Banco Santander Sells Office Building in Bilbao to M&G for €50M

23 April 2018 – Mis Oficinas

Banco Santander is continuing with its divestment strategy and, to that end, has reached an agreement with the British fund M&G to sell one of its buildings located in Bilbao, for which it expects to receive €50 million.

Santander has undertaken several divestments in recent years. To tackle the crisis, it sold ten buildings for around €418 million and, in 2008, it carved out other important properties in Boadilla del Monte, in the Community of Madrid, for €1.9 billion.

It is currently holding negotiations regarding the sale of a building that is located on Bilbao’s central Gran Vía for around €50 million. The property spans 4,967 m2 and houses some of Santander’s subsidiaries.

The British fund M&G already owns the Nao building in Barcelona, which it purchased from Axa for €30 million. That property spans 9,000 m2 and is home to the headquarters of Servei d´ Ocupacio de Cataluya. Now, the fund has set its sights on Bilbao where real estate operations are on a roll; BBVA has also got caught up in the fever and is holding negotiations for the sale of its office tower, also located in Gran Vía.

Original story: Mis Oficinas

Translation: Carmel Drake

Popular’s €10bn Portfolio Sale Was The Largest RE Operation in the World in 2017

26 March 2018 – Cinco Días

Spain was the setting for the largest real estate operation in the world in 2017. The stars were Santander, as the vendor, and Blackstone, as the buyer. The object of desire was the property portfolio that took down Popular. The price: no less than a valuation of €10 billion.

The purchase of Popular’s property portfolio (containing real estate assets and loans with real estate collateral) led last year’s ranking of the largest operations in the sector involving a single asset or portfolio, compiled by Real Capital Analytics (RCA). Of the largest transactions, those undertaken in China stand out in particular, as well as a handful of deals completed in the United Kingdom. The classification excludes operations involving the purchase of companies.

The operation to sell Popular’s portfolio, announced in August, after Santander took control of the entity in June, was structured into a company worth €10 billion, in which Blackstone controls 51% and the rest remained in the hands of the bank chaired by Ana Botín.

Following that purchase, as well as others, such as Catalunya Caixa’s portfolio, Blackstone is now one of the largest owners of real estate assets in Spain. Another major operation of this nature was closed a few months later when Cerberus purchased 80% of BBVA’s real estate portfolio worth €5.5 billion (…).

In total, around the world, last year, deals worth USD 143.2 billion were closed, which represented an increase of 14% compared to the previous year.

China starred in the majority of the largest operations last year. China Vanke acquired an enormous land portfolio for real estate developments in Cantón for €7.1 billion, which constituted the second largest transaction of 2017. The next largest sale in the Asian country was the purchase of part of an office and retail development in Shenzhen by the company Kingboard, which is headquartered in Hong Kong (…).

In Europe and the USA, the focus was on alternative investments, such as student halls of residence, hospitals and logistics warehouses.

In fact, the third largest transaction in the world last year involved an alternative investment. Specifically, the sale of a stake in a portfolio of hospitals and 200 nursing homes in the USA and UK, which was purchased by the Chinese insurance company Taikang Insurance Group.

In Europe, in addition to Popular’s portfolio, the next largest deal saw the sale of the Bluewater shopping centre in the United Kingdom, worth €2.1 billion, in which Royal London Mutual Assurance acquired a stake.

In terms of office buildings, the sale of the Leadenhall Building in London, popularly known as the “cheese grater”, also stood out; it was acquired by the investment group CC Land, from Hong Kong, for more than €1.3 billion.

Typically, the large buyers include the largest investment managers, such as Blackstone, Brookfield, Deka, THI, Axa, Invesco and Morgan Stanley, whose clients tend to include sovereign funds from Norway and Abu Dhabi, as well as universities (for example, the Harvard investment fund) and workers’ unions or pension funds (German doctors, public sector workers from Korea and Ontario…).

In terms of 2018, for example in Europe, Borja Sierra, Executive Vice-President of Savills Aguirre Newman, believes that the clearest trend will be investment in the residential rental sector as a form of institutionalised real estate investment. “With the scenario of rising interest rates and measures from Trump that favour the renewal of infrastructure in the USA, I think that we will see a migration towards infrastructure funds, a move that will somewhat reduce investment pressure on the real estate sector. Nevertheless, the year has started with volumes that exceed those recorded in 2017, and so we expect a good year”.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Lar España Buys Rivas Futura Shopping Centre for €62M

6 February 2018 – Expansión

The Socimi in which Pimco holds a stake has purchased the Rivas Futura shopping complex, in the Madrilenian town of the same name, for €62 million.

