Globe Trade Centre looks to expand Galeria Mokotow
The recently opened Galeria Mokotow may be the largest shopping mall in Poland, but it's still not big enough for its developer, Globe Trade Centre (GTC).
The company plans to expand Galeria Mokotow's retail space by an additional net 11,500 square meters, said Eli Alroy, GTC's founder and chairman of its supervisory board.
Alroy said Galeria Mokotow's 130,000 square meters of gross space, which includes 49,000 square meters of net retail space, makes it the biggest shopping mall in Central Europe. "It's a mega mall, and its catchment area is not the neighborhood but the entire city," Alroy said.
GTC plans to start building the project's second phase next year. That phase will be located between the current mall and ulica Woloska, and is planned for completion in 2002.
GTC owns 8.6 hectares of land between ulica Domaniewska, ulica Woloska and ulica Wilanowska, with Galeria Mokotow located on the corner of the latter two. Ownership of this property will allow the company not only to expand Galeria Mokotow but build three office buildings totaling 47,000 square meters of net space, Alroy said. The construction of the office buildings is also planned to start next year and the first building is to be completed in 2002.
To finance its investment, GTC will issue shares representing about 20% of its capitalization and list them on the Warsaw Stock Exchange (WSE). The subscription period for the issue is set for the end of September while the listing is planned for mid-October. Although the company wouldn't comment on how much the issue would raise and the share price range was not announced at press time, sources close to GTC say the company could earn as much as $50 million. Up to 85% of the income from the issue will be direct towards new investment, while the rest would go into the pockets of existing shareholders, the company said.
Alroy said the company, which will be the first Western developer to be listed on the WSE, decided to enter the exchange to underline its strong presence in Poland. "Real estate is not a global product, real estate is marketed locally," he said. Although GTC is majority owned by the Netherlands' Nobelgo, which has a 65.5% stake, and it's minority shareholders are Belgian-based Adria, Deutsche Bank and Citibank, the developer operates only in Central Europe.
In Warsaw, GTC owns properties worth about $450 million, the company said, including Galeria Mokotow, the 88,000 square-meter Mokotow Business Park, and the residential Apartamenty Przy Krolikarni.
The developer has also secured land ownership to pursue several other projects, which are in various stages of development. In Warsaw, these include the Okecie Business Park and the Konstancja residential project in the suburb of Konstancin. Outside Warsaw, GTC established a joint venture with Orbis to develop office buildings in Wroclaw and Poznan, and also owns 1.7 hectares of land in Krakow for office development, Alroy said. In addition, GTC has one office and one residential project in Hungary, and an office and a hotel project in Romania, Alroy said.
GTC, which last year had revenue of $46.2 million, wouldn't reveal any future forecasts. The developer said, however, that rental income from Galeria Mokotow is expected to reach $14 million annually.
The company plans to focus its expansion on big Polish cities such as Warsaw, Krakow, Wroclaw, Poznan, Gdansk, Lodz and Katowice. "We need critical mass," Alroy said.
The company is not likely to invest in the residential sector soon. "We are shooting for offices and retail," he said. Alroy said that in the case of residential and office projects of similar size, the residential developer needs to deal with 100 customers, while the office developer need only tackle about five. "From a management point of view, a residential (project) is very time consuming," Alroy said.
ING gets green light
for massive retail project
Dutch developer ING Real Estate has the go ahead to develop the massive zl. 1 billion ($220 million) mixed-use Zlote Tarasy (previously known as Zlota Centre) in central Warsaw, the company announced during a joint press conference with Mayor Pawel Piskorski.
"We have got the decision on city planning and site development conditions," said Jan van Hensbergen, managing director of ING Real Estate in Poland.
ING has wanted to develop the 32,000 square meters of land between Warsaw's central railway station and the Holiday Inn hotel since the mid-1990s, but its plans have only now been approved by the city. "It is a very special, strategic area for Warsaw" Piskorski said.
The city's decision paves the way for ING to start construction of Zlote Tarasy next spring and complete the development in 2004, ING said.
When developed, Zlote Tarasy will be the first downtown modern commercial center in Warsaw. "This is what Warsaw has been waiting for," Piskorski said.
ING plans to develop 205,000 square meters of space, which would include retail stores, restaurants, entertainment facilities, a multiplex cinema for 4,000 viewers, a hotel and parking. "It will be the place to be, not just to shop," van Hensbergen said.
ING said it decided to rename the project to differentiate it from dozens of other shopping centers, and to reflect its architectural concept. Zlote Tarasy, or Golden Terraces, will be a multi-level complex of buildings, looking like a set of terraces with an open, circular courtyard, according to ING's presentation.
ING will finance the project, which will stand on a site worth $30 million supplied by Gmina Centrum. ING, which is part of a Dutch capital group operating worldwide in the banking, insurance and asset management sectors, has developed the Holland Park complex on plac Trzech Krzyýy and is now constructing a residential section comprising 82 apartments in Poland. It is also looking to cooperate with the Polish State Railways (PKP) to redevelop the adjacent railway station, van Hensbergen said, and presented a bid for the project when PKP called the tender earlier this year. So far, no winner has been announced.
Lublin hotel project attracts German developer
German developer Von der Heyden Group has bought a heritage building in Lublin to develop a four-star, 70-room hotel, said Sven von der Heyden, the company's owner.
The $8 million project would be first hotel venture in Poland for Von der Heyden, which has so far specialized in offices.
Von der Heyden said that what attracted him to the project was the financial conditions and the charm of the building, which is located on Lublin's ulica Krakowskie Przedmiescie.
"First of all, it's an absolutely beautiful building," von den Heyden said, adding that the early 20th century edifice resembles Warsaw's Bristol Hotel.
Von der Heyden acquired the partly renovated, 6,000 square-meter building for an undisclosed sum from a Daewoo/Budimex joint venture, which backed off from its initial plans to build a Lublinianka hotel because of Daewoo's financial problems. "Daewoo decided to abandon the building," von der Heyden said.
Von der Heyden believes that Lublin, which is not the first choice for foreign investors in Poland, has development potential and is a good place to acquire properties at bargain prices.
"I like to go where no one else is going," he said. The only other business hotel in Lublin is operated by Orbis, von der Heyden said.
As the city is on a route linking Warsaw with Ukraine, it could attract Ukrainian business visitors in the future, von der Heyden said. Another target group are Korean executives visiting the Lublin truck manufacturing plant owned by Daewoo, he said.
Von der Heyden plans to take over the renovation works from Daewoo and Budimex in September. The building, which is already 40% renovated, is planned for completion by next summer.
After the renovation, von der Heyden tentatively plans for his company to operate the hotel, to be called Grand Hotel Lublinianka, although he doesn't rule out hiring a world chain hotel operator, he said.
