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Morgan Stanley Goes On Another Russian Shopping Spree

This article is more than 10 years old.

The one sector of the Russian economy foreign investors love most is retail. Especially high end retail floating in the outskirts of Moscow, billionaire capital of the world. And what self-respecting Moscovite with a Benz and an audi/" target="_self" data-ga-track="InternalLink:http://www.forbes.com/companies/audi/" aria-label="Audi">Audi in the garage doesn't love the cool, colorful gear by Russian designer Kira PlastininaMorgan Stanley (MS) likes the sector so much, they bought an entire mall.

The investment bank's real estate investment trust, Morgan Stanley Real Estate Investing, acquired the Metropolis Shopping & Entertainment Mall this year.  The bank announced the purchase on Friday, making it the largest ever foreign acquisition of Russian commercial real estate.

Real-estate experts in Moscow estimate the price tag on the luxurious 205,000 square meter shopping center developed by Capital Partners was a cool $1.2 billion.

The Metropolis opened in 2009 and has over 250 international, high end retail brands, restaurants, a bowling alley and the usual movie theater. Major tenants include food hypermarket Karusel owned by X5 (LON: FIVE) and Finnish department store Stockmann, U.S. brands Michael Kors, H&M, GAP, DKNY and Imaginarium are also in-house, along with Spain's Zara and French clothing brand Naf Naf.

Metropolis is Morgan Stanley’s second major acquisition of prime retail space in Russia in a year as high oil prices continue to fuel a spending boom in the country. Last year, they bought the Galeria Mall in the center of St. Petersburg, Russia’s second largest city, for an estimated $1 billion.

Although not in the retail space, Magnit (Micex: MGNT), a Russian supermarket chain, is often selected along with X5 Retail Group as some of the best investments in Russia for money managers looking to get away from the typical commodity stories Russia's known for.  Retail investors only have access to these equities through foreign broker/dealer like Troika and VTB Capital, both with offices in New York.

Russian Retail

Company                            Mkt Cap        Free-float factor       YTD%              1yr

Dixy Group                        R$56.89 bln           33%                   13.45%      18.28%

Magnit                                 R$546 bln               24%                   20.76%    67.77%

Company M Video         R$48.09 bln          26%                    11.77%      19.11%

Rosinter Restaurants     R$2.08 bln             36%                   13.68%    -14.74%

Sinergiya Group               R$11.12 bln             35%                  17.57%       -8.8%