81
81

Sonae Sierra Pursues Capital Recycling Strategy

19 July 2017

Sonae Sierra has been implementing a capital recycling strategy since 2008, consisting in the partial or total sale of its real estate assets, first internationally and later in Portugal. This strategy has allowed “the company to continue to innovate and develop its business, and to create value for its shareholders and partners,” a spokesman stated.

Currently, Sonae Sierra manages and/or markets a total of 74 shopping centres, of which 45 are in the Iberian Peninsula (36 in Portugal and nine in Spain).

Sonae Sierra continues to be a benchmark investor, at the same time as it strengthens its capital structure and continues to focus on the management of its assets. The success of the completed sales “reflects the quality of its assets” and “the company’s ability to actively implement its capital recycling strategy to reinvest in new projects.”

Renew, expand, enhance

Between 2015 and 2016, Sonae Sierra invested around 147 million euros in expansions, renovations and the reorganization of the layout of some important centres in its portfolio. Of particular note was the total renovation of the Vasco da Gama centre, which represented an investment of 12 million euros, with completion scheduled in 2017. The goal was “to create environments that are more welcoming and that favour the comfort of visitors.” To do this, “it will contemplate spatial interventions, both inside the centre and outside on the esplanade, further enhancing and taking advantage of its excellent location and views of the river.

The total renovation of CascaiShopping accounted for an investment of 13.7 million euros, and is also scheduled to be completed in 2017. The first phase, inaugurated in May, resulted in a redesigned food-court, using a new concept, the Cascais Kitchen, inspired by street fairs and traditional markets.

Cascais Kitchen has transformed the shopping area “into a dynamic and profitable zone.” Although the total rental area declined, “rents per square meter increased by about 630% compared to the previous configuration, and the shopping centre enjoyed immediate benefits, with a 3% increase in the number of visitors between July and December 2016 compared to the same period of the previous year.”

Also worth mentioning is the expansion of NorteShopping, an investment of 60 million euros, with completion scheduled for 2018, increasing the centre’s Gross Leasable Area by 15,000 square meters; and the 47 million euro expansion of the Colombo Center, which has not yet begun, but aims at an increasing the GLA by 17,000 m2, while also relocating, reorganizing and expanding the restaurant area, as well as the expanding the area dedicated to retail, with the aim of strengthening the mix of stores and bringing new brands to the centre.

In 2011, LoureShopping started a pilot project to reduce water consumption. Using a new system, the centre now recovers water from its cooling towers and reuses rainwater in its bathrooms and cooling towers.

The project permits the reuse more than 6,250 m3 of wastewater and rain and reduced costs by 6%, allowing a return on investment in three and a half years. Sonae Sierra’s other 10 shopping centres in Portugal (and 20 in its global portfolio) have already introduced rainwater harvesting systems and/or reuse or recycling systems.

In turn, the Iberia Coop fund, a strategic partnership created by CBRE Global Investment Partners and Sonae Sierra, inaugurated an expansion in AlgarveShopping this year, with the goal of strengthening and improving its retail mix. An investment of about 4.5 million euros led to an increase of the retail space by 1,500 m2 and, in parallel, enabled the remodelling the existing 4,200 m2 retail area, leading to the improvement and expansion of seven stores in the fashion and perfumery segment.

Its international portfolio includes renovations to two centres in Brazil: Uberlândia Shopping (in Uberlândia), which received an investment of 8.3 million euros, and Parque D. Pedro (in Campinas), receiving an investment of 5.8 million euros, both with completion scheduled for 2017; and finally, the reorganization of the layout of Loop5 (Germany), accounting for an investment of 8.7 million euros.

Original Story: Público – Imobiliário

Translation: Richard Turner