Union Investment emerges as buyer of €300m Polish mall

Union Investment Real Estate has emerged as the buyer of the €300 mln Riviera shopping centre in Poland, as tipped by PropertyEU in March.

The mall was put on the market earlier this year by a consortium led by French listed firm Foncière Euris and investment partner Rallye. The owners announced in July that they had signed an agreement to sell the mall in the Polish city of Gdynia to an unnamed buyer.

The deal is one of the largest transactions in the Polish retail property market this year. Union Investment has agreed to pay €291 mln, which may increase to €300 mln depending on the centre's performance over the next three years. The transaction reflects a capitalisation rate of stabilised net operating income of 5.4%.

The 70,000 m2 mall is located close to the city centre in the Tricity region and comprises 250 shops, including an Auchan hypermarket as well as a 1,200-seat cinema and 1,750 parking spaces.

Foncière Euris owns 67,5% of the scheme while Rallye holds 22,5% and Casino the remaining 10%.

Union Investment, which was advised on the deal by Hogan Lovells, C&W and EY, will add the asset to its UniInstitutional European Real Estate open-ended fund.

Comment
'The Polish regional markets offer our institutional products good opportunities for diversification and rejuvenation of the portfolio. Important for our investments in the retail segment is the combination of good macroeconomic environment with a stable population base, high purchasing power and low unemployment rate - this combination distinguishes the Gdynia location,' said Christoph Schumacher of Union Investment's board.

Developed by Mayland Real Estate with €137 mln in finance provided by Polish banks, Pekao and Zachodni, the scheme has been revamped and extended before reopening in October 2013. It is nearly fully let.

Mayland, a unit of Casino Group, will retain the management of the asset.

Agents Colliers International and JLL advised Fonciere Euris on the sale.

Polish market
'Demand for regionally dominant centres in Poland is growing and now attracting the top investors globally. Investor interest in Riviera originated from across the EMEA and Asia and the fierce competition for the property was reflected in pricing, a new benchmark in Poland,' said Neil Gregory-Eaves, International Director at Colliers.

Foncière Euris has long been active in the Polish shopping centre market. It invested in Manufaktura in Lódz before selling it to Union Investment in 2012 for €390 mln.

The French group is also involved in the development of Posnania, the largest retail project currently under way in Poland. The mall, representing an investment of €300 mln, covers 100,000 m2 over 300 shops. The scheme is slated for delivery in the second half of 2016.

Foncière Euris recently acquired Kraków’s Serenada shopping centre project for an investment of €140 mln. The 43,000 m2 mall, developed by Mayland, was financed by banks Unicredit’s Pekao and Santander and is slated for delivery in September 2016.