Intu Properties is studying the creation of a holding which would include all its real estate assets in Spain with the intention of going public in the Madrid Stock Exchange and thus obtaining capital from other investors to finance its development.
The British company would include in this company the mall Parque Principado, in Asturias, acquired last month jointly with the Canadian pension fund CPPIB. The holding, that would work as a socimi (listed public limited companies for real estate investments), would also include projects to build other distribution complexes in Málaga, Vigo and Valencia.
David Fischel, managing director at Intu Properties, declares that “there is a high possibility of creating a listed real estate group with the Spanish assets”, an option with many tax benefits, according to experts. Intu “would keep more than 50% of the holding and the entrance of other investors would make it easier to carry out investments in Spain without removing too many resources from the United Kingdom”.
For the moment, and in order to finance Parque Principado, Intu is searching for a credit for half of the price of the operation. Its cost could be around 6%, according to sources within the market.
Deducting this loan and the money CPPIB is providing for its 50% of shares, the amount to be paid by Intu would reach 40 million Euros. If it develops the one in Malaga, which is the most advanced project, the group hopes to invest a similar amount in capital, without taking in account the debt it will need for the construction.
Fischel considers that “it is the right moment to invest in Spain. The economic situation is stabilizing and the country seems to be one and a half or two years behind the United Kingdom, where we are starting to see the recovery. The acquisition of Parque Principado provides a base to take advantage of the potential recovery in Spain and to develop other projects”, Fischel declares, who has been working for 28 years in Intu.
After the acquisition of the Asturian complex, the priority for Intu properties is to grow organically in Spain. But the company does not discard further acquisitions such as Puerto Principado, where the former owners (CBRE and Sonae Sierra) faced the refinancing of the debt. “There is an opportunity of acquiring great malls of a high quality at a low price”, Fischel declares. In the Asturian centre, it hopes to obtain an annual yield of 7,2%.
But for the moment, the company is not analyzing actively any further acquisition. Its priority is to follow up the evolution of Parque Principado, and use this experience to develop the centers in Malaga, Valencia and Vigo, where it already has the plots.
“We want to have a base in the country, with centers in different locations that will allow us to negotiate agreements with chains of stores”, Fischel explains. “One of the reasons for the opportunities we see in Spain is that there are not very many projects ot develop new centers, when great international chains such as Primark and H&M have expansion plans, while those companies already established, such as Inditex rationalize their stores rotating towards the most important shopping malls.