OHL Negotiates the Sale of Canalejas for €200M to Raise Liquidity

15 April 2019 – Expansión

The construction group OHL is considering selling its 50% stake in the Canalejas complex in order to raise cash. The other half was acquired by the PokerStars founder, Mark Scheinberg, in February 2017.

Canalejas, which is located in the centre of Madrid, just a stone’s throw from Puerta del Sol, and which is going to house Spain’s first Four Seasons hotel, with 200 rooms and a 15,000 m2 high-end shopping arcade, is one of the jewel’s in OHL’s crown. Nevertheless, the construction company chaired by Juan Villar-Mir de Fuentes, needs funding to undertake new projects and return to growth, and so it is considering selling its 50% stake in the complex.

Although no formal competitive process has been opened, sources report that preliminary conversations are being held with interested investors, including one international fund.

Canalejas spans a surface area of 50,000 m2 and its development has involved the investment of €525 million. The complex is due to open in the final quarter of this year.

Original story: Expansión (by R. Arroyo & C. Morán)

Translation/Summary: Carmel Drake

Which Homes Cost More Than €10,000/m2 in Madrid?

2 November 2018 – Expansión

Canalejas (€14,500/m2)

Canalejas is undoubtedly one of the most anticipated major luxury mega-projects. Owned by OHL and Mohari Limited, the company owned by the Israeli businessman Mark Scheinberg, the central corner surrounded by Calles Alcalá, Sevilla and Carrer de San Jerónima, now known as Project Canalejas, is going to be home to the first Four Seasons hotel in Spain, with 200 rooms, as well as 22 luxury apartments costing €14,500/m2 on average. For the project, 7 historical buildings have been joined together, which used to house the headquarters of some of the most important banking institutions in the country, and in which €300 million have been invested. Of the 22 properties available, 16 have already been sold, including a penthouse for €10 million.

Lagasca 99 (€11,800/m2)

But the record for an apartment with these characteristics in the centre of Madrid is still held by the duplex that was sold on Lagasca 99 at the end of 2016. It is a penthouse duplex spanning 703 m2, with a terrace and private swimming pool, and two parking spaces, which was sold for €14 million. That building, which is currently being promoted by Grupo Lar, after suffering several ups and downs in its development history, has become one of the most exclusive buildings in Madrid, with 44 new homes in total, measuring between 300 m2 and 700 m2 each, and of which 90% have now been sold.

General Castaños 2 (€20,000/m2).

Meanwhile, the property developer Mabel Real Estate has undertaken a stunning renovation of the property at c/General Castaños, 2. Although the 11 homes that the building is going to comprise never actually went on the market (they were offered directly to private investors), the sector calculated that the prices amounted to around €20,000/m2.

José Abascal 48 (€10,000/m2)

Two years ago, the first homes in one of the best fully reformed buildings in the Castellana area, José Abascal 48, started to be handed over. Three exclusive penthouses are still available, including the so-called “duplex penthouse retreat” measuring 462 m2, with terraces spanning 100 m2, 4 parking spaces, a storeroom and an independent service room, which is on the market for €5.87 million.

The home has two main entrances on each of its floors, in such a way that you can access the rooms from the lift if you do not want to use the internal stairs. Moreover, the building has an exceptional entrance hall and an automated parking lot, an events area, a 100 m2 gym and a spa.

Original story: Expansión (by L. Ruiz-Ocaña)

Translation: Carmel Drake

Villar Mir Sells its 32.5% Stake in Canalejas to OHL for €50 Million

14 August 2018

Grupo Villar Mir has left the Canalejas project (Madrid), selling the 32.5% that it held in the development to its subsidiary OHL for 50 million euros. In this way, Canalejas will be equally owned by OHL, which already had 17%, and Mohari Limited, a company controlled by the Israeli executive Mark Scheinberg. Villar Mir sold 50% of Canalejas to Mohari in February 2017 for €225 million.