Lar España has completed its first investment of 2018. The Socimi, whose largest shareholder is the fund manager Pimco, has completed the purchase of the Rivas Futura shopping complex, located in the Madrilenian town of Rivas.

Inaugurated in 2016, this complex was promoted by the real estate firm Avantis, and became a reference in Madrid, with a surface area spanning more than 55,000 m2 and first-class tenants such as Media Markt, Conforama and Toys R Us. Next to the retail park, the same real estate firm constructed a large office complex and a shopping centre called H2Ocio. Recently, that shopping centre also changed hands, with the manager CBRE Global Investors acquiring 70% of the property.

In 2008, Avantis’ liquidity problems meant that it had to find a new owner for the complex. The real estate subsidiary of Axa spent €81 million to buy the centre at that time. Years later, the fund Lone Star was awarded the park as part of Project Octopus, formed by loans from the German bank Eurohypo.

Now, the Socimi managed by the real estate group Lar has become its new owner, after paying €61.6 million to the most recent owner: Credit Suisse.

With this new investment, Lar España has become the largest operator of retail parks in Spain, with more than 150,000 m2 in its portfolio. Its flagship assets include the Megapark complex in Barakaldo, where the Socimi owns both the Megapark shopping centre and the factory outlet (acquired for €170 million), as well as the leisure area; that operation was closed at the end of October.

This purchase also represents the first acquisition of a commercial asset by the Socimi in Madrid, where it already owns a luxury housing development, Lagasca 99, as well as two office buildings. At the end of last year, Lar España put its office portfolio, comprising four assets and worth €170 million, up for sale. Since then, it has sold two of the assets, both located in Madrid and both sold to the same buyer: the real estate firm Colonial.

During the first nine months of 2017, Lar España generated profits of €72.2 million, up by 55% compared to a year earlier, after earning €57.2 million, up by 36%.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

AXA Buys 850 Prime Residential Assets in Spain for €170M

20 December 2017 – Eje Prime

AXA is redoubling its commitment to Spanish real estate. Two weeks after formalising the purchase of the largest portfolio of student halls in Spain, through a joint venture with CBRE, for which it paid Resa €0.5 billion, the investment arm of the insurance company has acquired 850 prime residential assets from Goldman Sachs and B Capital. This operation has been signed for €170 million.

Most of the homes purchased by AXA are located in the central areas of Madrid and Barcelona. Moreover, fourteen of the properties have been built since 2005 and the remainder have all been renovated within the last fifteen years. As such, the portfolio comprises luxury homes, which the company will revalue over the next few years by putting them up for rent.

Hermann Montenegro, Director of Investments at AXA Real Assets, also said that “the purchase of this portfolio of high-quality residential assets reflects our confidence in the residential markets in Madrid and Barcelona, where the growth in rentals has increased and the outlook for the next few years in terms of demand is very favourable.

This investment forms part of a long-term plan by AXA Real Assets to invest in sustainable and growth markets. In this context, in the last year, it has undertaken investments in Finland, Germany and the USA, amongst others.

Original story: Eje Prime 

Translation: Carmel Drake

Deloitte: Hotel Inv’t Will Exceed €3,000M In 2017

7 November 2017 – Expansión

The extraordinary tourism data in Spain, the interest from investors in real estate assets and the purchase by international funds of hotel portfolios has catapulted investment in the Spanish hotel segment so far this year to €2,600 million. That figure is 21% higher than the total amount recorded in 2016, and is very close to the record figure of €2,700 million recorded in 2015, according to The Hotel Property Handbook report, prepared by Deloitte España.

In this way, the hotel sector now accounts for 35% of total real estate investment in the tertiary sector (non-residential assets) in Spain. The firm forecasts that, by the end of this year, the investment volume figure will have easily surpassed the €3,000 million threshold.

In terms of the main operations of the year, the purchase by the US fund Blackstone of the HI Partners hotel portfolio, comprising 14 establishments, from Sabadell for €630 million and the acquisition by the British fund London & Regional of four Starmel hotels – a joint company formed by Meliá and Starwood Capital in 2015 – for €230 million, have given the investment figure a real boost.

