17 New Shopping Centres will Open in Spain over the Next 3 Years

22 February 2019 – Expansión

Shopping centres and retail parks are still fashionable despite the boom in online commerce. In this context, Spain is going to increase its retail surface area by 650,000 m2 over the next three years with the opening of 17 new centres by 2021. In addition, eight of the existing centres are going to be expanded to 267,250m2, according to data from the Spanish Association of Shopping Centres and Retail Parks (AECC).

These openings follow those completed in 2018 when 8 centres were opened spanning 233,700 m2 in total (…).

Spain currently has a gross leasable surface area of 16 million m2, spread over 563 shopping centres and retail parks, which generate 720,000 jobs, 46% of which are direct.

This growth in space is being accompanied by rising interest from investors in these types of assets.

Last year, transactions amounting to €2.2 billion were closed, just below the record of €2.7 billion recorded in 2017 (…).

In operational terms, sales at shopping centres and retail parks rose by 2.7% last year to €45.5 billion, whilst visitor numbers increased by 3.1% to 1.97 million. Sources at AECC forecast continued sales growth, albeit at a slower rate than in previous years due to a deceleration in domestic consumption (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

ECE and J&T Bid in RE Operation of the Year

12 June 2018 – Expansión

One of the real estate mega-operations of the year is entering the home stretch. The German manager specialising in retail ECE and the Slovakian real estate leader J&T Real Estate are positioning themselves as favourites to acquire the Valle Real (Santander), Max Center (Bilbao) and Gran Casa (Zaragoza) shopping centres, currently owned by Iberian Assets, a joint venture in which the fund managers CBRE Global Investors (CBRE GI) and the multi-national Sonae Sierra both hold 50% stakes.

In the case of the Slovakian firm, the operation would be carried out through an alliance with Sonae Sierra and would represent J&T Real Estate’s debut in Spain.

Market sources explain that, in both cases, the bids for these assets exceed €450 million and reveal that the transaction could be closed within the next few weeks.

The portfolio, baptised as Project Summit, includes almost 117,000 m2 of gross leasable space in total (owned by Iberian Assets) and together, the three centres received 24 million visitors last year. CBRE GI and Sonae Sierra engaged the real estate consultancy firms CBRE and JLL at the beginning of the year to sell the three shopping centres.

The assets

Valle Real, opened in November 1994, has a gross leasable area of 47,725 m2, spread over two floors and is fully occupied (100%).

The shopping centre, located in Santander, closed last year with 5.9 million visitors. Valle Real includes a Carrefour hypermarket, which occupies almost 16,000 m2. Its other main tenants include Primark, Inditex, H&M and Forum Sport.

Meanwhile, Max Center is located in Bilbao and it opened its doors for the first time in 1997. The asset was remodelled in 2000 and its tenants include Inditex, H&M, Cortefiel, La Tagliatella, Foster’s Hollywood and Cinesa.

The shopping centre also has an adjoining leisure space, Max Ocio, which opened in 2002.

In total, the centre has a surface area of almost 40,000 m2 and it also received 5.9 million visitors last year.

Gran Casa, inaugurated in 1997, has a gross leasable area spanning 80,000 m2, almost half of which is occupied by Hipercor, and with an overall occupancy rate of 93%. Last year, the shopping centre, located in Zaragoza, received 12.2 million visitors.

If the transaction goes ahead, it will be the largest (non-corporate) operation in the real estate sector so far this year by transaction volume.

Moreover, the sale of the Summit portfolio would clear the way for the sale of another major commercial portfolio by Unibail Rodamco.

The shopping centre giant has hung the “for sale” sign up over four of its shopping centres in Spain – Los Arcos (Sevilla), Bahía Sur (Cádiz), Vallsur (Valladolid) and El Faro (Badajoz) – an operation that may exceed the volume of Project Summit.

Investment

According to data from the Spanish Association of Shopping Centres and Retail Parks (AECC), last year 29 transactions, involving 36 assets, were closed for a total sum of €2.7 billion, which represented growth of 35% YoY.

