6 October 2018 – Real Estate Press
Colonial has announced the sale of seven office buildings and a turnkey project in Madrid for a total price of €441 million. The sales have been made under very favourable conditions for the company for a premium of 12% above the most recent valuation.
The assets transacted have a gross leasable area of 106,574 m2 and are located, for the most part (91%) outside of the city’s central business district. They are non-strategic buildings for the company outside of the M-30, mature assets and a project in Castellana Sur / Mendez Álvaro.
Colonial has divested assets, which after a recent real estate transformation have reached high occupancy levels and the maximum point in the cycle for the creation of real estate value. For example, in the case of Alcalá 30-32, the rental contract was recently renegotiated with a +21% increase in the rental price and which is currently 100% occupied by the Public Administration with a long-term contract.
Colonial has reached an agreement with Grupo Catalana Occidente to sell it a turnkey project spanning more than 20,000 m2 on a plot that it acquired under the framework of the Alpha-III project in January. The project is located in the Méndez Álvaro office market and will allow the consolidation of the Castellana Sur area with the occupancy of the building by a large corporation.
Similarly, Colonial will begin construction of another major project “Méndez Álvaro Campus” over the next few months. That project has an above ground surface area of 90,000 m2 and will house the largest office complex inside the M-30.
Optimal conditions at the right time
This operation has been carried out taking advantage of the good momentum in the office investment market in Spain, which is continuing to generate strong interest amongst institutional and private investors.
Only 4 months have passed since the company identified these assets for sale along with the potential investors, demonstrating the Colonial Group’s capacity to execute this type of transaction under optimal conditions.
The buyers include institutional investors of recognised prestige such as Tristan Capital Partners, Real I.S. and Grupo Catalana Occidente. In the different operations, Colonial has received legal advice from Ramón y Cajal Abogados and Roca Junyent
Reinvestment of capital focused on Prime
The funds received from the divestments will be used primarily to finance the portfolio of high-quality office projects spanning a surface area of 320,000 m2, as well as the company’s acquisition program. The Group’s net indebtedness (LTV) following the divestment of these assets will clearly fall below 40%.
“The company frames these divestments within its strategy to focus on prime assets with maximum added value, where demand and value growth are most notable. With this operation, Colonial increases its flexibility and capacity to continue developing its growth strategy, focused on projects with maximum values and returns”, explained Pere Viñolas, CEO of Colonial.
Original story: Real Estate Press
Translation: Carmel Drake