Acquisition of M1 portfolio composed of 12 major shopping centres located across Poland

In December 2017 EPP announced an acquisition of 12 major shopping centres located in densely populated catchments. The takeover from a consortium owned 25% by Redefine Properties totaled €692 million and was one of the biggest acquisitions in the history of the Polish real estate sector.

As a result of the takeover EPP acquired the 446,500 sqm portfolio comprised of over 620 stores located in eight M1 superregional shopping centres with GLA ranging from 30,000 sqm to 55,000 sqm, which attract more than 40 million annual visitors, and four retail power parks with GLA ranging from 20,000 sqm to 35,000 sqm.

All of the properties are well established and have long trading history of approx. 20 years. All of them are single level and fully leased, grocery anchored shopping malls situated in great urban locations, on large motorway fronting sites. They are anchored by Auchan Hypermarkets as well as a variety of international and domestic brands such as MediaMarkt and fashion retailers, TK Maxx, H&M and C&A.

The deal has already been closed, but due to its size and value the actual takeover was divided into three stages with the first €358.7 million GAV comprised M1 Czeladz, M1 Krakow, M1 Lodz and M1 Zabrze, totaling collectively 194,400 sqm GLA and NOI of €25.1 million and concluded in January 2018. This will be followed by tranche two of €222.5 million GAV in June 2019 consisting of M1 Bytom, M1 Czestochowa, M1 Radom, PP Kielce, PP Olsztyn and PP Opole and adding 184,000 sqm GLA NOI of €16.3 million. The final €110.9 million tranche consisting of M1 Poznan and PP Tychy, collectively 68,100 sqm and NOI of €7.6 million, will conclude in June 2020.

Once the purchase is finalised, EPP will expand its current portfolio by further 252,000 sqm, becoming the country’s leading retail property operator, with over 1 million sqm of space located in at least 28 schemes.
Name of the deal Acquisition of M1 portfolio composed of 12 major shopping centres located across Poland
Information about the transaction project/projects/portfolio In December 2017 EPP announced an acquisition of 12 major shopping centres located in densely populated catchments. The takeover from a consortium owned 25% by Redefine Properties totaled €692 million and was one of the biggest acquisitions in the history of the Polish real estate sector.

As a result of the takeover EPP acquired the 446,500 sqm portfolio comprised of over 620 stores located in eight M1 superregional shopping centres with GLA ranging from 30,000 sqm to 55,000 sqm, which attract more than 40 million annual visitors, and four retail power parks with GLA ranging from 20,000 sqm to 35,000 sqm.

All of the properties are well established and have long trading history of approx. 20 years. All of them are single level and fully leased, grocery anchored shopping malls situated in great urban locations, on large motorway fronting sites. They are anchored by Auchan Hypermarkets as well as a variety of international and domestic brands such as MediaMarkt and fashion retailers, TK Maxx, H&M and C&A.

The deal has already been closed, but due to its size and value the actual takeover was divided into three stages with the first €358.7 million GAV comprised M1 Czeladz, M1 Krakow, M1 Lodz and M1 Zabrze, totaling collectively 194,400 sqm GLA and NOI of €25.1 million and concluded in January 2018. This will be followed by tranche two of €222.5 million GAV in June 2019 consisting of M1 Bytom, M1 Czestochowa, M1 Radom, PP Kielce, PP Olsztyn and PP Opole and adding 184,000 sqm GLA NOI of €16.3 million. The final €110.9 million tranche consisting of M1 Poznan and PP Tychy, collectively 68,100 sqm and NOI of €7.6 million, will conclude in June 2020.

Once the purchase is finalised, EPP will expand its current portfolio by further 252,000 sqm, becoming the country’s leading retail property operator, with over 1 million sqm of space located in at least 28 schemes.
The date of closing the deal The deal was closed on December 4th, 2017. The final tranche is to be finalised in June 2020.
Value of the transaction (in EUR) €692 million – one of the biggest transactions in the history of the Polish real estate sector
Yield The entire portfolio was secured at a yield of 7,1%
Seller, plus brief information about the company The seller was a consortium of Oaktree Capital Management, Pacific Investment Management Company (PIMCO) and Redefine Properties.

1) Pimco (37.5%) is an American investment management firm founded in 1971 in California and managing more than $1.72 trillion in assets,

2) Oaktree Capital Management (37.5%) is a leading global alternative investment management firm with expertise in credit strategies with assets under management amounting to $122 billion,

