14% stake in the development. 'Stalowa Wola, a so-called secondary city, is a promising location for a retail development project of this size because of the catchment area and the moderate competitive situation. This is confirmed by the first positive responses from potential tenants,' added Zehetner.

In Poland Immofinanz is currently realising the 19,000 m2 Nimbus office building in Warsaw and the 37,000 m2 Tarasy Zamkowe shopping centre in Lublin. In the residential segment, it is developing the Riverpark in Poznan and the third construction stage of the Debowe Tarasy in Katowice.