Blackstone, Cerberus, Apollo, Intu & Singapore’s Government Poach Real Estate Bargains in Spain

6/10/2014 – Expansion

Blackstone, Cerberus, Apollo, Intu, the Singapore Sovereign Wealth Fund and China’s richest man are only few examples of big-name international investors who have carried out significant transactions on the property market in Spain over the past months.

In its latest report, CBRE Spain tries to answer the question what is the investor boom due to? Presently, the country’s market is the third hottest in Europe, ranking just behind the United Kingdom and Germany. Unlike its opponents, Spain has got up its sleeve historically low property prices and pretty positive outlook for economic recovery.

‘Since first real estate purchases back in July 2013 by foreign private equity firms like Goldman Sachs or Blackstone, we have observed a money-pouring fever on the part of all kinds of investors, ranging from international funds, private equity and family offices, as well as other locally found partners and sources of capital’, says Alejandro Campoy, general director for Investment at Aguirre Newman.

Their arrival marked the Spanish non-residential sector with a €3.23 billion FDI (Foreign Direct Investment) spent on offices, retails and logistics hubs.

What are they looking for? Great majority of foreign equity groups strives at value-adding and they do not hesitate to buy a property requiring refurbishment as long as an attractive discount is applied. For instance, a joint venture established by Baupost, Green Oak and Socimi (REIT) Lar acquired six retail parks for €160 million in total. To compare, Oaktree alone bought the Gran Vía de Vigo shopping center for €115 million.

Other, more conservative investors opt for prime assets rented by trustworthy tenants. To give an example, the headquarters of IBM has been purchased by Mexican group Financess, while the one of Vodafone by London & Regional Properties for €117 million.

Aside from custom investors from the U.S.A. and Europe, last months have also seen equity flowing from sovereign wealth and pension funds of China, Korea and Singapore. From January to June, the Asian countries mainlined €368 million, whereas during the entire year 2013 the amount post €50 million.

The most recent Asian investment examples are: the purchase of 30% stake in Spanish property manager GMP for more than €200 million by Singapore Sovereign Wealth Fund (GIC) or the hotel-entertainment project of Wang Jianlin, the richest man of China who bought the Edificio España iconic building in Madrid earlier this year.

When it comes to corporative investments, Spanish Socimis shone on this field like stars. With support of billionaires like George Soros or John Paulson and big-name companies like Cohen & Steers, Pimco or Goldman Sachs, all freshly listed REITs could do property shopping for more than €1.6 billion year-to-date.

 

Original article: Expansión (by Rocío Ruiz)

Translation: AURA REE

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