Multi Development Corporation

DC relies on strong branding to secure developments, while diversification could see it move into residential development and asset management Multi Development Corporation (MDC) is expanding rapidly into new markets. Following the recent acquisition of schemes in the UK, Czech Republic and Greece, the company is active in more than 10 European markets. MDC covers all sectors, but specialises in mixed-use city centre schemes. With such schemes normally anchored by retail and leisure, MDC is a leading retail developer, building shops in malls, streets, arcades, glass spheres and underground. CEO Jaap Gillis, who joined MDC from ING Real Estate early last year, has assumed special responsibilities for Dutch developments and the company’s expansion into central Europe. He expects that this year’s turnover will exceed last year’s €343m (NLG756m), on which a net profit margin after tax of 9.7% was achieved. More than half of turnover will be achieved outside the company’s home market. The current staff of under 200 will increase to around 250. Last year’s takeover by ABN Amro of one of MDC’s domestic competitors, Bouwfonds, led to speculation that the bank might use its 38% stake in unquoted MDC to try to merge the two property development operations. This rumour is unfounded, says Gillis, who argues that the status quo suits both parties. Gillis points at the value of the strong brand name MDC has developed. This message and the company’s growing track record have opened doors to schemes in many countries. It has secured reliable support from lending and funding institutions, and gained the confidence and demand from end users. For its many retail schemes, the relationship with tenants has been formalised in the International Retailers Forum, a channel for dialogue with international retailers. Gillis underlines the significance of a strong brand name to secure projects. It means that MDC has no need to invest heavily in land positions to secure future production. Less than €38m is activated on the balance sheet for land holdings. Despite being a pure developer, the spread of business over many markets has helped MDC to avoid cyclical swings, and it has managed a consistent growth of turnover and earnings. Further diversification remains on the agenda. The geographical spread of activities continues. Last year, it secured its first UK scheme with the Victoria Square scheme in Belfast. Plans for a 55,000m2 mixed-use scheme of retail, leisure, hotel, apartments and a World Trade Centre are awaiting planning consent. The company is bidding for a mixed-use development in Sheffield’s city centre where, in the shadow of the Meadowhall regional centre, a stern test could be waiting for MDC’s claim that its schemes help turn around the fate of city centres. This year, MDC opened an office in Greece to oversee the Stoa Olympica project in Athens, which will include a 60,000m2 shopping centre, multiplex cinema, hotel, offices and a complex of 460 apartments, initially for use as the Media Village during the 2004 Olympic Games. In the Chodov district of Prague, MDC is to develop a 75,000m2 shopping mall with offices and apartments in a joint venture with Rodamco Europe, who will be retaining the investment. Other markets in central Europe are being explored, with Gillis also singling out Austria and Switzerland as countries where MDC expects to get a number of schemes off the ground. MDC is diversifying in other ways as well. In the Utrecht suburb of Zeist, the company is building its first purely residential scheme, which is aimed at the top end of the market. The 60 villas were quickly sold prior to completion. Expansion into fund management is not on the agenda, but some of the company’s regular funding partners have shown interest in setting up investment funds based on MDC schemes. Gillis admits that it may prove attractive to MDC to benefit from the investment performance of its developments, by taking a stake in such funds. The idea is still in an early stage, but could lead to MDC moving into asset management, by being retained by such funds to exploit the company’s property expertise to secure the future performance of the investments. In the meantime, it is business as usual in MDC’s core markets. In the Netherlands, MDC remains busy with retail-led town centre schemes. During this year, a 20,000m2 scheme in Dordrecht is due for completion, and a start has been made to a similar scheme in Enschede. This will be followed next year with the start of a town centre scheme in Arnhem. Other developments in the pipeline include a large, mixed-use scheme in Heerlen, with 135,000m2 of commercial space and 200 apartments, together with schemes in Nijmegen, Groningen, Emmen, Woerden and