MSREF VII’s $1.1bn deal for St Petersburg mall is one of many that will help to set record volume
International investors are back in the Russian real estate market. Morgan Stanley’s latest global real estate fund, MSREF VII, is buying the Galleria shopping centre in St Petersburg for $1.1bn (€808m) in Europe’s biggest single-asset deal for more than two years.
The deal reflects a yield of around 8.7%. Galleria, which is being sold by Kazak group Meridian, opened last November, and at almost 200,000 m2, is the city’s largest shopping and entertainment centre.
Galleria has served as the launch pad for 22 international brands new to the Russian marketplace, such as Miss Selfridge, River Island and NordSee. Jones Lang LaSalle is understood to be advising on the transaction but did not comment.
In Moscow, Heitman is acquiring the Metropolis Business Park for $120m, while Hines Global REIT has completed the purchase of Gogolevsky Boulevard 11 from Fleming Family Fund for around $100m. The transactions show yields of around 9% and 8% respectively.
Large retail element at Metropolis
Procter & Gamble is the main tenant at the 80,000 m2 Metropolis, which also has a large retail element. Other tenants at the building, which was developed by Capital Partners, include Raiffeisen, OTP Bank and Dell.
Tenants at the 10,900 m2 Gogolevsky Boulevard include the IMF and Delta Airlines. The class A asset was Russia’s first institutional deal when Britain’s Fleming Family acquired it in 2004 from Swiss banking group Credit Suisse First Boston for around $30m at a yield of 13.25%.
This year is set to break all investment volume records for Russia. According to Cushman & Wakefield, $6.5bn of real estate has changed hands in the country so far in 2011. The firm says that the previous high point was $5.8bn for the whole of 2008.
C&W estimates that the total deal volume by the end of this year will reach about $8bn, which will help to make Moscow into one of the biggest commercial property investment markets, along with London and Paris.
Deals in the pipeline include a probable sale of the 74,000 m2 White Square office complex for over $1bn. It is presently co-owned by VTB Capital and US investor TPG (47%), and AIG Lincoln (53%)
The White Square project was developed by a joint venture between Coalco and AIG Lincoln; tenants include Microsoft, PwC, Deloitte, and McKinsey & Co.
White Square comprises three separate buildings and is located by Belorusskaya Metro Station, two stops from the Kremlin, inside the city’s inner ring road.
The location has proved so lucrative for the developers that the joint venture is building another 62,000 m2 office project, called White Gardens, next to White Square. Meanwhile, Hines has been looking to sell its 33,250 m2 Ducat Place III office building, which it completed in 2006, for around $400m.
