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EBRD supports pioneering real estate initiative in Poland
The European Bank for Reconstruction and Development (EBRD) is to invest up to US$ 10 million (ECU 9.3 million) in a real estate fund which aims to accelerate development of Poland's real estate markets, with a special focus on investment in regional business centres.
The Pioneer Polish Real Estate Fund, the first of its kind in central and eastern Europe, will be managed by Pioneer Real Estate Advisors Poland Sp. z o.o. (an affiliate of the Pioneer Group, the Boston-based fund manager), and will be majority controlled by Polish institutional and other Polish investors. Based on a target final closing of US$ 60 million (ECU 55.6 million), the EBRD's commitment would represent 15 per cent of the Fund's capital. The Bank's investment is conditional on the Fund's receiving commitments from other investors of at least US$ 40 million.
Commenting on the Polish real estate market, Marc Mogull, the EBRD's Director for Property, Tourism and Shipping, said, "The EBRD has been engaged in direct property financing in Warsaw for nearly four years, supporting projects with a total development cost in excess of US$ 200 million. The Pioneer Polish Real Estate Fund will be the first efficient mechanism to channel institutional capital into smaller development projects, in particular projects in Poland's regional cities."
Mr. Mogull highighted the Fund's ability to invest in completed properties, adding, "We expect the Fund's puchases of existing assets will bring much-needed liquidity to Poland's property markets, unlocking capital for re-investment, and attracting investors to Poland who may have been deterred by fears of illiquidity."
The Fund will invest in a variety of property-related assets, including offices, industrial property, shopping centres and residential property; and will initially be structured as a private joint-stock company. At a future point, the Fund's shares may be listed on the Warsaw Stock Exchange, offering investors greater liquidity and providing support for Poland's developing capital markets.
Stephen Kasnet, President of the Fund's Management Board, said, "We are absolutely delighted to have the EBRD's participation and support. The EBRD's commitment is another example of the close working relationship and confidence that exists between the Bank and Pioneer."
Pioneer has previous experience in Poland, Russia and the Czech Republic. In 1995, the EBRD took a 12.1 per cent stake in the Pioneer Poland Fund, a US$ 60 million private equity fund established to invest in medium-sized Polish enterprises.
As a condition of its input to Pioneer's fund-raising efforts, the EBRD has agreed certain changes in the Fund's original structure designed to enhance transparency in the Fund's operations and improve governance mechanisms. The EBRD's Environmental Procedures will be followed, requiring compliance with local and national health, safety, environmental and public consultation requirements. The Fund, which is already operational and expects to begin making investments in the by mid-year, will be based in Warsaw. Regional offices will be established as the portfolio grows.
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