EPP to have market cap of R12bn when it lists

EPP CEO Hadley Dean. Image source: cijeurope.com

The real estate investment trust wants to attract South African investors looking to benefit from a fast-growing eastern European economy driven by wealthier consumers and by the offices of the growing outsourcing industry in the country.

"We have noticed that many South African investors have been attracted to real estate companies in central and eastern Europe. As Echo, we are a company which owns some of the best shopping centres and offices in Poland, which is the largest economy in eastern Europe. Poland is also very stable, and its markets are more liquid than other countries in the region," said EPP CEO Hadley Dean.

South African-based Redefine Properties holds a 49.9% stake in EPP, having bought into the company earlier in 2016.

Dean said Poland had become a highly attractive investment destination for western European countries. It was the largest EU development beneficiary, with €105.8bn allocated for the years 2014-20. As much as 27% of Polish exports were sent to Germany, its largest trading partner.

Poland was the only country in Europe to avoid recession during the 2008 global financial crisis.

"Between 2007 and 2015, Poland experienced 28% growth in GDP and 45% growth in exports," said Marek Belka, an independent nonexecutive director at EPP.

The value of EPP's initial portfolio as at June 30 2016 was €1.2bn, with retail properties comprising 78% of the initial portfolio by market value.

The other 12% represents office exposure. These offices are dominated by Poland's business process outsourcing industry.

Dean said many European companies chose to run call centres and support offices from Poland as labour was relatively cheaper there than in western Europe but the quality of services was competitive.

EPP owns six office and 10 retail properties with a gross leasable area totalling 446,400m².

The buildings are located in major cities across Poland, and were all built by Echo Investment.

Alternative Real Estate Capital Management's Garreth Elston said EPP's team had "very good experience", and the Polish "country story looked very positive" for investors.

"A big plus is that they will likely end up in the (South African listed property) index straight away," Elston said.

Source: Business Day