TIAA-CREF Shops in Poland

TH Real Estate, on behalf of TIAA-CREF, has acquired a 50 percent interest in three Polish assets.
Futura Park, Krakow

Futura Park, Krakow

By Keith Loria, Contributing Editor

TH Real Estate, on behalf of TIAA-CREF, has acquired a 50 percent interest in Factory Annopol, a retail park in Warsaw, Poland; and Factory Krakow and Futura Park, two outlet malls in Krakow, Poland from Neinver, for somewhere in the neighborhood of $70million.

The joint venture will see TH Real Estate acting as investment advisor to the vehicle, while Neinver will provide specialized asset management and operational services to the assets.

“We were particularly interested in the markets in Poland because our expectations are that retail sales are going to be stronger than what we’ll see in the eurozone across the board, on average,” Chris Burk, TIAA-CREF’s senior director, international portfolio management, told Commercial Property Executive. “Our projection is about 3.5 percent a year vs. about 3 percent, so we think the wind is definitely going to be at our back as it relates to consumer demand and sales.”

A second thing that appealed to the company is the cap rate range of 7 to 8 percent, where Western Europe cap rates in the retail sector are currently 4 to 5 percent range.

“Some of the spread is justified because you have different markets at different stages of maturity, but we don’t think that so much of it is justified, beyond the fact that maybe some other investors haven’t discovered yet what a great thing Eastern Europe is, or at least certain locations, and very specific to retail as a class,” Burk said. “We really love the spreads we are getting in these locations and feel we got a really great risk-adjusted deal.”

The 213,000-square-foot Factory Annopol was originally developed by Neinver and opened in 2013 in one of the most densely populated, fastest growing areas of Warsaw. The property is located just 15 minutes away from the city’s center and contains 102 units.

Originally developed by Neinver in 2011, Factory Krakow is a 237,000-square-foot outlet center, while the adjoining Futura Park is 204,500 square feet. Both are located close to Krakow International airport and nearby the city’s center.

The acquisitions are TIAA-CREF’s first investment in Poland. According to Burk, the retail sector in the country offers excellent prospects for growth and the company believes that the outlet mall market is well-placed to capture the growth as the market matures.

“The other thing that drove us in this direction is our partner on these assets— Neinver,” Burk said. “They are a retail outlet center specialist and we’re very confident in them as an operator in Europe, and specifically in Poland because they already have a handful of investments there.”

TIAA-CREF currently has $911 billion worth of assets under management.

In April, TIAA-CREF agreed to buy out the remaining 40 percent interest in TIAA Henderson Real Estate from its joint venture partner, Henderson Global Investors, for $122.7 million.