Oaktree takes stake in Griffin

Global private private equity firm Oaktree Capital Management has increased its focus on opportunistic real estate investment in Poland by buying into Warsaw-based property company Griffin Group.

The intention is to create a long-term platform for real estate-related investments in Poland, including direct purchases of assets, development projects and lending activities.

Griffin has invested some €900 mln in the last five years across the range of property segments in Poland.

The group, which manages funds focused on real estate investment in Central and Eastern Europe, was founded in 2007 as a joint venture between Cornerstone Partners (Poland) and Chelsfield Partners (UK).

It is particularly active in Warsaw. Last month a fund managed by Griffin acquired Philips House and Batory Office Building I, two modern office buildings located in suburban Warsaw, in a court bankruptcy public tender.

In September last year Griffin acquired a 4,000 m2 office building in the Ursynow District of Warsaw from German multimedia company Bertelsmann.

'We are as opportunistic as it goes but in order to limit our downside we focus on the most liquid parts of the Polish market,' Przemys³aw Krych, managing partner of Cornerstone Partners and Griffin Group, told PropertyEU in an interview.

Oaktree will take over Chelsfield’s stake in Griffin indirectly through its European Principal Group subsidiary. Oaktree manages about $80 bn (€62 bn) of private equity investments across a range of asset classes.

The firm has been a significant investor in Poland for over seven years both directly and through its portfolio companies. Oaktree's best known brands in Poland are Stock Poland (spirits industry) and Zielona Budka (ice cream). For the last two years it has been investing with Griffin in real estate-related transactions.

Karim Khairallah, managing director of Oaktree’s European Principal Group and head of its CEE activities, said €150 mln has been allocated so far to the partnership with Griffin. A proportion of these funds has been used among other things to purchase Hala Koszyki, Meble Emilia, Renoma Shopping Center, office buildings in Warsaw and a land bank for residential development.

The focus of the joint venture is on special situations. 'This isn’t classic distress as you would see in Ireland but three of the 15 assets that we bought were bought through an administrator,’ Khairallah said. ‘We create a solution that isn’t necessarily available in the market for a bank or a seller of an asset. We are trying to tailor solutions for them that they wouldn’t necessarily have access to.’

Firepower is not an issue, Khairallah said: 'As long as the opportunities are there we are very happy to invest in them and as a partnership we have the ability to take in third party money if we so want on a deal-by-deal basis.’