“We will invest EUR5 million in remodeling the shopping centers in Galati, Piatra Neamt, Ploiesti, Ramnicu Valcea and Tulcea. In Tulcea we will begin work this year but complete it the next, when our list includes Braila and Ploiesti (a different center than the one remodeled in 2014 i.e.),” Carlo Barban, 36, said.
The company has already done some remodeling, having invested EUR4.5 million in it last year.
“The 2015-2016 plan includes further investment of EUR3.6 million.”
Winmarkt network managed by Win Magazin, numbers 15 retail centers and an office building in medium and large cities other than Bucharest. Ploiesti is the only city where the company has three shopping centers and an office building, while the other cities are served by only one center.
Italy’s IGD group in 2008 bought the Winmarkt centers from US-held NCH, a company run by Siminel Andrei. Andrei bundled a number of shopping centers built during the days of the communist regime in various cities such as Ploiesti, Valcea, Buzau, Tulcea and Cluj-Napoca and sold them a little while before the onset of the crisis.
“Our shopping centers are located in the center of the cities, positioned as well as the Unirea Shopping Center in Bucharest is,” says Carlo Barban, who came in Romania at the end of 2005 when he took an audit job with consultancy Boscolo&Partners. In 2009 he joined Winmarkt as chief financial officer and became CEO this spring.
He says he stayed in Romania because “it is the country that provides the most opportunities for business in Europe.”
Whereas investors took a speculative approach during the boom days, when they would come, make money and then leave without leaving anything behind, things have changed in the meantime and a basis for new growth has been created.
“We bought the shopping centers in 2008 and then worked out the business strategy over several months. Afterwards we consolidated client portfolio and stabilized traffic.”
In 2009, the company decided to attract international anchor tenants, and its first such tenant was Carrefour, which can be found in 10 of the 15 Winmarkt centers today. Carrefour is the most important tenant of Winmarkt.
The other important tenants are H&M (3 stores), Domo (8), B&B Collection (9) and Drogerie Markt (5).
“H&M is the latest international brand attracted and we will open another store of the brand in Piatra Neamt by yearend.”
The new Winmarkt boss says the arrival of international brands was good for business, but now the company is trying to create a mix of foreign and local tenants.
“Our most important Romanian tenants are Sense (clothing), Stil (jewelry), San Savana (shoes), Punto Zero (clothing) and Robest (accessories).”
Overall take-up of Winmarkt shopping centers is 83%.
Win Magazin also started developing entertainment areas with playgrounds for kids and restaurants, especially local businesses. Carlo Barban says it will not open cinemas, because the buildings were built vertically, so floor space does not allow for such developments.
“After we took over the shopping centers will analyzed the tenant mix and shortly thereafter some retailers closed and others were replaced. Attracting international tenants started in 2009, but that meant reducing average rent per square meter.”
Rent varies from EUR8 to EUR13 per square meter for an anchor, and it is only the starting price, which may go up over time or once sales pick up, while smaller tenants may pay as much as EUR30 per square meter for a very well positioned space, Barban says.
The decline in rent per square meter was as high as 50% during the crisis, but in Winmarkt’s case it only reached 30% to 35%, Winmarkt boss added.
The rent decline was one of the factors for Winmarkt’s lower revenue in Romania. Other causes include the lower purchasing power and salaries.
Win Magazin posted 43.4 million lei (EUR9.9 million) revenue last year, down 13% on 2012 and 40% on 2009. Profit margin, too, fell to 28% compared with 39% in 2009. Traffic, on the other hand, has been relatively constant at 32 million people a year, Winmarkt’s CEO said.
“We budgeted EUR9 million to EUR10 million revenue for next year and it will be a big effort for us to keep the revenue at the 2012 level, considering we will conduct extensive remodeling on some of our shopping centers.”
The centers will not be closed for the duration of the remodeling process and Carlo Barban wants similar results to those of a regular period. Remodeling takes three to twelve months.
“The year 2014 will be our most difficult year because it will be a year of major investment, but then time will come to collect on all those years of consolidation.”
The best shopping centers of the group are those in Ploiesti, followed by Galati, Ramnicu Valcea, Cluj and Piatra Neamt.
(English version by Loredana Fratila-Cristescu)