So far this year, several significant operations have been closed such as the sale of a portfolio of 14 premises by Inditex to the German fund Deka for €370 million (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

ECE Finalises Purchase of 3 Shopping Centres from Sonae & CBRE GI for €450M

8 June 2018 – Eje Prime

The portfolio of shopping centres jointly owned by Sonae Sierra and CBRE Global Investors could be on the verge of having a new owner. The German company ECE is reportedly finalising the purchase of three shopping centres from the two groups for between €450 million and €500 million, according to sources close to the operation speaking to Eje Prime. Sonae Sierra and CBRE GI jointly own these three assets (50% each).

With the purchase of this portfolio, ECE would begin to acquire its first assets in Spain, given that since it carried out the acquisition of Auxideico Gestión in 2010, a company specialising in the management of retail complexes and which previously belonged to ING Real Estate Development, it has not closed any transaction of this kind.

The centres that may be added to the portfolio of the German firm ECE are: Gran Casa en Zaragoza, the largest of the three; Valle Real (Cantabria); and Max Center (Barakaldo, Bizkaia). The two current owners already announced when the sales process was launched that they expected to pocket around €500 million from the sale.

If the operation with ECE goes ahead, it will represent the real estate giant’s first purchase in Spain since its arrival. Eight years ago, the group headquartered in Hamburg and the leader of the European market in urban shopping centres, acquired the Spanish firm Auxideico Gestión, which was, at the time, responsible for the management of fourteen shopping centres.

Until last year and following its acquisition by ECE, the group controlled more than 25 retail complexes in Spain, including Albufera Plaza, Montecarmelo and Moraleja Green in Madrid, Alcalá Magna in Alcalá de Henares and Parc Central in Tarragona. In 2017, Auxideico finally stopped operating in Spain due to “its small business volume”, according to sources in the sector. Across Europe, ECE has more than 195 shopping centres under management.

ECE, a giant with a healthy investor appetite

Founded in 1965 by Werner Otto, ECE now has more than half a century of experience in the sector under its belt. The family-owned company develops, plans, builds, leases and manages shopping centres and invests in real estate projects.

With a retail surface area of 7.2 million m2 and around 21,000 retail operators, the shopping centres managed by ECE generate annual sales of more than €23 billion and have a market value of €30 billion. Moreover, ECE has a stock of shopping centres under construction and being planned, with an investment volume of €3.2 billion.

ECE, in addition to specialising in the management of shopping centres, also operates in the real estate sector with other types of assets. The company owns a portfolio of logistics assets spanning 913,000 m2 and office buildings measuring 1 million m2.

Shopping centres, a good business in Spain

The fact that a group such as ECE is showing interest again in this business in Spain is due to the good outlook that the studies predict for the sector. Spanish people both visited and spent more in shopping centres in 2017, and the turnover in this types of assets increased by 1.5% last year with respect to the previous year, whilst visitor footfall grew by 1.1% YoY.

The sectors that performed the best last year with respect to 2016 in terms of sales were the household, leisure and restaurant segments, with increases of 5%, 3,7% and 2,7%, respectively, according to a report from Cushman&Wakefield (…).

Shopping centres will continue to be the most sought-after assets by investors, primarily international funds. The Spanish retail market closed 2017 with 555 active shopping centres and a stock spanning 15.8 million m2, according to the Spanish Association of Shopping Centres (AECC).

Original story: Eje Prime (by C. Pareja)

Translation: Carmel Drake

Intu’s New Strategy in Spain: to Change the Names of its Shopping Centres

16 May 2018 – Eje Prime

Intu is betting on branding to raise the profile of its name in Spain. The company, which has a vast presence in the United Kingdom, where it owns almost twenty shopping centres, is going to replicate its British strategy in Spain, by adding the word Intu to the name of its retail complexes. This week, the company announced that its shopping centre in Zaragoza, which has been called Puerto Venecia to date, is now going to be named Intu Puerto Venecia.

It was in 2014 when Intu reached an agreement with the fund Orion European Real Estate to acquire the Puerto Venecia complex, the largest shopping centre in Spain, for €451 million. The complex contains a retail park spanning 82,600 m2, which was inaugurated in 2008 and a leisure and fashion area measuring 130,000 m2, which opened in October 2012 (…).

