Blackstone completes Multi takeover

The Blackstone Group has completed the takeover of Multi Corporation, the Dutch developer that owns shopping centers in thirteen European countries.

 

The deal has been widely trailed by the financial press for weeks, and was also approved by the European Commission in August. However, today the New York-firm confirmed completion of the deal without disclosing an investment value. The firm has been buying up to half of its €900 million debt in the developer at a reported 50 percent discount.

 

Multi will now become a portfolio company alongside others owned by Blackstone real estate funds such as Hilton Hotels – which is to be taken public – Equity Office Properties and Brixmor shopping centers. 

 

In a statement, the company added Multi would be a well-capitalised “growth orientated” pan-European retail platform that currently owns or manages 56 shopping centers with more than 5,200 stores restaurants and other attractions. The assets are in Turkey, the Netherlands, Belgium, Portugal, Spain, Italy, Germany, the UK, Czech Republic, Poland, and Ukraine.

 

Completion of the deal draws a line under a noteworthy few years for Multi which has been labouring under a debt mountain, with €900 million of loans maturing in 2015 and a recent missed interest payment.  

 

In 2005, Morgan Stanley Real Estate Fund V International (MSREF V International) bought the commercial development arm of Dutch developer AM Development for €479 million and renamed it Multi, implementing a plan to expand activities further across Europe. Scroll forward a few years and the 80 percent investment lurched into trouble. In 2011, Morgan Stanley relinquished control in a €850 million debt restructuring as a group of 11 lenders took it over. 

 

At the time, Reuters reported that as part of the agreement, Morgan Stanley would gain a stake of more than 10 percent in the Multi Forum Turkey Fund, which owned seven shopping centers in the country. 

 

Jan Meines, who has served on the supervisory board of Multi since 2011, has been elected as the chairman of the firm following Blackstone’s investment which has been achieved by taking control of around 90 percent of the debt. He is joined on the board by Jonathan Lurie, managing director in Blackstone’s European Real Estate asset management division, and Robert Welanetz, former head of worldwide retail at Jones Lang LaSalle.

 

Blackstone’s head of European real estate, Ken Caplan, said of the deal: “Our acquisition has significantly strengthened Multi’s financial position, and its portfolio includes some of the highest quality retail real estate in Europe. The Multi team has an outstanding track record of bringing retail centres to life and has achieved excellent results in creating spaces that make it exciting to shop.”

 

It has already been mooted that after the transaction, Blackstone will merge the Multi portfolio with three assets it bought last year in Turkey from Dutch company Redevco.

 

Up until Morgan Stanley's investment in 2005, Multi was considered as a “merchant developer”. The majority of its 145 projects were built for German open-ended funds, insurance companies or opportunistic funds on a forward-purchase basis. 

 

As PERE reported in January 2009, a significant development came when 21 Turkish assets – some of which were completed centers and others in various construction and planning stages – were organised into a separate fund, called the Multi Retail Turkey fund. The Canada Pension Plan Investment Board (CPPIB) became a cornerstone investor. At the time, former Morgan Stanley dealmaker, Glenn Aaronson, was Multi chief executive officer. 

 

He said: “Multi was actively looking for investors because MSREF V International had invested its equity and capital had to be found for future growth. Given that the usual real estate loan providers are restricted at the moment and accepting that there would be little interest from investors in an IPO, Multi chose to approach third-party institutions.” 

 

Aaronson is now managing partner at Aevitas Property Partners which won a $250 million seed capital commitment from US pension fund Washington State Investment Board in 2012, but he stayed on as chairman of the Turkey fund.