Agalarov refinances loans for more than ₽100 billion at Gazprombank

Araz Agalarov's Crocus Group is changing its main creditor: the group will refinance more than 100 billion rubles. loans from Sberbank to Gazprombank.

Gazprombank will become a new financial partner of the Crocus Group, two sources in Sberbank, which until recently was the group's largest creditor, told RBC. This was confirmed by a source close to the developer. According to him, Crocus Group is "in the process" of refinancing its debt, Gazprombank has offered more favorable terms. Another RBC source in the commercial real estate market claims that Sberbank “simply sold the debt” of Crocus Group to Gazprombank, but did not specify the details.

The press services of Crocus Group and Gazprombank did not respond to requests from RBC. A spokesman for Sberbank declined to comment.

Crocus Group took out loans from Sberbank for the construction of real estate, and Agalarov himself called him the company's largest creditor. The group owns more than 1.6 million sq. m of commercial real estate, including the network of Vegas shopping centers, the Crocus Expo exhibition complex, hypermarkets for household goods and products "Your Home".

Why Crocus needed to refinance debts

In the spring of 2021, the HEAD and owner of the Crocus Group, Araz Agalarov, said that the company's debt to Sberbank had reached 120 billion rubles. (later data not available). He explained that even before the 2008 crisis, the company attracted a loan of $2 billion - at that time it corresponded to 58 billion rubles, but after the depreciation of the ruble, the total amount in Russian currency doubled.

After the start of the covid-19 pandemic in 2020, Agalarov, together with his son, the first vice president of Crocus Group Emin Agalarov, even had to take out a personal loan for 700 million rubles in order to pay interest on the Sberbank loan for the third quarter of 2020, he said RBC businessman himself. This was necessary because in the Moscow region, due to the pandemic, there were restrictions on visiting shopping centers, due to which they were closed.

Sberbank is “tired” of this borrower, because since the restrictions of the pandemic, the Crocus Group has repeatedly refinanced loans from the bank, it is difficult for the group to provide them in a crisis, says a source in the commercial real estate market.

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“Any loan is issued for a certain period, and it is possible that Crocus Group loans were close to expiration and they had to either be paid off or refinanced. Refinancing a loan from one bank to another is a normal practice, but here, of course, the conditions are important,” says Sayan Tsyrenov, DIRECTOR of real estate transaction support practice at Technology of Trust (ex-PwC in RUSSIA).

The refinancing process is aligned with plans for a major housing project, says a source familiar with Crocus Group's plans. Now is not the best time for retail and office real estate - accordingly, development plans are associated with residential real estate, he explains. The group plans to build a residential area on the banks of the Moskva River next to Crocus City, Agalarov said. Previously, it was planned to build a block with office skyscrapers, including Trump Tower in collaboration with Donald Trump. “We will start developing this territory with Dom.RF. There will be a modern quarterly residential development with jobs and all the infrastructure: housing, apartments, kindergartens, schools, a sports center, swimming pools and ice arenas, ”said the businessman. The total area of ​​the project will be 500 thousand square meters. m, the construction budget was estimated at 85 billion rubles. Now the site for future construction is laid in Dom.RF, indicated in the USRN.

How Agalarov's commercial real estate is developing now

Crocus Group received $240 million from commercial property leases last year, FORBES calculated. This is in line with the results of 2020 and 26% lower than in 2021. In 2019, the last year before the COVID-19 pandemic, the group earned $370 million from rentals.

“The company has a very high-quality concept and a good pool of tenants, the only drawback I would call a slightly confusing layout and a relatively typical set of brands,” says Marina Malakhatko, head of the retail department of the CORE.XP consulting company.

According to her, the start of a special military operation in Ukraine hit Crocus Group projects not as much as others. Against the background of other large shopping centers, Crocus Group projects have a more favorable situation, agrees Mikael Kazaryan, Head of the Capital Markets and Investments Department at IBC Real Estate. “They didn’t have the outgoing IKEA, they have their own brand “Your House”, there are such anchors as Auchan and Leroy Merlin, which, unlike other foreign brands, continue their work,” he says. The expert calls Vegas Crocus City shopping center the highest quality object in the company's retail real estate portfolio.

Despite this, now the value of the Crocus Group real estate portfolio is equal to the volume of loans or even less, admits a RBC source in the commercial real estate market. According to the SPARK system, Crocus Group has pledged in Sberbank the rights to the trademarks Vegas, Crocus Expo, etc., shares of Kashirsky Mall (owns the Vegas shopping center on Kashirskoye Shosse) and Crotex (operates the Tvoy Dom hypermarkets ”), equipment that ensures the functioning of the real estate of Crocus (the head legal entity of the group) and other objects.

In response to the outbreak of hostilities in Ukraine on February 24 last year and sanctions from the European Union, the United States and other countries, many clothing, footwear and catering brands that rent space in shopping centers left the Russian market. The Swedish group H&M (brands H&M, Cos, Monki, Arket, etc.), the Danish furniture and household goods chain Jysk, and the Japanese Uniqlo left. The Spanish group Inditex (brands Zara, Massimo Dutti, Oysho, etc.) sold its business in Russia. French L'Occitane sold the business to Russian management with a buyback option. Due to the closure of stores of international brands, the attendance of shopping centers has fallen to the lowest level in four years.