Standard Life Investments has teamed up with Helical Bar to jointly develop the Europa Centralna retail park and shopping centre in Gliwice, Poland.
Construction of the 710,000 sq ft scheme has already started, with completion due in October 2012.
The development will comprise a 300,000 sq ft shopping centre, anchored by a 110,000 sq ft Tesco hypermarket, and a 400,000 sq ft retail park, anchored by a 100,000 Castorama DIY store.
The development is 51% prelet to tenants including Tesco, Castorama, H&M, Kappahl, Lindex, Smyk, JULA, RTV Euro AGD, with heads of terms agreed on a further 12% of space.
It will be funded by a combination of a €72m (£61.6m) development loan from Aareal Bank and €40m cash from the joint venture partners.
Helical is providing €4m – or 10% – of this cash, retaining a 37.5% equity stake in the jv.
Standard Life Investment’s client will acquire Helical’s equity stake, and that of the local management team – or 12.5% – two years after completion of building works for a sum reflecting their share of the value of the development.
Helical development director Gerald Kaye said: “The fact that Standard Life Investments and their client have joined us on this transaction endorses the quality of this development and our long-held belief in the strength of the Polish market, which despite concerns elsewhere in Europe, remains one of the stronger economies.
“This deal will see the return of most of our current equity invested (circa £16m cash) for investment elsewhere within the group and reduces our current stock levels by circa £43m (gross). We expect it will provide us with a good development profit at our planned exit from the scheme in 2014/2015.”
Danny McHugh, head of continental European real estate at Standard Life Investments said: “Entering into this development joint venture with Helical provides an opportunity to access excellent returns from a substantially de-risked development. We believe Europa Centralna will be a top quality retail destination on completion, with a mix of national and international retailers.
“We are anticipating strong growth over the longer term given its location in this densely populated region of Southern Poland and unique position on the intersection of Poland’s two main primary highways.
“This acquisition follows others this year in continental Europe, where our research-led investment approach and jurisdictionally focused team have allowed us to source excellent investment opportunities against a difficult economic backdrop for Europe.”
bridget.o’connell@estatesgazette.com
