Parque Arauco S.A.

Parque Arauco is the third largest Chilean shopping malls company, after Cencosud's malls division and Mall Plaza the S.A.C.I. Falabella shopping malls subsidiary. It is headquartered in Santiago. The company manages shopping malls in Chile, Peru and Colombia. 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 from Jerusalem and made a fortune in commerce. His five sons contributed much towards the development of the textile industry in Peru and Bolivia, managing extensive cotton 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 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.

Entry into Argentina

PASA entered Argentina 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 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 to convert the former produce 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. 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. APSA held three Buenos Aires shopping centers: Alto Palermo, Alto Avellaneda, and Paseo Alcorta, plus 50.5% of a fourth, Buenos Aires Design. Abasto Shopping Center was completed in 1998 at a cost of about $112 million. Located in Balvanera, a formerly Jewish barrio that was also the stamping grounds of Carlos Gardel, 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 1998–2002 Argentine great depression culminated in the government defaulting on its debt and the devaluation of the Argentine peso at the end of 2001. APSA's market value declined from $390 million to as low as $40 million. The damage to PASA's finances inspired a shakeup of the company's management. In an interview with the new general manager, Andrés Olivos, for the Chilean magazine La Capital 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 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. 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 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.[1]

After the revival of the Argentine economy

With the revival of the Argentine economy well underway, PASA was planning new shopping malls in Rosario, Neuquén, and Caballito, 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 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.

type	Sociedad Anónima
traded as	bcs: PARAUCO
foundation	1979
location	Santiago, Chile
key people	José Said, (CEO)
industry	Shopping Malls
products	Management of Shopping Malls
revenue	▲ US$ 209.4 million (2012)
net income	▲ US$ 76.0 million (2012)
num employees	300
homepage	www.parquearauco.cl

Company history

Chilean projects during the 1980s

1990s

Entry into Argentina

Argentine recession

After the revival of the Argentine economy

Developments since 2005

References