Alpha 2: Colonial Invests €400M In RE In Spain & France

7 February 2017 – Expansión

On Monday, Colonial, the second largest real estate company in Spain (after Merlin Properties) unveiled its new strategic plan, known as Alpha 2. Under this plan, the company has invested €400 million in four operations: three in Spain and one in France (Paris). The group has opted to undertake operations to reposition its assets. In this way, it will allocate €250 million to property acquisitions this year and the remainder will be spent on renovation work.

The group will invest €51 million on an office building on Paseo de la Castellana, 163, which has a surface area of 11,000 m2. The property is currently occupied and will be renovated floor by floor, as the current tenants vacate the property.

In Barcelona, the group has acquired the headquarters of Fundación Bertelsmann, on Travessera de Gràcia, 47-49. The operation, including the remodelling work, amounts to €41 million. On the other hand, Colonial will spend €32 million to build a new office tower in Plaza Europa, number 46-48. This operation will be performed through a joint venture with the perfumery and fashion group Puig. The future building will be located opposite the Catalan company’s current headquarters.

Finally, the fourth operation involves the acquisition of a building at number 112-122 Avenida Emile Zola in Paris. In total, the group will spend €245 million on this purchase, in an operation that was announced a few weeks ago.

This plan complements another one, executed last year, known as Alpha, which initially planned to make investments amounting to €400 million, but in the end spent more than €500 million.

Its purchases included the acquisition of 15% of the Socimi Axiare’s share capital. The company led by Pere Viñolas (pictured above) spent €135 million to become the largest shareholder of that listed company, which debuted on the stock market in the summer of 2014 and which has been setting itself up as one of the main owners of office buildings in Madrid and Barcelona – it has very similar portfolio to that of Colonial.

Currently, Colonial owns 59 properties in Paris, Madrid and Barcelona, with a combined value of €7,543 million, according to the most recent estimates, performed as at 30 June 2016. Its most recent acquisitions include several office buildings, such as IBM’s headquarters in Madrid, located on Calle Santa Hortensia, worth €154 million. The Mexican group Finaccess (former owner of the Modelo group, the manufacturer of Corona beer) sold that property, along with another building on Calle Serrano, in exchange for a stake in Colonial.

Alpha also included the purchase of a 4.4% stake in the French firm SFL, which the Reig family sold for €106 million.

During the 9 months to September 2016, the real estate company in which the Sovereign fund of Qatar, Finaccess and Villar Mir hold stakes, generated revenues of around €205 million, up by 21% compared to the same period in 2015.

During the same period, Colonial earned €249 million, up by 17%, whilst its level of indebtedness (LTV) amounted to 40.3%. Just three months ago, the real estate company carried out a bond issue amounting to €600 million.

Original story: Expansión (by G. Trindade and R. Ruiz)

Translation: Carmel Drake