Hines CalPERS Russia Long Term Hold Fund Acquires Stake in Moscow’s Metropolis Mall

By Adriana Pop, Associate Editor

Moscow—A real estate fund managed by Morgan Stanley Real Estate Investing (MSREI) has announced the sale of a stake in the Metropolis Shopping and Entertainment Mall in Moscow to the Hines CalPERS Russia Long Term Hold Fund (HCRLTH). Terms of the transaction were not disclosed.

Located in the northwest part of the city, the 2.2-million-square-foot shopping center is widely recognized as Russia’s premier full-price retail development, with approximately 55,000 customers per day. Major tenants include food hypermarket Karusel and department store Stockmann, along with a large number of international retailers: Michael Kors, H&M, GAP, River Island, New Look, DKNY, Bebe, Jaeger, Uterque, Imaginarium and Zara. The center also features a multi-screen cinema operated by Cinema Park Deluxe and a bowling alley.

Open since 2009, the property is part of the Metropolis mixed-use complex, which also includes three office buildings offering a total gross leasable area of more than 860,000 square feet.

In February, the MSREI fund purchased the Metropolis Mall from its developer, Capital Partners, for an undisclosed amount. The acquisition still ranks as the largest-ever transaction in the Russian commercial real estate market.

“We are delighted that CalPERS and Hines are investing alongside Morgan Stanley Real Estate Investing in the Metropolis Mall in Moscow,” said Thierry Vanden Hende, managing director at MSREI. “MSREI has built a strong retail platform in Russia through the acquisitions of Metropolis in Moscow and Galeria in St. Petersburg, and we look forward to working with Hines and CalPERS to deliver the operational leverage and strategic benefits associated with owning two prime shopping centers in Russia.”

The Hines CalPERS Russia Long Term Hold Fund is a joint venture between CalPERS and Hines. The entity, which was formed in March 2013 with initial equity commitments of $493 million, focuses on the long-term acquisition of Class A logistics and retail assets in Russia.

Lee Timmins, senior managing director and country head for Hines Russia since 1992, added, “The consumer is the engine of Russian economic growth, and we are excited about the opportunity to increase our exposure to this sector of the economy, especially with a leading partner like MSREI.”

“This investment is part of the implementation of our 2011 Strategic Plan, which outlines our intent to buy stabilized assets in major cities in emerging market countries. The Metropolis Mall is a good addition to our portfolio,” commented CalPERS’ Senior Investment Officer for Real Assets Ted Eliopoulos.