Groupe Casino, Whitehall to Build Polish Shopping Malls in $680M JV

July 05, 2007
By Gail Kalinoski, Contributing Editor

Looking to speed up the pace of its commercial development projects in Eastern Europe, Casino Guichard-Perrachon, S.A., France's largest supermarket owner, has teamed up with Whitehall real estate investment funds in a $680 million joint venture.

The deal calls for Whitehall, a division of Goldman Sachs, to finance 75 percent of the JV’s development costs of several shopping centers in Eastern Europe. At this time, three malls are being constructed in the Polish cities of Slupsk, Opole and Dabrowa with a total space of about 1.37 million square feet.


Whitehall will invest a minimum of €500 million (U.S.$680 million), in the joint venture over the next five years. Groupe Casino’s contribution is the transfer of the three shopping centers to the partnership. A release from Groupe Casino said future investments should be financed with sale proceeds of the finished developments.

“This partnership provides an opportunity for Casino to optimize the value of its Polish real estate assets, to speed up the pace of development of its commercial property projects in Eastern Europe and to limit its investment to current levels,” a statement from Groupe Casino noted. “The agreement concluded with the Whitehall funds is part of Casino’s strategy to enhance the value of its real estate assets and to leverage its development expertise.”

The agreement calls for Groupe Casino to hold the majority of the voting rights, noting it should receive between 65 percent and 70 percent of the development margin. The Saint-Etienne, France-based firm said the business is expected to contribute to its results on a recurring basis starting in 2009.

The Whitehall deal comes nearly a year after Groupe Casino sold 16 Casino hypermarkets in Poland to GE Real Estate Central Europe for €550 million (U.S.$687 million), according to a July 18, 2006 CPN report. CPN noted then that the GE deal was part of Groupe Casino’s exit from Poland, in which it sold nearly all its real estate to GE and its retail operations to Metro Group. Three years earlier, GE had bought 13 retail centers from Groupe Casino in Poland for€220 million.

A July 3 Bloomberg story by Albertina Torsoli and Peter Woodifield noted that Groupe Casino had sold off most of its Polish assets last year to reduce debt and focus on Latin America and Asia. Most of the growth in Groupe Casino’s international business is in Latin America and Asia, according to the firm’s first quarter 2007 report.

When it divested itself of its Polish operations last year, Groupe Casino retained a group of commercial development projects and Mayfield, its Eastern European real estate development arm. While the first three projects are in Poland, Groupe Casino noted that the Whitehall JV could also fund future shopping centers in other parts of Eastern Europe.

In another big European deal, affiliates of the Whitehall funds bought a 37-property portfolio in Germany from DEGI’s GRUNDWERT-FONDS open-end fund for more than €2.45 billion (U.S.$3.3 billion), according to a May 10 CPN story. The portfolio consisted of 35 office buildings, one shopping center and one industrial facility.

Here in the U.S., an affiliate of Whitehall Street Global Real Estate Limited Partnership 2007, recently agreed to acquire Equity Inns for $2.2 billion, CPN reported on June 21. The third largest hotel REIT based on the number of owned properties, Equity Inns has a portfolio of 132 hotels with 15,731 rooms in 35 states.

On April 23, CPN reported that an affiliate of Whitehall was buying American Casino & Entertainment Properties L.L.C., the gaming operations of an American Real Estate Partners subsidiary, for $1.3 billion.

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