Emira Property Fund has invested €55.5 million (R1.1bn) in the Luxembourg-headquartered Polish property developer and investor DL Invest Group.
Emira has acquired a 25% initial stake in DL Invest Group, which has a gross asset value (GAV) of about €730m and a net asset value (NAV) prior to Emira’s investment of some €278m. Emira’s equity interest has a face value of €101.5m.
Emira, which currently has properties in SA and the US has also secured an option to acquire a further interest for €45.5m. If exercised, this second tranche will result in Emira holding 45% of DL Invest Group.
This initial shareholding will increase Emira’s international investments to 32% of its portfolio — with 19% in the US and 13% in Poland — while 68% remains in South Africa, further strengthening its investment diversification.
“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. This results in informed investment decisions and improved returns,” said Emira Property Fund CEO Geoff Jennet.
DL Invest, an owned subsidiary of the DL Invest Group, controlled by Dominik Leszczynski has been active in the Polish commercial real estate market since 2007.
It has a portfolio of 50 properties, including large logistics facilities (75%); small retail parks (15%); and mixed-use office/retail spaces (10%), with a strong multinational tenant base. Its assets are internally managed by about 232 employees who make up the founder-led private company.
Emira’s capital injection would help to fuel DL Invest Group’s logistics warehouse development pipeline and propel it towards becoming a €1 billion business, Jennett said.
For Emira, the investment had an attractive return profile, with a minimum internal rate of return (IRR) on a five-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.
“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 cooperating with DL Invest Group to maximise what we can achieve by playing to our strengths together,” said Jennett.
Emira would fund the investment from its balance sheet using available debt facilities and proceeds from recently announced disposals.
Emira will have a director’s seat and an observer’s seat on the DL Invest Group board. It had committed to a minimum five to six-year initial investment period but, if both parties agree, the partnership can continue beyond this timeframe.
Emira, which owns a portfolio of retail, industrial, office and residential units in South Africa, as well as an indirect investment in 12 value centres in the US, was recently a top performing REIT in SA, having in its year to March 31, lifted its dividend for the year by 12% to 117.02 cents, while distributable income per share increased by over 11% to 119.03 cents a share.
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