Emira Property Fund (JSE: EMI) has announced the posting of a circular for the second tranche of its strategic investment in DL Invest Group, the Luxembourg-headquartered Polish property developer and investor, reinforcing the viability and strength of its well-received initial investment as Emira continues to enhance its international exposure and diversify its investment portfolio.
Geoff Jennett, CEO of Emira Property Fund
The first tranche saw Emira acquire a 25% strategically structured stake in DL Invest in August 2024, with its first foray into the Polish Market marking a significant expansion of Emira’s international investment portfolio. The collation of the initial investment and the proposed second tranche, if exercised, would bring Emira’s total shareholding in DL Invest Group to 45% for a further consideration of €44.4m.
Geoff Jennett, CEO of Emira Property Fund, reaffirmed confidence in the transaction: “This second tranche continues our structured co-ownership model that has underpinned our offshore investment growth. Emira’s co-investment model mitigates risk while leveraging the operational expertise of a local partner.”
The viability of this tranche is underpinned by the same investment fundamentals that drove the initial deal. DL Invest Group maintains a robust asset base of approximately €670m GAV, with a diversified portfolio of large logistics facilities (67%), small retail parks (11%), and mixed-use office/retail spaces (22%), with a strong multinational tenant base.
Further, DL Invest Group has the invaluable asset of local market expertise, established through an 18-year track record in the Polish real estate market and a 230-strong team on the ground.
“The strength of DL Invest Group’s portfolio, its position in the Polish market and the alignment of our investment philosophies ensure this is a high-quality opportunity for Emira,” says Jennett.
The capital from this investment is expected to further accelerate DL Invest Group’s logistics warehouse development pipeline, reinforcing its trajectory towards becoming a €1bn business. As with the first tranche, Emira’s investment is structured for an attractive return profile, with a minimum Internal Rate of Return (IRR) on a five-year basis of approximately 20.9% in Euros, including an annual cash yield of at least 7.2%, escalated by the Harmonised Index of Consumer Prices (HICP) for the European Area.
Its strategic co-ownership approach ensures Emira’s active participation in key decision-making through a director’s seat and an observer’s seat on the DL Invest Group board. Emira has committed to an initial five to six-year investment term.
Jennett added: “We are not just investing in assets; we are investing in expertise, partnerships, and shared growth. Pursuing the option for an additional tranche underscores our commitment to creating value through informed, risk-adjusted international investment.”
Emira’s international investments are currently 30.3% of its total portfolio, of which 17.6% is in the United States with US-based partner The Rainier Companies, where Emira holds equity interests with unanimous voting rights in 12 dominant, value-oriented grocery-anchored power centres. The second tranche DL Invest Group option creates the potential for this to grow to nearly 37% offshore investments, with DL Invest Group being 20.8% of Emira’s total investment, further shifting it towards lower-risk, more attractive diversification with enhanced stability and appeal.
Emira intends to continue to fund this investment opportunity from its balance sheet with available debt facilities and proceeds from recently completed disposals.
This second tranche subscription option requires 50% shareholder approval, and the circular is now available for review by eligible investors, with further details on the terms and conditions of the second tranche outlined therein, ensuring all investors can participate in the decision, which will be made at a general meeting on 17 March 2025. Castleview Property Fund, which holds around 58% of Emira’s issued shares, has given its irrevocable vote in favour of exercising the option.