BPI sells City Block in Downtown Lisbon for €66 Million

15 July 2018

The hotly disputed deal was finalised in a just over six months, as more than 20 interested parties, of various nationalities, vied to acquire the properties.

BPI sold its oldest and principal property in Lisbon. According to the Jornal Expresso, the building – which comprises an entire city block in downtown Lisbon – was acquired by a German fund for more than 66 million euros.

“This divestment allows us to realize an important capital gain, which will reinforce the capital of the Pension Fund, opening up new options for alternative real estate investments with the potential for appreciation and income,” notes Manuel Puerta da Costa, a member of the board at BPI Asset Management and the manager of the pension fund, which owns the property.

The buyer was an international fund that is to be managed by Norfin, a Portuguese real estate investment fund manager, owned by João Brion Sanches and Alexandre Relvas. JLL, the consultancy responsible for the operation on behalf of the pension fund of BPI announced the deal.

“This property is what we call a trophy building. It is a unique property and therefore sold quite well, but it was also a good buy because it has a significant potential for appreciation,” JLL’s director, Pedro Lancastre, stated.

Properties that can be used for anything

As the Jornal Expresso reported in January when it wrote that the building was for sale, the property is made up of five 18th-century buildings in the Pombaline architectural style, which BPI acquired over the years for a total of 11,100 square meters of area. The properties account for an entire city block, facing Rua Augusta, Rua do Ouro, Rua do Comércio and Rua de São Julião, right in front of the Design Museum and meters from the Arch of Rua Augusta and the Terreiro do Paço.

All this makes it a property with a “significant potential to host one of the largest real estate developments ever in Lisbon’s historic centre,” JLL stated. In fact, Mr Lancastre added, the building “is in a very busy area, which is very valuable for commerce. However, it is also a very touristy area, and would therefore also be good for a hotel, and the area also has a lot of demand for housing. Therefore, given the type of the property, it would be possible to develop homes for a certain type of buyer,” Mr Lancastre said.

In other words, the property benefits from “great versatility for real estate development,” including housing, retail and hospitality or even a combination of the three, says JLL. In fact, the consultancy is “helping the buyer to define the type of project for the building.” However, whatever the project, it “will undoubtedly have a strong impact on the city of Lisbon, as it will further the rehabilitation of an entire downtown city block, renewing the whole area and creating another point of attraction for people and the creation of wealth,” he enthused.

Hotly disputed sale

We have repeatedly written that Portugal and Lisbon are currently the darlings of both individual and corporate investors. This operation is further proof of our contention. More than 20 companies and investors of various nationalities submitted non-binding proposals to BPI and JLL, showing interest in acquiring the property.

And, one of them did it, even knowing that the purchase price – in this case, more than €60 million – is in addition to the needed investment in rehabilitating the property, which will “never cost less than €1000 per square meter, i.e., €10 million [for the whole 11,100 m2],” Mr Lancastre reasoned. They did it also understanding that they have to wait for BPI to leave the premises, which will only happen “by the end of 2018,” Manuel Puerta da Costa guaranteed.

According to a statement in January, by a source at the bank, it will not be necessary to build any new offices for these “hundreds of people” because they will be placed in existing buildings spread throughout Lisbon. “We have a tower near Saldanha, in Casal Ribeiro, which was the former headquarters of the National Development Bank, and the Jean Monet building, where the European Commission is, and we have spaces in the Torres de Lisboa and at Braancamp, in front of the Lojas das Meias,” the same source stated.

Even with all these peculiarities, the operation “exceeded all expectations.” “This was an opportunity that will hardly be repeated in the market, and this was reflected throughout the hotly disputed sales process, where we received an elevated number of proposals and requests for information from players from around the globe, with suggestions for several rehabilitation projects targeting retail, residential and hotel uses,” says the new director of JLL’s urban development department, Gonçalo Santos.

Also, the operation was nearly finalised in just six months. The consultancy was mandated at the end of 2017, put the property on the market in mid-January and the pre-contract was signed last week. The only thing that is now missing is the deed, which should be signed later this month or, at the latest, in August.

Original Story: Jornal Expresso – Ana Baptista

Photo: D.R.

Translation: Richard Turner

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