Parque Arauco is the third largest Chilean
shopping malls company, after
Cencosud
Cencosud S.A. is a publicly traded multinational retail company. It's the largest retail company in Chile and the third largest listed retail company in Latin America, competing with the Brazilian Companhia Brasileira de Distribuição and the Mex ...
's malls division and
Mall Plaza the
S.A.C.I. Falabella
Falabella is a Chilean multinational company. It is the largest retail company in Chile followed by Cencosud and one of the largest in Latin America. It operates its flagship Falabella department stores in addition to Mall Plaza shopping cente ...
shopping malls subsidiary. It is headquartered in
Santiago
Santiago (, ; ), also known as Santiago de Chile, is the capital and largest city of Chile as well as one of the largest cities in the Americas. It is the center of Chile's most densely populated region, the Santiago Metropolitan Region, whose ...
. The company manages
shopping malls in
Chile
Chile, officially the Republic of Chile, is a country in the western part of South America. It is the southernmost country in the world, and the closest to Antarctica, occupying a long and narrow strip of land between the Andes to the east a ...
,
Peru
, image_flag = Flag of Peru.svg
, image_coat = Escudo nacional del Perú.svg
, other_symbol = Great Seal of the State
, other_symbol_type = Seal (emblem), National seal
, national_motto = "Fi ...
and
Colombia
Colombia (, ; ), officially the Republic of Colombia, is a country in South America with insular regions in North America—near Nicaragua's Caribbean coast—as well as in the Pacific Ocean. The Colombian mainland is bordered by the Car ...
. It has 24 shopping malls with a total of GLA 672,700 square meters.
Company history
The powerful Said clan in South America was founded by patriarch Isa Said, who immigrated to
Peru
, image_flag = Flag of Peru.svg
, image_coat = Escudo nacional del Perú.svg
, other_symbol = Great Seal of the State
, other_symbol_type = Seal (emblem), National seal
, national_motto = "Fi ...
from
Jerusalem
Jerusalem (; he, יְרוּשָׁלַיִם ; ar, القُدس ) (combining the Biblical and common usage Arabic names); grc, Ἱερουσαλήμ/Ἰεροσόλυμα, Hierousalḗm/Hierosóluma; hy, Երուսաղեմ, Erusałēm. i ...
and made a fortune in commerce. His five sons contributed much towards the development of the
textile
Textile is an umbrella term that includes various fiber-based materials, including fibers, yarns, filaments, threads, different fabric types, etc. At first, the word "textiles" only referred to woven fabrics. However, weaving is not the ...
industry in Peru and
Bolivia
, image_flag = Bandera de Bolivia (Estado).svg
, flag_alt = Horizontal tricolor (red, yellow, and green from top to bottom) with the coat of arms of Bolivia in the center
, flag_alt2 = 7 × 7 square p ...
, managing extensive
cotton
Cotton is a soft, fluffy staple fiber that grows in a boll, or protective case, around the seeds of the cotton plants of the genus ''Gossypium'' in the mallow family Malvaceae. The fiber is almost pure cellulose, and can contain minor perce ...
plantations and cotton-yarn factories. One of the five was Salvador, the father of nine children, including one son named
José Said Saffie. José became involved in his extended family's operations at an early age. During the 1940s, the Said family relocated to Chile to develop a
textile
Textile is an umbrella term that includes various fiber-based materials, including fibers, yarns, filaments, threads, different fabric types, etc. At first, the word "textiles" only referred to woven fabrics. However, weaving is not the ...
industry there, and José Said was an active participant in their first business, Industrias Químicas Generales. In the 1960s, José Said and his uncle founded
Banco del Trabajo, which grew to be among the five largest banks in Chile.
Chilean projects during the 1980s
In 1979, José Said founded Parque Arauco
S.A. (PASA), a
real estate development
Real estate development, or property development, is a business process, encompassing activities that range from the renovation and re-lease of existing buildings to the purchase of raw Real Estate, land and the sale of developed land or parcels ...
firm that was incorporated in 1981. The following year, he and his associates, who included Tomás Fürst Freiwirth and the Martínez Perales brothers, opened the Parque Arauco Shopping Center in the
Las Condes
Las Condes is a commune of Chile located in Santiago Province, Santiago Metropolitan Region. The area is inhabited primarily by upper-mid- to high income families, and known in the Chilean collective consciousness as home to the country's economi ...
municipality
A municipality is usually a single administrative division having corporate status and powers of self-government or jurisdiction as granted by national and regional laws to which it is subordinate.
