NREP, the biggest Nordic private real estate investment manager, has expanded its operations beyond the region, PERE can reveal.
The Copenhagen-based manager has secured logistics and residential deals in Poland as part of plans to deploy up to €500 million in the country before the end of the year.
The capital is expected to come from its €1.8 billion NREP Nordic Strategic Fund IV, the latest vehicle in its pan-Nordics value-add fund series, for which the firm held a final close in October 2020. With €250 million of co-investment capital, the vehicle has more than €2 billion of equity for investments.
According to the firm, the fund is permitted to be up to 10 percent deployed outside of the region and NREP has determined that allocation should go to the Polish market. The €500 million deployment plan comprises this equity and supplementary debt finance.
NREP said it was attracted to Poland as it boasted five of the 20 fastest growing cities in the EU and, at 3.6 percent, is seeing annual growth be more than twice the average of 1.6 percent in the wider region.
The expansion, which is expected to be announced formally early next week, will be led by NREP’s chief business officer Stefan Wallander, with support from chief executive officer Claus Mathisen and chief investment officer Jani Nokkanen on its execution. The firm is expected to operate from an office in Warsaw, staffed by between eight and 10 people by the end of the year, comprising professionals from both NREP’s existing Nordics operations and local hires.
The logistics transaction is the privatization of BIK, a real estate business with four standing assets, two potential extensions and a land plot in the Wroclaw and Katowice areas, both in southern Poland. The potential space being acquired extends to about 130,000 square feet. The residential transaction comprises a commitment to invest in more than 10,000 homes by 2025 via an acquisition from homebuilder YIT. The two deals are understood to cost NREP approximately €150 million combined.
Mathisen told PERE the decision to expand to outside of the Nordics was encouraged by its tenants and investors. He said: “We’ve seen outreach from our customers and capital partners to take our concepts elsewhere. NREP prides itself on being sustainability-centric and boots-on-the-ground-centric and that approach has led to invitations to go to other European markets.”
He said the plans to enter Poland were three years in the making, similar to how NREP orchestrated its entry in Norway in 2015. “We spent a few years looking at that market figuring that out. We took our time. Our confidence comes from the way in which we approach such an opportunity.”
When asked whether the expansion to Poland constituted a first step to an even more international operation for NREP, Mathisen said there were “no concrete plans right now. But we’re curious as a bunch. The opportunity must qualify itself. Global or geographical expansion is not an objective in and of itself. We need to see the combination of the receptiveness to what we do and the return risk balance is right. I’m sure other markets represent that as well apart from the Nordics and Poland.”