Overview – OCTOBER

 

Corporate transactional activity in Portugal’s logistical and industrial sectors ticked up this month, while growth in the residential real estate market appeared to finally begin to cool off in the country’s capital, Lisbon. Housing prices in Lisbon’s historic centre increased by just 0.1% from January to June, compared to the preceding semester. The previous semester had also seen a reduction in the pace of growth as relatively high prices and the effects of recent measures aimed at containing the expansion of the local tourist accommodations market bit into investors’ enthusiasm.  Other areas of the country, however, saw no slackening in demand as the focus of investors began to turn more fully towards areas that have seen a lower level of appreciation. A monthly survey by Portugal’s statistical agency, the INE, showed that housing prices had increased by nine euros to a series-high of €1,205. The Algarve had the highest valuation per square meter (1,584 euros per square meter for apartments), and Alentejo had the lowest (1,029 euros per square meter).

Despite the Bank of Portugal’s recent macro-prudential measures, which the central bank aimed at restricting the flow of credit to Portuguese households, lending reached an eight-year high in August of this year. Outstanding loans reached €92.86 billion euros, just short of the 97.957 billion euros in August 2007. Meanwhile, the total amount of consumer loans surpassed the pre-crisis high: €14.762 billion in August 2018 versus €12.18 billion euros 11 years ago.

Residential & Land

The Centro Hospitalar de Lisboa Centro held a sparsely attended auction at the end of September in which it sought to sell off eight real estate assets.  The hospital pulled a ninth before bidding began,  a building that currently houses an 86-student nursery school when the Lisbon city council indicated that it would hold on to the property due to fears of a possible eviction of the tenant after the sale. The Left Block political party wanted the city to acquire all of the assets for use in the affordable housing rental market.  In any event, just three of the eight assets sold for a total of €1.7-million amidst complaints that the hospital had done a poor job of advertising the event. A vacant lot located at 188 Rua do Século attracted the most interest and sold for 809,000 euros, 170,000 euros above its base bidding price.

Retail

Savills Investment Management, a European property investment fund manager, acquired the Aveiro Shopping Centre through its Europe V retail fund, which invests in local shopping centres, retail parks, designer outlet centres, high street and other retail assets across Europe. The fund targets a total return of 10-12% net per annum after costs, fees and local taxes, including a yield of more than 5%. The fund paid €29 million for the Portuguese shopping centre, the Euro V fund’s first acquisition on the Iberian Peninsula. The Aveiro Shopping Center has 30,700 square meters of gross leasable area (GLA) and is home to a Continente supermarket, a 39-store commercial gallery and four medium-sized stores. Located in the town of Aveiro, the asset receives about three million visits per year.

Offices

AM Alpha, a Munich based real estate family office servicing private and institutional clients, completed the acquisition of an office building in Lisbon’s central business district (CBD). The building is in the heart of the city centre on Rua Castilho and just behind the Praça Marquês de Pombal. The building is in an area that has a good mix of office space, some of the city’s best hotels, restaurants, high street retail and luxury residences. The property, called Edificio Mapfre, was built in the 1990s and has housed the Portuguese headquarters of the Spanish insurance group Mapfre since its completion. The building has approximately 3,500 square meters of office space spread out over nine floors, along with a large garden terrace and roughly 70 parking spots units in two underground floors. AM Alpha purchased the property with a very short WALT and will subsequently seek to reposition the asset. The amount of the transaction was not disclosed.

Quantico SA, a real estate company that develops projects based on sustainable value creation, in partnership with Spain’s Albatross, acquired the Café Embaixador building in downtown Porto and will transform the property into a luxury residential housing project. The plan is to renovate the building, whose entrance is via Lisbon’s iconic Praça da Liberdade, creating 18, 60-75 m2 one-bedroom flats for the high-end market. The well-known Café Embaixador, located on the building’s ground floor, was not included in the transaction.

Logistics & Industrial

  1. P. Carey, a real estate investment trust that invests in properties leased to single tenants via triple-net leases, acquired a 50,000-square-meter central logistics facility near Lisbon, for approximately €43m. The distribution centre is currently occupied by Sonae MC, Portugal’s leading food retailer, through a triple net lease contract in which the tenant typically required to pay property taxes, insurance, and maintenance, in addition to monthly rents.The property is in Portugal’s prime logistics hub, the Azambuja logistics park.The facility is Sonae MC’s central distribution facility and its only warehouse in the Azambuja region with cold storage for perishable food products. The asset is located on a large parcel of land with substantial building rights, for potential future expansion.

Incus Capital, a Madrid based Specialty Credit investment advisory firm providing flexible credit solutions to mid-market European businesses, acquired seven real estate assets in different areas of mainland Portugal and Madeira for an undisclosed sum. Fundo Logística e Distribuição sold the portfolio of high-quality assets totalling approximately 74,000 m2 of 100% occupied gross leasable area. CBRE’s Capital Advisors team advised on the transaction, working with several financial institutions to secure funds and obtaining favourable financing conditions.

The Turkish OYAK Group (Ordu Yardımlaşma Kurumu) acquired assets in Cimpor and InterCement’s Portugal and Cape Verde business units for an undisclosed amount. The two companies stated that the transaction is part of InterCement (formerly Camargo Corrêa Cimentos) and Cimpor’s publicly announced debt reduction plan, created in response to adverse conditions in South America, especially Brazil. The OYAK Group is Turkey’s largest pension fund, investing in such profitable sectors growth industries as cement and concrete, mining and metallurgy, automobiles, energy and the chemical sector, agriculture, logistics, finance and specialised aluminium. The group currently employs around 30,000 people in 19 countries, had a turnover of USD 10.2 billion in 2017.