Allan Saunderson is managing editor of Property Finance Europe and a contributor to

THE NETHERLANDS-Netherlands-based Multi Corp. is well on course to transform from a merchant to an investing developer of European shopping centers, retaining stakes in malls it builds such as the newly-opened Centrum Galerie in east Germany’s Dresden.

CEO Glenn Aaronson, a native of San Francisco, says that Multi–de-listed and taken private three years ago wıth the help of the Morgan Stanley Real Estate Funds–is making considerable strides. “Many original centers were pre-sold to the likes of German open-ended funds, insurance companies, private investors,” he tells PIE. “But since that point we’ve moved away from being a merchant developer to being an investing developer. Now, as much as 50% to 60% of that which goes into the pipeline is for our own box. That will come to fruition in another two year or three years, and we will then have a reasonably substantial portfolio of our own.”

Grounds for the transition are Multi’s forecasts of a structural change in the retail mall segment. “In the end, being simply a merchant developer is a business that, though sustainable in the past, may not be the way of the future,” says Aaronson. Part of the prognosis is that retail cannot keep expanding, and that a limited pool of potential shopping center tenants will–without redevelopment and upgrade of standing malls–want to shift to the next new premises constructed. Like most other mall developers and owners, Multi works on a fixed-percentage rent plus a turnover component. In Dresden, Centrum Galerie opened 62,000 square meters in mid-September. Even before opening, Centrum Galerie, Dresden was certified “Excellent” in the BREEAM sustainability audit; becoming the only mall in continental Europe to have received the highest rating by the assessor selected by the International Council of Shopping Centres.

One of the main decisions for shifting the strategy to an investing developer is that a shopping center takes between three to five years to prove itself, says Marcel Kokkeel, Multi’s managing director of Western Europe and chairman of Multi Mall Management. Multi in recent months opened a large mall in Duisburg in the Ruhr region and plans a second in the town. It is just completing a new mall in central Berlin and is scouting for further locations, some of them in the south. “Germany will be a core market for Multi for the next few years,” Kokkeel says, “It may be expensive but it is solid. German shoppers are not that affected by cycles; they just spend.”

Active in 17 European countries, Multi has an investment arm holding a selection of projects. One large new project is the Centre Forum Kayseri in the central Anatolia region of Turkey, starting by its Multi Turkmall unit. Developed in partnership with Hamburg’s Union Investment Real Estate, Kayseri will be the largest and most modern shopping center in the region when it opens in autumn 2011. To exploit opportunities in the nation, Multi last December closed the Multi Retail Turkey fund as a development platform for 21 completed, under construction or planned shopping centers with a projected final value of €4.3 billion.

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