Multi, Meyer Bergman open Forum Nova Karolina

European shopping centre specialist Multi Development and real estate fund manager Meyer Bergman have opened Forum Nova Karolina, the first part of a major urban development and regeneration project in the eastern Czech city of Ostrava.

Forum Nova Karolina comprises 240 shops over an area of 58,000 m². The shopping centre is the first completed element of phase 1 of the regeneration project in Ostrava. Multi is developing four planned phases to extend the inner city within a 32-hectare brownfield site in the former coalmining region.

Phase 1 consists of the shopping centre, as well as a 23,000 office building and 220 apartments which are being developed by joint venture partners. The entire 4-phase project is expected to complete by 2018.

Multi has been active in the Czech market for 10 years. Ronald Dasbach, managing director in CEE for Multi, noted that Forum Nova Karolina was probably the developer’s best project in the country so far and was of a very high international standard. ‘This project could have been built in Paris or Rome,’ he told the press.

Ostrava has a thriving steel industry and is the third largest city in the Czech Republic. Located near the Polish border, the city has a catchment area of 1 million inhabitants.

Multi won the tender for the project in 2005. Negotiations with a club of banks for funding was derailed by the financial crisis in 2008 and work involving a team of 2,000 people was suspended. The bank negotiations resumed in 2009 and were concluded in 2010.

In November 2011, Meyer Bergman and Healthcare of Ontario Pension Plan (HOOPP) acquired Forum Nova Karolina and Forum Ústí nad Labem, located in its namesake city north of Prague, from Multi for EUR 300 mln.

The acquisition was undertaken through a 50:50 joint venture between Meyer Bergman's specialist retail focused fund, Meyer Bergman European Retail Partners I (MBERP) and Healthcare of Ontario Pension Plan (HOOPP). HOOPP is also an investor in the Meyer Bergman fund.

While the final investment volume for the acquisition of Forum Nova Karolina is being decided by an ongoing pricing mechanism, Meyer Bergman said the net initial yield was about 7%.

Read the full story in the April issue of PropertyEU Magazine