17/11/2014 – Expansion
Winds of change blow above Madrid-based, 35-year old real estate company GMP as its new partner GIC convinced the Montoro Aleman family the time has come to take steps on creating a new strategic plan including ongoing transactions and naming Xavier Barrondo as its new business director.
Mr. Barrondo returns to Spain after acquiring wide professional experience at GE Capital Real Estate and leading the French, the Italian and the Spanish markets from Paris. ‘I had known the Montoros since they had shares in some buildings also held by GE’, he explained.
The Arrival of GIC
‘I am a visionary who has come back just in time for the cycle change’, Mr. Barrondo joked. ‘We are experts in the Spanish office industry, we know how to interprete the real estate cycles and we believe this is the right moment to buy. In spring, we will look for a partner for the new strategic plan’, he explained.
At the beginning of October, Singapore’s Sovereign Wealth Fund GIC bought a 30% stake in GMP. ‘GIC is a long-run player and we appreciate that as we do not strive at bargain-hunting and subsequent sales’.
The Asian partner brought into the company a €200 million investment which will be intended for GMP’s growth. ‘We aim at expanding our property portfolio by 25% by 2015, through adding around 65.000 square meters more. This is the bottomline and we will not refuse any appropriate product when we find such’, the CEO assured. ‘We are presently analyzing some interesting assets which amount to €250 million’. The new resources are not the only available. ‘We are a prudent company with the LTV rate positioning between 40% and 50%’, he said.
The ambitious growth plan arrives at the moment of a grand demand on the part of international funds but also of existence of a lot of supply. The fact does not worry the general director, though. ‘Some office stock in Madrid and Barcelona became too obsolete to fit in. Risk on this kind of product cannot be assumed by a fund. This is how we move away from global investor seeking simple management’, the executive pointed out.
Purchase of ‘challenging’ properties, as Mr. Barrondo called them, will be combined with proprietary project development. ‘By nature, we are developers. We have developed many of our buildings and we own land in such areas as Las Tablas and Valdebebas‘.
GMP, which earned €98 million with a €68 million ebitda in 2013, has just fulfilled all requirements to become a Socimi (Spanish REIT vehicle). ‘It’s a tailor-made option for us’. Unlike other Socimis listed on the stock exchange market, the firm yet will not look for debut partners. ‘We will go public next year’.
The new assets will be added up to the 413.486 square meter area portfolio, of which 260.000 square meters correspond to lettable office area. Some of the buildings are rented by upper level tenants such as private companies and public administrations. ‘In the tough times of recession, the key is to give quality to the properties and our services’, he explained.
One of the occupiers was BBVA that abandoned several properties of GMP, including the unit at 81 Castellana street, and moved to its new headquaters ‘Foresta’, located in the Las Tablas business area. ‘This is our portfolio’s jewel asset and we are not bothered by the leave of BBVA. One of the buildings at 14 Goya street was renovated and leased to the National High Court’, remarked Mr. Barrondo.
Except for the office portfolio worth €1.05 billion (87% of the total), GMP owns the Campanar retail park in Valencia and a high-end housing development in Alicante. GIC did not miss the prime quality of the project. ‘We can build up to 200.000 square meters and we have completed only 10% so far. We do not want to possess the biggest buildings in Spain but the highest quality ones’, Mr. Barrondo concluded.
Original article: Expansión (by Rocío Ruiz)
Translation: AURA REE