Silk Project Portfolio for Sale for 60 Million Euros

20 May 2021 – Ana Custódio

The portfolio of 200 properties comprises a high-quality residential portfolio located mainly within the metropolitan areas of Lisbon and Porto.

The project provides an opportunity to acquire a high-quality portfolio with which to capture residential price appreciation. Addrezza, the owner of several luxury projects in Lisbon, has a portfolio of over 200 properties, including highly concentrated assets and unique locations throughout Portugal, that have been for sale since March.

The process is in the hands of Square AM (Square Asset Management), manager of the fund that owns the properties, and CBRE, which has opened a standard bidding process for the possible acquisition of the SILK Project. There are already two interested parties for the portfolio valued at €60 million, Whitestar Asset Solutions, representing an investor, and the German fund Deutsche Finance, together with Finsolutia.

The residential portfolio stands out for its high-quality units and assets in unique locations. Although Project SILK is mainly concentrated in the urban areas of Lisbon, Porto and Faro, the portfolio also includes other areas of the country such as Setúbal, Leiria, Portalegre, among others.

With an average unit size of 120 m², the portfolio is largely composed of 2, 3 and 4-bedroom flats (76% of the total units). The remaining residential units range from studios to 6 bedroom flats.

Other types of assets are neither significant nor representative of the total portfolio. The SILK Project includes different asset classes, such as eight office units, five retail shops, three parking spaces and three plots of land, in a total area of 40,670 square metres, generating annual rents of €32,000.

Initially designed for leasing, the seller began terminating leases as early as 2020 to implement a unit-by-unit function strategy. Currently, 46% of the properties are unoccupied, a percentage that will quickly increase in the coming months as most lease contracts are ending. The seller has not signed new leases and has opposed all renewals.

The assets in the Top 8 group, with 125 units, represent 72% of the total potential sale price of Project SILK. These assets are in well-consolidated urban areas, which increases the liquidity of the units. In general terms, the residential units in the portfolio are in very good condition and vacant units can be sold and/or occupied by future tenants.

Translation: Richard D. K. Turner