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Global luxury brands from LVMH and Kering will be among those rolling out at Cenomi Centers’ new flagship developments, CEO Alison Rehill-Erguven told EnterpriseAM Saudi in a wide-ranging conversation.
On the agenda for our talk: A deep dive into the planks of Cenomi’s five-year strategy, unveiled at the beginning of 2023, with a particular emphasis on portfolio growth. Prior to joining the nation’s largest lifestyle centers operator in August 2022, Rehill-Erguven (LinkedIn) held leadership roles at top real estate companies in Turkey, Europe, China, and the US, including Esas Gayrimenkul, Pradera, Brookfield Properties, and General Growth Properties.
Cenomi has six new developments in the pipeline and is set to launch two new flagships — Jawharat Riyadh, and Jawharat Jeddah — in 2H 2025, adding around 300k sqm of GLA to its portfolio, Rehill-Erguven told Enterprise, adding that the two properties are at a 30-35% completion rate right now. Jawharat Alkhobar will open in 2027, and Cenomi has three new lifestyle destination centers similar to U Walk Jeddah in the works; U Walk Jeddah had its grand opening last February.
“These assets will have improved design features and circulation with a best-in-class retail offering,” she said, adding that “The flagships specifically will have luxury precincts, immersive and digital experiences, a refined delivery on food and beverage, international-level multi-age entertainment experiences.”
The benchmarks: Think Mall of Emirates, Westfield London, and Dubai Mall, Rehill-Erguven says.
By the numbers: Cenomi plans to deploy some of its SAR +5 bn in planned capex to these six new projects, with more than 50% of that figure earmarked for the flagships, she tells us.
Bringing prominent global retails to the Saudi market: The Riyadh and Jeddah flagships “will feature first-to-KSA retailers,” Rehill-Erguven says. “We’re having live conversations with a number of retailers that are interested in setting up their first store in KSA … the likes of the Paris-based family-run LVMH Group, the Kering Group, and the Swiss Richemont Group.” This in addition to a long list of ongoing partnerships with the UAE-based fashion and retail giant Apparel Group, luxury retailer and distributor Chalhoub Group, Landmark Group, and the Kuwait-based family-owned Alshaya Group.
“It’s about togetherness, inclusion and family,” Rehill-Erguven said, explaining that Cenomi is putting F&B and entertainment at the core of its growth strategy. Cenomi is on a drive to better cater to the shifting needs of local consumers, drawing from their spending patterns.
Consumer spending is shifting towards F&B, entertainment, and services. “We looked at Mada spending, Visa spending, and we tried to understand where they are spending their money after covid-19, and it became very clear that it’s being spent in the areas of food and beverage, entertainment and services,” she explained.
F&B, services, lifestyle, and entertainment currently account for 38% of Cenomi’s tenant mix, while retail accounts for 62%, said Rehill-Erguven, explaining that a few years ago it was 70% retail.“Our research data suggests that this is what the Saudi consumer is looking for,” she added. The company is optimizing its mix of retail versus F&B and entertainment offerings to address that demand.
SOUND SMART- “This evolution of tenant-mix is clearly resonating with the Saudi consumer,” she said, saying Cenomi Centers had a record footfall in 2023, with 124 mn people visiting its malls — far exceeding pre-covid levels. Cenomi currently boasts a “market share of 18% and its portfolio reaches 80% of the Saudi population.”
Less business with related parties: “As Cenomi Retail has been beginning to look at restructuring themselves, their profile with us Cenomi Centers has begun to shrink. So, if they were 25% of the GLA at that time and maybe 20% of revenues, it’s now comfortably close to 20% of the GLA or less, and around 15% of the revenues. Now, there is a balance with us, but there are ongoing discussions. I am sure we will find a resolution,” said Rehill-Erguven.
Strong fundamentals resulting in better financing conditions. The company’s SAR 5.25 bn financing facilities signed in February 2024 were funded by a syndicate of banks, carrying lower interest rates than historical figures, with less collateral to securitize, and a more effective amortization as it was spread across two tranches, she added. The proceeds from that will bolster the balance sheet, liquidity, and will be used, as needed, to finance the capex plan.
The facility was sustainability-linked, with three KPIs tied to the loan including the lowering of the company’s carbon footprint, connecting some assets that aren’t connected to the grid, as well as diversity and the inclusion of more women in leadership positions. “So if we can achieve and hit on these three, it lowers the rate even further.”
A laser-sharp focus on people: Cenomi’s strong conviction that people are one of the main drivers of growth has inspired its leadership to hire new C-suite industry leaders with at least two decades of experience in the realm of shopping centers to better align the company with best practices, Rehill-Erguven highlighted.
Internal restructuring for operational efficiency: The company has revamped its organizational structure where currently its leasing division is now divided into a local-accounts department and a global-accounts department that are driven by regional leaders, said Rehill-Erguven. This is bolstering Cenomi’s efficiency, adding more clarity and transparency. They have also formalized how they naturally run national assets where now there’s one COO for each of the regions they operate in the Kingdom, with each COO running each region like its own vertical company. This is resulting in better communication, collaboration, transparency, and consistency across the board, she added.
“We’re lucky to be in Saudi right now,” said Rehill-Erguven, explaining that the company’s research shows that there is still massive room for growth in the kingdom, making it unlikely to make plans for regional expansion at the moment.
WHAT’S NEXT- Expect Cenomi to reveal what assets will be part of the remaining SAR 800 mn of its SAR 2 bn non-core asset sale plan in 3Q 2024, with completion slated for 12-18 months from now, Rehill-Erguven told us.
