We aim for a portfolio of 1.5 thousand units

August 2021

At this stage, the Polish PRS market is large enough to accommodate many players without any problem - says Peter Noack.



Zeitgeist Asset Management is one of the pioneers building the living market in Poland. How has the pandemic affected rental housing and dormitories in countries where you already have operating portfolios?

We saw slightly lower occupancy in long-term apartments during the lockdown due to fewer people making look-ins, but even during that period almost none of our tenants terminated their lease. In the Czech Republic, we have now returned to an occupancy rate of nearly 95 percent. The same is true in newly started projects, such as Barrandov in Prague, where we are seeing a lot of interest and quick lease signings.

In the dormitories, we had an increase in vacancy, of course, as many foreign students left for home, but overall we maintained 70 percent occupancy, which is a great result if we compare it to hotels.

From the point of view of business assumptions, we can safely say that the freeze year of the economy did not significantly affect the financial side of our plans. We assumed short-term fluctuations and did not go below those assumptions during the pandemic period. An additional plus for us is that Covid-19 has changed a lot in the minds of customers who recognize the advantage of renting over buying property - especially with the increasing requirements of banks making it more difficult to get a loan to purchase their own property.

Before the pandemic, you had gathered a sizeable land bank in Poland, buying up existing, often historic properties; meanwhile, at the beginning of this month, you acquired a student dormitory in Krakow, which had been operating for three years. How do you assess the prospects of this market, are there any more student residences planned in Poland?

Yes, this is also part of our strategy. We are happy that Krakow, as the first city in Poland, will join the student cities where we offer dormitories. The purchased building requires only minor changes to adapt it to our standards, we already have nearly 75 percent occupancy for the academic year 2021/2022. We plan to continue expanding in Poland, the next in order will be: Poznan, Wroclaw and Tricity. All student residences will be managed by Zeitraum, our subsidiary company, which is currently the second largest professional operator of student residences in the Czech Republic. It has been operating on the market for five years and manages 460 beds in student residences and 156 beds in 53 serviced apartments.

Three years ago you bought an old office building in the Solec district of Warsaw to adapt it into a dormitory. How are the works progressing and when do you plan to open?

We recently completed its design. A general contractor is already working on the property. The building will be ready in September/October 2022. Later this year, we will enable students to enter into leases for the 2022/2023 academic year using our zeitraum.re platform. Students will have 214 beds available in 149 rooms, some at a premium standard.

Next year, we will also launch a boarding house, a dormitory with a very high standard, in a revitalized historic building on Długa Street in Warsaw. The property consists of a complex of buildings with a rentable area of nearly 9 thousand square meters, and we are working on it in two directions. We are renovating a ten-storey skyscraper to be used as a premium dormitory, and we are trying to obtain a permit for the rest of the historic buildings to create residential apartments here.

Speaking of multifunctionality... You have bought from Orange a complex on Nowogrodzka Street in Warsaw, which includes the former headquarters of the Telecommunications and Telegraph Office. What are the plans to use this property and what is the timetable?

We gave ourselves plenty of time to create a good project. Until Orange moves out of the building, which will be in 2026, the facility will generate rental income. At the moment, the smallest part of the complex - the building on the St. Barbara Street side - is covered by a redevelopment permit, under which we will renovate the residential building, restoring its historic appearance. The apartments in this project will be available to customers in late 2022 or early 2023. As for the other parts of this complex, we do not exclude any option, we are currently refining ideas.

What is happening with a tenement house on Wrzesińska Street in Warsaw's Praga district?

Revitalization of an over 100-year-old building and construction of a new one - so that it would be one residential complex - are carried out simultaneously. Apartments for rent will be built here, and the first floor will be occupied by commercial premises. Ultimately, about 107 apartments will be available for the tenants. The building will be put into use in 2023. Just like in Prague in the Czech Republic, we intend to restore the unique atmosphere of this place.

Your portfolio also includes the historic Main Post Office in Kraków. What will be built there?

We bought the building from Orange in the sell & lease back formula, with the ultimate goal of using it as a hotel - mainly because of its ideal location for tourist and business traffic. We are at the stage of planning the functional formula of the building. What is important for Cracovians, the post office itself will operate in the building without any changes, independently of our investments.

You have ordered 210 apartments from a developer in Gdańsk. Are you considering further investments of this type?

The investment in Gdansk Oliwa will be the first residential project, which we will launch in a few months. The 210 flats are already at the final stage of finishing work.

The purchase of the entire estate from the Gdańsk developer took place back in 2018 under the forward purchase formula and was part of our strategy to enter the Polish PRS market by creating an offer of apartments for rent and student houses. We are constantly building our portfolio, buying properties, and in the next two years we are also planning greenfield investments. We operate in Gdansk, Krakow and Warsaw and are looking at opportunities in Lodz, Katowice, Wroclaw and Poznan. An important role is played by commitment and determination of our institutional investors who provide project financing. This, plus the knowledge and experience we gained in the Czech Republic, allows us to develop effectively.

What scale do you want to achieve when it comes to PRS in Poland? Two years ago you spoke of 800 units. More funds are entering our market, and their ambition is to build portfolios of thousands of apartments.

Taking into account the existing projects, the Zeitgeist portfolio will offer, after redevelopment, more than 800 apartments. We currently have five more projects in exclusive negotiations, which will bring our portfolio closer to 1,500 units if all goes according to plan.

We are not targeting massive investments, we want to focus on properties with a maximum of 400 units. Our overriding goal is to hold assets for the long term, in the best possible quality of service. At the current stage, the market is large enough to accommodate these players - their presence is even conducive to the development of different segments of this market - which should be seen as a positive trend. We are currently focusing on promoting the Home by Zeitgeist brand in Poland, which includes apartments for long-term rental.

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