Miller back in market to buy Bulgarian retail centre for £100m

Published on Saturday 15 November 2008 13:24

MILLER Developments, the commercial property division of Edinburgh-based Miller Group, has made its biggest acquisition in mainland Europe amid signs that falling prices are attracting cash-rich buyers.

The ?120m (102m) purchase of Mall Varna, the largest new retail and leisure development in Bulgaria, is Miller's first for nine months.

Miller's involvement in the scheme dates back to June last year when it signed a conditional contract to acquire the scheme on its completion.

Since then, however, Miller has sold property across the continent worth 250m as it liquidated assets ahead of the slowdown.

Acquiring the freehold of Mall Varna, which is based in the coastal tourist city of Varna, follows a renegotiation of the terms and indications of growth in the Bulgarian retail market.

Mall Varna, which opened for trading in June this year, is 95% let and has 150 shops, a multi-screen cinema, bowling alley and food court. It boasts an international line-up of tenants including Adidas, Camper, Esprit, L'Occitane, Nike, Nine West and Swarovski.

Phil Miller, chief executive of Miller Developments, said: "Only the best deals are obtaining finance in this market, so this deal underlines the capability of the Miller Developments team to source and execute the best transactions."

He said that he expects it to be cash-generative from day one. "We stopped buying at the end of 2007 and sold most of our mature assets and we have been sitting on our hands since then. We are getting to the point where property is getting interesting again.

"There will be a lot of distressed situations in the UK that will become attractive. Luckily, we are cash rich."

Funding for the deal was provided by the Austrian Raiffeisen Bank. Miller Developments represented itself, while Cushman & Wakefield, in association with Forton International, advised the vendor, Interservice Uzunovi.

Keith Miller, group chief executive, said: "Mall Varna is an impressive addition to our portfolio and the investment is part of the group's strategy to expand its presence in Europe.

"Despite the current economic climate we expect the retail market in Bulgaria to continue to grow, making this prime asset a very attractive investment opportunity. This latest acquisition means Bulgaria is one of eight countries in which we are now operating outside the UK."

Varna is Bulgaria's second largest city and the country's leading tourist destination with a population of 460,000, growing to more than a million during the peak season.