3) Redefine Properties (25%) is a leading South African-based Real Estate Investment Trust, with a diversified portfolio of premium office, industrial and retail properties – both in South Africa and internationally.
Consultancy which advised Seller CBRE
Purchaser, plus brief information about the company EPP is the largest owner of retail real estate in Poland that follows the REIT formula regarding investment strategy and dividend policy, investing in retail properties throughout Poland with primary listings on the Main Board of the JSE and the Euro MTF market of the Luxembourg Stock Exchange. The company has total assets of 2 billion euro. Its current portfolio includes 19 retail properties which attract over 120 visitors a year and six office buildings offering a total of over 800,000 sqm as well as two development sites in Warsaw, with one currently under construction. EPP’s investments are located in 20 cities across the country, characterized by their strong economy and purchasing power, and ability to attract international investment interests.
Consultancy which advised Purchaser n/a
Financing institution The transaction was financed through a combination of senior debt secured by HSBC Bank and equity financing.
Current occupancy level All the properties within the M1 portfolio are fully leased.
Please say why this deal should be considered for the award EPP’s acquisition of M1 portfolio was not only one of the biggest transactions in the history of the Polish retail sector, but also a game-changer for EPP itself. The portfolio of regional super malls comprises 12 dominant retail properties situated in densely populated catchments which are complementary to EPP’s existing assets. Due to the transaction EPP has trebled its catchment area to 40% of Polish population within a 30-min drive time and doubled its footfall to 120 million. Moreover the M1 portfolio has also substantial expansion opportunities (potential to increase the GLA by 8-10%) which will help EPP to increase the NOI and strengthen each property’s competitive position. The acquisition of the M1 portfolio demonstrates the continues successful implementation of EPP’s strategy of consolidating the retail market in Poland. Through the combined scale of EPP and M1 assets, the company is able to attract retail market leaders and assist with their growth aspirations.
Name of the deal
Acquisition of M1 portfolio composed of 12 major shopping centres located across Poland
Information about the transaction project/projects/portfolio
In December 2017 EPP announced an acquisition of 12 major shopping centres located in densely populated catchments. The takeover from a consortium owned 25% by Redefine Properties totaled €692 million and was one of the biggest acquisitions in the history of the Polish real estate sector.

As a result of the takeover EPP acquired the 446,500 sqm portfolio comprised of over 620 stores located in eight M1 superregional shopping centres with GLA ranging from 30,000 sqm to 55,000 sqm, which attract more than 40 million annual visitors, and four retail power parks with GLA ranging from 20,000 sqm to 35,000 sqm.

All of the properties are well established and have long trading history of approx. 20 years. All of them are single level and fully leased, grocery anchored shopping malls situated in great urban locations, on large motorway fronting sites. They are anchored by Auchan Hypermarkets as well as a variety of international and domestic brands such as MediaMarkt and fashion retailers, TK Maxx, H&M and C&A.

The deal has already been closed, but due to its size and value the actual takeover was divided into three stages with the first €358.7 million GAV comprised M1 Czeladz, M1 Krakow, M1 Lodz and M1 Zabrze, totaling collectively 194,400 sqm GLA and NOI of €25.1 million and concluded in January 2018. This will be followed by tranche two of €222.5 million GAV in June 2019 consisting of M1 Bytom, M1 Czestochowa, M1 Radom, PP Kielce, PP Olsztyn and PP Opole and adding 184,000 sqm GLA NOI of €16.3 million. The final €110.9 million tranche consisting of M1 Poznan and PP Tychy, collectively 68,100 sqm and NOI of €7.6 million, will conclude in June 2020.

Once the purchase is finalised, EPP will expand its current portfolio by further 252,000 sqm, becoming the country’s leading retail property operator, with over 1 million sqm of space located in at least 28 schemes.
The date of closing the deal
The deal was closed on December 4th, 2017. The final tranche is to be finalised in June 2020.
Value of the transaction (in EUR)
€692 million – one of the biggest transactions in the history of the Polish real estate sector
Yield
The entire portfolio was secured at a yield of 7,1%
Seller, plus brief information about the company
The seller was a consortium of Oaktree Capital Management, Pacific Investment Management Company (PIMCO) and Redefine Properties.

1) Pimco (37.5%) is an American investment management firm founded in 1971 in California and managing more than $1.72 trillion in assets,

2) Oaktree Capital Management (37.5%) is a leading global alternative investment management firm with expertise in credit strategies with assets under management amounting to $122 billion,

3) Redefine Properties (25%) is a leading South African-based Real Estate Investment Trust, with a diversified portfolio of premium office, industrial and retail properties – both in South Africa and internationally.
Consultancy which advised Seller
CBRE
Purchaser, plus brief information about the company
EPP is the largest owner of retail real estate in Poland that follows the REIT formula regarding investment strategy and dividend policy, investing in retail properties throughout Poland with primary listings on the Main Board of the JSE and the Euro MTF market of the Luxembourg Stock Exchange. The company has total assets of 2 billion euro. Its current portfolio includes 19 retail properties which attract over 120 visitors a year and six office buildings offering a total of over 800,000 sqm as well as two development sites in Warsaw, with one currently under construction. EPP’s investments are located in 20 cities across the country, characterized by their strong economy and purchasing power, and ability to attract international investment interests.
Consultancy which advised Purchaser
n/a
Financing institution
The transaction was financed through a combination of senior debt secured by HSBC Bank and equity financing.
Current occupancy level
All the properties within the M1 portfolio are fully leased.
Please say why this deal should be considered for the award
EPP’s acquisition of M1 portfolio was not only one of the biggest transactions in the history of the Polish retail sector, but also a game-changer for EPP itself. The portfolio of regional super malls comprises 12 dominant retail properties situated in densely populated catchments which are complementary to EPP’s existing assets. Due to the transaction EPP has trebled its catchment area to 40% of Polish population within a 30-min drive time and doubled its footfall to 120 million. Moreover the M1 portfolio has also substantial expansion opportunities (potential to increase the GLA by 8-10%) which will help EPP to increase the NOI and strengthen each property’s competitive position. The acquisition of the M1 portfolio demonstrates the continues successful implementation of EPP’s strategy of consolidating the retail market in Poland. Through the combined scale of EPP and M1 assets, the company is able to attract retail market leaders and assist with their growth aspirations.

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