Globalworth Real Estate Investments Ltd (GREIL) is the leading commercial property investor and developer in Poland and Romania.
Listed on the Alternative Investment Market (AIM) of the London Stock Exchange (LSE) with a market capitalisation of about €1.3 billion, it owns and manages a portfolio of 50 Class-A standing office buildings, as well as some logistics and light industrial properties, leased primarily to blue-chip multinationals under long-term leases. The company’s property portfolio is currently valued at €3.1 billion.
In 2017 and 2019, the EBRD invested a total of around €95 million in newly issued ordinary shares in GREIL, acting as an anchor in several private placements to facilitate GREIL’s further growth. The proceeds were used to fund acquisitions and developments in Poland and Romania, including green investments such as resource efficiency, environmental remediation and climate resilience.
Seizing opportunities for growth
The EBRD saw several opportunities at the time of the investment in 2017. First was the chance to capitalise on GDP growth in Romania and Poland, coupled with the low cost of long-term debt funding.
Second was the opportunity to promote regional integration and cross-border activities within central and eastern Europe and create a regional real estate platform with a strong project pipeline.
Third, GREIL’s business model was transforming from development projects to predominantly income-generating assets through active asset management, with a focus on cash generation.
Lastly, GREIL was sufficiently large enough and had low enough leverage to create the pre-conditions to then achieve (in 2018) an investment grade rating, which could further lower its cost of debt. There was also potential for GREIL to move from the AIM to the Main Market of the LSE, possibly boosting its share price and liquidity. With a dividend yield of 5 to 6 per cent and potential rental yield convergence with EU property markets, this could translate into an appreciation of property assets in Poland and Romania during the investment holding period.
All of this was possible because of the management team’s strategic vision and know-how; a team that was led by a successful and experienced entrepreneur and backed by strategic and financial investors.
Even though this was largely a passive investment given its relatively small stake in GREIL and the public nature of the company, the EBRD sought to support the company’s value creation efforts; the Bank’s involvement provided comfort to commercial investors, ensuring the success of the capital increases.
The EBRD subscription included a roadmap detailing governance and sustainability improvements, as agreed with the company. Regarding governance, the Bank supported the implementation of the Global Reporting Initiative (GRI) . For GREIL, this is expected to provide a number of benefits, including:
- an increased understanding of internal risks and opportunities
- seeing a clearer link between financial and non-financial performance
- being able to influence long-term management strategy and policy and business plans
- the ability to compare performance internally, and between organisations and sectors
- mitigating – or reversing – negative environmental, social and governance impacts
- an improved reputation and customer loyalty.
GREIL was the first real estate company in Romania to adopt GRI, and in doing so it became an institutional quality leader in the central and south-eastern European property sector. Due to the size and profile of its assets, GREIL’s governance and reporting standards should also act as a model for other industry stakeholders in the region.
GREIL has also proven to be one of the regional leaders in terms of sustainability, which is at the heart of its corporate vision to build a more environmentally friendly portfolio. This makes strong commercial sense since top energy efficiency standards are a typical requirement for multinational tenants.
By (re)developing energy efficient buildings, GREIL has become the go-to landlord for top tenants. It aims to reflect this effort through one of the international sustainability certification schemes; as part of the EBRD’s investment, the company has committed to achieving and implementing sustainability certifications and/or improvements for assets that have been added to its portfolio up until 2020 (minimum BREEAM Very Good or LEED Gold) for all new developments.
Having achieved the goals of its investment, the EBRD exited the engagement with GREIL in July 2021.