The biggest loan taken out by a mall in Romania in the last five years is the EUR220 million refinancing that the owners of AFI Palace Cotroceni in Bucharest got from a syndicate of three foreign banks two weeks ago. Another mall that owes more than EUR200 million is the Palas mall in Iasi developed by businessman Iulian Dascalu, according to a ZF analysis based on Finance Ministry data.
Other malls, like Oradea Shopping City and Galleria Arad are in a more complicated situation, as their debt is 35 times higher than their revenue.
Best positioned mall in terms to debt to revenue ratio is Baneasa Shopping City in northern Bucharest. Its owner, Baneasa Developments, posted EUR41.6 million revenue last year, and debt amounts to EUR110 million, 2.6 times that.
Worst positioned in this regard is Oradea Shopping City, whose debt stood at EUR55.5 million at the end of last year, while revenue was 37 times lower than that, EUR1.5 million. Other heavily indebted malls compared with their annual revenue are Galleria Arad, Atrium Center Arad, ERA Shopping Park Iasi and ERA Shopping Park Oradea. ERA Shopping Park Oradea is also insolvent.
Most malls in Romania were developed with bank loans and owners usually pay only the interests and a small part of the principal and choose to refinance upon due date unless they have found a buyer first.
The development model on the Romanian market has changed a great deal over the last few years, as banks became more reluctant to fund real estate investment, much less mall construction, a bet that turned out to be a losing one in many cities of the country, after the malls there went bankrupt.
Therefore, French-held Immochan is self-funding an about EUR120 million investment in the construction of two shopping centers in Bucharest and Brasov currently in progress, while South-Africa’s NEPI and the Austrian-owned Real4You are working on the Mega Mall in Pantelimon, NE Bucharest, a EUR165 million investment for which they did not take out any loans from banks.
Once construction completed and space rented, banks become more open to grant refinancing loans, which do not go beyond 60% of the market value of the mall or the estimated rent for seven or eight years, in an attempt to avoid having to deal with new bankruptcies.
(English version by Loredana Fratila-Cristescu)