
- Poland | 20 July 2021

To begin, could you provide an overview of Fortress REIT’s interest and presence in the CEE region, particularly in Poland and Romania?
Our focus in Europe aligns with the growing CEE market, aiming to evolve alongside its expansion. As the third-largest real estate REIT in South Africa, we’ve secured a prominent position, particularly in the logistics sector through NEPI Rockcastle. In the CEE, we prioritize logistics investments to avoid internal competition within NEPI Rockcastle’s retail services, ensuring a strategic approach to our ventures.
Specifically in Poland and Romania, what factors influenced your investment decisions?
We exercise stringent selectivity when investing, conducting comprehensive risk assessments. Romania and Poland boast the largest and rapidly growing markets in the CEE, making them natural choices for business. These emerging markets presented early-stage project opportunities, aligning with our investment strategy.
Considering their high yields, Romania and Poland are sometimes seen as higher-risk markets. Do you share this view?
When considering “country risk,” both Romania and Poland aren’t yet at the safety level of Western European countries. However, property investments in the CEE hold unique potential due to their growth prospects. Labor costs are favorable, and technological underdevelopment offers opportunities to construct state-of-the-art, eco-friendly projects, leveraging photovoltaics and rainwater use.
Could you outline the significant investments made in Romania and Poland and what made them appealing?
In Romania, we’ve agreed to acquire a 50,000 sqm project, pending the vendor meeting conditions, which we anticipate will be resolved soon. In Poland, our entry into the logistics sector through acquiring operational parks secured a long-term income stream from quality tenants. Moreover, we’re expanding one park with a new building after finalizing the acquisition in December 2020.
How welcoming is the financing climate in these countries, particularly given the REIT model you operate under?
We found the investment climate in both countries sufficiently favorable, encountering no notable challenges. The REIT legislation offers additional investment opportunities, potentially exploring real estate projects or other REITs, like NEPI Rockcastle. REIT legislation enhances market liquidity, a crucial factor for us as long-term holders.
Sustainability is increasingly crucial across segments. Where does Fortress REIT stand on this and have you noticed a demand for sustainable solutions from your tenants?
Carbon emissions will eventually hike energy costs, urging tenants to adopt sustainable solutions. Warehouses, ideal for photovoltaic projects, are increasingly accepting such solutions as the new real estate norm. EU regulations will drive changes in transportation, leading to increased usage of electric vehicles across industries. Tenants appreciate cost-saving sustainable measures, with logistics companies showing willingness to adopt such practices.
What are your top priorities in the next two-three years?
Our focus is on further investments, expanding our footprint in diverse markets, and securing a robust portfolio to serve our global clients across multiple locations. We aim to maintain our selective investment criteria while seeking to start ventures in additional CEE countries, aligning our approach with market evolution.