The office real estate business will suffer from the impact of the coronavirus, as less space will be leased and rents will fall, however, the experts are optimistic about investment since there is liquidity in the market.
Lower employment, and the greater use of so-called agile workplaces, will mean less need for office space and more empty properties. However, the office sector has the potential to attract significant investment as an alternative to the stock market and other real estate segments.
That is the short and medium-term view of the office market, which experienced an exceptional 2019, when investment amounted to €3.7 billion, accounting for more than a third of all real estate investment. Last year also saw the highest volume of office space leased since 2017, although a 15% reduction in leasing was already forecast before the coronavirus hit, due to the cooling off of the economy, according to estimates from CBRE.
In light of the crisis caused by the coronavirus, the Socimi is postponing part of its capex program until next year: €60 million, which represents 40% of the total investment of €150 million that it had planned to spend on the refurbishment and development of buildings in 2020.
The real estate company has acknowledged that “the coronavirus crisis is impacting our portfolio of projects and so specific delays on some of them are expected,” in a statement sent to the National Securities Market Commission (CNMV). One third of the amount deferred corresponds to investments in the office and housing project that the company is working on in the Méndez Álvaro area of Madrid.
According to the listed real estate company, the impact of the coronavirus crisis on Colonial’s real estate activity, as well as on the economy in general, continues to be “uncertain and difficult to predict.” For this reason, the company has acknowledged that it has reviewed its investment criteria and policies “in accordance with a more prudent context”. However, it stresses that the company’s asset portfolio, as well as its current liquidity and solvency, allow it to “face and manage the situation in an optimal way”. Regarding its financial position, the firm explains that it has available credit lines and cash amounting to €2,000 million and net liquidity that covers “the maturities due over the next two years by more than four times.”
Manuel Lao, founder of the gaming group Cirsa, has acquired 5.39% of the Socimi’s share capital through the investment holding company Nortia.
Manuel Lao, former owner of the gaming group Cirsa, has purchased 5.39% of the Socimi’s share capital through the investment holding company Nortia. The executive is now Merlin’s second-largest shareholder, after Banco Santander, which owns 22.27%, and ahead of the funds managed by BlackRock, which own 3.99%.
At market closing prices on Monday night, Lao’s stake was valued at €170 million, since Merlin’s market capitalisation currently amounts to €3,150 million. On Monday, the real estate group saw its share price fall by 9.58% on the stock market; it has accumulated a decrease of 48% over the last month as a result of the uncertainty caused by the Covid-19 pandemic.
The buildings, which are both leased to BBVA, span a combined surface area of 19,261 square metres and have 65 parking spaces.
Mazabi has purchased two office buildings located in prime areas of Valencia and Sevilla for €70 million. Both properties were owned by investment funds of Deutsche Bank, according to El Confidencial.
The two buildings have a combined surface area of 19,261 square metres and 65 parking spaces. Both are leased to BBVA, which has guaranteed the operation with its rental income. The bank has also provided the necessary financing to the multi ‘family office’ led by Vicente Gómez de la Cruz and Juan Antonio Gutiérrez.
Hotel, restaurants and textile chains are asking to negotiate the conditions of their rental contracts and are proposing rent waivers, moratoriums and discounts for the duration of the state of emergency due to Covid-19.
Hotel groups, restaurants and textile chains have started to ask their landlords to negotiate the conditions of their rental contracts and to propose rent moratoriums and discounts, at least for the duration of the state of emergency decreed by the Government to try to put a stop to Covid-19.
This would affect Socimis that own shopping centres, such as Merlin, Lar España, Castellana Properties and General de Galerías Comerciales; other retail giants, such as Sonae Sierra and Unibail Romanco-Westfield – which have already announced that the coronavirus pandemic has affected their centres. It would also impact funds such as Blackstone, which owns a high-profile hotel portfolio following its purchase of Hispania, which it controls through HIP; and property managers such as Azora, which will have to review their business plans and adapt their commercial policies with their tenants.
Regus has reached an agreement with BWA for the partial assignment of the business centre in the port of Alicante.
Regus, the brand owned by the British group IWG, has arrived in Alicante after reaching an agreement with Javier Reina, CEO of BWA, for the partial assignment of the concession to operate the port’s business centre. As such, it will become the new operator of the building, with the exception of the two restaurant spaces, reports Alicante Plaza.
After a year of paperwork, the agreement was signed on Friday 28 February. The deal specifies that IWG will carry out a renovation of the property within a period of four months with an expected investment of €1.5 million.
The market that will grow by the most in Madrid will be Madbit, the new technological district within the limits of the M-40. That area will see an additional 63,000 square meters of office space.
Of the 500,000 m2 of office space that will be added to the market in the Spanish capital, 310,000 m2 is located outside of the M-30, accounting for 62% of all new construction, according to the Madrid Office Study published by the consulting firm Savills Aguirre Newman, and reported by Eje Prime.
The shortage of high-quality product has meant that 31% of future projects – 116,000 m2 – has already been committed. Although that figure is expected to increase, according to data from Savills Aguirre Newman.
The US fund is looking to get a return from the investment that it closed at the end of 2016.
The US fund Värde has put up for sale its 38% stake in the Socimi La Finca Global Assets controlled by the Cereceda family, which owns the Pozuelo business park, one of the most prominent office complexes in the north of Madrid. The company is accelerating its round of contact with private equity funds and institutional investors, to take advantage of the positive performance of the firm and the fact that it has now been a shareholder of the company for more than three years, according to Expansión.
The Socimi owns a portfolio of 11 office assets in prime locations in Madrid, such as the La Finca business park comprising 20 buildings in Pozuelo de Alarcón (Madrid). At the end of 2019, the valuation of the company amounted to €790 million. Susana García Cereceda owns 50% of La Finca Global Asset; the fund Värde owns 38% through Mansfield Invest; and Yolanda García-Cereceda owns almost 11%.
Santander’s online bank could move its headquarters to the Palacio de los Guevara if its conversations prove fruitful with BBVA, which currently occupies the building, located in the Plaza Santa Bárbara.
Openbank, whose headquarters is currently located in another historic mansion on Paseo de la Castellana, 24, has been looking for a new headquarters for a while, according to El Confidencial.
An opportunity has now arisen, according to the digital newspaper, as a result of BBVA’s decision to move almost 1,000 of the professionals that it has working in other offices to a location close to its quarters in the Las Tablas neighbourhood of Madrid.
That will free up a historic building in central Madrid. Built in 1920 for the Guevara family, the property was expropriated after the Civil War to house financial institutions. In 1999, BBVA bought it and subjected it to a thorough renovation to host its Innovation Centre. The current owner of the property, which spans 11,549 square metres, is the Swiss entity UBS.
Last year, the Sevillan company sold one of the two properties that form the Madrid Río office project to the fund AEW Europe. Now the firm has repurchased 40% of the property developer IDS Manzanares, which still controls the other building.
The property developer Inmobiliaria del Sur (Insur) has decided to hold onto part of its large office project in Madrid Rio, in the Spanish capital. The company led by Ricardo Pumar joined forces with two Spanish family offices to develop the business complex, which spans 28,000 square meters spread over two buildings, and which has involved an investment of almost €60 million. Last year, the real estate company sold one of the two properties that comprise the project to the fund AEW Europe. Now, the Sevillian firm has repurchased 40% of the property developer IDS Manzanares, which still controls the other building in the Rio 55 development, according to sources at Insur speaking to Brainsre.news.
The Moya-Yoldi family, owners of the Persán cleaning brand, previously owned this stake. Following the repurchase, the property developer now controls 90% of the northern building, which has been leased to BNP Paribas since last year.