Building a new platform

Nebil Senman

Griffin Real Estate, one of the biggest investment managers in Poland, will soon enter the logistics property market. WBJ sat down with managing partner Nebil Senman to talk about this and the company’s other plans for the near future

Interview by Adam Zdrodowski and Morten Lindholm

WBJ: There were quite a few new appointments and promotions at Griffin Real Estate at the beginning of this year. Is the process of making personnel changes at the company now complete?

Nebil Senman: Yes, we integrated the new hires executed earlier this year into the Griffin Real Estate team. We wanted to strengthen not only the investment team but also our financial and legal departments. Our former chief financial officer moved into the investment team and has new responsibilities, being directly involved in overseeing two of our newly created investment platforms. We also appointed a new co-general counsel and chief compliance officer, whose extensive experience, among others, will help us with negotiating and setting up our new investment platform, which should come online in the summer.

What kind of platform will that be?

It will be a logistics platform that we will set up in a joint venture with one of our leading strategic investors and through a separate framework agreement with one of the leading logistics space developers active in the Polish market, which will help to develop the newly acquired portfolio into a leading Polish logistic platform. We will initially invest around €200 million in the acquisition of a standing portfolio comprising approximately 300,000 sqm located in the main Polish logistics centers.

We will initially invest around €200 million in the acquisition of a standing portfolio comprising approximately 300,000 sqm.

Over the next three years, Griffin Real Estate together with its strategic partner intend to develop and buy more assets – we are talking about an additional one million sqm of logistics space and a gross asset value of over €1 billion. The logistics property market in Poland has been performing very well in recent years and the new platform will complement our existing platforms nicely.

Do you have any priorities when it comes to the development of the existing platforms?

No, I would not say that we are paying more attention to some of the eight existing platforms than to the others. They may vary in size in terms of their capitalization – some, like Echo Investment and EPP, are really big, while others, like Student Depot, are much smaller – but they have all been growing dynamically and we try to develop them further to maintain their leadership position in their respective markets. There are also synergies between the particular platforms. For example, the Resi 4 Rent platform may invest along with Echo Investment in acquisitions of larger development schemes, while Echo Investment will benefit from being an investment partner in Resi 4 Rent as well as acting as a developer for the Resi 4 Rent platform.

Globalworth last year acquired a controlling stake in the Griffin Premium RE office platform that has now been renamed Globalworth Poland. Are you going to exit that platform altogether?

We still have an almost 4 percent stake in the platform and plan to keep it for now. We are proud of the success of Griffin Premium RE, which we brought onto the Warsaw Stock Exchange last April. And we are proud of the fact that the platform attracted the attention of a leading major international investor which is consistently executing the growth path that we originally intended for this yielding office platform.

There have been several major mergers and acquisitions in the Polish real estate industry over the past year and a half. Are you looking for investment opportunities in the M&A market?

We are watching the M&A market. For example, we are considering the potential further growth of Echo Investment through an M&A transaction. Echo Investment is already one of the biggest office developers in Poland, but when it comes to the company’s activity in the residential market, there is certainly room for further growth. Echo Investment could potentially acquire a smaller residential developer if the transaction complemented its existing portfolio of sites and allowed it to enter new locations.

You have just finished establishing the Resi 4 Rent platform. How big will it be?

Our minimum target is approximately 5,000 apartments. Around 2,500 apartments will have been completed by 2020, and another 1,000 apartments are currently in the pipeline. We see huge potential in the institutional rental apartment market in Poland. That is still a nascent market in the country, but one that has very bright prospects, as Poles – traditionally used to the ownership model – are increasingly discovering the benefits of renting professionally managed housing units as mobility and flexibility play a bigger role, especially amongst the younger generation.

What is the target when it comes to the Student Depot dormitory platform?

We now have 1,200 beds and are currently developing a further 500 beds in Wrocław. We have already secured locations for new projects in Kraków, Warsaw and Gdańsk. In two years’ time, we will have approximately 2,800 beds. This market is obviously not as big as the office market or the retail market, but it is certainly a market that is undersupplied in Poland and still has a lot of development potential. We are now looking for a long-term investor who would be interested in acquiring this kind of product in the country and we want to double the size of the portfolio to 5,000-6,000 beds within the next 4-5 years.

Are you interested in other alternative real estate asset classes – such as data centers or medical centers – in Poland?

Not immediately, as we are currently focused on the creation of the logistics platform. Also, before we look at alternative asset classes such as data centers or medical centers in Poland, we will probably be interested in the acquisition of hotels and food-anchored/smaller retail projects. However, this is unlikely to happen this year.

How much equity will you invest in real estate in Poland this year?

We plan to invest at least between €200 million and €300 million of equity in real estate projects in Poland in 2018. We expect the value of the assets under our management this year to increase by at least 10 percent to over €5.5 billion.

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