Feb 20, 2019
Investors lose interest in Italy's malls as Sunday shopping curbs loom
Feb 20, 2019
Three deals to sell shopping malls in Italy have been scrapped or put on hold as a plan by the coalition to restrict Sunday trading raises questions about the value of the properties involved, three sources close to the matter said.
Chinese mall operator Sasseur walked away from preliminary talks with Blackstone Group over the acquisition of a portfolio of Italian outlets worth more than 800 million euros ($905 million), two of the sources said.
Two other deals, worth more than 200 million euros each, have also been put on ice due to the proposal, which has compounded investor fears about a possible recession in Italy and a bleak outlook for fashion retailers.
Talks between Nuveen, the investment manager of U.S. financial services firm TIAA, and German asset manager DWS about the sale of an outlet near Florence are “dragging on because of the Sunday shopping ban,” said one of the sources.
Nuveen, which owns the property, may have to lower the asking price or shelve the sale, the source added. Meanwhile the planned disposal of a retail portfolio held by Italian entrepreneur Antonio Percassi has been delayed, the source said.
Sasseur did not respond to a request for comment. Blackstone, DWS, Nuveen and Percassi declined to comment.
“Several big acquisitions of shopping centres and outlets based in Italy that were expected to close by the end of last year were blocked,” said Silvia Rovere, head of Assoimmobiliare, Italy’s association of real estate companies.
CLOSED ON SUNDAY?
A draft bill championed by Italy’s ruling coalition would force shopping malls, outlets and supermarkets outside city centres to shut 26 Sundays a year. The bill also limits the public holiday openings to four out of 12.
Tourist areas would be exempted from the rules, which are being debated in parliament and could still be modified or even shelved. The aim of the coalition is to protect small shopkeepers, who say a 2011 law that liberalised Sunday trade should change.
“The liberalisation only shifted sales away from small shops, forcing many to close. Now we need to correct this competition bias,” said Mauro Bussoni, head of Confesercenti, which represents small retail businesses in Italy.
Experts say Sunday shopping accounted for 10 percent of food sales and 15 percent of non-food items for Italian shops.
For outlets, however, Sunday sales could be worth as much as 30 percent of the total making them the most vulnerable.
Davide Dalmiglio, head of capital markets for Jones Lang LaSalle in Italy estimated a fall of around 10 percent in the value of retail real estate properties due to the uncertainty.
The expectation of a Sunday shopping ban last year halted the sale of Italy’s Old Wild West restaurant chain, which has a number of sites inside shopping malls.
Italy’s plan mirrors shopping curbs for big retailers that were introduced in Poland early last year.
In a country where the economy grew 5 percent in the first three quarters of last year the Sunday ban lead to flat sales at hypermarkets, while discounters posted healthy sales thanks to promotions on weekdays, a report by research firm Nielsen showed.
Polish Prime Minister Mateusz Morawiecki this month said the government was reviewing the law, as discontent with the shopping ban was growing among citizens.
In Italy bigger retailers warned of a hit to sales when the economy risks slipping into a prolonged recession after shrinking for two consecutive quarters last year.
“It would be an absurd return to the Middle Age,” said Giorgio Santambrogio, CEO of supermarket chain Gruppo VeGe.
League lawmaker Andrea Dara, who drafted the bill, said the ruling coalition should not be blamed for scaring off foreign investors.
“The political debate over a shopping ban started under the previous government and has been going on for the past four years, so it is not fair to say that uncertainty was triggered by our proposal,” Dara told Reuters.
“The proposal we have presented is not written in stone, it can be amended, improved with the suggestions that will come from business groups and political parties,” he said.
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