GE Real Estate ‘sells’ Poland fund to Valad Europe

The Connecticut-based firm, which has shifted its strategy away from being a third-party investment manager to concentrate on making credit investments, has agreed to sell the management contract to its €240 million Polish Retail Fund and transfer around 20 staff.

GE Real Estate has sold the management contract for its Polish Retail Fund and transferred 20 staff to Valad Europe in a rare example of merger and acquisition activity in European  private equity real estate.

According to the two firms, the closed-ended fund comprises six shopping centres and three hypermarkets totalling more than 3 million square feet in seven of Poland’s major cities including Warsaw, Kraków and Wroclaw. Although GE is retaining co-investment in the Poland fund, Valad is buying a part of that co-investment in order to provide investors with alignment of interest.

Today’s announcement follows months of talks with potential acquirers after GE Real Estate told investors in its Poland fund last year that it wanted to sell the management contract to another asset manager because it no longer harboured an ambition to become a large-scale third-party real estate investment management player. Instead, the Connecticut-based firm wanted to concentrate on debt-related investments.

Funded from the firm's balance sheet capital reserves, this transaction represents Valad Europe's first major corporate acquisition since becoming a private, independent company nearly one-and-a-half years ago. The acquisition has more than doubled the firm's assets under management in Central and Eastern Europe to around €800 million and has increased its total assets in Europe to €4.3 billion across 16 funds and mandates.

Marty McCarthy, Valad Europe’s chief executive officer, said in a statement that the acquisition expanded its footprint as a diversified core-plus and value-added real estate investment manager. “It is a key element of our growth strategy to acquire funds, GPs and companies that add value to our platform,” he added. “Given that the fund’s investors, many of whom already are existing investors in our other funds, have supported this transaction process, we are very grateful for their endorsement and look forward to continuing to deliver superior investment and asset management performance for all our investors.”

As part of the acquisition, Thierry Leleu, formerly general manager for Europe at GE Capital Real Estate Investment Management, has joined Valad Europe as head of funds management and also will join the firm’s executive committee. David Kirkby, Valad Europe’s current head of funds management, has been appointed to the new role of chief investment officer. Also joining Valad Europe’s CEE team will be a team from GE Capital Real Estate Poland, which has managed the fund since it was launched in 2011 and raised €240 million in capital commitments.