El Corte Ingles Holds an €18 Bn Worth of Real Estate

17/09/2014 – Expansion

Over the eight decades of its lifespan, El Corte Ingles expanded to all regions and all large cities of Spain, creating a genuine real estate network. At present, the group until recently chaired by Isidoro Alvarez (pictured) possesses 88 department stores, including two in Portugal (in Oporto and in Lisboa). Great majority of these properties are situated on the countrys most commercial streets, such as the Preciados street in Madrid or the Portal del Angel street in Barcelona.

Shopping

Most of the department stores have been opened during the 25-year presidency of late Mr. Alvarez who also took care of growth of El Corte Ingles. Apart from development projects, the late chairman acquired several units which enriched the groups portfolio.

The most important operation of its was sealed in 1995 when Mr. Alvarez purchased 30 establishments from his then-competitor Galerias Preciados for 30 billion pesetas (around 180 million euros). The acquisition allowed to double the size of the group and to settle down in thirteen Spanish cities. In 2001, El Corte Ingles bought nine properties from British Marks & Spencer, including the Serrano street building in the Golden Mile of Madrid.

Together with the 88 department stores, the chain expanded its retail offer with hipermarket chain Hipercor. At the day of 28th February this year, this arm operated 43 hipermarkets located in Andalusia, Madrid, Catalonia and Asturias, among other regions.

The food offer was soon amplified by convenience stores (Opencor) and supermarkets (Supercor), as well as Supercor Express. In total, 203 next-door shops.

El Corte Ingless portfolio has been completed by nearly a hundred of Sfera fashion stores, 588 travel agencies (91 outside of Spain) and 29 establishments of do-it-yourself and household appliances chain Bricor.

Properties

The group owns majority of these business lines properties. Unlike other large consumption managers, El Corte Ingles has not sold part of its patrimony to stay as a tenant (sale & leaseback).

According to estimations of Spanish appraiser Tinsa, the groups portfolio represents an €18 billion worth of real estate assets.

In November 2013, in order to pay-off its €5.7 billion indebtness, El Corte Ingles came to an agreement with Santander, CaixaBank and BBVA on a syndicated loan amounting to €4.9 billion. Moreover, at that time, the group sold 51% of its financial arm and debt to Santander for €900 million..

Some of the properties owned by the company and said to be worth of €435.31 million, backed the new financial scheme.

The group itself denies the appraisal of Tinsa and claims that at the end of 2013 the value of its land and buildings equaled to €10.59 billion and €10.41 billion a year earlier.

The Torre Titania tower

Two properties in hands of El Corte Ingles indeed are the real estate jewels: its headquarters on the Hermosilla street and the Torre Titania skyscraper in the Nuevos Ministerios area, both located in Madrid.

The latter property of 70.000 square meters was built by El Corte Ingles after the purchase of a plot carrying the Torre Windsor tower before for €480 million. The building was designed to be the flagship of the department stores capable to compete with other shopping parks housing such luxury brands as Louis Vuitton or Bulgari. The 6-storey property situated on the Castellana street was built up with 21.000 square meters of office space for sale or rent.

IBA Capital

Although the policy of El Corte Ingles did not predict selling its real estate assets, the group made two exceptions. In July 2013, it signed a sale & leaseback contract with French manager IBA Capital on conveying the building number 23 on the Plaza Catalonia square in Barcelona for €100 million.

Few months later, the firm sold the property located at 9 Preciados street in Madrid for €150 million, also to IBA Capital.

 

Original article: Expansión (by R. Ruiz)

Translation: AURA REE

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