The Pivotal Fund has become the second Johannesburg-listed real estate company to take a stake in a €1.2 bn property portfolio owned by Poland's Echo Investment. 

Pivotal announced this week that it has agreed in principle to pay €30 mln to acquire 6% of the share capital in Echo Prime Properties (EPP), an Amsterdam-listed subsidiary of Echo that indirectly owns the portfolio. The co-investment transaction also offers participation in a substantial development pipeline with a value on completion in excess of €500 mln, Pivotal said.

The Privotal transaction is in line with its strategy to invest up to 15% of its assets in mature emerging markets. The co-investment comes less than a month after South African REIT Redefine Properties completed the acquisition of a 75% stake in EPP, with the intention of selling on 25% to a group of investors.

Redefine paid €362 mln for the stake, net of debt, valuing the portfolio at €1.2 bn. The Redefine investment was the single largest offshore property transaction by a South African property company, the largest-ever real estate investment transaction in Poland, as well as the largest-ever single transaction of income-generating real estate assets in Central Eastern Europe.

The Redefine and Pivotal participations were made possible after Echo made a strategic decision to split its high-yielding platform from its development and residential business and to find a buyer for the commercial real estate platform in which it will retain a 25% stake.

Echo Investment was founded in 1994 and has completed over 115 real estate projects in 37 cities and four countries, with a total area of more than 1 million m2 of which around 446,000 m2 is retail and 291,000 m2 office space. Currently Echo's portfolio includes 138,000 m2 of real estate projects under construction and 136,000m2 in preparation, with an additional land bank of over 200,000 m2 for retail and office space in Poland. It has a presence in four real estate sectors including housing, shopping, outlets and entertainment centres, office buildings and hotels.

Redefine Properties has €3.9 bn of properties, split between its domestic market South Africa as well as Poland and the UK, through its 30% holding in London-listed Redefine International.


The Pivotal Fund is a development-focused investment vehicle with €650 mln of assets under management according to its last report in August 2015.