August 12 2024 14:00
SOUTH AFRICA
Geoff Jennett, Emira CEO
Emira Property Fund (JSE: EMI) has announced an investment in the Luxembourg-headquartered Polish property developer and investor DL Invest Group, marking a significant milestone in the SA REIT’s international investment strategy. With a €55.5m investment, Emira has acquired a 25% initial stake in DL Invest Group, which has a gross asset value (GAV) of approximately €730m and a net asset value (NAV) prior to Emira’s investment of approximately €278m. Emira’s equity interest has a face value of €101.5m. Emira has also secured the option to acquire another interest for €45.5m. If exercised, this second tranche will result in Emira holding 45.0% of the issued shares of DL Invest Group.
This is the first time that Emira has invested in Poland. The group already owns assets in SA and has exposure to the US through its investment in Rainier group.
This initial investment will immediately increase Emira’s international investments to 32% of its portfoli, with 19% in the US and 13% in Poland, while 68% remains in South Africa.
Geoff Jennett, CEO of Emira Property Fund, said: “We’ve taken the time to find the right partner, and for us, this is the right way to enter this economy at the right time. This method of capitalising on opportunities in the growing Polish economy aligns with Emira’s co-investment model, which the market is familiar with, where we mitigate risk as a minority partner with solid protections paired with an established local specialist seeking similar outcomes, resulting in informed investment decisions and improved returns.”
DL Invest is a wholly owned subsidiary of the DL Invest Group, controlled by Dominik Leszczynski and has been active in the Polish commercial real estate market for 17 years, since 2007. It owns a portfolio of around 50 properties, including large logistics facilities accounting for 75%, small retail parks which account for 15%, and mixed-use office and retail spaces which make up 10%. This portfolio of assets is internally managed by approximately 232 employees who make up the founder-led private company. It is a long-term property investor.
Industrial logistics assets are growing in popularity among landlords globally. These properties attract groups who need to store goods for online shopping, food and manufacturing. They include groups who produce fruits which need to be stored at cold conditions so that they can shipped abroad.
The capital injection provided by Emira will fuel DL Invest Group’s ambitious logistics warehouse development pipeline and propel it towards becoming a €1bn business, according to Jennett.
he said the investment had an attractive return profile, with a minimum Internal Rate of Return (IRR) on a 5 year basis of approximately 20.9% in Euros, yielding at least 7.2% in cash per year, escalated annually by the Harmonised Index of Consumer Prices for the European Area (HICP) of between 2% and 4%, with the balance on redemption. Emira will fund the investment from its current balance sheet using available debt facilities and proceeds from recently announced disposals.
“Ensuring active participation in strategic decisions, Emira will have a director’s seat and an observer’s seat on the DL Invest Group board,” said Jennett. Emira has committed to a minimum five to six-year initial investment period but, if both parties agree, the partnership can continue beyond this timeframe.
“For Emira, taking a stake in DL Invest Group provides security of sector, country, company, and returns – we’re not only excited about the diversification for Emira but we are also very excited about co-operating with DL Invest Group to maximise what we can achieve by playing to our strengths together,” said Jennett.
alistair@propertyflash.co.za