The term ''municipality'' may also mean the go ...
of Santiago, which contained retail stores
Gala-Sears and
Muricy (later owned by Falabella and Almacenes París, respectively). Since the mall adjoins at Kennedy Avenue (Avenida Kennedy), it is often referred to as Parque Arauco Kennedy to distinguish it from the corporation. Aided by an overvalued
Chilean peso and an economic
free trade
Free trade is a trade policy that does not restrict imports or exports. It can also be understood as the free market idea applied to international trade. In government, free trade is predominantly advocated by political parties that hold econo ...
policy, Chile was saturated with inexpensive foreign products when Parque Arauco Kennedy was inaugurated, and those who could afford to buy filled the new mall. However, the Chilean economy was falling into deep
recession
In economics, a recession is a business cycle contraction when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending (an adverse demand shock). This may be triggered by various ...
. Around the same time, the company introduced Arauco Outlet Mall in Santiago's
Maipú municipality. This commercial center did not perform well and was later converted into a
shopping mall
A shopping mall (or simply mall) is a North American term for a large indoor shopping center, usually anchored by department stores. The term "mall" originally meant a pedestrian promenade with shops along it (that is, the term was used to refe ...
.
1990s
In 1997, PASA's partners decided to divide their Chilean holdings. The Said group acquired Fürst's 12% holding and turned over to Fürst its 14% share of Plaza Vespucio, which became the core property of Fürst's rival venture,
Grupo Plaza (or Mall Plaza). The Said group now controlled 38% of PASA's
outstanding shares. The
Abumohor Abumohor is a surname. Notable people with the surname include:
*Carlos Abumohor
Carlos Abumohor Touma (1921 - 2010) was a successful Chilean of Palestinian descent, businessman and investor who was involved in a number of financial activities i ...
family, also active in textiles and, like the Saids, of
Arab
The Arabs (singular: Arab; singular ar, عَرَبِيٌّ, DIN 31635: , , plural ar, عَرَب, DIN 31635: , Arabic pronunciation: ), also known as the Arab people, are an ethnic group mainly inhabiting the Arab world in Western Asia, ...
origin, held 10%. Two
pension fund
A pension fund, also known as a superannuation fund in some countries, is any plan, fund, or scheme which provides retirement income.
Pension funds typically have large amounts of money to invest and are the major investors in listed and priva ...
s held a combined 24%. Parque Arauco Kennedy was Chile's largest shopping mall at the time, with annual sales of $500 million, while Plaza Vespucio ranked third, at $380 million. A medical tower was being constructed at Parque Arauco Kennedy, and an office building was being contemplated at a cost of $100 million. For Mall Arauco Maipú, PASA was considering building an additional medical tower and a high-rise apartment building. In 1999, PASA, in partnership with the Almacenes Paris and Ripley
retail chain
A chain store or retail chain is a retail outlet in which several locations share a brand, central management and standardized business practices. They have come to dominate the retail and dining markets and many service categories, in many pa ...
, completed the Marina Arauco Mall in
Viña del Mar
Viña del Mar (; meaning "Vineyard of the Sea") is a city and commune on central Chile's Pacific coast. Often referred to as ("The Garden City"), Viña del Mar is located within the Valparaíso Region, and it is Chile's fourth largest city w ...
at a cost of $120 million. PASA malls accounted for 24% of Chile's shopping-center revenues in that year.
Entry into Argentina
PASA entered
Argentina
Argentina (), officially the Argentine Republic ( es, link=no, República Argentina), is a country in the southern half of South America. Argentina covers an area of , making it the second-largest country in South America after Brazil, th ...
in the early 1990s, when the nation was emerging from a decade of economic crisis. In 1992, the company acquired a 25% share of the Centro Comercial Mendoza Plaza Shopping and later became a major investor in Argentine
real estate
Real estate is property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water; immovable property of this nature; an interest vested in this (also) an item of real property, (more general ...
in association with
Inversiones y Representaciones S.A. (IRSA). In 1994, IRSA and PASA became partners in
Sociedad Anónimo del Mercado de Abasto Provedor (Samap), a
joint venture
A joint venture (JV) is a business entity created by two or more parties, generally characterized by shared ownership, shared returns and risks, and shared governance. Companies typically pursue joint ventures for one of four reasons: to acces ...
to convert the former
produce
Produce is a generalized term for many farm-produced crops, including fruits and vegetables (grains, oats, etc. are also sometimes considered ''produce''). More specifically, the term ''produce'' often implies that the products are fresh and g ...
market in Buenos Aires to a shopping mall. PASA donated its share of the
Mendoza shopping center to Samap, while IRSA turned over its holding in Nuevo Noa Shopping, located in
Salta City
Salta () is the capital and largest city in the Argentine province of the same name. With a population of 618,375 according to the 2010 census, it is also the 7th most-populous city in Argentina. The city serves as the cultural and economic c ...
