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The Warsaw Voice » Business » April 25, 2013
The Real Estate Voice
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We want to unlock value
April 25, 2013   
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Shane Scott, partner of Resolution Property talks to the Voice.

What is Resolution property?
Resolution Property is a private equity real estate practice formed in 1998 by Robert Laurence. To date, Resolution Property has raised anmd invested 3 separate funds and we arecurrently raising our fourth fund. We are value-add fund. We seek to identify assets where we believe we can transform those assets from their current position to what we call a more prime position. Typically, we do not buy prime property. If it is too dry, too clean and shiny, it is for somebody else. We want to use our experience in the field retail unlock value. To bring certain very intensive transformational changes to move the shopping center towards a position where an institutional-type buyer would be interested.

When did you came to Poland?
Resolution Property acquired it’s first asset, Galeria Pomorska in Bydgoszcz May 2010. However we spent some 18 month prior to that date analysing the market and looking for the right types of opportuniies.. I personally first came to Poland in 2001 whilst at my former company Cushman and Wakefield. I spent quite a lot of time in Poland, Czech Republic and Hungary.

Galeria Pomorska, is a very good practical example of what our company seeks to acquire. The seller was a foreign investment company leaving Europe and needing to dispose of their assets. So the price was slightly distressed which of course suited us. Also, the property lacked investment, so we came with new capital and new ideas. Through a series of asset management initiatives that we have carried out over the past three years we have managed to transform a somehwat unloved shopping centre in to a environment that is attractive to both our customers and retailers.

What are your plans for future investment in Poland?
Galeria Pomorska was our first and only investment in Poland so far. Since that acquisition, we have been very active in searching for new opportunities, new potential acquisitions, both in Warsaw and other parts of Poland. Our primary field is retailWe understand the market of retailers - we have relationships with key retailers having worked with them before in Germany, Spain or the U.K. Having been involved with Galeria Pomorska for 3 years, we now understand the significance of cooperation with domestic retailers. Thanks to these relationships, we can prequalify an asset for certain type of retailers, and therefore before even acquiring the asset get a better undertsanding of what the current retailers think of the centre and create a business plan that reflects this knowledge.

We are also looking for other forms of retail, not just the shopping centers. Factory outlet centres for example are an asset class not yet prevalant in the market. We own three factory outlet centres, two in France and on in the Netherlands. We firmly believe that it is very prospective type of asset, with very strong performance. We are seeing good turnover growth and increasing customers for these assets. If we can see a growth in this market in Poland, we would be quite comfortable investing in this sector.

How does the Polish market looks compared to other Central European markets?
Our core markets are Poland, France, Germany, the U.K., and some Scandinavian countries. We are 100 percent active in trying to acquire new property in Poland. After looking at many opportunities in CEE markets we now firmly believe that we should look at capital cities.

We are very comfortable in Poland and we have capital to invest. Hopefully, in the next several months we will announce our next acquisition. We are in the process of negotiations, we working very hard on the due diligence and we believe it is a fantastic opportunity, a fantastic shopping center.

Are you going to keep the strategy of modernizing the existing shopping centers or are you also going to build a new ones?
There are opportunities in both I belive. There is undoubtedly a big need of modernizing many Polish first-generation shopping centers in many provincial cities, so it presents a great opportunity for our company.There is also a standard problem with space - in Bydgoszcz, we were fortunate to acquire a single level mall with a large surface level car park. This allowed us the opportunity to expand Galeria Pomorska and retain its single level characteriestics which I believe is important.Our experience shows us that multi-level shopping centres in Poland typically perform well in larger cities and in smaller cities where retailer demand may not be as strong, the upper levels can underperform.

There is a very clear global trend among customers between convenience shopping centers and experience shopping centers. There are certainly cities that could be considered as saturated but there are also cities taht are currently undersupplied and people from those cities have to travel large distances to visit shopping centers, especially new generation ones. Of course, it is much easier to an exisiting shopping centre to retailers, assuming it is performing well as there is a track record of performace and typically a loyal customer base, but I think that there is also a room for building new shopping centres of course.

But even in Warsaw, a city with many shopping centers of newest generation, like Galeria Mokotów, Panorama or Z“ote Tarasy, there are districts where new shopping centers can be located. But, again, it all depends on retailers interest and you have to be very selective as an investor.
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