Record operations

These operations have been accompanied by several one-off hotel transactions, such as Edificio España, which was acquired by RIU in June for €272 million (…).

Other noteworthy operations so far this year include the purchase of Hotel Silken in Barcelona by the British fund Benson Elliot for €80 million and the acquisition of 55% of Hotel Diagonal Mar in Barcelona by Axa for €80 million.

For Javier García-Mateo, Partner at Deloitte Financial Advisory, institutional investors are seeing the opportunity to build large portfolios of holiday hotels in Spain, to integrate them into their international platforms in the Caribbean, South America and South-East Asia, developing a direct channel and obtaining greater negotiating power with tour operators. “In the end, Spain is establishing itself as the world’s main tourist market”, he says.

In this sense, we are seeing the natural migration of traditional hotel owners, who are divesting property to focus on management, such as in the case of the Meliá chain, which is making way for overseas investors who have greater financial muscle and so can launch more ambitious projects, explains Patricia Pana at Deloitte Financial Advisory.

In this context, the large tour operators are also participating in the investment fever and are buying assets in order to carry out a vertical integration of their business (…).

Interest from investors is partly driven by the record number of visitor arrivals – more than 84 million international tourists are forecast to visit Spain this year – and the strong evolution of key performance indicators such as the average daily rate (ADR), revenue per available room (RevPAR) and the occupancy rate.

Peak returns

Specifically, the ADR in Spain reached an average of €82.30 in 2016, up by 5% YoY; the occupancy rate rose by four percentage points to 66%; and RevPAR increased by 10% to €53.90.

The challenges for the sector now include improving the hotel portfolio to allow for an increase in prices. “If we compare our hotels with those in other urban and vacation destinations, the price per room of Spanish hotels still has a lot of potential, provided that renovation and transformation projects are carried out with the help of the main operators”, says Ana Granado, Director at Deloitte Financial Advisory (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Carmena Scuppers AXA’s Plans For Cine Rex

27 September 2017 – El Confidencial

An urban planning setback for the real estate arm of the French insurance company AXA. The Town Hall of Madrid has scuppered the company’s plans to convert the former Cines Rex into a retail space, by declaring inadmissible both the modification to the Special Plan for the building located on Calle Gran Vía, number 43 Bis, as well as the Special Plan for Environmental Urban Planning Control for Uses of the property. The first of these instruments is used to process the change of use for buildings, whilst the latter is an urban planning instrument aimed at evaluating “the incidence that the implementation of a certain use may have on the urban environment and on the characteristics of the space that it inhabits, prior to the concession of the licence”, according to the Official Gazette of the Town Hall of Madrid.

It is worth remembering that the building has Level 1 protection, which means that the owner has an obligation to protect both the façade and the interior, and from therein arises the need to approve both urban planning procedures.

The Town Hall’s decision represents a major setback for the French insurance company, which reached an agreement to acquire the building that houses Hotel Rex and the historical cinemas of the same name for around €42 million at the end of 2015 (…).

AXA had planned to remodel the building, which has a surface area of 9,000 m2, and operate it by combining the hotel use – which it already held – with retail, the use that was reserved for cinemas, whose protected nature the insurance company was willing to respect, even though the space, measuring 700 m2, had been in disuse for several years. Sources at the company assure El Confidencial that “the project for the Rex building is going ahead as planned and on time. We are holding conversations with the Town Hall of Madrid to undertake certain modifications as part of the operations usually involved in these types of large projects” (…).

According to the sources consulted, the French insurance company had planned to convert the cinema into a large retail space to house a flagship store, in a similar style to Primark, a few doors along on the same street. In terms of the hotel side, Room Mate Hotels, the hotel chain owned by Kike Sarasola, reached an agreement with AXA at the beginning of this year to operate the iconic Hotel Rex. (…). The chain’s objective is to undertake a remodelling of the property, with the aim of inaugurating the new hotel, which will comprise 130 rooms and create 45 jobs, between the end of 2018 and the beginning of 2019 (…).

