Knight Frank: High Street Investment Soared by 84% to €1.3bn in 2018

31 January 2019 – Eje Prime

The real estate sector has closed another year with a strong performance in the Spanish market. As we approach the end of the real estate cycle in the country, the tertiary sector is continuing to maintain high levels of investment, with growing rents and sustainable yields.

In the retail sector, the investment volume amounted to around €3.7 billion in 2018, according to data from Knight Frank. The main driver of that investment was the high street, where spending soared by 84% to €1.3 billion.

Despite that, the bulk of retail investment in Spain continued to be directed towards shopping centres, which accounted for 54% of the total last year with major operations such as the sale of the Summit portfolio, owned by Sonae Sierra in conjunction with CBRE GI, and of which 87% is now controlled by JT Real Estate.

Moreover, the consultancy firm highlights that interest has increased from investors in shopping centres and isolated retail warehouses in good locations “which allow them to manage last mile delivery points”, said the consultancy firm.

Returns have remained stable across the three segments with yields of 5.25% for retail parks, 4.25% for shopping centres and 3% for high street assets.

Despite the strong performance of the retail sector in 2018, the jewel in the Spanish real estate crown is still the logistics segment. In 2018, investment in logistics assets amounted to €1.255 billion, close to the record set in 2017 of €1.28 billion.

In the last quarter, several large operations were closed, such as Blackstone’s purchase of a portfolio of 55 assets from Neinver for €300 million.

Interest in the segment continues to generate expectations regarding the compression of yields, and so Knight Frank forecasts returns of around 5% this year.

Finally, the office sector has also maintained a robust rate of activity, after the maximums recorded in 2017 thanks to operations undertaken by the Administration. Specifically, Knight Frank estimates that 2018 closed with a gross absorption of 493,000 m2.

Following the trend set in 2017, 52% of the surface area leased was located outside of the M-30, although during the final quarter, it was the secondary centre that accounted for the bulk of the space rented, around 35%.

Prime office rents remained stable at around €30.5/m2/month, and reached maximums of €38.5/m2/month in the most sought-after areas of the business district.

Original story: Eje Prime

Translation: Carmel Drake

UBS Euroinvest Fund Acquires Core Madrid Office Asset

6 March 2018 – Property Funds World

UBS Real Estate has acquired the Titán 8 office asset in Madrid on behalf of the UBS (D) Euroinvest Immobilien fund. This transaction represents Euroinvest’s debut investment since the fund’s recent strategic relaunch.

Titán 8 is a prominent office asset in the south of Madrid comprising 18 storeys spread across 10,633 sqm and including 228 underground car parking spaces. The imposing tower has been acquired in Grade A condition having been completed according to the highest quality, efficiency and design standards in 2008 and well-maintained since. It features a glass curtain wall façade that offers impressive views from upper levels. Main tenants are from the financial business, the energy and service provider industry.

The asset is strategically located in Madrid’s business district of Méndez Álvaro, in the south of the city centre, and benefits from strong transport links, positioned adjacent to the M30 ring-road, providing access to Madrid’s international airport in just 15 minutes and with the capital’s main train station, Atocha, nearby. With highly constrained supply in the area and resilient occupier demand, Méndez Álvaro office rents have demonstrated buoyant performance over recent years.

Euroinvest comprises an EUR820 million portfolio of predominantly core office assets located across key European cities. Following a strategic review of the Fund, Euroinvest has strengthened its core-profile through the disposal of non-strategic assets and delivered a strong performance of 4.4 percent for its investors (as of 31 December 2017), outperforming its benchmark (MSCI OFIX Europe) by 260 basis points. The Fund’s management team is actively seeking further attractive investment opportunities that are in line with its strategy across top performing European markets.

Alexander Isak, Fund Manager of Euroinvest, says: “As the fund’s maiden investment since relaunching, Titán 8 is a perfect illustration of the high quality and resilient assets that we are targeting, benefitting from an excellent location which is proven to generate robust occupier demand and offering further upside as the Spanish economy strengthens.”

“We are pleased to be in a position to prudently invest in new attractive opportunities that we are identifying in the market, following a disciplined programme of non-strategic disposals and the extensive management of the Fund’s assets that has delivered a viable core European real estate portfolio for our investors.”

Euroinvest was established in 1999 as the first open-ended public fund focusing primarily on institutional investors, with this category of investors currently holding more than 95 percent of the Fund’s units. Its investment strategy is focused on core office properties located in the strongest European cities, demonstrating resilient occupational demand.

Original story: Property Funds World

Edited by: Carmel Drake

Drago Lets Building I in Castellana 200 to Workspace Supplier Spaces

28 February 2018 – Interempresas

The Socimi Silvercode Investments, managed by Drago, has signed an agreement with Spaces, the new international workspace supplier that promotes dynamic communities for entrepreneurs and companies, to lease it Building I of the Castellana 200 complex. Spaces, whose main activity focuses on offering flexible, innovative and disruptive workspaces, including coworking offices, in more than 100 countries, has decided to strengthen its expansion in Spain with the rental of this building, which has a surface area of 5,155 m2.

As a result of this deal, Spaces will have three centres available in the Spanish capital, in addition to the centre it owns in Barcelona. CBRE, the leading international consultancy and real estate services company, has advised the operation. Divided into nine open-plan floors spanning more than 600 m2 each with lots of light thanks to the integrated glass façade, Building I in Castellana 200 was the first in the country to obtain the B+ rating granted by the Spanish Office Association (AEO) for its excellent qualities and services, which are capable of exceeding the expectations of even the most demanding occupants.

According to Philippe Jiménez, Director of Spaces in Spain: “Following our arrival in Madrid with Spaces Río and the imminent opening of Atocha, Castellana 200 is going to become the third Spaces centre in the capital. This building is in a privileged location in the heart of the city’s business district, which will allow the new way of working that Spaces offers to reach many more Madrilenian companies and entrepreneurs”. And he added, “Spaces is still looking for new locations both in Madrid as well as in other Spanish cities to continue its growth across the country.

With this operation, Drago and CBRE have managed to lease more than 95% of the space available for office rental in Castellana 200, a complex comprising two office buildings and a shopping centre located on the Madrilenian Paseo de la Castellana. Building II has an occupancy rate of 95% and is home to leading companies such as Discovery Channel, Linkedin, CBRE, Ebury and Schweppes.

Original story: Interempresas

Translation: Carmel Drake

Merlin To Invest €460M On Improving Its RE Portfolio

24 October 2017 – El Español

Merlin Properties plans to invest around €459 million in the renovation and improvement of several office buildings, shopping centres and logistics facilities that comprise its real estate portfolio. The entity plans to undertake this work between 2018 and 2021, according to reports from the Socimi in which Santander and BBVA hold a stake.

The company led by Ismael Clemente (pictured above) calculates that these improvements will generate additional revenues from rental income amounting to €60.9 million per annum.

Merlin estimates that these improvements, together with its management and the natural growth of the assets, will allow it to raise its current revenue from rental income by 22% and whereby exceed the €500 million threshold, without the need to purchase any new properties.

That is according to the company, which is currently the largest listed real estate firm by asset value. It is holding its “Investor Day” in Barcelona this week, despite the uncertainty currently hanging over Cataluña.

During the event, the firm unveiled a presentation, which has been submitted to Spain’s National Securities Exchange Commission (CNMV), detailing the assets that Merlin plans to renovate.

The list includes the building that houses Sacyr’s headquarters in the centre of Madrid, at numbers 83 and 85 on Paseo de la Castellana, the heart of the capital’s business district.

The Socimi will spend €20 million on a comprehensive renovation of that property, which it expects to complete by 2020 and which will involve a radical change to its external appearance, which will be completely glazed.

Merlin’s list of renovations also includes investments and construction work in Barcelona, in properties as iconic as Torre Glories, the building formerly known as Torre Agbar.

There, the firm will spend €15 million to convert the tower into a “multi-tenant” office building. Moreover, it will install an observatory at the top of the tower, on the 30th floor (…).

Original story: El Español

Translation: Carmel Drake

Auren Sells 3rd Floor Of Its HQ In Madrid For €10.5M

9 October 2017 – El Economista

The professional services firm Auren has sold one floor of its office building in Madrid to a Spanish foundation for €10.5 million, according to sources in the sector.

The headquarters of the consultancy firm is located in the Edificio Masters I building on Avenida General Perón, 38; Auren has operated from that multi-owner property for almost 20 years. When it first moved in, it acquired the third floor of the building and then went on to lease more space on two other floors, as the company continued to grow. Now that this asset is no longer strategic for the firm, it has opted to undertake a long-term sale & leaseback operation, which has been advised by Catella.

The transaction comprises one floor measuring 1,669 m2 and 16 parking spaces in the property, located in the Azca business district, which has established itself as a strategic enclave over the last few decades, above all for companies in the financial and technological sectors.

This operation, which has been closed at the high end of the market in terms of price per square metre, is another example of the good times that the office sector is enjoying. During the first nine months of this year, the office segment accounted for 24% of all real estate investment in Spain.

In this sense, Pablo Carvajal, Director of Capital Markets at Catella, highlights that “we are in an increasingly competitive market where it is hard to find quality assets for sale. That means that sale & leaseback operations, involving tenants of the calibre and solvency of Auren, in prime locations, are particularly attractive for investors looking for long-term stability”.