The transaction also includes the acquisition, by OHL Desarrollos, of the credit rights agreed to by Grupo Villar Mir with regards to the project for €9.8 million.

As the company explained to the CNMV, this price could be adjusted upwards to reach a maximum of €60 million (an additional €10 million). depending on “possible capital gains generated in a subsequent sale of these shares.”

Reduce debt

This operation will allow Grupo Villar Mir to continue reducing its debt. The Spanish industrial corporation sold 12% of the Spanish construction company last July for €98 million, reducing its stake in OHL to 38% compared to its previous 50%.

The Canalejas project will feature the Canadian luxury chain Four Seasons’ first hotel in Spain, a commercial complex and exclusive homes. The complex will bring together seven historic buildings, some of them built at the beginning of the 19th century, in a single unit, through an investment of 525 million euros.

Expansion – Rebecca Arroyo

Hyatt To Open Its New 5-Star Hotel In Madrid In December

6 November 2017 – Cinco Días

Nine years after it stopped managing Hotel Villa Magna, the North American hotel chain Hyatt, is finalising its return to Spain and will benefit from first-mover advantage in the battle between the luxury hotels in Madrid. It will be the first to open, but close behind it will be followed by the five-star Four Seasons hotel in Canalejas, the four-star RIU hotel in Plaza de España and the five-star Starwood hotel in the former Hotel Asturias.

The hotel will be located in the heart of Gran Vía, will have 159 rooms (of which 10% will be suites with views over the iconic street) and will be very focused on tourists with a high purchasing power. Gonzalo Maggi, Director of the hotel, highlights that it will be the first hotel to operate under the Centric brand in Europe. “The main features of the brand including being at the centre of the action. We are targeting clients who want to explore, get to know the city and discover new things and who want to use the hotel as a launch pad for their stay”, says Maggi, who admits that the building work is being accelerated to ensure that the hotel will be ready to open in December to take advantage of the Christmas rush.

Maggi defines the client that his hotel is targeting as “lifestyle”, which serves, in his opinion, to differentiate its offer from those of the other operators that are going to compete with Hyatt. “We are going to target people who place a lot of importance on design, fashion, the people they share space with and the gastronomy they seek. We are going to position ourselves in the high-end segment. Of the scale of traditional five-star hotels, we are going to aim a bit lower, but in the highest range of the new establishments”, he says. Another feature of the chain is the food. “We are going to have a music studio in the hotel lobby specialising in vermouths, a restaurant with international food and a rooftop bar, which will open in the first quarter of 2018”, he says (…).

The Director of the Hyatt Centric forecasts that to start with, 40% of the hotel’s clients will come from the USA, where the brand has been established for 60 years and is very well known. The rest will come mainly from three European countries (France, Germany and the UK) as well as from certain Asian countries. Maggi does not rule out that the hotel will also spark interest in the domestic market, despite its high prices, given its good location.

The director of the hotel highlights that Spain represents a very interesting market, as shown by the opening of the Park Hyatt in Mallorca a year and a half ago, although he is sure that the main opportunities are in Madrid and Barcelona (…). Asked about the hotel moratorium, he says (…) “as soon as they let us build there, we will launch ourselves into that market. It is a fantastic city and has a great deal to offer”, he says.

Original story: Cinco Días (by Carlos Molina)

Translation: Carmel Drake

Villar Mir Seeks 40 Luxury Brands For ‘Galería de Canalejas’

19 July 2017 – Eje Prime

More than nine million people visited Madrid in 2016. Of those, 4.6 million were foreigners. The museums, Royal Palace, Retiro Park and Santiago Bernabéu were some of the most popular attractions, although the centre of the capital took the biscuit, receiving the most visitors overall. This area is also home to the most luxurious hotels in Madrid and several more are currently being built there. Nevertheless, there is no shopping area to cater for these high-end visitors and hotel guests. And that is precisely the gap that the Canalejas complex wants to fill. And if it does so, the shopping arcade could revolutionise Madrid’s high street.

