The sale of AM Development’s commercial arm to Morgan Stanley last month marked a new chapter for the Dutch-based company. The deal, which led to the delisting of one of Europe’s largest retail developers, has given the company a new lease of life.
Freed from the shackles of the stock market and worries about hitting targets, AM could begin a new way of thinking.
At the offices of the company’s London surveyor, Gardiner & Theobald, on a sunny but cold February day, Arnold de Haan is ready to outline AM’s future plans to Estates Gazette. Rising from his seat, de Haan is a giant of a man, whose stature clearly matches his position as chief operating officer – the top job in the company that he took up on 1 January. De Haan states categorically that he will start from the very beginning — from when the company was first established (see panel). Ten minutes later, he moves on to modern history and explains that, following the new partnership and the demerger from construction company Amstrelland, there has been a change in name. Gone is AM Development, and back in is the old Multi Development name that the company had sported for 22 years.
The next change is in the company’s operating policy. No longer will Multi Development just build its massive retail developments all over Europe purely to be sold on. Now it intends to become an investor – holding on to a select number of developments to start a portfolio. It is also moving into mall management.
But Multi Development will still stay true to its roots – building cutting-edge retail schemes and regenerating Europe’s city centres. It currently has developments in 13 countries and is looking for new European ventures, while developing in far-off countries such as China and India is not entirely ruled out.
It was the rise in values across Europe that prompted MD to rethink its position. Glancing at the stack of papers in front of him, evidence of a morning full of meetings, de Haan says: “The new strategy is to profit from the growth in value of the projects within the market.” From his delivery this is clearly something that de Haan believes is entirely logical in today’s world. Giving credence to his point, de Haan uses Portugal – the first country in which MD developed outside its native Holland – as a prime example. “Capital rates have gone from 10% to 6-7%. There’s been a real capital gain on the assets.”
Multi Development has 13 developments in the country, including the Almada Forum.
MD is also banking on its projects in eastern Europe. The company’s Prague scheme – the 55,000m2 Centrum Chodov – has a total investment of €138m, with an estimated yield of 9.3%. Now the attention is turning to Poland. “Look at Poland. When we started buying sites, capital rates were about 12% because it was an immature market, but because of the increased competition today they are between 7% and 8%. If we had hung onto those assets we would have benefited,” says de Haan. There is the distinct feeling that the 51-year-old Dutch man is berating the fact that the company hadn’t taken advantage, especially when, in the past, it had been a trailblazer. That is due to be rectified. In November, MD announced that it would build its first shopping centre – a 44,000m2 development – at Koszalin, in north-central Poland.
He might be a corporate man in a grey suit in charge of 475 people, but de Haan is keen to get across that MD will remain a company that is very innovative, design-driven and, today, particularly focused on regenerating city centres. “We look to add something to the environment,” says de Haan, using Victoria Square, which is a 700,000 sq ft (65,000m2) redevelopment of a quarter of Belfast city centre, as an example.
When asked if the company was forced down the regeneration route because of the difficulty of finding new sites, de Haan looks surprised, but does admit that it is less complicated building on new sites. “Brand-new developments are always easier. Build on the outside of a town or city and you get a piece of greenfield land on which, within the constraints, you can build what you want. But in the city centre you have to get a compulsory purchase order and that’s always a very lengthy process. But we have got quite good at it.” De Haan adds that regeneration has now become very important because, “throughout Europe, people do like being in the city centre again”.
Within the UK, MD has several schemes either under development or in the pipeline. Victoria Square in Belfast is due for completion in 2008, and the company has also been chosen as the preferred developer to regenerate the Edinburgh’s historic shopping area — Princes Street. And then there is the redevelopment of the Southgate centre in Bath where MD is, says de Haan, choosing his words, “trying to wrap up an agreement with [UK developer] Morley.”
When asked how working in the UK compares to how the company works in the rest of Europe, de Haan is very diplomatic. He says it is slightly easier working within the British system. “When you get CPOs in the UK, that’s it, development can then start, but outside the UK it is very different.” And, despite what many UK agents might say, de Haan believes that the British planning system, on the whole, is “quite good.” When pushed, de Haan reveals that the systems in Germany and France are a little harder to navigate.
While it is not a major problem, de Haan does add that “it would be nice if [the UK] was within the eurozone.” Letting his corporate facade drop, he breaks into a smile and says that “one day it will be”.
Entering markets that are slightly different to others has never been a problem for MD, as de Haan points out: “You have to remember, we are developers who love to be in emerging markets. We have moved headlong into Turkey, where we were one of the first to build.” The first scheme, built through local company MDC Turkmall, set up by MD, was a 41,805m2 shopping centre in Izmir. It has been sold on to Commerz Grundbesitz Investment – de Haan’s former employer pre-MD.
With 70m inhabitants and the future prospects of joining the European Union, Turkey has prime pickings for developers. De Haan describes the country as “being very underdeveloped”. He adds that MD is poised to build millions of square feet there in the next few years. “The growth is amazing.”
Other countries catching MD’s interest are the Ukraine, Romania and Bulgaria, which will complete an eastern European full house to go with those developments by the company in Slovakia, the Czech Republic, Hungry and Poland. De Haan would not be drawn on Russia. Even China and India could be possibilities, although de Haan says a move that far would be a long way off.
“Expansion is down to how much we can control and how much we can manage because we believe that senior management should go to each country. Currently we are covering many countries in Europe. As well as expanding, we also want to build up our mall managers and our asset mangers, so there is a lot happening. To go to India and China we would first need to increase our staff.” With that, the EG photographer leads de Haan out of the office and into Bedford Square next to the British Museum. The plan is to get some photos of him outside in the gardens. The one and only time he lets his guard down is as he shivers without an overcoat and utters “ah, but it is so cold out here”. But, like MD’s new direction, de Haan wanders off with a determination to give his best side to the camera – and hence the world.
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Multi Development Corporation started life 25 years ago, when it was founded by two Dutch developers Hans van Veggel and Ton van Dam. Having initially started with developments in its native Holland, the company expanded into Portugal. As the business grew further and expanded throughout Europe, it needed more capital. This came three years ago when MDC merged with Amstelland, a residential developer, and the new company changed its name to AM Developments. AM Developments now had two distinct arms — commercial and residential. The former concentrated on developing in Europe, including Victoria Square, Belfast (pictured above), while the latter decided not to venture outside Holland. As a result, the company never fully integrated, but both arms were cash-rich; at the beginning of this year, AM commercial had a €10bn development pipeline across Europe, while the residential side had a €10bn pipeline in Holland. Last November, the group announced that the two arms were to separate after approaches from different potential purchasers. Morgan Stanley had said, in the middle of last year, that it was interested in buying the commercial arm. The deal was finalised on 25 January, when MSERF paid €479m (£322m). This followed the successful bid of Dutch builder Royal BAM Groep for the remaining share capital of AM. AM was subsequently delisted and demerged and the name changed to Multi Developments. |
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1954 Born in Amsterdam 1977 Graduates from the judicial faculty of the University of Utrecht, Netherlands 1977 Joins Interned Holding, the management organisation of Wereldhave’s international real estate portfolio 1989 Appointed MD of Vaste Waarden Nederland’s property investment fund 1994 Managing director of Commerz Grundbesitz Investment June 2005 appointed chief operating officer of AM Development (now Multi Corporation) to become CEO as of 1 January 2006 agddag;daggda Lifestyle Arnold de Haan lives in Holland and is married |
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