EPP and Echo Investment have secured EUR 145.2 million refinancing loan for Galeria Młociny

EPP and Echo Investment have successfully secured a loan worth EUR 145.2 million for the new financing of the Galeria Młociny shopping centre located in Warsaw. The five-year financing was classified as meeting the EU Taxonomy. Galeria Młociny, owned by EPP (70% stake) and Echo Investment (30% stake), complies with the environmental objective of the EU Taxonomy on climate change adaptation.

Erste Bank Group AG (Austria), Rand Merchant Bank (RMB), a division of FirstRand Bank Limited (Republic of South Africa) and Santander Bank Polska (Poland) acted as arrangers of the new credit facility, with Santander Bank Polska also acting as Facility Agent, Security Agent and Account Bank. The credit facility has a term of five years with a payment at the end of that period and no amortisation requirement.

“The new financing for Galeria Młociny is the first such large-scale transaction on the Polish retail real estate market after the pandemic. It demonstrates quality of the building and marks the rebirth of the retail market for investors and providers of capital. The refinancing will have a positive impact on the EPP’s balance sheet. It was a complex process due to the value of the loan and the expectations of the lenders, but we concluded it on good financing terms. It was important for the banks that Galeria Młociny is a green asset that meets the criteria of the EU Taxonomy, and is compliant with the technical screening criteria to prove substantial contribution to climate adaptation and minimum safeguards indicated in the EU Taxonomy delegated acts,” said Jacek Bagiński, CFO at EPP.

“Galeria Młociny stands out as a vital component of Echo Investment's portfolio, notable for its green features and strong operational performance. The centre saw both a solid boost in turnover and rise in footfall in 2023, underscoring its appeal to consumers. As a co-owner, we are pleased that Galeria Młociny has also earned the confidence of lenders through successful refinancing. This endorsement serves as a compelling indicator to prospective investors, who are once again seeking out properties that can enhance their portfolios of sustainable real estate,” remarks Grzegorz Iwański, Financing Director at Echo Investment.

Galeria Młociny is one of the youngest shopping centres in Warsaw. It has quickly become one of the leading retail destinations on the map of the Polish capital with a growing number of customers. The shopping centre is compliant with the environmental objective of adapting to climate change as defined within the EU Taxonomy and is among the 30% most energy-efficient non-residential buildings built before the end of 2020. Galeria Młociny has the BREEAM In-Use certificate at the Excellent level.

“This deal is a milestone in the history of Erste, as it is our first ever EU Taxonomy compliant real estate loan in Poland. Galeria Młociny will help us achieve our sustainability goals: aligning our lending portfolio to meet net-zero emissions latest by 2050. The strong long-term relationship with EPP allowed us to underwrite a substantial volume in this transaction, confirming the solid fundamentals of the real estate market in Poland,” said Balazs Gal, Director at Erste Group Bank AG.

“RMB is thrilled to have assisted the EPP group in the funding of Galeria Młociny, an EU Taxonomy compliant and BREEAM certified shopping centre. This is in line with RMB’s commitment to advancing our clients’ sustainability strategies. The EPP group is a key strategic client of the bank, and we are pleased to conclude another transaction with them as we grow our relationship together. We look forward to further working with Erste Group Bank AG and Santander Bank Polska in this transaction,” says Sashen Naidoo, Real Estate Finance Transactor at Rand Merchant Bank.

“We are happy that we had the opportunity to be a part of financing provided for Galeria Młociny as an Agent Bank of the consortium together with Erste Bank and Rand Merchant Bank. Our primary goal is to support our Clients with growth of their real estate businesses, especially in terms of sustainable investments like Galeria Młociny. Both EPP being the biggest retail assets manager in Poland and Echo Investment as a largest Polish developer are our key Clients, so we appreciate that we could lead this transaction and strengthen our relationship,” added Bartłomiej Barej, Director in Property Finance at Santander Bank Polska.

Dentons advised and provided legal services for lenders, while the borrower was represented by Clifford Chance.