Blackstone completes takeover of European mall specialist Multi

US private equity giant Blackstone has completed the acquisition of European shopping centre developer Multi Corporation in one of Europe's largest distressed transactions since the onset of the credit crisis.

Multi currently owns or manages 56 shopping centres in 13 European countries including Turkey, where it is the largest owner and manager of shopping centres. The Gouda, Netherlands-based retail specialist has over 500 employees across its mall management, asset management, development and support businesses.

'As a Blackstone portfolio company, Multi will be a well-capitalised, growth-oriented, pan-European retail platform focussed on creating, managing and improving sustainable rental income,' New York-based Blackstone said on Thursday in a statement.

Blackstone has been actively working on a takeover of Multi in recent months and was given the green light by the European Commission in late July.

Multi, Europe's largest privately-held shopping centre developer, entered the spotlight in April amid media reports that Blackstone was close to taking control of the group due to liquidity problems relating to a €900 mln loan package. In April Blackstone was said to have acquired almost half of Multi's €900 mln in corporate debt over a nine month period at a hefty discount of 50 cents per euro of debt.

Upon closing of the deal, Dick van Well, formerly chairman of Multi’s supervisory board has joined the management board as its chairman. Heino Vink and Mark van den Berg will continue to serve on the company’s management board.

Jan Meines, who has served on the Multi supervisory board since 2011, has been elected as the chairman of the supervisory board. He is joined by Jonathan Lurie, managing director in Blackstone’s European Real Estate activities, and Robert Welanetz, former head of worldwide retail at Jones Lang LaSalle.

'Our acquisition has significantly strengthened Multi’s financial position, and its portfolio includes some of the highest quality retail real estate in Europe,' commented Ken Caplan, head of European Real Estate at Blackstone. Caplan said Blackstone looks forward to take advantage of expansion opportunities in European retail together with Multi.

The deal is the latest distressed acquisition completed by Blackstone in Europe after the private equity giant raised billions for a new European real estate fund, its fourth on the continent. The company is in the running to acquire a major stake in the French real estate investment trust Gecina and last month completed the purchase of the Franciacorta Outlet Village in Italy for a discount of nearly 20% to market value.

US push into Europe’s distress

A substantial amount of capital is targeting European distressed real estate, with US private equity firms at the forefront of investment activity. Lured by a combination of rising corporate distress and stretched public finances, US-based investors have raised billions of euros for European opportunities, and competition for distressed assets is increasing. In addition to real estate specialists such as Tristan, Orion and Moorfield, hedge funds like Centerbridge and private equity firms like KKR and Baupost are also finding their way into the European playground.

‘We are seeing a gravitation from the big buys of the likes of Lone Star, Fortress and Kennedy Wilson to new entrants like Pimco and Marathon, and others out of the US whose names we’ve never heard of,’ commented Jos Short, founder and executive chairman of Internos Global Investors. ‘Now even the banks are looking for distressed situations in Europe, with JP Morgan and Citi Bank reportedly being shortlisted for Deutsche Postbank’s UK performing loan book.'

This week alone, KKR clinched its first purchase in France with the acquisition of the River Plaza from Aberdeen and US student housing operator Greystar Real Estate Partners entered the UK with the purchase of the bulk of the collapsed Opal student housing portfolio in the UK.

The package, consisting of 21 assets with a value of some £300 mln (€360 mln), was sold by Ernst & Young Real Estate Corporate Finance on behalf of a group of banks led by RBS.