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Drago Finalises Purchase Of Gas Natural’s RE Jewels

7 November 2016 – Expansión

The investment firm Drago Capital, together with the Canadian pension fund manager PSP Investments, has emerged as the clear candidate to acquire the real estate jewels of Gas Natural Fenosa in Madrid. The firm is now holding exclusive negotiations with the energy company to put the finishing touches to a deal that is likely to close within the next few weeks.

According to market sources, the offer from the Spanish real estate vehicle manager, which was presented as part of a consortium with the Canadian fund, has supplanted those submitted by the other suitors also interested in the assets.

The operation values the energy company’s assets in Spain’s capital at just over €300 million, which means that this will be the largest sale and leaseback transaction (sale to a third party and subsequent rental of the property) since 2010.

The firm chaired by Isidro Fainé engaged the real estate consultancy firms CBRE and Cushman & Wakefield in the summer to sell its main real estate assets in Madrid. This process sparked interest amongst private equity funds and investors alike, both at home and overseas.

Other candidates

Specifically, in addition to Drago, the investors Iba Capital, Henderson Park and a family office participated in the bidding until the latest round. Has Capital, which had also expressed its interest in Gas Natural’s properties, withdrew at the last minute as it was unable to raise financing.

The assets up for sale are: the group’s headquarters in Madrid, located on Avenida de San Luis 77; a property on Avenida de América 38; the Acanto complex, at number 11 on the same street; and the Antonio López complex on Calle Antonio López 193.

Altogether, the global surface area of the four complexes amounts to 57,000 m2. In addition, the portfolio of assets includes 1,695 parking spaces. (…) .

Gas Natural’s move comes at a time when its competitors are also divesting their real estate assets.

Specifically, Torre Cepsa – one of the Cuatro Torres in Madrid – was acquired just two months ago by Pontegadea. That purchase – the largest ever undertaken by Amancio Ortega’s investment vehicle – was completed in September and saw the founder and largest shareholder of Inditex spend €490 million.

Meanwhile, Endesa’s headquarters in the capital is owned by Merlin; and Iberdrola’s headquarters in Bilbao is partially owned by Kutxabank.

Repsol still owns its headquarters in Madrid, in Méndez Álvaro, however, there has been speculation that the oil company may sell the asset. (…).

According to the consultancy JLL, real estate investment in the office segment is expected to exceed €2,400 million in 2016. That figure falls below the record €3,170 million achieved last year due to the limited supply of high quality products. During the first nine months of 2016, investment in offices amounted to €1,572 million, with Madrid accounting for the vast majority of that figure (€1,150 million).

Original story: Expansión (by R. Arroyo & M. A. Patiño)

Translation: Carmel Drake