The Ukraina shopping centre became a Kyiv landmark when it opened in 1968 and is still doing brisk trade today, having survived the 1991 collapse of the Soviet Union, two revolutions, and now Russian bombing of the city during its war against Ukraine.
It also came through a murky battle for control in 2011-2012, when the Irish Bank Resolution Corporation (IBRC) struggled to take over the mall amid bankruptcy proceedings against its erstwhile owners – former billionaire Seán Quinn and his family.
State-owned IBRC ultimately won that fight and also secured Quinn’s Leonardo business centre in Kyiv, but Russia’s invasion has put an indefinite pause on plans to recoup money for Irish taxpayers by selling the two properties, which were valued at a combined €70 million to €80 million before all-out fighting began in February 2022.
“The start of the full-scale war had a negative impact on both properties, especially the Ukraina shopping mall – people weren’t in the mood for shopping under air raids and the constant threat of Russian occupation, many people left Kyiv – families evacuated to western Ukraine or even abroad,” says Rostislav Levinzon, who has overseen operations at Ukraina and Leonardo on behalf of an IBRC unit for more than a decade.
“During this time, Russian troops were on the outskirts of Kyiv... and the fate of the city was uncertain. Nevertheless, by May 2022, when the immediate threat to Kyiv had passed, the city began to come back to life, and things started to return to normal,” he adds.
“Even when missile strikes and drone attacks resumed in early October 2022, the overall trend towards normalisation in the city continued. After a tough 2022, occupancy rates and rental incomes began to recover in 2023, though they haven’t yet reached pre-war levels.”
Both properties are in prime locations – Ukraina sits opposite Kyiv’s circus and near its main train station, and Leonardo faces the city’s grand opera house – and neither has suffered serious damage despite occasional Russian missile strikes on central areas. When rockets landed about 300m from Leonardo in October 2022, the business centre escaped with only a few broken windows.
The two former Quinn assets in Kyiv are among the final major assets held by IBRC, formerly Anglo Irish Bank, which was put into liquidation 11 years ago with a loan portfolio that had an original value of €21 billion, with more than 15,000 borrowers with assets across 22 jurisdictions. That had been whittled down to €3.6 billion by the end of 2022, even if the underlying value of loans and assets is much lower.
This week saw Minister for Finance Jack Chambers secure approval from Cabinet for the drafting of legislation that would see IBRC’s special liquidators, Kieran Wallace and Eamonn Richardson of Interpath Ireland, stand down by the end of this year, and its remaining assets rolled into the National Asset Management Agency (Nama), a State agency set up in 2010 to take huge non-performing property loans off the balance sheets of domestic banks.
Nama itself will be dissolved by the end of 2025, with the remaining activities of both crisis-era agencies set to be put into a new resolution unit within the National Treasury Management Agency.
The Ukrainian assets are expected to end up in the resolution unit, as there is little prospect of them being sold in the foreseeable future, according to sources, even if Russian attacks on central Kyiv have dwindled since western states provided air defence systems that now form a formidable shield around a city that is home to 3.6 million people.
Air raid sirens still wail several times on most days and Russia’s destruction of Ukrainian energy infrastructure has made blackouts a frequent inconvenience – factors that have actually boosted the appeal of business centres such as Leonardo, which have bomb shelters and on-site power generators.
“After a period of shock in 2022, people realised that if they want to keep working in a relatively comfortable environment, they would rather go to the office than work from home,” says Oleg Boichuk, a partner at the Asters law firm that represents IBRC interests in Kyiv.
“Business centres, including Leonardo, have managed to keep going during blackouts... and there is access to shelters, so safety is being managed as far as possible.”
Renting space in both properties is cheaper than before 2022, occupancy levels remain high, and the war has brought a new type of tenant to Kyiv.
“A certain restructuring of the office market has taken place recently: many foreign companies and international organisations – financial, humanitarian, etc – have set up in Kyiv, successfully replacing local companies that had to leave the market for economic reasons. This has contributed to improving occupancy levels at Leonardo,” Levinzon says.
Ukraina – also known as Univermag (department store) – is a mid-range mall with a mix of local and international brands, but looks dated beside much bigger and far glitzier competitors in Kyiv.
When it opened in 1968, however, it was one of Ukraine’s first malls and promised locals and visitors to Kyiv a Soviet take on modern western-style shopping.
“For the Kyiv market, Univermag is a well-known name. It comes from Soviet times when we had a very limited number of real shopping centres, and everyone knew two such places – Univermag Ukraina and Tsum,” Boichuk says. Tsum is a high-end department store near Maidan square, the epicentre of Ukraine’s 2013-2014 revolution.
“Families coming to Kyiv from the regions to go sightseeing would visit Univermag or Tsum, because they were the only places to buy something really nice.”
Ukraina was renovated in 2003-2004 and became part of Quinn’s property empire in 2006 for a reported $59 million (€54 million). He bought Leonardo for a reported $95 million (€87 million) the same year.
