18/12/2014 – Expansion
The sale of the property situated at 32 Gran Via street in Madrid is nearing the end. It was put up for sale by Spanish manager Drago Capital back in October.
Among the bidders one may find German fund Deka Inmobilien, the real estate arm of Axa Seguros and the Singapore Sovereign Wealth Fund GIC. According to sources with knowledge of the process, the three bids are binding.
The property will house the first Primark store located on a street in a city center, once the renovation works are completed at the end of 2015. The biggest low-cost flagship unit in Spain will occupy 12.000 sqm of the total of 36.376 square meters. The opening adds one more world-wide known clothing brand to the high street of Madrid, which already has huge shops of Zara, H&M, with Mango preparing to open its mega-store inside the old Palacio de la Musica.
The rest of the space offered by 32 Gran Via building is occupied by media group Prisa, having its headquarters in there since long.
Drago Capital aims at closing the sale before the year ends. However, legal problems of the firm’s managers, Oleguer Pujol and Luis Iglesias, could impede the process. Apart from the property housing Prisa, Drago Capital owns, together with Canadian fund PSP, the Castellana 200 complex.
Axa, Deka and GIC are not the only investors craving for the beautiful 32 Gran Via (upper facade pictured). Also Pontegadea, the investment arm of Amancio Ortega , submitted its bid.
While recently the firm has been focused on purchases out of Spain, for this building Pontegadea could change its mind. However, supposedly, Primark would not be particularly happy to rent from one of its main rivals, Inditex.
Drago Capital is set to obtain considerable capital gains from the sale, as the fund bought it together with two other properties, one located in Madrid and the other in Barcelona, for 315 million euros in total. That is, almost 100 million of difference.
The asking amount, 400 million euros, and even more the number of investors ready to pay it, demonstrates huge interest in retail properties in large cities. For instance, the building leased to Adolfo Domínguez on the Serrano or the retail unit bought by Mango on the Orense street, both in Madrid.
In fact, Axa has just acquired another nearby propety at 37 Gran Via, let to H&M, for a record 20.000 euros per square meter.
Of the year-to-date total investment in CRE (over €2 billion), 27% was spent on shops, Deloitte Real Estate reported. Family offices usually buy units up to 10 million and funds from the line up.
Original article: Expansión (by Rocío Ruiz)
Translation: AURA REE