Since the purchase by Intu, the British group has carried out a series of changes to the appearance and management of the shopping centre. But it has not been until now that the group has decided to complete the process by adding the word Intu to the name of the complex, whereby following in the footsteps of Intu Asturias.

Now, the next step will be for Intu to apply the same strategy to the Xanadú shopping centre. The British group completed the purchase of that shopping centre, located in Arroyomolinos (Madrid), from Ivanhoé Cambridge for more than €520 million in March last year. That acquisition was the largest operation since Deutsche Bank paid €495 million for Diagonal Mar.

In May of the same year, Intu created a joint venture with TH Real Estate to share the ownership of the Madrilenian shopping centre, transferring 50% of the complex to TH Real Estate for €264.4 million, half of the amount that it had paid for Xanadú.

That shopping centre, constructed in 2003, has a total surface area of 153,695 m2 spread over two storeys and with a total of 220 stores, making it one of the largest retail complexes in Madrid. Its tenants include Inditex, El Corte Inglés, Hipercor, Bricor, Decathlon, Primark and Apple. Xanadú Madrid receives almost 13 million visitors per year and generates sales of around €230 million.

Shopping centres on the rise in Spain

Intu’s commitment to Spain comes at a good time for this retail format in the country. Sales registered at these complexes rose by 3.5% in 2017, to exceed €43.5 billion.

Specifically, revenues in the sector amounted to €43.59 billion in 2017. The market share of shopping centres and retail parks rose to reach 17.9%. Last year, around 1,900 million visits were registered at these complexes.

Meanwhile, investment in the sector soared by 35% in 2017, to €2.7 billion. During the course of last year, 29 transactions were closed involving 36 assets, according to data from the Spanish Association of Shopping Centres and Retail Parks (AECC).

Original story: Eje Prime (by C. Pareja)

Translation: Carmel Drake

German Fund Deka Puts Ballonti Shopping Centre (Vizcaya) Up For Sale

26 February 2018 – Expansión

Deka wants to make some cash and has hung the “for sale” sign up over the Ballonti shopping centre, located in the municipality of Portugalete (Vizcaya). The German fund, which acquired the asset in 2010, at the height of the economic crisis, has decided now, eight years later, to put it up for sale and has engaged the consultancy firm CBRE to manage the process, according to reports from market sources speaking to Expansión.

The German group purchased the shopping centre from Eroski for €116 million and the current valuation could reach €150 million, in such a way that Deka could obtain significant capital gains from the sale.

In any case, sources in the sector consider that the timing of the operation will depend on the evolution of the sales process involving a portfolio of three shopping centres by Sonae and CBRE Global Investors, which is expected to come onto the market within the next few days. That portfolio of assets, which includes the Gran Casa shopping centre (Zaragoza), the Valle Real shopping centre (Cantabria) and the Max Center (Barakaldo), may be sold for around €500 million.

Ballonti, inaugurated in 2008, has a surface area of more than 50,000 m2 spread over two floors, and its tenants include Primark, H&M, Springfield, Bershka, Pull & Bear, Stradivarius, Lefties and Women’s Secret. Moreover, the shopping centre is home to a large Eroski hypermarket spanning a surface area of more than 13,000 m2.

The retail space includes an upper floor dedicated to leisure with a cinema, an adventure park, a gym and a restaurant area with brands such as Burger King, Foster’s Hollywood, 100 Montaditos, Krunch, Mr Wok, Café and Bodega Ballonti.

Investor appetite

After the significant investment drive in shopping centres last year, which ended with a transaction volume of around €2.7 billion, thanks to record operations such as the purchase of Xanadú, in Arroyomolinos (Madrid) for €530 million, investor appetite is expected to be maintained this year.

According to data from the Spanish Association of Shopping Centres and Retail Parks (AECC), last year, 29 transactions were closed involving 36 assets for €2.7 billion, which represents growth of 35% with respect to the previous year.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Heron City Sale Fails to Spark Interest amongst Investors

12 December 2017 – El Confidencial

A concept too unique for a market that is used to something a lot more familiar. That is the moral that can be drawn from the decision by Heron International, the property developer behind the famous Heron City centres, to put into quarantine the sales process of the three leisure centres that it owns in Spain.