Auren is one of the largest multidisciplinary firms in Spain, with 51 offices in nine countries and more than 200 offices in 60 countries through Antea. The firm closed 2016 with a total turnover of €52.2 million, up by 4% compared to 2015. The company offers the following services: Audit, Legal & Tax Advice, Consultancy and Corporate and employs more than 1,500 people in the countries in which it has an international presence.

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake

‘Operación Chamartín’ Becomes ‘Madrid, Nuevo Norte’

31 July 2017 – Expansión

A Solomonic agreement has been reached between DCN, the Ministry of Development, the Town Hall of Madrid and the Community of Madrid to push ahead with the long-standing project, which will see the construction of 11,000 homes (including 4,100 social housing properties) and a large business centre.

But its name is no longer ‘Operación Chamartín’, ‘Distrito Castellana Norte’ or ‘Madrid Puerta Norte’….after almost 25 years since the idea was first floated by the then government of Felipe González, the development in the northern zone of the belt of Madrid’s M30, is going to be called ‘Madrid, Nuevo Norte’.

On Thursday, the Town Hall of Madrid, Adif and DCN (the property developer in which BBVA and SanJosé hold stakes) presented the strategic guidelines upon which the new project is going to be based. It reduces the buildability to 2.68 million m2, down by 20.5% compared to the 3.37 million m2 proposed by DCN, and cuts the total number of homes to 11,000, of which 20% will be social housing properties. On the other hand, the management of the plan has been handed over to the Town Hall of Madrid, which will control the timings and activities.

The players involved announced the 19 points included as the basis of the agreement, most of which are technical, and which also involve resolving the legal actions. The new plan will see a modification to the General Urban Plan (PGOU) and is divided into five areas (Chamartín Station, Business Centre, Fuencarral Malmea, Fuencarral Tres Olivos and Las Tablas) and two large zones: the South of the M30, which will constitute primarily office space and a large CBD, and the North of the M30, which will focus on housing.

A large business centre for Madrid

One of the fundamental axes of the plan will be the Chamartín station and the Business Centre, which will be located next to the new station to allow for sustainable mobility. The event on Thursday was attended by the Minister for Development, Íñigo de la Serna; the mayor of Madrid, Manuela Carmena, and the President of the company Distrito Castellana Norte (DCN), Antonio Béjar. “This initiative has solid pillars and is sustainable over time. It is an avant-garde and recognisable project, which will generate investment and create employment”, said Antonio Béjar.

Meanwhile, the mayor of Madrid, Manuela Carmena, expressed her appreciation for the capacity for “dialogue and consensus” and asked for collaboration from the other political groups to move ahead with the project. “The world is changing. From now on, in Madrid, we are going to be capable of forming part of that change”. For the Minister for Development, Íñigo de la Serna, this is a new project, born out of an agreement that unites the interests of the parties (…).

In this way, the urban planning project, which just six months ago looked to be doomed to failure, seems to be back on track in the critical areas. The property developers said that Madrid does not currently have a recognisable and compact business district. This plan, they said, is designed to fill that gap.

Original story: Expansión (by R. Arroyo, L. Ruiz-Ocaña and C. Galera)

Translation: Carmel Drake

Royal Metropolitan Buys Bancoval’s HQ In Madrid For c. €20M

25 July 2017 – Expansión

The headquarters of Bancoval in Madrid has a new owner. The fund manager Royal Metropolitan has closed an agreement with Inversis to purchase the building, located at number 20 on the Madrilenian street Calle Fernando El Santo.

The operation has been closed for a price of just over €20 million, which is equivalent to around €7,400/m2, according to market sources.

Last year, Inversis – owner of Grupo Banca March – acquired the subsidiary of Royal Bank of Canada (RBC) – later renamed Bancoval – and inherited this asset.

A year later, the financial institution decided to put the building up for sale to take advantage of the good times in the real estate sector and the interest from investors in assets in the best locations. Savills has participated in the transaction, which has been closed in record time, advising the buyer, and Deloitte has advised the vendor.

The building has a gross leasable area of almost 2,700 m2, distributed over seven floors, as well as two basement floors for parking with more than 700 m2 of additional space. The building, constructed in 1967, was renovated in 1998 and received a special mention from the Town Hall of Madrid in 1999 for the urban planning, architecture and public work awards, within the renovated building category.

This property is located in the Almagro district – one of the most-sought after in Madrid for investors due to the scarcity of prime products there -. The location, its renovation potential and the possibility of using it for offices (for one or more tenants) or for residential purposes, since it has licences for both uses, constitute some of the main advantages of the asset.