. In 1997, after Samap was renamed Alto Palermo S.A. (APSA), IRSA controlled 51%, while Parque Arauco controlled 35%.
In 1997, Samap acquired
Alto Palermo S.A. from the Pérez Company S.A.
holding company
A holding company is a company whose primary business is holding a controlling interest in the securities of other companies. A holding company usually does not produce goods or services itself. Its purpose is to own shares of other companies ...
. APSA held three
Buenos Aires
Buenos Aires ( or ; ), officially the Autonomous City of Buenos Aires ( es, link=no, Ciudad Autónoma de Buenos Aires), is the capital and primate city of Argentina. The city is located on the western shore of the Río de la Plata, on South ...
shopping centers: Alto Palermo, Alto Avellaneda, and Paseo Alcorta, plus 50.5% of a fourth, Buenos Aires Design.
Abasto
The Abasto Shopping is one of the biggest shopping mall centers in Buenos Aires, Argentina. The building was the central wholesale fruit and vegetable market in the city ("Mercado de Abasto") from 1893 to 1984. Since 1999, it has served as a shop ...
Shopping Center was completed in 1998 at a cost of about $112 million. Located in
Balvanera
Balvanera is a barrio or neighborhood of Buenos Aires, Argentina.
Origin of name and alternative names
The official name, Balvanera, is the name of the ''parroquia'' (parish) centered around the church of ''Nuestra Señora de Balvanera'', erected ...
, a formerly
Jewish
Jews ( he, יְהוּדִים, , ) or Jewish people are an ethnoreligious group and nation originating from the Israelites Israelite origins and kingdom: "The first act in the long drama of Jewish history is the age of the Israelites""The ...
barrio
''Barrio'' () is a Spanish language, Spanish word that means "Quarter (urban subdivision), quarter" or "neighborhood". In the modern Spanish language, it is generally defined as each area of a city, usually delimited by functional (e.g. residenti ...
that was also the stamping grounds of
Carlos Gardel
Carlos Gardel (born Charles Romuald Gardès; 11 December 1890 – 24 June 1935) was a French-born Argentine singer, songwriter, composer and actor, and the most prominent figure in the history of tango. He was one of the most influential inte ...
, Argentina's well-known
tango dancer and singer, it occupied five levels, with 189 stores, a food court, a multiplex cinema, entertainment facilities, and a children's museum.
Argentine recession
The
Argentine economic crisis culminated in the government
defaulting on its debt and the
devaluation of the
Argentine peso at the end of 2001. APSA's
market value
Market value or OMV (Open Market Valuation) is the price at which an asset would trade in a competitive auction setting. Market value is often used interchangeably with ''open market value'', ''fair value'' or ''fair market value'', although the ...
declined from $390 million to as low as $40 million. The damage to PASA's finances inspired a shakeup of the company's
management
Management (or managing) is the administration of an organization, whether it is a business, a nonprofit organization, or a government body. It is the art and science of managing resources of the business.
Management includes the activities o ...
. In an interview with the new general manager, Andrés Olivos, for the Chilean magazine ''
La Capital
, type = Daily newspaper
, format =Tabloid
, founder = Ovidio LagosEudoro Carrasco
, foundation = 15 November 1867
, owners = Grupo América
, publisher = Orlando Vignatti
, editor = Editorial Diario LA CAPITAL S.A.
, circulation ...
'' in 2003, reporter Lorena Medel contended that "it was rumored that Parque Arauco had had a grade-10 earthquake. That its finances were delicate, and that
shareholders
A shareholder (in the United States often referred to as stockholder) of a corporation is an individual or legal entity (such as another corporation, a body politic, a trust or partnership) that is registered by the corporation as the legal owner ...
couldn't believe the level of debt that was permitted to arise with respect to Arauco Salud" (the medical tower). Olivos denied the situation was ever as dire as some suspected and revealed that the company was opening a "gastronomical boulevard" for Parque Arauco Kennedy. He conceded that
Arauco Maipú had failed as an outlet store center and had returned to its role as a traditional mall.