The offers received by the British company fall well below its expectations, which has caused it to reconsider its whole strategy and take the decision, last week, to suspend the current sales process, according to sources familiar with proceedings.

As El Confidencial revealed in September, the British company engaged CBRE to find a buyer for its whole portfolio, which comprises Heron City Las Rozas (Madrid), Heron City Paterna (Valencia) and Heron Diversia Alcobendas (Madrid), and which has a valuation of between €230 million and €250 million.

Nevertheless, the appetite in the market has been lower than anticipated because the usual suspects who typically participate in these types of operations (large international funds and Socimis) actually specialise in shopping centres, whose casuistry differs from those of leisure centres, and where lots of investment opportunities are still emerging.

In 2017 alone, with less than a month to go before the end of the year, 17 transactions involving shopping centres and retail parks have been closed across Spain, according to data from the trade association AECC, led by giants such as Xanadú. Moreover, during the next two years, around twenty new centres are expected to open and six centres are due to be expanded, which will see an additional gross leasable area come onto the market of more than 2 million m2.

The result has been that Heron International has decided to suspend the sales process and redefine its strategy. The three Heron City complexes, which span a combined gross leasable area of 84,000 m2, have 6,100 parking spaces, receive more than 12 million visitors per year, and represent a brand that arrived in Spain almost three decades ago with a very specific leisure concept, based on cinemas and a restaurant offer that tries to distance itself from classic fast food.

Since its arrival in Spain, Heron International has only starred in one operation, involving the sale of one of its leisure centred, namely Heron City in Barcelona, which it sold to Babcock & Brown and GPT at the end of 2006 for €138 million. Almost a decade later, as El Confidencial revealed, that complex was acquired by ASG, the Spanish subsidiary of Activum, a deal that represented that firm’s first operation in the Catalan capital.

The leisure centre in Barcelona, as well as those in Las Rozas and Paterna were all built by the British company. In the case of Diversia, it purchased that centre in 2003 in conjunction with Realia (50%) and a decade ago it took over all of the share capital when it also acquired the stake owned by FCC’s subsidiary.

Original story: El Confidencial (by R. Ugalde)

Translation: Carmel Drake

Activum Buys Zubiarte Shopping Centre In Bilbao

7 January 2016 – Expansión

The real estate fund manager Activum SG Capital has closed another real estate operation in Spain. The company, which opened an office in Madrid at the beginning of 2015 and which is led by Brian Betel (former head of Cerberus in Spain) and Carlos Moreno, has purchased the Zubiarte shopping centre in Bilbao.

The shopping centre is one of the most iconic properties in the País Vasco. Inaugurated in 2014, the building has a surface area of more than 61,000 m2 spread across five buildings, which are connected by walkways made to look like shopping streets. Around 20,640 m2 of the total surface area is dedicated to retail space, which includes a cinema measuring more than 4,400 m2 and several outlets leased to the Inditex group, according to information provided by the Spanish Shopping Centre Association (‘Asociación Española de Centros Comerciales’ or AECC).

The shopping centre, which was jointly owned by the fund Sierra (which forms part of the Portuguese real estate company Sonae Sierra) and the fund manager CBRE Global Investors, has been sold for around €30 million, according to real estate sources.

In addition to its extensive surface area, Zubiarte is a prime shopping centre thanks to its location in the Abandoibarra area, next to the river, between the Guggenheim museum and the Euskalduna palace.

New investors

With this acquisition, Ativum strengthens its portfolio of properties in Spain, a market in which it has been particularly active despite maintaining a very low profile.

In October last year, Activum also purchased the Heron City shopping centre in Barcelona. That property, which has a surface area of 100,000 m2, has a licence to be extended further. Moreover, last summer, the fund manager acquired the former Mercado de Fuencarral in Madrid, together with Talus Capital, for €22 million. Following the closure of the property, the new owners are working on a comprehensive renovation to convert it into a flagship store for a fashion retailer. The fund manager also purchased an office building in Madrid, together with Talus, on Calle Manuel de Falla, which is going to be converted into a hotel. Nevertheless, it sold that property to the Socimi Axiare a few months later for €31 million.

In total, Activum has €200 million to invest exclusively in the Spanish market through its vehicle Iberian Fund I.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake