The political risks that exist in Russia are increasingly affecting the commercial real estate market. British Raven Russia refused to buy from the Austrian Atrium Europian Real Estate Park House shopping centers, operating not only in Moscow, but also in the regions.
Raven Russia, a British investment company, refused to buy shopping centers located in Russia and owned by the Austrian Atrium Europian Real Estate (AERE) fund, three commercial real estate brokers told Kommersant. According to them, the seller was not satisfied with the price offered by the potential buyer. Raven Russia on Thursday could not give an operational comment. AERE spokesman Richard Sunderland told Kommersant that the company had previously stated that it was satisfied with the performance of its Russian assets. “But it does not exclude the possibility of selling the network in Russia in the long term,” he explained.
In the AERE portfolio there are 34 trading centers with a total area of over 900 thousand square meters. m in Poland, the Czech Republic, Slovakia and Russia, their cost reaches € 2.5 billion. In Russia, AERE has seven facilities under the single Park House brand (total area is 279.8 thousand square meters): two in Moscow and one each in St. Petersburg, Volgograd, Kazan, Yekaterinburg and Tolyatti. According to the AERE report for the first half of 2018, the company's Russian assets are estimated at € 300 million (RUB 22.7 billion at the Central Bank exchange rate).
In the summer of 2017, Vedomosti reported that AERE had put the Russian portfolio on sale entirely. Later, Raven Russia confirmed its interest in the Park House chain. In Russia, Raven Russia is known as a large owner of warehouse real estate: the company has 15 operating class A logging parks with a total area of 1.8 million square meters. This year, the purchase by Raven Property Group of space in the industrial park “North” on the Leningradsky highway near Moscow (the deal was estimated at 7 billion rubles, according to Knight Frank) was in the list of the largest in the warehouse real estate segment.
The AERE asset purchase deal could be the largest in commercial real estate. Now the largest this year is the purchase by the Leroy Merlin network of 12 K-Raut stores for 12 billion rubles, said Igor Roganovich, director of financial markets and investments at Knight Frank.
The current crisis, which started in December 2014 with a two-fold collapse of the ruble, which was preceded by sanctions against Russia, led to an outflow of foreign investors into commercial real estate. Finnish Sponda and Stokmann, Austrian Immofinanz have already left the market. At the end of 2017, the share of foreigners in the total investment in commercial real estate was 6%, which is almost 3.5 times less than at the end of 2015. Then, deals with foreign capital accounted for 20%. In addition to the weakening of interest in the market of foreign players, consultants estimate the total investment activity as moderate. Although, according to Igor Roganovich's calculations, in the first or third quarter of this year there were 36 transactions with commercial real estate, and in the same period last year - 30.
Alan Baloev, director of capital markets at Cushman & Wakefield, explains the decline in investment activity by high currency and political risks for foreign players. Therefore, the expert continues, in the conditions of reduced demand, property owners suspend the sale of assets, negotiating with banks about the restructuring of loans. According to Mr. Baloev, the market needs foreign investment to revive, and the restructuring of local investors may take two to three years.
AERE has more chances to sell Russian assets in parts. "Profile investors or local players interested in buying commercial real estate," adds Stanislav Bibik, a partner with Colliers International. He points out that in the regions, retail properties are subject to fluctuations in investment value, and institutional investors have limited interest in them. Mr. Bibik estimates the AERE portfolio of Russian assets at 19–20 billion rubles.
Raven Russia, a British investment company, refused to buy shopping centers located in Russia and owned by the Austrian Atrium Europian Real Estate (AERE) fund, three commercial real estate brokers told Kommersant. According to them, the seller was not satisfied with the price offered by the potential buyer. Raven Russia on Thursday could not give an operational comment. AERE spokesman Richard Sunderland told Kommersant that the company had previously stated that it was satisfied with the performance of its Russian assets. “But it does not exclude the possibility of selling the network in Russia in the long term,” he explained.
In the AERE portfolio there are 34 trading centers with a total area of over 900 thousand square meters. m in Poland, the Czech Republic, Slovakia and Russia, their cost reaches € 2.5 billion. In Russia, AERE has seven facilities under the single Park House brand (total area is 279.8 thousand square meters): two in Moscow and one each in St. Petersburg, Volgograd, Kazan, Yekaterinburg and Tolyatti. According to the AERE report for the first half of 2018, the company's Russian assets are estimated at € 300 million (RUB 22.7 billion at the Central Bank exchange rate).
In the summer of 2017, Vedomosti reported that AERE had put the Russian portfolio on sale entirely. Later, Raven Russia confirmed its interest in the Park House chain. In Russia, Raven Russia is known as a large owner of warehouse real estate: the company has 15 operating class A logging parks with a total area of 1.8 million square meters. This year, the purchase by Raven Property Group of space in the industrial park “North” on the Leningradsky highway near Moscow (the deal was estimated at 7 billion rubles, according to Knight Frank) was in the list of the largest in the warehouse real estate segment.
The AERE asset purchase deal could be the largest in commercial real estate. Now the largest this year is the purchase by the Leroy Merlin network of 12 K-Raut stores for 12 billion rubles, said Igor Roganovich, director of financial markets and investments at Knight Frank.
The current crisis, which started in December 2014 with a two-fold collapse of the ruble, which was preceded by sanctions against Russia, led to an outflow of foreign investors into commercial real estate. Finnish Sponda and Stokmann, Austrian Immofinanz have already left the market. At the end of 2017, the share of foreigners in the total investment in commercial real estate was 6%, which is almost 3.5 times less than at the end of 2015. Then, deals with foreign capital accounted for 20%. In addition to the weakening of interest in the market of foreign players, consultants estimate the total investment activity as moderate. Although, according to Igor Roganovich's calculations, in the first or third quarter of this year there were 36 transactions with commercial real estate, and in the same period last year - 30.
Alan Baloev, director of capital markets at Cushman & Wakefield, explains the decline in investment activity by high currency and political risks for foreign players. Therefore, the expert continues, in the conditions of reduced demand, property owners suspend the sale of assets, negotiating with banks about the restructuring of loans. According to Mr. Baloev, the market needs foreign investment to revive, and the restructuring of local investors may take two to three years.
AERE has more chances to sell Russian assets in parts. "Profile investors or local players interested in buying commercial real estate," adds Stanislav Bibik, a partner with Colliers International. He points out that in the regions, retail properties are subject to fluctuations in investment value, and institutional investors have limited interest in them. Mr. Bibik estimates the AERE portfolio of Russian assets at 19–20 billion rubles.
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