Forton

Successful Development and Sale of the First Modern Shopping Center in Varna

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Overview

Mall Varna, the first modern shopping center in Varna, was developed, leased out and sold to international investor between 2005 and 2008 at significant profit for the developer. Forton, together with Cushman & Wakefield assisted every phase of the project and remained exclusive leasing agent and property manager over two subsequent ownership changes.


The Challenge

Mall Varna was the first major shopping center development outside Sofia. From the outset it was intended to be sold to an international investor so the implementation of institutional lease structures was of utmost importance. To attract interest, it needed a modern and sustainable tenant mix, a challenge at a time of limited presence of international brands in Bulgaria. Under the conditions of forward purchase agreement professional management was also vital for both the buyer and the seller.


The Solution

Forton provided pre-development advice on the concept. Together with the global real estate consultant Cushman & Wakefield it drew up the leasing strategy and acted as exclusive leasing agent. The two jointly prepared and executed an investment sale process generating interest from 15 investors. A new owner in 2008 retained Forton as property manager with responsibilities for the technical maintenance, marketing, finance, rent and service charge collection, coordination and reporting.


The Result

Mall Varna was the first modern shopping center outside Sofia and at the time offered the widest variety of the brands, large international anchor tenants, a cinema, as well as unmatched entertainment and food court offer. It opened at full occupancy and sold to international investor for €120 million at 7.5 per cent yield. Even though competition and an economic recession affected performance, Forton remained property manager after subsequent ownership changes up until 2012. It played a role in renegotiations, securing a proper and regular dialogue between landlord and tenants and thus managing hold vacancy low. The tenant mix was adjusted to reflect the new market conditions. The only remodeled Puma store in Bulgaria’s third largest city opened in Mall Varna in 2014, an evidence for the constant interest of retailers in the project.