Penta Real Estate, the property arm of Czech Republic-headquartered Penta Investments, has “a war chest” of up to £600 million in debt and equity for deployment as it looks to build its footprint in the UK.
The company, which made a splash when it entered the UK property market in December with two living acquisitions in London valued at £700 million, is now turning its attention to more sites in the capital as it expands its portfolio.
“We like the depth and clarity of the [UK] market,” Pavel Streblov, business director commercial real estate for the busines, told CoStar News. “The UK is an open market, but development is usually a closed market.”
Motivated by the transparency of the market and a “planning process comparatively easier than lots of Europe,” according to Streblov, the firm has ambitions to deploy £100 million in equity into investments over the next 12 months. This reflects a 20-30% equity commitment, with potential to increase spend if further opportunities arise.
This would rise to £300 million-£600 million with leverage and potential joint ventures, such as its existing joint venture with housebuilder Ballymore for the 680 new homes it is building on Cuba Street at Canary Wharf and The Capston in Nine Elms.
“When you look comparatively at other European markets and how they’ve grown, the UK doesn’t look all that expensive anymore,” Streblov said.
Depending on the market, the firm uses leverage from 60-70% loan-to-cost, putting its equity range at 30-40%, Streblov said.
The investment thesis is focused on schemes that already have consent and spans the whole of London. By asset class, Penta Real Estate is looking to capitalise on the experience it has gained across sectors including hotels, offices and residential in its existing developments on the Continent.
In the UK, this looks like hotels, mid-market residential schemes aimed at international buyers, purpose-built student accommodation and build-to-rent. It is actively bidding on a few office sites, geographically homed in on the City, West End and Midtown, Streblov added. Meanwhile, the company is also exploring growth through M&A and is looking at corporate acquisitions in the form of small developers in the capital.
Penta Investments has around £11 billion in assets and operates across various sectors including healthcare, real estate, sports betting and media across Europe. Its greatest exposure is to the healthcare sector, followed by its sports betting business and then real estate which is roughly 18% of the business. Penta Real Estate has around €2 billion in assets.
The real estate arm of the business has 40 projects in Prague and Bratislava spanning multiple asset classes and a development pipeline spanning 2.87 million metres squared, according to its website. It specialises in mixed use regeneration and brownfield revitalisation and operates from offices in London, Prague and Bratislava.
It recently gained Gateway 2 approval for its two UK projects and construction has begun on the living schemes, which are expected to complete in 2029. The projects were financed by Eldridge Real Estate Credit, Starwood Capital and an unnamed UK high street bank.