Olivos acknowledged that PASA had fallen behind Grupo Plaza and
Cencosud S.A.
Cencosud S.A. is a publicly traded multinational retail company. It's the largest retail company in Chile and the third largest listed retail company in Latin America, competing with the Brazilian Companhia Brasileira de Distribuição and the Me ...
in commercial real estate development in Chile. "Our strategy", he maintained, "is distinct, and we believe that to enter this headlong race by adding square meters doesn't necessarily add value. A good part of this growth only generates cannibalization, and many of the new investments won't pay off in any foreseeable amount of time." Olivos said that PASA maintained a 32%
market share
Market share is the percentage of the total revenue or sales in a market that a company's business makes up. For example, if there are 50,000 units sold per year in a given industry, a company whose sales were 5,000 of those units would have a ...
in Santiago, with annual sales of roughly $200 million, and 20 million annual customers for Arauco Kennedy, 15 million for Arauco Maipú, and 17 million for Marina Arauco. He added that the company had 45% of the mall market in Buenos Aires. Olivos revealed that PASA signed a contract with Arauco Salud's new owners that would permit it to recover the $2.5 million debt incurred while constructing the 13-story tower. The company was also contemplating construction of a dental-office building in Arauco Kennedy. In addition, PASA completed its gastronomical boulevard during late 2003.
After the revival of the Argentine economy
With the revival of the Argentine economy well underway, PASA was planning new shopping malls in
Rosario
Rosario () is the largest city in the central provinces of Argentina, Argentine province of Santa Fe Province, Santa Fe. The city is located northwest of Buenos Aires, on the west bank of the Paraná River. Rosario is the third-most populous ci ...
,
Neuquén, and
Caballito
Caballito (; Spanish for "little horse") is a ''barrio'' (neighborhood) of the Argentine capital, Buenos Aires. It is the only ''barrio'' in the administrative division ''Comuna'' 6.
It is located in the geographical centre of the city, limited ...
, the latter two in collaboration with IRSA by means of APSA. Alto Rosario Shopping, completed in late 2004 in partnership with
Coto Centro Integral de Comercialización S.A., was a conversion of an old
railroad station
A train station, railway station, railroad station or depot is a railway facility where trains stop to load or unload passengers, freight or both. It generally consists of at least one platform, one track and a station building providing such ...
within the original structure. APSA also had plans to enter
Córdoba by purchasing land or acquiring one of three existing shopping centers. Sales from PASA properties were expected to reach $1.1 billion in 2004, with Argentina providing 38% of the total. All of APSA's properties were at least 96% leased. PASA's debt in Argentina was reduced from over $200 million in 2002 to about $28 million in 2003.
Developments since 2005
In a 2005 article, ''La Capital'' proclaimed that PASA had "woken up", with its three Chilean malls fully occupied, the success of ''Boulevard Gastronómico'', a strong financial structure, many new projects for the next two years, and intentions to enter the retail market. The company was planning to construct 40 new Boulevard sites, a $20 million office real-estate project, remodel Arauco Maipú, build, in alliance with the Almacenes Paris and Ripley, a new commercial center in Curicó, and possibly financing retail businesses. He told the magazine, however, that the shopping mall market was saturated in Santiago and that PASA was not interested in entering "the war for square meters." Indeed, he voiced his belief that only three or four malls in Chile generated enough business to justify the level of investment that had been made in them. In Argentina, besides participating in the construction of
Alto Rosario, PASA was preparing to increase its stake in APSA from 27% to 32% with the impending conversion of $200 million in
convertible bond
In finance, a convertible bond or convertible note or convertible debt (or a convertible debenture if it has a maturity of greater than 10 years) is a type of bond that the holder can convert into a specified number of shares of common stock in ...
s to
common stock. In 2004, PASA reported net profits of
CLP 7.56 billion on revenues of CLP 24.89 billion. The company's long-term debt was CLP 101.92 billion at the end of 2004.
["El despertar de Parque Arauco". '']La Capital
, type = Daily newspaper
, format =Tabloid
, founder = Ovidio LagosEudoro Carrasco
, foundation = 15 November 1867
, owners = Grupo América
, publisher = Orlando Vignatti
, editor = Editorial Diario LA CAPITAL S.A.
, circulation ...
'', April 8–21, 2005, pp. 68-69.
Notes
{{IPSA companies
Companies listed on the Santiago Stock Exchange
Shopping malls in Chile
Real estate companies of Chile
1979 establishments in Chile
Retail companies of Chile
Companies based in Santiago
Companies established in 1979