The organization Finspot got acquainted with the 2023 financial results of five shopping centers in Georgia. "IG Development Georgia" LLC (City Mall), "CBD Development" LLC (East Point), "Galleria Tbilisi" LLC (Galleria Tbilisi), "Rakeen Uptown Development" LLC (Tbilisi Mall) and JSC "Tbilisi Central" (Tbilisi Central Shopping mall) represent modern shopping centers in Georgia which have been actively developing in the last ten years. Shopping centers that offer different services to customers in addition to stores are particularly successful.

"The most popular and profitable shopping centers are characterized by offering a variety of goods/services and have more than one center of attraction (for example: a leading chain supermarket, entertainment centers, food court, gym, salon, etc.). The first 4 shopping centers meet these criteria, which affects their profitability and the number of visitors. In this regard, Tbilisi Central Shopping mall has great prospects for development if profile is changed. At this stage, most of the tenants of Tbilisi Central are hardware stores and a gold exchange.

In 2023, the rental and related revenues of all five malls totaled ₾217 million. IG Development (City Mall) accounts for 41% of the total income which unites 3 malls and business centers: "City Mall Vazha", "City Mall Kavtaradze", "City Mall Gldani" and A-class business center City Tower. It is worth noting that "City Mall Vazha", which was opened in 2019, exceeds all other malls in the country in terms of revenue separately," the review states.

In 2023, the revenues of the above shopping centers increased by 8% annually. In addition, except for "Tbilisi Central", each shopping center exceeded the turnover of 2019. IG Development (City Mall) is the most efficient in terms of cost management and the share of the company's operating costs in the income is 30%. The indicators of other shopping centers range within 35%-46%. Operating expenses cover costs such as salaries.

The share of salaries in the income is 6%-10%, although this figure is quite high in "Tbilisi Central" (24%) and "East Point" (18%).

Tbilisi Mall has the lowest EBITDA margin. The main reason is high utility and communication costs, which account for 12% of gross income while Galleria Tbilisi - 3%.

The companies generate positive free cash flows from their operating activities. However, due to the leverage of the companies, a significant part of these funds is used for loan servicing. It’s worth mentioning that two shopping centers have already started distributing dividends to their owners - IG Development (City Mall) and Galleria Tbilisi.

"In 2019-23, IG Development generated a total of ₾110 million free cash flow from operating activities and took an additional ₾79 million loan (net of debt repayment). Of these funds, ₾65 million was used to pay interest on the loan, ₾79 million was used to purchase land (for the Citizen project), ₾26 million was loaned to a related party, ₾8.6 million was used for dividends.

In the same period, Galleria Tbilisi generated free cash flow of ₾85 million and additionally borrowed ₾18 million (net of debt repayment). Of these funds, ₾63 million was used to pay interest on the loan, and ₾37 million was used for dividends (however, the owners have not yet fully withdrawn the investment made in their own capital).The rest companies do not have enough free cash flow left to distribute to owners, mainly due to the desired capital expenditures and/or high leverage,” the review reads.