Maastricht. Office developments are concentrated in the major cities. In The Hague, a start will be made this year on the 21,000m2 Twin Towers development. MDC is also a member of a consortium set up to redevelop the nearby Central Station, where the company will be responsible for the development of 60,000m2 of offices. A number of prelet offices are under construction in Utrecht, both in the city centre and in a phased 160,000m2 development at Papendorp on the outskirts. In Amsterdam, a start will be made later this year on a development spanning the A10 motorway, which will include 30,000m2 of offices, as well as 12,000m2 of retail. Abroad, MDC goes it alone. Gillis argues that MDC’s international experience, tested in many countries, gives it the clout and expertise to operate independently. He sees drawbacks associated with the alternative of forming joint ventures with local partners, which are time consuming and not always effective. Portugal is MDC’s second home market, where it has been actively developing shopping centres for more than a decade. The latest centre – Forum Algarve (45,000m2) in Faro – opened this year. More are in the pipeline and the 110,000m2 Forum Almada is under construction. This year will see the start of a 31,000m2 retail park in Coimbra, a 43,500m2 retail development, with apartments in Funchal, Madeira and Forum Montijo, a 39,000m2 retail development incorporating both mall shopping and retail park. Another scheme, Metropolis, is a mixed-use scheme on the site of the Sporting Lisboa stadium, where next to a new stadium MDC will build offices, shops, apartments and the so-called “Food Ball”, a glass and steel sphere containing five floors of restaurants and leisure. In Spain, MDC has yet to develop a scheme, but it is involved in plans for retail schemes in Salamanca and La Coruña. Development activities in Germany and France were started up four or five years ago, and the first schemes are now coming through. Last year saw the opening of MDC’s first two German town centre schemes in Solingen and Bocholt. A start has just been made to a mixed-use town centre scheme in Hagen. This will be followed by other retail-led schemes in Osnabrück, Wiesbaden and München Gladbach. On a larger scale is a proposed 72,000m2 office development in Cologne. In France, a town centre scheme in Vichy is under construction. In the pipeline is a similar town centre scheme in Cholet, and next year MDC (with Sadev) hopes to start on site with a large development at Les Portes d’Arceuil on the south side of Paris. The 160,000m2 development will include La Vache Noire, a 36,000m2 two-level underground shopping centre. The Belgium development programme has yet to begin. This is expected later this year with the development of a mixed-use scheme, including 13,000m2 of shopping in the Abdijstraat in Antwerp. Also in Antwerp, MDC plans to start next year with the creation of a shopping arcade within a listed building. Following on from that will be retail schemes in Genk and Tongeren. Multi Development Corporation Hanzeweg 16 PO Box 875 2800 AW Gouda The Netherlands Tel 31 182 690 900 Fax 31 182 690 690 Financial highlights Last year saw less investment for schemes under construction, but there is a healthy pipeline ALIGN=”CENTER”>2000 ALIGN=”CENTER”>1999 Balance sheet items €m NLGm €m NLGm Total assets 323 712 357 787 Schemes under construction 176 388 252 555 Schemes in the pipeline 62 137 27 60 Equity 85 187 77 170 Profit & loss account items Turnover 343 75.6 340 749 After-tax profit 33.2 73.2 22.9 50.5 Source: MDC Selected developments MDC says its development experience in several countries means it does not need to work with partners Project Location Content Status Stadspark Oranje Nassau Heerlen Offices (65,200m2), retail (38,000m2), leisure (34,000m2), apartments (200) Development stage Gulden Winkelplantsoen Amsterdam Retail (12,000m2) offices (30,000m2) Development stage, starts 2002 Les Portes d’Arceuil Paris 160,000m2 mixed-use development, including offices and retail (38,000m2) Development stage, starts 2001 Les quatre Chemins Vichy 20,000m2 mixed-use development Under construction Forum Almada Almada Shopping centre (110,000m2) and leisure Under construction Stoa Olympica Maroussi (Athens) Retail (60,000m2), cinema, foodcourts, leisure, offices, hotel and apartments Development stage, to be completed by 2004 Olympic Games Victoria Square Belfast Mixed-use scheme (55,000m2) with retail, offices, leisure, hotel and apartments Development stage Metropolis Lisbon Mixed-use scheme with offices (117,000m2), retail (20,000m2) and residential (20,000m2) Development stage Chodov Prague Shopping mall (75,000m2) with offices and residential Development stage jv with Rodamco Europe Source: MDC