The deal is an expansion of locally based Behringer Harvard's ties to Hunter Property Fund Management Ltd. of Edinburgh, England, the portfolio manager of the St. Wenceslas Property Fund. The portfolio's size isn't available, but it is mostly retail with the heaviest concentration in Prague, Jason Mattox, Behringer Harvard's executive vice president, tells GlobeSt.com. Other properties are located in Warsaw, Gdynia, also in Poland, and Brno in the Czech Republic, with their European Union pushes underwriting the REIT's investment strategy.
"We're betting on these economies largely," Mattox says. "You have growth in these economies that's considerably faster than Western Europe and they're now becoming part of formal Europe."
Mattox says the portfolio is 95% occupied. The assets were built between 2003 and 2007, with the "vast majority" coming on line just last year, he adds. The tenant roster includes well-known European retailer Carrefour, UK-based Tesco, Royal Ahold of the Netherlands and Plus, a discount foods division of Germany-based Tenglemann, which is in a merger play with Rewe, also from Germany. The lead industrial tenant is Unomedical of Denmark, a global supplier of medical devices.
According to its website, St. Wenceslas Property Fund has accumulated 22 properties since it opened in 2005. The fund, with a target size of €200 million [$395 million], is focused on acquisition and development in the Czech Republic, Hungary, Poland and Slovakia. The fund's projected yields are 6.5% to 9%.
Hunter Property Fund Management has seated a team in Prague to step up the acquisition and development push for the St. Wenceslas investment program, which first invested in the Czech market in July 2005 with a retail acquisition in Beroun, Central Bohemia. It pushed into Poland in late December 2006, paying €19 million [$37.5 million] for five Tesco-anchored shopping centers in Bydgoszcz, Torun, Inowroclaw, Piotrkow Trybunalski, and Warsaw-Tarchomin to Group Apsys, Foncière Euris and ING Lease Polska. The package, now half owned by Behringer Harvard's REIT, totals 8,932 m2 [96,143 sf].
In August 2007, the St. Wenceslas fund paid €9 million [$17.79 million] to Allcon Investment for the Witawa Family Center in Gdynia's Tricity submarket. The mixed-use building has roughly 6,000 m2 [64,583 sf] of retail and office space, with 3,240 m2 [34,875 sf] specifically shops and a food court. Anchor tenants are Albert, Pepco, Gymnasion and Rossman.
Allcon and Group Apsys are well-known developers in Poland. Part of the Behringer Harvard-St. Wenceslas plan is to invest in ground-up projects as well as existing space. "There are a number of opportunities that we've identified for potential acquisition," Mattox confirms without going into specifics.
The REIT closed its offering period at the beginning of the year, triggering the start of a three- to six-year hold for its investments. The St. Wenceslas partnership is its second investment in Europe with a Hunter-managed fund, coming about eight months after it acquired an 80% indirect interest in Becket House, a fully leased, 4,292 m2 [46,200 sf] office building at 81-90 Cheapside St. in London's financial district. The REIT paid £6.1 million [$12.6 million], minus closing and other acquisition costs.
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