Why Ceetrus got rid of commercial space in Russia

Auchan’s subsidiary sold its Russian assets. We are talking about the French corporation Ceetrus. It owned about 150 thousand square meters of commercial real estate, including the Akvarel and Troika shopping centers, as well as checkout areas in the hypermarkets of the parent company. On April 12, the Trade Galleries company became the new owner of the objects. At the same time, according to RBC, the preliminary purchase and sale agreement was signed back in October 2023.

What is known about the transaction and the buyer of the assets? Details are in the Kommersant FM help:

Analysts estimated the value of the Ceetrus portfolio at 20 billion rubles. They called the assets extremely attractive to investors. The shopping centers that belonged to the group are small in area, which means they have high liquidity, Vedomosti wrote. At the same time, as experts note, the new owners will have to change the concept of malls and build some business processes from scratch in order to increase visitor traffic.

However, despite this, the deal is beneficial for all its participants, believes Anton Belykh, CEO of the consulting company DNA-Realty: “In general, this may be due to the general practice of large retailers leaving the ownership of their premises. At one time, a similar transaction was carried out by X5 Retail Group. They sold a lot of their buildings under lease agreements. It’s just that retailers don’t want to own space; it’s becoming, roughly speaking, impractical. Plus, it allows you to significantly reduce the staff, the entire sublease and rental department, in order to reduce administrative costs and free up money for development and promotion.

Most likely, the deal was at some kind of discount, and everything calmly passed into ownership. Probably, all lease agreements were specified in the contract, the preservation of all sites under lease relations, with registered agreements. Apparently, since everything went quietly and unnoticed, it means that we agreed on normal terms for everyone. This deal is very large, because there are many objects and they are very diverse. But at least this is not a departure from the market specifically as a retail sector. But I do not rule out that this may be the first stage of leaving the market entirely. At least one heavy asset was disposed of.”

In December 2023, the media reported that the Ministry of Industry and Trade warned about the risk of Auchan leaving Russia. The department noted that for now the retailer does not plan to suspend operations, but may take such a step due to sanctions pressure. Against this background, the ministry even developed preventive measures. In particular, it was proposed not to limit transactions for the acquisition of assets of foreign networks by large Russian players. However, the head of the Infoline-Analytics company, Mikhail Burmistrov, sees no reason for concern: “I would not connect the strategy of the Ceetrus company with the strategy of Auchan, because these are different divisions, different businesses. I haven’t heard any rumors about Auchan’s plans to leave Russia, that’s the first thing.

Secondly, the logic of the exit is not very clear, because objectively it would now be extremely difficult to find a potential buyer. Auchan is not in the easiest situation. The company’s revenue in 2023 decreased by 4.5% in the difficult hypermarket segment. Most players are experiencing serious problems. Large formats, there is a fairly low level of interest in them.”

In March 2022, Auchan CEO Yves Claude said that the retailer will not leave the domestic market because it is aware of its social responsibility. According to the top manager of the network, the company employs about 30 thousand Russians, for whom it is important to maintain their earnings. In addition, the holding’s clients should still have the opportunity to purchase cheap goods in conditions of high inflation.

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Ivan Khorushevsky