Anglo Irish Bank seized the Quinn Group in April 2011 because it was owed a debt of €2.9 billion, and Quinn was declared bankrupt the following January. The loans were granted at the height of the financial crisis to prop up a leverage stake the Quinns held in the bank – through financial instruments called contracts for difference (CFDs) – before the bank failed.
When Anglo collapsed, its remnants were wrapped into the state-owned IBRC, which won the right to take over Quinn’s property assets around the world.
In the notoriously corrupt Ukraine of then president Viktor Yanukovich, who would be ousted in the Maidan revolution, IBRC had to fight a fierce battle with local businessmen who tried to seize control of Ukraina and Leonardo.
“There was a conflict situation caused by local management, which attempted to take over the assets by some obviously illegal means. They used a number of shady techniques,” Boichuk says.
“We were engaged to basically counteract a raider attack initiated by local management. We engaged quite massive resources, and at the end of the day we were successful. The case was quite well known in Ukraine because it demonstrated that even in the Yanukovich days – which were unfortunate days for Ukraine generally – it was possible to counterattack in the legal field,” he adds.
“After that we changed the management, Rostislav Levinzon entered his position in both companies [Ukraina and Leonardo], and both have been functioning successfully and fully since then. The situation has stabilised.”
IBRC accused the Quinns of being behind efforts to stop it from seizing their properties in Kyiv and elsewhere, and in 2012 Irish courts gave Quinn and his son, Seán jnr, jail terms over the allegations.
Under a settlement of litigation reached in 2019, the five adult Quinn children consented to judgment for €440 million, but execution and registration of the ruling was stayed on condition that they helped IBRC secure control of properties abroad.
The IBRC was put into liquidation in February 2013, as the then government went about a complicated and high-stakes restructuring of most of the €34.5 billion crisis-era bailout of Anglo Irish Bank and fellow failed lender Irish Nationwide Building Society, which paved the way for the State to exit its own troika international bailout programme later that year.
The special liquidators were expected to try to sell Ukraina and Leonardo in 2022, following delays caused by the Covid-19 pandemic. They were also planning to offload two Russian commercial properties the Quinns once owned in Moscow and Kazan, that had an estimated combined value at the time of about €100 million three years ago.
Russia’s invasion of its pro-western neighbour scuppered those plans and effectively froze Kyiv’s market for large-scale commercial real estate – leaving in limbo Irish hopes of salvaging tens of millions of euro from the wreckage of the Quinn empire in the near term.
The subsequent branding of Russia as a pariah state also forced the IBRC liquidators to put the disposal of assets in that country on the back burner.
There is an outside possibility that the Russian assets – comprised of a 20-storey Moscow office block, known as Kutuzoff Tower, and a big logistics centre in Kazan called Q Park, almost 800km east of the Russian capital – could be sold before Nama (then containing IBRC assets) is wound down by the end of next year.
It is understood that the special liquidators of IBRC have fielded some approaches from opportunistic European funds interested in the assets – particularly the strategically well-positioned logistics centre – in recent times.
I think commercial real estate, especially expensive commercial retail estate in premium locations, will probably gain value again when the war risks go down. It will probably be one of the last segments to recover
— Oleg Boichuk, partner at law firm representing IBRC
“I wouldn’t rule out a sale of the Russian assets,” said a source briefed on the matter, who declined to be named.
Elsewhere, the liquidators are selling other parts of the former Quinn empire, including the Hilton Prague, which real estate adviser CBRE said on Thursday it has been appointed to market, and the Slieve Russell Hotel in Cavan, once a jewel in the crown of family’s hospitality empire.
The liquidators are also the process of selling remaining former assets Anglo Irish Bank once directly owned in Boston, which was the hub of its US operations. These range from social and affordable apartments in the city to six high-end units attached to the local Mandarin Oriental Hotel that the bank also once owned.
The liquidators are also said to be preparing to put the upmarket Prudential Centre shopping mall, which is attached to the Mandarin, on the market in the coming months.
[ IBRC’s income from former Quinn assets hit by upheaval in UkraineOpens in new window ]
There are no such plans for the assets in Kyiv. For now. Still, the IBRC liquidators’ eyes and ears in the city – Levinzon and Boichuk – remain optimistic.
“I think commercial real estate, especially expensive commercial retail estate in premium locations, will probably gain value again when the war risks go down. It will probably be one of the last segments to recover,” Boichuk says.
Levinzon says it is impossible to gauge the current value of Ukraina and Leonardo, largely because “since the start of the war, there have been no significant market transactions to form objective statistics”.
“While the current situation is difficult and unpredictable, there’s a consensus that after the war, Ukraine will see an investment boom and rapid economic growth,” he adds. “This means that each investor finds their own balance of fears and expectations, threats and opportunities.”
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