Luxembourg-based fund REINO RF CEE Real Estate Fund, formed as part of a strategic collaboration between REINO Capital and Australia’s RF CorVal, has signed preliminary agreements to purchase Kraków-based Buma Group’s entire property package. It consists of office buildings as well as office and residential property development projects.
The acquired assets will eventually be held by separate sub-funds with different investment strategies, where the partners will invite investors. The planned total asset value in these jointly managed portfolios will reach at least EUR 750 million.
This investment platform will also generate business for BUMA Group’s operating companies that provide general contractor, property development management and property services. They will be acquired in the transaction’s second phase by REINO Capital and RF CorVal.
The total gross value of Buma Group’s assets exceeds PLN 1.3 billion.
The asset portfolio being acquired consists of 10 office properties totalling over 110 000 m2 GLA and either generating stable income or being at an advanced stage of construction and commercialisation, along with a land bank with capacity for office projects totalling more than 80 000 m2 GLA and residential projects with over 100 000 m2 of usable area.
These assets will be assigned to a range of sub-funds with different strategies: Core+ Office Compartment (with a dividend strategy), Office Development Compartment (property development strategy) and Residential Compartment (residential strategy), managed by an investment firm formed by RF CorVal and REINO Capital.
The transaction will be financed by the partners and selected international investors invited into the fund.
“Separating the operating business, which handles investment projects, from asset ownership is a key tenet of our strategy. This model makes it possible to achieve large scale without the necessity to commit a lot of capital, all the while maintaining full control over the assets. The Buma acquisition is a breakthrough for REINO Capital as it supplements our group’s competences but also due to the size of the business. This is also one of the most interesting M&A transactions involving an exchange-listed entity over the past several years, which – just as REINO Group does – uniquely combines properties with financial markets,” explained Radosław Świątkowski, REINO Capital co-founder and CEO.
The transaction is an important event for all of the participants. The family business Buma will get a strong impulse for further development. For RF CorVal, this will be a vital step in its European expansion, at the centre of which is RF CorVal Europe, based in London.
“Poland is increasingly seen as a strong and stable European property market, with a constantly growing influx of international capital. It offers relatively high rates of return for investors, while international tenants appreciate the young and well-educated population and favourable market conditions. The Buma acquisition is an ideal transaction for us. Our business covers property investments, property development and construction. We are therefore glad that we can combine all of these skills in such an exciting and dynamic region. The strategic partnership with REINO Group gives us a strong and highly valued local partner, with which we can further develop the business,” said Stuart Webster, Managing Director, Head of Europe RF CorVal.
In line with the preliminary agreements, the first part of the transaction will be finalised within three months, however no later than 30 June 2020. In the preceding period, the buyers secured approval from the Office of Competition and Consumer Protection (UOKiK). Signing the final agreements is subject to completing standard procedures related to the acquisition of bank financing, which are already under-way.
Buma Group’s operating companies will be acquired in the second phase. As agreed, once the transaction is completed, REINO Capital and RF CorVal will each hold a 50% stake in the companies, which currently include: general contractor, developer, property manager and facility manager.