The retail sector is undergoing tectonic changes through the rise of e-commerce and ‘Experience over ownership’.
In Turkey, the retail sector is further affected by οver-supply, poor economic performance and currency fluctuations.
As a result:
Many centres have witnessed dwindling financial performance….
…causing a decline in income and value
…resulting in a breach of loan covenants and rendering the loan non-performing
Pure shopping centres are being transformed to mixed-use destinations, combining retail, entertainment and logistics. There are a number of actions that owners and lenders may take:
Denial – which will most probably lead to a permanent value destruction
Fixing the symptom (e.g. renegotiating the loan) but not the problem
Trying to address the problem itself
When trying to address the problem, actions range from the minimally invasive to the comprehensive:
Refine: optimize the tenant mix, costs, management etc. with little or no capex
Reposition: improve and extend the current retail space through the judicious use of capex
Repurpose: transform (part of) the space into an alternative, non-retail use