After investing on behalf of Grosvenor in Poland, the two sector specialists are sounding out more investors about markets of interest.
During the pandemic, UK property company Grosvenor - which has real estate interests around the world - invested around €200 mln in Polish logistics – its preferred asset class.
It did so through Polish Logistics LLP, a vehicle managed by Reino IO Logistics and backed by Grosvenor’s indirect investment team. Reino IO Logistics was created by IO Asset Management, a specialist UK manager of industrial property and Reink Capital, based in Poland.
To date, the two deals made in Poland on behalf of Grosvenor have passed relatively under-reported, perhaps because the value of the deals was not made public. The first was of Logistics City, a 135,000 m2 asset in Piotrków, south of Lodz, from a private investor. The second was of the ‘Vale’ portfolio from seller, AEW.
In an interview with PropertyEU, Angus Scott-Brown, managing partner of IO Asset Management and Dorota Latkowska, CIO of Reino Partners, said the preliminary agreement for Logistics City was signed before the pandemic. The AEW opportunity surfaced shortly thereafter, which Polish Logistics bid for quickly and won in the second round. ‘We did that deal during Covid-19. That was my first experience of negotiating with someone over Teams!’ said Latkowska.
Scott-Brown, a longstanding contact of Latkowska, said they had noticed investment funds turning their attention towards Poland from more established logistics markets such as France and Germany in order to chase better yields.
‘The increase in interest in Polish logistics is something that Dorota and I picked up some years ago, hence the idea to establish this joint venture. We have been vindicated in our thoughts. I think it is fair to say the investments we have made for Grosvenor have been very successful. We have a happy investor.’
Pandemic-proof
Covid-19 has not damaged vacancy rates or rent collections at all in Poland and indeed in any logistics market, the UK included. The JV has collected 100% of rent in Poland and occupancy is also running at close to full capacity. It is a very similar story across the English Channel.
Said Scott-Brown: ‘It is extraordinary how all tenants have paid the rents. During Covid-19, tenants of commercial property were protected. If tenants did not want to pay rent, landlords were not allowed to evict. There was a great deal of concern not just in the UK and Poland but globally that we might see mass bankruptcies of tenants, but we did not see any of that. You might have thought tenants would have taken advantage of the government protection by not paying rent, but far from it. It is extraordinary but they have all paid their rent.’
Poland is often criticised as being an opaque market and also one dominated by Panattoni. But Latkowska remarked that since the logistics giant began expanding across Western European markets such as the UK and Spain, its market share has actually been declining, leaving a gap for others to come into Poland.
As the experience in Poland has been so positive on behalf of Grosvenor, Scott-Brown said Reino IO Logistics might expand in Europe by working with other partners and investors. ‘We are thinking about how we can build on the success and track record with more investors. We are beginning to have more and more conversations with others. Poland is a point of departure to build on what we have currently got.’
Asked if he was worried about supply chain difficulties, economic headwinds, the recent petrol crisis, and other negative factors, he said: ‘I see logistics as a juggernaut or even a super tanker if that is not a bad metaphor. My point is that it can sail through good times and bad.’
