Hili Properties explores fast-growing European markets to expand €115m portfolio

Strategic real estate investment company Hili Properties constantly monitors evolving trends shaping the property industry in fast-growing European markets to calibrate its strategy to grow the return of its investments, according to Chairman Pier Luca Demajo.

The company, a member of wholly Maltese-owned multi-disciplinary group Hili Ventures, focuses its strategy on providing attractive, risk-adjusted total returns to shareholders. The returns are derived from stable yield supported by its current portfolio’s long-term contracted cash flows and income growth embedded in contractual rent escalations.

Hili Properties’ current portfolio comprises six grocery-anchored shopping centres across Latvia’s capital Riga, a private hospital in Bucharest, Romania, 11 properties housing restaurants in key commercial districts in Estonia, Latvia, Lithuania and Malta, and three dedicated business blocks and office space in Sliema, Marsa and Floriana. Its tenants include Premier Restaurants, the operator of McDonald’s in these markets, Swedish-owned supermarket giant Rimi, and Norwegian newsagent/convenience chain Narvesen. In total, the assets accommodate more than 80 business tenants.

Hili Properties Chairman Pier Luca Demajo (left) and Managing Director George Kakouras: “We are active in European territories which have exhibited advantageous investment potential in real estate over the past few years.”

The current assets total 75,500 square metres of rentable real estate, enjoying an occupancy level of 99% with a highly favourable weighted average unexpired lease term of 8.8 years.

“Hili Properties is active in territories which have exhibited advantageous investment potential in real estate over the past few years,” Mr Demajo continues.

“Despite restrictions on trade and services at the height of the COVID-19 pandemic, Hili Properties did not experience significant impact on its business in Latvia, and the tenants occupying our shopping centres in the market are very strong. As commercial centres become larger, shopper habits are changing. This has led brands and service providers to favour malls and shopping centres as a location for their stores. The circumstances brought about by COVID-19 that led consumers to seek more convenience seems to have accelerated this trend.”

In Romania, the real estate market is carving a new direction for itself as it emerges from the COVID-19 situation. Hili Properties Managing Director George Kakouras says forecasts for 2021 are “cautiously positive” and sizable transactions involving office space have taken place while several high profile transactions involving industrial property are underway across the Romanian territory.

“Our tenant activity in Romania is stable,” Mr Kakouras adds. “This is our second largest market and even here we have not experienced a negative impact. Late last year, we acquired a tract of land in Brasov on which a restaurant was opened in 2021. Meanwhile, Malta’s market continues to experience high demand for quality commercial property that drastically exceeds supply. As a result, most high quality commercial developments are currently fully let. Hili Properties’ position in the local market is extremely stable.”

As a subsidiary of Hili Ventures, the group present in nine Central and Eastern European countries with many long-established and high profile retail and commercial activities, Hili Properties is considerably advantaged. Its senior executives can leverage the market intelligence and knowledge of each host country held by their colleagues around the group as they shape and review business strategy and mirror its footprint.

“Our parent company Hili Ventures has been particularly successful in its pursuit of growth over the years because it is a group of companies that truly acts like a group,” Mr Kakouras explains. “It is a community of highly talented, driven people working within a collaborative culture that holds a wealth of knowledge about the markets it operates in.”

Now Hili Properties is currently in advanced discussions to acquire an industrial property in Lithuania and real estate housing a major retail operation in Warsaw. The acquisition of the latter, Hili Properties’ first asset in Poland, will support its strategy to venture into more EU countries that present stable economic growth and potential.

Going forward, Hili Properties’ growth strategy will continue to focus on building a portfolio of attractively-located, institutional and high quality, income-producing investment properties to deliver income and capital growth through active asset management. By understanding the needs of current and future tenants, city planners and communities, its teams are able to rejuvenate and remodel its assets into attractive shopping destinations and desirable business addresses under a programme of committed and consistent investment.

The company sources its investment opportunities through its extensive network of relationships with corporate and private landlords, brokers and domestic banks to deliver sustainable income and strong capital returns. Hili Properties’ targets for its acquisition pipeline includes shopping centres and high street retail outlets, commercial real estate such as warehousing, industrial and distribution facilities, and office properties in prime locations with a high potential of attracting demand for space from top tenants.

During the first six months to June 2021, Hili Properties registered stable total revenues of €3.8 million. Profitability between January and June 2021 improved over the preceding period thanks to improved cost management. The company’s profitability will be strengthened further thanks to its planned investments in the short and medium term.