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

The Alternative Asset Boom: Student Halls, Co-Working Spaces & Data Centres Are On The Rise

26 September 2017 – Eje Prime

2017 is going to be remembered in the real estate sector as the year of alternative assets. A large number of corporate operations in the student housing segment and healthcare sector means that investors are looking more carefully at these products. So much so that 44% of international investors say that they plan to spend money acquiring these kinds of assets over the next few years.

One of the main reasons for focusing on these types of investments is geographical behaviour and demand, important for 69% of the international funds surveyed. The next most important reason, for 46% of investors, is the stability of the returns from such investments, according to the Emerging Trends Europe 2017 study prepared by PwC. Diversification and high yields are also reasons for 46% and 45% of investors, respectively, according to the findings of the report.

For 61% of investors, the student housing business has one of the most promising outlooks, in that case, due to the demand from the demographics. “It is important to highlight that this looks like being a secular trend rather than a cyclical one”, explain sources at PwC.

Nevertheless, the corporate operations that have been carried out in recent months in the sector support this trend. The most recent saw Azora, Artá Capital, March Campus (Banca March’s client investor vehicle) and Mutua Madrileña, reach an agreement to sell Grupo Resa to a group of international investors, represented by Axa and CBRE. Even so, and although these kinds of assets are on the rise, only 23% of the funds specialising in real estate hold such properties in their portfolios.

After student halls of residence come hotels. 51% of investors have either acquired or have been exploring the possibility of investing in this kind of asset. In Spain, the Socimi Hispania has decided to specialise in this type of asset, whereby positioning itself as one of the largest companies in the hotel segment in the country.

Nursing homes for the elderly and clinics (healthcare) have also been gaining in importance during 2017 and will be the assets to watch in coming years (…).

One recent operation involving this kind of asset in Spain saw Healthcare Activos Investment acquire the Los Tilos nursing home for €15.5 million, in a transaction brokered by BNP Paribas Real Estate (…).

The most alternative assets

Within the group of alternative investments identified by PwC are some that break the mould due to their lack of history in the real estate sector. One of them is shared offices, also known as co-working spaces. In recent months, they have sparked interest amongst investors of all kinds, with operators such as WeWork and Spaces leading the way (…).

Last week, Spaces, an international workspace company, announced that it is going to open an office measuring 1,511 m2 in Madrid, at number 4 Calle Manzanares, known by the group as Spaces Rio. And within the next few weeks, it will open a new Spaces centre in Barcelona (in the 22@ district).

Meanwhile, WeWork confirmed its arrival in Spain earlier this month. The company, which specialises in the management of coworking spaces, has leased an office building in the 22@ district in Barcelona (…).

Finally, data centres, where data servers are managed and stored, have also seen their profile rise in the real estate business. These types of asset, which are mostly located on the outskirts of major cities, are expected to capture the attention of 15% of investors this year (…).

Original story: Eje Prime (by C. Pareja)

Translation: Carmel Drake

Hispania Sells Its Portfolio of Offices to Swiss Life

9 August 2017

 

The Ázcarraga 3 building in the Chamartín district (Madrid)

The Spanish REIT, which counts George Soros as an investor, is close to finalizing the sale of about twenty office buildings to focus on its hotel business.

Everything is ready for the sale of Hispania’s portfolio of offices, one of the most anticipated deals in the real estate market. Absent any last-minute hiccups, the Spanish REIT, which counts George Soros as an investor, will sign an agreement with Swiss Life for the sale of some twenty office buildings for about 510 million euros, according to EXPANSIÓN’s sources.

Hispania’s office portfolio is distributed between Madrid, where 16 buildings are located, as well as two offices in two buildings and one asset under development, Barcelona and Málaga, with five and one building each.

The real estate consultants CBRE, JLL and the law firm Freshfields have advised Hispania, while Swiss Life has been advised by Aguirre Newman and Garrigues.  The deal is expected to be finalized in the coming weeks, or even days.

According to the latest information provided by Hispania, the Spanish REIT’s portfolio of offices had a value of 584 million euros at the end of the first semester of 2017. This assessment included the Aurelio Menéndez building, sold in June to a family office for 37.5 million euros. Hispania plans on keeping its commitment to execute pending works on the asset, which it expects to complete in November, at which time the sale of the building will be finalized.

Not including Aurelio Menéndez, Hispania has offices with almost 182,000 square meters of gross leasable area, of which almost 21,300 meters are in Madrid’s financial district. It also has another 116,852 square meters in office buildings in the prime secondary zone. Hispania has 39,506 square meters in Barcelona and 4,288 square meters in Malaga.