After more than ten years of abandon, the group of seven buildings located at the intersection of Calles Alcalá, Sevilla and San Jerónimo promises to become a wake-up-car for retail, especially fashion, in the centre of the capital. Promoted by OHL Desarrollos and Grupo Villar Mir, Madrid’s Canalejas Centre welcomed a new shareholder in February, with the arrival of the company Mohari Limited, in which the co-founder of Poker Stars, Mark Scheinberg owns a stake. His company purchased 50% of the complex for €225 million.

A Four Seasons hotel with 200 rooms, 22 private residences associated with the hotel, a 400-space car park and the shopping arcade will comprise the complex’s four main areas. The shopping arcade, which will link Calles Alcalá and Canalejas, will be the heart of the centre and has plans to welcome more than 2 million clients every year (of the 147 million people who move in the vicinity of the centre each year).

With a select client profile, the Galería de Canalejas will comprise a commercial space with a surface area of 15,000 m2, which will be home to more than 40 fashion, cosmetic/perfume and jewellery/watch brands (on the ground and first floors) as well as a restaurant area covering more than 3,000 m2 (on the lower ground floor).

Canalejas has already started to market the space and is getting ready to sign the first agreements with some of the high-end operators, which will take receipt of their stores in November 2018 ready to open their doors in 2019, at the same time as the rest of the complex.

There are no plans for any of the large retailers (such as Zara and Uniqlo) to open stores in the complex, given that the positioning of the centre and the space requirements of such players do not tally. According to the managers of the centre, the average asking prices for the stores are below the average for the area, given that the whole zone is conditioned by Preciados, the most expensive street in Madrid for opening retail premises.

With the aim of securing around forty brands to occupy the premises, which will measure between 40 m2 and 400 m2 each, Canalejas is looking for high-end, premium firms in the fashion, jewellery and cosmetics segments (…).

Original story: Eje Prime (by P. Riaño)

Translation: Carmel Drake

Hines Acquires c/Preciados 13 & c/Maestro Victoria 5 In Madrid

13 March 2017 – Mis Oficinas

The Baraka Group, the former owner, will manage and market the property until the renovation project is completed.

Aguirre Newman has advised Hines on the purchase of the adjoining buildings on Calles Preciados 13 and Maestro Victoria 5 in Madrid, from the Baraka Group. The future plans for the property involve the development of a 5,000 m2 flagship store, which will be managed and marketed by the Baraka Group until it is handed over (most likely in 2018).

It is the second operation between Hines and the Baraka Group that Aguirre Newman has advised and it may be considered to be the most ambitious and representative development on Calle Preciados, given that it will house a large store with a surface area of more than 5,000 m2 spread over several floors.

In fact, according to Aguirre Newman, this operation will be one of the most representative of the year on the high street in terms of volume and representativity, given that, although investor appetite to invest in retail premises is high, few opportunities arise to acquire assets with similar characteristics.

Calle Preciados is still the most expensive street in Spain, although prices there are still well below those charged in the prime areas of London, Paris and Milan.

For Aguirre Newman, the imminent developments in Canalejas and Edificio España have already become a reality and are changing the central area of Madrid. The strong tourism figures, as well as the future retail and hotel projects that are going to be developed in the area, are attracting international brands and investment funds, seduced by what is expected to be the great transformation of the central area of Madrid, which began with the commercial development of Gran Vía and is now moving along the Canalejas-Sol-Plaza España axis.

Retail groups’ interest in positioning themselves in the centre of the city also extends to adjacent streets such as Montera and Arenal, according to the real estate consultancy Aguirre Newman.

Original story: Mis Oficinas 

Translation: Carmel Drake

Caja Madrid’s Former HQ Is Up For Sale

5 November 2015 – Cinco Días

The former headquarters of the Caja Madrid is up for sale. La Fundación Montemadrid has engaged Irea to search for a buyer for the historical building, located a short distance from the Puerta del Sol in Madrid.

