Madison International Deal Looks to Broaden Firm’s Investment in Poland

NEW YORK CITY—Locally-based Madison International Realty has signed a preliminary agreement to acquire the controlling interest in real estate development and investment firm Capital Park SA of Warsaw, Poland.

The agreement calls for Madison International to purchase 65.99% of Capital Park from Patron Capital Partners of London. No financial terms of the transaction were disclosed.

Madison International entered the Warsaw market last year with the acquisition of a 50% interest in the Warsaw Spire office tower. Madison officials say that its investment in Capital Park will provide the firm with significant and strong local platform from which to expand its Polish investment.

Last month, Madison International Realty made news on the domestic front when it purchased approximately 4.5 million shares of Mack-Cali Realty Corp. trading at about $20, which represented a 5% ownership interest in the publicly-traded REIT.

The deal with Patron Capital in Poland also gives Madison International exposure to Capital Park’s existing diversified portfolio of high quality assets in Poland comprising 304,000 square meters (approximately 3.28 million square feet) of lettable area with a value of  PLN2.5 billion (approximately $653 million) of which 77% is located in Warsaw.

The transaction offers Capital Park, which is currently undertaking the full redevelopment of the former Norblin factory in Warsaw into a flagship mixed-used complex, with a new equity partner.

Madison is undertaking the acquisition on behalf of the Madison International Real Estate Liquidity Fund VI.

EY Real Estate Corporate Finance advised Capital Park and Patron Capital on the transaction. Madison International Realty was represented by Greenberg Traurig, KPMG and GGR Group.

Completion of the final sale agreement for the acquisition is subject to a number of conditions precedent, including receiving the consent of Poland’s president of the Office of Competition and Consumer Protection. After completion of the transaction Patron Capital Partners will retain a minority stake in the group with the remaining shares held by management, leading pension funds, investment funds and retail investors.

Capital Park has operated in the Polish real estate market since 2003. In 2004 the company started its successful cooperation with Patron Capital Partners. Capital Park has traded on the Warsaw Stock Exchange since 13 December 2013.

Jan Motz, the founder and president of the Capital Park Group says of the deal, “Working with Patron Capital Partners started a new chapter for our company, providing us with the strategic understanding and support that has allowed us to build a prime real estate portfolio of modern class A office and retail assets. This includes the Eurocentrum Office Complex and Royal Wilanów, with the repositioning of the former Norblin factory, our largest and most prestigious investment project to date, well underway. We are happy to have gained the new partner that appreciates strength of our team and quality of our projects. We are sure that having such experienced equity partner as Madison we will further strengthen our position, and open new opportunities for the continued growth of value of the group. ”

“Capital Park marks our second acquisition in Poland, where we see great potential. Poland has a strong economy, offering solid market fundamentals and a robust premium compared to other core European markets,” says Derek Jacobson, Madison International Realty Co-Chief Investment officer.

Madison managing director Matthias Cordier adds, “This transaction fits well with our distinct strategy of investing selectively in listed property companies with strong sourcing opportunities in growth markets and superior management teams.  We are very pleased to be working with Capital Park, which has a quality portfolio of prime assets.”

Madison International specializes in acquiring private ownership stakes, joint venture positions, and listed property shares in prime properties and portfolios in major markets in the US, UK and Western Europe. Other Madison International REIT investments have included GGP Inc., TIER REIT, Monogram Residential Trust, Inc., Alexander’s Inc. and Songbird Estates.