Investor interest

The office market is still one of the star segments in the real estate sector. In the first half of the year alone, the volume of investment in the office market in Madrid and Barcelona exceeded €1,100 million. Although the growth in rents is still in its infancy, an improvement is starting to be felt in buildings located in the business district and in the best-located areas, and upwards movements are forecast for the second half of the year.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Hispania Sells Office Building In Madrid For €37.5M

26 June 2017 – El Mundo

The real estate investment company (Socimi) Hispania has commenced its office divestment process with the sale of the Aurelio Menéndez building in Madrid for €37.5 million, according to a statement issued by the company.

The sales price – which is equivalent to a cost of €7,800/m2 – represents an increase of 39% over the property’s most recent appraisal value, including the pending investment.

The building, acquired by Hispania in October 2015, has a gross leasable area (GLA) of 4,700 m2. With the sale of this building, the Socimi has begun the divestment of its portfolio announced in February 2017 and as such to fulfil the commitment acquired with its shareholders.

The property, which is located in the Principe de Vergara area, one of the capital’s business districts, is currently being renovated.

Moreover, Hispania signed a lease contract with the law firm Uría y Menéndez to occupy the whole building for a duration of 17 years, of which it is obliged to fulfil 7.5 years.

The director of the Socimi, Concha Osácar, has highlighted that the sale of this property “shows Hispania’s capacity to identify buildings in prime locations, reposition them to a higher level and attract first-rate tenants with stable, long-term contracts.

“We are satisfied with the result of this investment and of the significant profitability it has generated for our shareholders”, she concluded.

Original story: El Mundo

Translation: Carmel Drake

Infinorsa Renovates Torre Europa To Attract New Tenants

8 August 2016 – Expansión

Torre Europa is completing the final details (of its renovation process) ahead of the debut of its new image from September. The iconic building – one of the first multiple ownership office buildings in Madrid, constructed in 1985 – will boast a new external façade, as well as a refurbished entrance lobby, floors and common areas, in order to appeal to new tenants.

Infinorsa, the majority owner of the property, has launched an ambitious transformation project, in which it is investing €20 million, with the aim of updating and improving the inside and outside of Torre Europa, equipping it with more light and technological innovations, and whereby allowing it to charge 20% higher average rents. Until now, the rent for Torre Europa has fallen in the middle band for buildings in Azca. With the changes, the rental charge could exceed €27.5/sqm/month.

Tenants

The building, designed by the architect Miguel Oriol e Ybarra, is located in Madrid’s financial district of Azca, just a stone’s throw away from the Santiago Bernabéu stadium and the Palacio de Congreso. The property has 32 floors and is 121 metres tall.

Following the departure of the building’s main tenant, KPMG, a few months ago, Torre Europa, with a leasable surface area of 43,000 sqm, currently has around 20,000 sqm of space available for rent. “High quality spaces are currently in demand. We must respond to the new paradigm, with brighter and technologically prepared spaces. This transformation seeks to adapt the property to the needs of the day, whilst at the same time retaining its essence and enhancing its unique qualities”, explained Fernando Ferrero, Director of Operations at Infinorsa.

The renovation process has been complicated by the fact that it has been performed at the same time as the current tenants are occupying approximately half of the building. For this reason, the construction work has been carried out during the night: “This has made the process more expensive, but, in return, we have caused less disruption to the tenants”.

Inside and outside

The work inside the building has involved the renovation of the entrance hall, the common areas and the floors, which is expected to be completed in September. The transformation of the hall will give rise to a much airier entrance, with higher ceilings and a brighter space overall. In terms of the floors, the glass of the windows will go down to the floors, in order to benefit from the natural light and the height of 260 cm per floor.

In terms of the changes outside, the plan involves covering the pillars with steel to preserve the structure, at the same time as updating the image. Similarly, an integrated glass canopy will be added to the external structure. This work is expected to be finalised during the first quarter of 2017.

In terms of technology and other new features, the building will have LED lighting and sensor systems to control both the light and ambient temperature. In addition, Torre Europa will have the technological tools to benefit from big data and geolocation services. Sources at Infinorsa explain that the project fits with the push that the Administrations are giving the capital’s financial district.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Q1 2016: Colonial’s Net Profit Rose By 131% To €11M

13 May 2016 – Expansión

Colonial closed the first quarter of the year with an attributable net profit of €11 million, up by 131% compared with the same period in 2015, after increasing its revenues from rental income by 20%. The real estate company generated €66 million from renting out its offices, which are primarily located in the major business districts of Madrid, Barcelona and Paris.

The company highlighted that it leased 40% more office space during the quarter, specifically, 45,000 sqm during the three months to March, which represents half of its objective for 2016 as a whole.

The greatest increase was recorded in Barcelona, where Colonial renewed the lease contract of the building that houses Gas Natural’s headquarters, measuring 22,400 sqm, and where it also leased out almost 3,000 sqm to the audit firm Grant Thornton.

Colonial’s share price increased by 0.32% yesterday to €0.633.

Original story: Expansión (by J.O.)

Translation: Carmel Drake