According to the latest information published by Hispania, the occupancy level in these buildings is 84%, with an average monthly income of 13.8 euros per square meter.

Hispania acknowledged this morning in a relevant fact to the market that is negotiating the sale of office assets and added that it maintains contacts with, among others, Swiss Life, although it added that it has not yet reached any agreement on the matter.

Divestment

With this operation, the company managed by the Azora Group goes one step further in its strategy to divest itself of residential and office assets to focus on the hotel business, in which it will continue to invest before putting those assets up for sale as well.

In this regard, in February Hispania announced its intention to continue with its initial objective of selling all its assets, individually, in portfolios or through a sale or change of control in the company, before March 2020, six years after the company was floated. Under this strategy, shareholders decided to extend the investment period until 31 December.

In addition to George Soros, who controls 16.7% of the REIT through Soros Fund Management, Fidelity Management and Research (7%), Tamerlane (6%), BW Gestão de Investimentos (3,6%), BlackRock (3.3%) and AXA Investments (3%) are also investors.

Original Story: Expansion – R. Arroyo / S. Saiz

Translation: Richard Turner

Iberdrola Sells 55% Of Hotel Hilton Barcelona For €80M

22 June 2017 – Expansión

Iberdrola Inmobiliaria has completed the sale of 55% of Hotel Hilton Diagonal Mar in Barcelona to the real estate division of the insurance company Axa (Axa Investment Managers- Real Assets). The operation has been closed by Axa on behalf of one of its clients, said the vendor in a statement issued on Tuesday.

The energy group’s real estate arm will retain ownership of 45% of the property. Iberdrola Inmobiliaria will receive €80 million for the percentage stake sold.

The Hotel Hilton Diagonal Mar, inaugurated in 2005, is operated by the chain Hilton Worldwide under a long-term lease contract. The four-star establishment contains 430 rooms, of which 20 are suites.

In the operation, the vendor has been advised by the consultancy firm Irea and the law firm Ashurst. Currently, Iberdrola Inmobiliaria owns a portfolio of rental assets spanning a gross leasable area (GLA) of more than 217,000 m2. Its most iconic property is the company’s headquarters in Bilbao.

Moreover, the company is developing around 300 homes, located mainly in the Community of Madrid, although it also has two projects on the coast. In addition, Iberdrola Inmobiliaria is working on a project comprising 42 villas located in the Islas del Mar area (Puerto Peñasco) of Mexico.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake

GSA Buys Oaktree’s Student Halls In Madrid & Barcelona

21 June 2017 – Expansión

GSA (Global Student Accommodation) has reached an agreement with Oaktree Capital to purchase its student halls of residence in Spain (which are owned and operated by an entity called Nexo). This operation, whose financial details have not been revealed, comes less than a year after GSA purchased Oaktree’s platform of halls of residence in the United Kingdom, comprising 7,100 beds, back in September 2016.

Both operations have been advised by the real estate consultancy firm JLL.

Nexo is one of the largest developers and operators of student halls of residence in Spain and currently owns a portfolio of approximately 2,300 beds located in Madrid and Barcelona – split between operational assets and those under construction.

The firm has three operational halls of residence in Madrid – Galdós, with 370 beds; El Faro, with 358 beds; and Claraval, with 186 beds – as well as the Lope de Vega University Residence, also located in the Spanish capital, which will open its doors in September 2017 and which will house 468 students, from both Spain and overseas.

The operation also includes two additional projects under development in Barcelona, which will be ready for use in 2019 and which increase the total number of beds to 2,234. The first centre, Barcelona Sants, will have 348 beds and the second, Campus Sur Diagonal, will have 504 beds.

Nicholas Porter, founder and President of GSA, said that the firm is continuing to fulfil its plans for rapid expansion in Europe with its focus on higher education markets.

Interest from funds in this segment has increased in recent months. In order to benefit from this situation, Azora and Grupo March have put RESA up for sale – it is the largest student residence management platform in Spain, with 9,000 beds – and interest has already been expressed by Axa, Round Hill, the Canadian pension fund CPPIB, CBRE Global Investment and Partners Group, amongst others.

Original story: Expansión (by R. Arroyo)

Translation: Carmel Drake