January 28, 2019

Poland is Union Investment’s second-largest lease market after Germany

Poland is Union Investment’s second-largest lease market after Germany

Office and retail real estate managed by Union Investment were the primary contributors to the 63k sqm leased in 2018. Three Warsaw office buildings: Zebra Tower, Horizon Plaza and Lipinski Passage contributed 14,200 sqm in new and renewed deals, and another 29,000 sqm came from shopping malls in Wrocław (Magnolia Park), Łódź (Manufaktura) and Gdynia (Riviera). The largest deals in the shopping mall segment were, among others, a new Decathlon store at Magnolia Park in Wrocław (1,800 sqm) as well as Saturn fitness centre (1,400 sqm) and a New Yorker fashion store (1,300 sqm) in Manufaktura.

New leases accounted for as much as 44% (28,000 sqm) of the total space leased in Poland in 2018. For comparison, this ratio in Germany stood at just 15%. New deals on the Polish market contributed to increasing the occupancy rate in Union Investment’s global real estate portfolio to 96.6%. The 63,000 sqm leased last year generates a net rental income of EUR 14.6 million per year. Union Investment’s Polish real estate portfolio increased last year to 21 properties worth over EUR 2 billion.

In 2018, Union Investment continued its selective acquisition policy of its open-ended real estate funds, with a clear focus on stable long-term rental income. The purchasing policy focused mainly on development projects and existing assets with a smaller scale.

Globally, Union Investment purchased 36 assets worth some EUR 2.3 bln on behalf of its institutional and retail funds specialising in commercial real estate, including 16 real estate assets at the early or advanced project stage. These projects accounted for over 50% of the value of assets purchased last year (EUR 1.2 billion).

“Acquiring development projects is our key tool for gaining access to properties with sustainable earnings prospects in this late stage of the market cycle,” said Dr. Reinhard Kutscher, Chairman of the Management Board of Union Investment Real Estate GmbH.

At the same time, Union Investment exited 18 investments worth a total of EUR 770 million. This brought the transaction volume to around EUR 3 billion, compared to EUR 2.9 billion in the prior year. Consequently, the overall value of Union Investments portfolio increased above the EUR 40 bln threshold for the first time.

IntraLog Poland
Private Equity