Extract from the investment report “Retail parks uncovered” by Avison Young and Partners: CMS, Newgate Investment, and PROH. Authors: Bartłomiej Krzyżak – Co-Head of Investment Department, Avison Young and Dominik Rafałko – Partner (Real Estate), CMS.
Market maturity favours portfolio transactions
With a 34% share of total investment volume, the Polish retail sector has emerged as the driving force behind the anticipated market recovery. The sector recorded its strongest first-half investment volume since 2018, supported by 20 completed transactions. Notably, 5 major deals, including the landmark sale of a 70% stake in the Posnania shopping centre, accounted for 73% of the sector’s total volume. All of these transactions involved capital originating from the CEE region.
The growing maturity of the Polish retail market is contributing to an increasing number of portfolio transactions. During H1 2026, Auchan and Ceetrus sold a portfolio of 8 shopping centres to Adventum Group, while Star Capital Finance and Generali expanded their portfolios through the acquisition of 6 Vendo Parks in a transaction brokered by Avison Young. In addition, the sale of a portfolio comprising 36 Vendo Parks to Ares Management and Slate is ongoing, with the transfer of the further 9 assets.
“In today’s retail park investment market, scale matters. Portfolio acquisitions allow investors to secure immediate market exposure and operational synergies, while vendors can unlock additional value through a streamlined disposal process. This combination of scale, diversification and execution efficiency continues to support strong demand for retail park portfolios across Poland and the wider CEE region. The retail park sector is increasingly attracting foreign core capital through large-scale portfolio transactions, allowing investors to allocate substantial capital more effectively,” said Bartłomiej Krzyżak, Co-Head of Investment Department, Avison Young.
The specifics of legal due diligence in portfolio transactions
The due diligence process in portfolio transactions differs fundamentally from the legal due diligence conducted in relation to a single property. The main difference stems from the scale of the project – a portfolio may comprise several dozen or even several hundred properties, involving thousands of lease agreements, dozens of administrative decisions and a long legal history for each asset.
“In practice, this means that the scope of the study must be limited pragmatically. A full due diligence review of each asset, at a level of detail appropriate to a stand-alone transaction, would often be unfeasible within the transaction’s timetable and budget. Consequently, the parties usually adopt a risk-based approach, focusing on the issues of greatest economic and legal significance,” commented Dominik Rafałko, Partner (Real Estate), CMS.
Concerning lease agreements – which usually constitute the most extensive category of documents – various methods are used to limit the scope of the review. The most common approaches include reviewing only lease agreements above a specified rent threshold (e.g. agreements generating more than 5% of the revenue from a given property), analysing a representative sample of agreements from each location, or limiting the scope of the review to selected key legal issues (such as break option clauses, rent indexation or restrictions on the transferability of rights under the lease agreement).
It is essential that the agreed scope of due diligence be clearly agreed between the parties and reflected in the transaction documentation, in particular about the seller’s representations and warranties, documents deemed to have been disclosed as part of the transaction, and the buyer’s protection mechanisms (including under W&I and Title insurance, as discussed below).
Transaction documentation
The structure of documentation for portfolio transactions is usually based on a two-tier model. The most common approach is to include, at the first level, a framework agreement governing the entirety of the relationship between the parties in relation to the transaction, including, in particular, matters such as the mechanism for determining and allocating the price across individual assets, the conditions precedent for the entire transaction, the rules governing the interdependence between individual assets, the timetable for the settlement of specific assets, and the consequences of being unable to settle the transaction in respect of one or more assets.
At the second, operational level, individual sales contracts are then drawn up, based on a standard template which is replicated for each asset in the portfolio, subject, of course, to any specific characteristics identified for a given location.
This approach enables negotiations to be conducted effectively, as the parties focus on a single set of general provisions rather than negotiating each of the dozens of agreements separately. At the same time, it requires a careful definition of the relationship between the framework agreement and the individual sales contracts, including the hierarchy of provisions in the event of any conflict.
An alternative is to implement the project solely at the level of sales contracts – however, in such a case, this requires a detailed linkage between the individual contracts relating to specific locations, particularly about so-called cross-defaults and the terms relating to any potential withdrawal from the relevant contracts, which may affect the efficiency of the entire negotiation process.
The role of transactional policies (W&I insurance and Title insurance)
Warranty & Indemnity (W&I) and Title insurance are an integral part of portfolio transactions. These policies provide the buyer with protection in the event of a breach of the representations and warranties made by the seller, or a defect in title, thereby effectively transferring the risks from the seller to the insurer.
Nevertheless, to ensure that these products are genuinely effective for the buyer, it is worth structuring them, defining their scope and carrying out a market analysis of insurers from the very earliest stages of the project – in practice, as soon as the scope of the due diligence is being defined. Involving insurers in the process at an early stage makes it possible to confirm the potential scope of insurance cover even before the actual legal due diligence begins, or to confirm other requirements set by insurers, so that the transaction can indeed be insured to the fullest extent possible.
This is particularly important in the context of the limited scope of due diligence typical of portfolio transactions. The insurer may specify the minimum requirements for a legal due diligence process that must be met for specific risks or areas of liability to be covered by the policy. This helps to avoid a situation where the buyer only discovers, once the due diligence process has been completed, that certain categories of risk cannot be insured due to the insufficient scope of the due diligence carried out.
Early collaboration with the insurer also makes it possible to better align the structure of the declarations and warranties in the transaction documentation with the requirements of the policies. As a result, the scope of insurance cover may be broader, whilst any exclusions may be more predictable and can be addressed at an earlier stage of negotiations.
To sum up, the successful completion of a portfolio transaction requires close coordination between the due diligence process, the negotiation of transaction documentation and the approach to liability arrangements between the Parties, including through the use of the insurance products outlined above from the very outset of the project. A pragmatic and structured approach to these elements from the very start of the process usually makes it possible to carry out a secure and effective transaction, even in the case of portfolios of significant scale and complexity.
