The Morgan Stanley Foundation refused to purchase the Nevsky Center retail and entertainment center in the center of St. Petersburg, two partners of the company and two consultants working with the facility told Vedomosti. Another consultant knows that the negotiations are continuing formally, but it is highly unlikely that the deal will be closed.
The decision to abstain from the deal was made in connection with the new US sanctions against Russia, says one of Vedomosti's interlocutors. Morgan Stanley left the negotiations a month ago, that is, before the news of the new sanctions became known, he shared information about the second - he believes that the deal was generally affected by the deterioration of relations between the two countries.
The request to Morgan Stanley remained unanswered. A representative of Colliers International (a broker who sells the Nevsky Center) and Anna Bjarland, head of the communications department of the Finnish Stockmann Group (owner of the facility) declined to comment.
Nevsky Center with an area of 91,000 sq. M. m opened in 2010. The complex consists of a shopping center, whose anchor tenant is the Stockmann department store, as well as office premises and underground parking. In late October 2016 Stockmann Group put up the object for sale. The purchase of the complex was considered by different companies.
In February of this year, the newspaper Kommersant reported that the Morgan Stanley fund remained the only contender for the Nevsky Center. The American company considered the purchase of the complex in conjunction with the Czech PPF Real Estate, say two people close to the different sides of the negotiations. In their opinion, since Morgan Stanley withdrew from the deal, the participation of PPF Real Estate in this project is now also in question. This is known to one of the former aspirants for the complex.
Two consultants who worked with the negotiating parties assure that now PPF Real Estate wants to buy Nevsky Center independently. Obtain confirmation of this failed. The representative of PPF Real Estate declined to comment.
Director of Capital Markets Department of Cushman & Wakefield Alan Baloev calls Nevsky Center a high-quality asset with a good location in the center of St. Petersburg and a stable cash flow. In this regard, it is interesting for investors. "The unconditional advantage of the Nevsky Center is its location on Nevsky Prospekt near the Moscow railway station," CBRE CEO Vladimir Pinaev agrees. In his opinion, the complex has the potential for growth in rental revenue due to a change in the concept and monetization of the significant pedestrian traffic of Nevsky Prospekt. With a successful positioning, Nevsky Center can become a successful investment, despite the competition from the shopping center Gallery, located just 300 meters from it, concludes Pinaev.
The market value of the Nevsky Center Baloev estimates at 10-12 billion rubles. He recalls that the owner of the complex hoped to gain from the sale of the amount in euros, and the rate of this currency has recently increased significantly in relation to the ruble. This, in his opinion, could lead to a decrease in investors' interest in the St. Petersburg facility.
Morgan Stanley is one of the most active investors in Russian real estate. In 2012, one of the funds of the investment company bought a shopping center "Gallery" (192,000 sq. M.) In St. Petersburg, paying for it about $ 1.1 billion. In the spring of this year, consultants told Vedomosti that the US investment company wants to sell this facility in connection with the expiration of the fund's work and expects to gain at least $ 1 billion for it. In 2013, another Morgan Stanley fund purchased from the Capital Partners the shopping and entertainment part of the first Metropolis complex (205,000 sq. m.). The transaction was a record $ 1.2 billion at that time. In the same year, half of the facility was resold to another American company, Hines.