TriGranit: One can no longer lease malls that are only on paper

Real estate developer TriGranit, controlled by Sandor Demjan, Hungary's richest businessman, says one can no longer seal transactions for projects that are only on paper, because there is a major lack of trust between investors, banks and tenants.
"Malls cannot be leased off-plan any more. You can talk to retailers, explain things to them, but until they see the building, they don't commit to open the stores. There is a trust crisis across the entire region (Central and Eastern Europe), and the only proof you can come up with to show you are a healthy company are the projects you continue to make developments," Arpad Torok, the company's development manager, told ZF.
TriGranit has around 60 employees on the Romanian market, who are involved in the management of shopping centres Polus Center in Cluj, Euromall Pitesti, and Armonia Center in Arad, as well as in the development of Constanta's Polus Center, which is set for completion in around one year's time.
"No-one has been sheltered from the financial crisis. We have had to renegotiate our bank funding structure and to alter the mall's design due to soil-related problems that forced us to make the building 1 metre taller. As for the funding of the project, we agreed with OTP for our share of equity to be larger," said Arpad Torok, development and leasing manager of TriGranit Development.
TriGranit is developing the Constanta mall that Austrian-based Immoeast has committed to buy as early as in March 2007, with the deal put at 185 million euros.
The mall's construction has been delayed by over a year, similarly to all projects of the Immoeast fund, which this year has experienced serious financial problems.
"The project currently entails a 140 million-euro investment, which includes tenants' costs with setting up the stores. Immoeast's commitment to this project remains in place, but I cannot provide further comment on this," Torok added.