MGPA snaps up two Polish malls and option for third

Private equity real estate fund MGPA has bought two prime Polish shopping centres, plus an option on a third centre, from developer Mayland Real Estate and Goldman Sachs’ Whitehall Fund. The 70,000 sq. m shopping centre and 36,000 sq. m Pogoria mall, both in Silesia near the German and Czech borders, were acquired for a combined €187m. Both will be held by MGPA’s Europe Fund III.

MGPA has a three-month call option to pay €49m for the third centre, the 22,000 sq. m Jantar scheme in northern Poland, which has potential to triple in size with the development of an extension. MGPA European head Alex Jeffrey said Karolinka and Pogoria were acquired with about €50m of equity, and senior debt from German banks WestImmo and DG Hyp. He said the deal is ‘highyielding”, but declined to say exactly what the initial yield on the acquisition was.

However, the price equates to €1,765/sq. m; at the top of the market in 2007, values for good Polish shopping centres were about €3,000/sq. m and yields around 5.5%, said MGPA Poland head Daniel Harris. Jeffrey said retail rents had remained strong in Poland, reflecting the country’s strong economic performance.

“Poland is the only European economy not to have gone into recession,” he added. “We are buying close to a cyclical low. Capital values have fallen in Poland, driven by a fall in investor interest. Poland has been lumped – unfairly – with underperforming markets in central Europe.” Whitehall is withdrawing from Europe, but Mayland continues to be active and has six more developments in the pipeline.

The deal is the seventh for MGPA Europe Fund III, which raised €841.5m in June 2008. Jeffrey said between 40% and 50% of the equity had been earmarked for those seven deals, including extra equity intended to be spent on them in future. Last month, MGPA bought UK residential land company Land Investment Holdings for £52.5m. Jeffrey said the fund was keen to buy in France and Germany.