With the purchase of a 1.8 million-square-foot logistics portfolio, Hines Global REIT has made its entrée into Poland. The REIT, sponsored by real estate investment firm Hines, acquired the group of four properties from ProLogis European Holdings for approximately $130.8 million.
It wasn’t a steal of a deal, but it was a bargain. “The purchase price was at least a 10 percent discount to replacement cost,” Charles Hazen, president and CEO of Hines Global, told Commercial Property Executive.
The collection of assets, all developed between 1997 and 2011, consists of ProLogis Park Warsaw I & II in Warsaw, ProLogis Park Bedzin I in Upper Silesia and ProLogis Park Wroclaw II in Wroclaw. The portfolio is 92.3 percent leased, featuring a tenant roster that includes such big-name businesses as Fagor Mastercook and Carrefour. Combined, the household appliances components manufacturer and the food retailer each lease nearly 989,800 square feet, or roughly 56 percent of the portfolio.
And there’s more to come. Hines Global will soon expand its presence in the country with an additional 505,900 square feet through another deal with ProLogis European. A fifth property, ProLogis Park Sosnowiec, was part of the original portfolio purchase agreement but was removed from the group to amend the acquisition terms and change the closing conditions. Hines Global expects to wrap up the $26.5 million acquisition of the logistics center on or before December 22 of this year. The REIT will re-brand all five of the properties as Distribution Parks.
Indeed, Poland is high on Hines Global’s radar. “Poland has been a bridge to a lot of the trade that has gone on between Western and Eastern Europe, and as a result of its economy being one of the stronger economies in Europe, it has a significant internal demand for goods and services as well,” Hazen said. According to a report by commercial real estate services firm Colliers International, Poland’s economy performed quite well compared to other European countries in 2011 and it is expected to remain stable with an anticipated growth of 3 percent in 2012.
“We think Poland is a great place to be because it’s a market that shows quite a bit of long-term strength,” he added. “It’s a market that is very pro-business, its fiscal position has been in pretty good shape and we see the internal demand from the growing middle class as being something that will drive a number of the real estate markets over the next 10 to 20 years.” Alas, Hines Global’s plans in Poland are not limited to the industrial sector; the REIT is pursuing transactions in the office and retail asset classes as well.
And when it comes to Hines Global’s activities in emerging markets, it’s not all about Poland. Hazen noted that Russia and Brazil are also of particular interest. The timing is right. In Moscow, for example, rental rates are projected to rise in the industrial, office and retail sectors, as per Colliers’ forecast.
*This story was updated at 2:55 p.m. on April 5, 2012.