Degi suspends Mall of Sofia deal pending economic review

German fund manger Degi has postponed the acquisition of the Mall of Sofia shopping centre from GE Real Estate and Quinlan Private, saying it wants to reassess the situation in light of the rapidly worsening economic situation worldwide. The potential transaction volume for the deal agreed provisionally in October was not disclosed but is thought to be in the region of EUR 110 mln.

Degi spokesman Dietmar Muller said all the basic element such as consumer spending, occupancy levels and the Bulgarian property investment market were being reassessed before a final decision would be made whether to proceed with the transaction or not. 'The simple reason for the review is that all the facts have changed. The economic climate has changed very quickly and this has had an effect on the property market in Bulgaria,' Muller said.

'We are in what is probably the largest financial crisis in 80 years so we think this is a good reason to have another look at all the relevant factors,' he added.

Talks with GE and Quinlan are scheduled to recommence in the first quarter of 2009.

Mall of Sofia was opened in mid 2006 and has a total built-up area of 73,000 m². All of the 130 stores are leased to major brands, The complex also features 10,000 m² of office space, 12 conventional movie screens and Bulgaria's first 3D screen. GE and Quinlan acquired 100% control of the mall in 2006 from their co investors Israeli companies Ocif and Aviv.

Quinlan and GE acquired full ownership of the Mall of Plovdiv in July last year. The shopping centre comprises 40,000 m² of retail space, 11 cinema screens and parking for 700 cars. The investment volume was not disclosed but GE and Quinlan are thought to have more than EUR 100 mln in total.