Prominent Investors Poach Shopping Centers & Offices in Spain

15/04/2014 – Cinco Dias

Since the dawn of the year, foreign investors have been looking closely at purchase opportunities in Spain, let it be through retail sales or betting on Socimis (Spanish REIT companies). Also, such giants as Baupost, Pimco or Fidelity have put their focus on our country´s real estate, especially on the tertiary sector: offices, trading premises, shopping centers and hotels.

Last year, investment in the sector reached €5 billion that duplicated the 2012 amount, however still much behind the scores of 2007 with €10 billion spent. According to a report drawn by CB Richard Ellis, the investment focus shifted from other countries to Spain.

This year, the most important transactions were defined by Baupost acquiring 8 shopping malls in Spain for €160 million and the Banco Sabadell and London & Regional Properties´s deal on purchase of trading properties in Madrid.

Such operations revive demand and help in obtaining better yields. As BNP Paribas Real Estate informs, during the first quarter of 2014, primary areas in the business part Madrid have seen 4% yields.

High yield and low risk are two factors that convince investors to look inclinably at Spain again. The best example are Socimis, the REIT firms that enjoy growing popularity. For instance, Lar España aspires at 12% profitability for its offices, shopping malls and industrial property. Pimco and UBS are its major shareholders.

In turn, Hispania Activos Inomobiliarios, another freshly listed Socimi, expects to raise 15% yields in the tertiary sector and the most important investors who decided to bet on it are Soros and Paulson, Morgan Stanley or Fidelity.

Out of the €5 billion invested in offices, shopping centers and trading premises in Spain, 70% was contributed by foreigners. Almost half of it, €1.582 million arrived from the United States.

The first signs of looming improvement was the return of foreign investors seeking Spanish public debt. Since August 2012, non-resident investors have bought sovereign debt for over €103 billion. At the end of February, they owned €295.282 million, while in December they reached €298.139 million. (…) Real estate represented €1.787 million, 66.7% more than a year before. CBRE adds that they all jumped by 200 bps more.

Last year, one of the most heard transactions was, for example, the lease-to-buy contract on Torre Foster in Madrid signed with Abu Dhabi sovereign fund. Also, the purchase of the Agbar Tower in Barcelona for around €200 million by Emin Capital has not escaped unheeded.



Original article: Cinco Días (by David M. Pérez)

Translation: AURA REE