PKP looks to lease prime Warsaw spots, develop others
The state-owned rail operator is in negotiations with an investor to lease 16 hectares of land to develop a commercial center near Warszawa Gdanska station in north-central Warsaw, according to sources within PKP.
The company is also in the final stage of selecting a developer who would lease five hectares by Warszawa Glowna station. The property, across from the Sobieski Hotel, would host an office and commercial complex, the sources said.
Later this year, PKP will look to find investors to develop 10 hectares near Dworzec Wschodni railway station, as well as 3.5 hectares at Dworzec Zachodni.
Real estate developers said properties next to these smaller railway stations could fetch a sales price of about $300 a square meter. The three sites now under negotiation comprise 310,000 square meters and could have a sales value of nearly $100 million.
PKP officials declined to comment on specific properties that are under discussion.
The land holdings are all part of the vast portfolio of 50,000 hectares around Poland that PKP owns, but does not need for its core railway business. The company is planning later this year to speed up efforts to make commercial use of this property portfolio through the lease or sale of land, officials said.
"We are trying to utilize commercially all land that PKP doesn't need," said Witalis Borowski, vice director for finance and economics in the real estate division of PKP. "The strategy is to make it a priority, to speed up sales of real estate this year."
Borowski said that PKP plans to earn zl. 30 million ($8.7 million) from leased land this year. He would not comment on any sites that are under negotiation, adding that some properties are the subject of ownership disputes.
In addition to leasing or selling properties, PKP may also look to form joint ventures with investors to develop sites. Members of the real estate industry said this would be a wise move because although PKP has a huge portfolio it doesn't know how to manage it commercially.
"Instead of being a provider of transportation services, they are a real estate holder" and they are not equipped to be a developer, said Roman Rewald, a senior attorney with Weil, Gotshal & Manges.
The PKP portfolio includes land in attractive areas in city centers throughout the country. "Certainly location is the most attractive element of the land," Rewald said.
And finding partners to develop the properties should not be a problem.
"They are good plots of land in the city center so they will be of interest to developers," said Sean Briggs, associate partner with real estate agency Healey & Baker. "If they're serious about doing any kind of commercial development on those sites they should be able to find good partners."
PKP's Borowski said the rail operator hadn't been serious about developing its portfolio until now because of a lack of clarity as to ownership of many properties.
While PKP has the right to administrate all its state-owned land, it doesn't automatically have full ownership rights, or 99-year rights known as perpetual usufruct that would enable it to sell or lease the land, Borowski said. Of the company's 50,000 hectares that could be used for commercial purposes, less than 20% has clear long-term lease agreements, he added.
However, PKP last November won a lawsuit in the Supreme Administrative Court (NSA) that ruled it did not have to prove ownership of buildings on land for which it has long-term leases. This meant PKP could develop such land even if a building was on it and there was a dispute about who owned the structure.
PKP is now hoping this case will have set a precedent for other properties it owns, Borowski said.
The company is also in the final stage of selecting a developer who would lease five hectares by Warszawa Glowna station. The property, across from the Sobieski Hotel, would host an office and commercial complex, the sources said.
Later this year, PKP will look to find investors to develop 10 hectares near Dworzec Wschodni railway station, as well as 3.5 hectares at Dworzec Zachodni.
Real estate developers said properties next to these smaller railway stations could fetch a sales price of about $300 a square meter. The three sites now under negotiation comprise 310,000 square meters and could have a sales value of nearly $100 million.
PKP officials declined to comment on specific properties that are under discussion.
The land holdings are all part of the vast portfolio of 50,000 hectares around Poland that PKP owns, but does not need for its core railway business. The company is planning later this year to speed up efforts to make commercial use of this property portfolio through the lease or sale of land, officials said.
"We are trying to utilize commercially all land that PKP doesn't need," said Witalis Borowski, vice director for finance and economics in the real estate division of PKP. "The strategy is to make it a priority, to speed up sales of real estate this year."
Borowski said that PKP plans to earn zl. 30 million ($8.7 million) from leased land this year. He would not comment on any sites that are under negotiation, adding that some properties are the subject of ownership disputes.
In addition to leasing or selling properties, PKP may also look to form joint ventures with investors to develop sites. Members of the real estate industry said this would be a wise move because although PKP has a huge portfolio it doesn't know how to manage it commercially.
"Instead of being a provider of transportation services, they are a real estate holder" and they are not equipped to be a developer, said Roman Rewald, a senior attorney with Weil, Gotshal & Manges.
The PKP portfolio includes land in attractive areas in city centers throughout the country. "Certainly location is the most attractive element of the land," Rewald said.
And finding partners to develop the properties should not be a problem.
"They are good plots of land in the city center so they will be of interest to developers," said Sean Briggs, associate partner with real estate agency Healey & Baker. "If they're serious about doing any kind of commercial development on those sites they should be able to find good partners."
PKP's Borowski said the rail operator hadn't been serious about developing its portfolio until now because of a lack of clarity as to ownership of many properties.
While PKP has the right to administrate all its state-owned land, it doesn't automatically have full ownership rights, or 99-year rights known as perpetual usufruct that would enable it to sell or lease the land, Borowski said. Of the company's 50,000 hectares that could be used for commercial purposes, less than 20% has clear long-term lease agreements, he added.
However, PKP last November won a lawsuit in the Supreme Administrative Court (NSA) that ruled it did not have to prove ownership of buildings on land for which it has long-term leases. This meant PKP could develop such land even if a building was on it and there was a dispute about who owned the structure.
PKP is now hoping this case will have set a precedent for other properties it owns, Borowski said.
