Company Briefing
The London-based retail specialist “respositions” existing retail centres, mostly in the UK, Spain and Portugal, to their changed catchment demographics – often alongside a local partner.
London – based retail developer and investor Milligan has agreed a joint venture with French construction group Eiffage to build and finance Barreiro Retail Planet in the south of Lisbon. The 35,000 m2 project, which is to open in autumn 2010, has a €50m investment value. Milligan sees value returning to the UK and Iberian markets, which is where it plans to invest in the short term.
The company was founded in 2002 by Jones Lang LaSalle’s former international director, John Milligan. The property entrepreneur specialises in refurbishing retail centres and developing new ones. In the UK, Milligan’s key projects include the Triangle shopping centre in Manchester, which it developed in partnership with US private equity firm The Blackstone Group, and the Metquarter shopping centre in Liverpool. The firm has also been engaged to help boost revenues at Manchester and London City Airports and is also working alongside Blackstone to overhaul retail and food facilities at Leisure operator Center Parcs.
“In Manchester Airport we have been working with existing retailers to bring in new brands,” says Milligan. “In London City Airport, the users are 65% male and don’t like shopping. They want to get through the airport quickly. Working out how we should look after them is a challenge.”
Elsewhere in the UK, Milligan has teamed up with the father-and-son duo behind Camden Lock’s market, Bill and Will Fulford, to roll out the market concept to other historic locations across the UK. The 50:50 joint venture will target such cities as Leeds, Bristol and Bath. “It is still early days, but we have had a phenomenal response,” says Milligan.
John Milligan was initially approached by Blackstone, after he had decided to leave Jones Lang LaSalle, to set up his own retail development company. In May 2002, Milligan secured its first deal as a principal, teaming up with Blackstone to buy the Triangle shopping centre in Manchester from Frogmore, and introducing new retailers and brands. “I had been at JLL 20 years,” says Milligan. “Blackstone had heard that I had resigned and told me that they wanted to buy this shopping centre in Manchester but didn’t have anyone who specialised in retail. We bought the Triangle for €40m and sold it for €65m. That was our first project with Blackstone, and the company is a good friend to have,” he said. “It has large sums of equity available and we have been keeping an eye on the Iberian and the UK markets.”
In 2007, Blackstone set up a joint venture with Milligan to invest £500m in UK shopping centres. For Milligan, falling property values in the UK mean that the company hopes to begin investing this capital towards the end of this year. In Europe, Milligan is working with Blackstone to transform a site in Berlin’s Alexanderplatz into retail use. “When they bought it, it was one of the biggest towers in the East of Berlin, called Park Inn. The big hotel sits on top of a podium that fronts Alexanderplatz. It is a great site and we are evaluating it with them,” Milligan says.
At the height of Spain’s property market, in November 2006, Milligan began its European expansion, opening an office in Spain with Denton Developments following a joint venture between the two companies to develop the Maremagnum retail park in Port Vell. Milligan and Denton co-invested and undertook a €14m refurbishment of the centre and incorporated brands such as Mango and H&M to boost the asset’s value by more than €50m. They then sold the centre to Duntch fund Corio for €122m.
Milligan’s Spanish office is headed by Fraser Denton, of Denton Developments. He also heads Milligan’s oeprations in Portugal. “We had a joint venture while we were repositioning Maremagnum and saw that we were like-minded,” Denton says. “We are a small company. We cover all aspects of retail, and focus on how the retail will function. We look at the catchment area and determine the best use of an opportunity.”
The property bubble has burst in Spain, but the pricing there now is starting to look more attractive, says Denton, “Since the sale of Marmegnum, we have kept an eye on the market and pursued opportunities,” says Denton. “We didn’t succeed in winning bids for some opportunities because of the land prices. What we are seeing now, as we did with Maremagnum, are opportunities in existing assets that will require respositioning over the longer term.”
In Lisbon, Milligan’s Barreiro Retail Planet project, which is being financed and built through a joint venture with the Portuguese arm of Eiffage, has four anchor tenants, including a Decathlon store and hypermarket, as well as Radio Popular, Casa, Brinka and Rucoline, and is 72% let. “What attracted us to the site was its proximity to a residential population and to a commuter station. But if it wasn’t for the fact that we were able to get it 70% prelet, we wouldn’t have been able to move forward with it,” says Milligan.
Milligan’s strategy is to reposition existing centres that have lost their customer focus. “We have been asked to look at projects in Turkey, eastern Europe and Russia, but it has got to be somewhere where our approach will work. In the short term we are focused on the UK and Iberia,” Milligan says.