Redevelopment and asset management
of distressed properties



Weißwasser centerr
Main entrance Sachsendamm


Weißwasser center
mall apparel store


Weißwasser center
home furniture store


Weißwasser center
mall overview

Falling rents and decreasing demands in the last years, especially in the German new federal states, have created a situation where private investors and closed-end real estate funds were getting almost into illiquidity. Insolvency became apparent for them.

In such a situation it is essential to have professional advise and negotiating skills with all parties involved – in particular with the creditor banks.

In the last few years we gained remarkable know how in both sectors retail and apartment management because of the takeover of several closed-end real estate funds which were threatened with insolvency.

Parts of a successful redevelopment concept:
Assurance of warranty claims according to the German  law of
contract (VOB and BGB)
Presentation of documents and handover to attorneys for the purpose
of enforcing warranty and payment claims
Listing of tender documents to ensure the rectification of defects
Conducting negotiations about the recapitalization with banks, supply
companies and all authorities
Development of a long-term rental concept in case of a high vacancy
rate
Long-ranging calculations of profitability and liquidity to optimize the
financial resources required

An important factor for a successful recapitalization management is the trustful cooperation with the advisory boards, trustees and owner representatives.



Weißwasser center
main entrance Sachsendamm


Weißwasser center
Kaufland grocery market


Weißwasser center
Kaufland main entrance


Weißwasser center
Sparkasse


Weißwasser center
Kaufland grocery market


Weißwasser center
Reno sporting goods
and apparel store


Weißwasser center
exterior features

The retail sector in times of change
An example for the successful reorganization and repositioning of a regional shopping-center in Weißwasser/Saxony

Starting point:
A multifunctional shopping and service center with a gross leasable area of app. 142.590 sq.ft. on a property with a total area of app. 378.990 sq.ft. built in 1992/1993. The shopping center has 26 retail units on the first floor and 17 office and medical  units on the second floor and 330 parking lots.

The district town of Weißwasser is located in the north-eastern part of Saxony close to the border to Poland, it is an industrial town. There was a population of 35.400 in 1990. In the administrative district there were 60.000 people.

Problem:
In 1992/1993 the shopping center was built in the midst of a residential area typical for the former GDR (precast concrete slab constructions). 15000 people were living within a walking distance of the shopping-center.

From 1993 to 2003 Weißwasser lost 25 % of the population (2003: population of 24.000). This number will fall under 20.000 in the year 2010; 50 % of the people of the residential area around the shopping-center will have left by then. The walk-in customers will have almost disappeared in the following years and the shopping-center will be located outside the residential areas due to the deconstruction and renaturation of it. For the last 3 years vacancies in the smaller retail areas have appeared although a full letting was quickly achieved at the startup of the center. The retail tenant mix developed in an unfavorable way. According to those vacancies a downward trend seemed to turn up, taking away the necessary footfall and causing further insolvencies among other retail tenants. In return the retail tenants of larger units complained about an insufficient parking situation because of the increasing number of customers, coming to the center by car.

The answer to the problem:
A concept to create more parking lots was developed and the municipality was convinced to sell the green verge between two roads and buildings in front of the shopping center to the community of owners, a closed-end real estate fund. This space was used to create 80 additional parking lots. After developing the detailed planning for the project, getting the building permission and calling for tender the construction of the parking lots was realized in six weeks in the summer of 2003. We did this in cooperation with a consulting engineer group (www.gatas.de), which is specialized in retail units in the East German states. All activities were accompanied by our center management.

Just before the top-selling pre-Christmas period 2003 the new parking lots were completed and were positively accepted by the customers. There was an increase in sales within a short period for all remaining retail tenants. By means of well-directed advertising and marketing actions new retail tenants were acquired in a very short period. The key tenant, the department chain Kaufland, was very satisfied with the new parking lots. The parking lot project lead to early extensions of leases with important retail tenants.

This property with a net asset value of about € 15 million was revitalised and successfully placed on the market with an expense of only € 150.000!

The proverb „No Parking – No Business“ as a benchmark for a successful center management was put into action.



before . . .

and after construction of additional
parking lots

Retail and business units have to be continuously customized to the requirements of customers and the retail market. Further actions like merging of retail units, extension and improvement, reconfiguration of the tenant mix can be examples that show the range of activities for the redevelopment and revitalisation management of distressed properties.

The Nietschmann group of companies manages eight local shopping facilities and other commercial properties in Berlin and the new East Germanl states. Almost all well unknown retail chains such as Aldi, Norma, Schlecker, Plus, Tengelmann, Reno, KIK, Kaufland etc. are among the tenants of those shopping facilities.