La Fundación Montemadrid, formerly known as ‘Fundación Obra Social y Monte de Piedad de Madrid’, plans to sell the whole property, excluding the premises where Monte de Piedad undertakes its activity, which will be made independent from the rest of the building. In total, the property has a surface area of 25,000 m2, which maybe used as a hotel, retail or office space.

Sources in the market consider that it is likely that the building will be converted into a “luxury five-star” hotel, which may also include some retail space.

If the building is converted into a hotel, then it would be highly coveted by international operators, at a time when Spain is under the spotlight thanks to the decision by Four Seasons to operate the hotel in the Canalejas Complex, and the purchase of the Ritz by Mandarin and Olayan. Meanwhile, in the Plaza Mayor, the Portuguese group Pestana is planning to open a five-star hotel in the Casa de la Carnicería.

Domestic and international investors, both hotel chains and investment funds have already expressed their interest in the property, which could represent the gateway into Madrid for franchises such as Hyatt, Kempinski, Hilton, W and Shangri-La. The future hotel would have around 200 rooms, as well as terrace space measuring 3,000 m2, one of which would be on the roof, with panoramic views of the city. The price of the property could exceed €100 million, and the buyer would also have to factor in the cost of the refurbishment.

No architectural protection

One of the features of the property is the lack of architectural protection, with the exception of the baroque doorway that overlooks the Plaza de las Descalzas. This makes the building a unique opportunity in the centre of the capital, according to market sources, vis-à-vis the Canalejas project, which is being developed by Villar Mir, whose construction has been unblocked this week by the courts, and Edificio España, acquired by the Chinese group Wanda, which had requested permission to dismantle the protected façade of that building brick by brick, to then rebuild it. That request was rejected by the Local Historical Heritage Commission of Madrid. Market sources believe that the operation could be closed by the end of this year or the beginning of 2016, and that the property, if it does end up being converted into a hotel, would open its doors in 2018, after the Four Seasons.

Original story: Cinco Días

Translation: Carmel Drake

Judge Lets Villar Mir Resume Work On Canalejas

3 November 2015 – Expansión

The judge at lower court number 54 in Madrid has lifted the temporary suspension imposed on the construction of Project Canalejas, located in the centre of Madrid.

The work to refurbish the complex – where Grupo Villar Mir wants to construct a Four Seasons hotel, a shopping arcade and luxury housing – has been suspended since 14 October, after a claim filed by the Basque company R&A Palace Gestión was accepted for processing.

The claimant denounced the alleged damage to the heritage of the seven buildings that comprise the complex, and which have different degrees of (historical) protection.

The Court in Madrid has taken the decision after the owner of OHL paid a pledge (aval) amounting to €163,000. Thanks to the legal decision, Villar Mir can resume the renovation work immediately.

The aval from the owner is significantly lower than the amount demanded by R&A Palace, which requested that it be equal to half of the total investment in the project, estimated at €500 million.

The Villar Mir complex had already been approved by the Town Hall of Madrid and the Community of Madrid after reductions were made to its buildable area. Following the agreement, Canalejas will house a 205-room hotel managed by Four Seasons, a retail space measuring 15,000 m2 managed by Grupo Villar Mir and around 22 luxury homes, which will be sold for c. €12,000/m2.

Original story: Expansión (by R.R.)

Translation: Carmel Drake

Investment Funds & Socimis Revolutionise RE Sector

26 October 2015 – Expansión

The real estate sector is recovering well. During the first nine months of 2015, purchases of offices, commercial and logistics assets, hotels and residential properties amounted to €10,800 million, representing an increase of 57% compared with the same period last year. After more than five years of severe economic difficulties, the return of investment, at the hands of investment funds and Socimis has breathed a new wave of optimism into the sector.

“After a really tough economic crisis, we were almost in a coma and the arrival of these funds is invigorating the market”, said Juan Antonio Gómez-Pintado, President of the Association for Real Estate Developers in Madrid (‘Asociación de Promotores Inmobiliarios de Madrid’ or Asprima), who together with Rafael González-Cobos, President of Grupo Inmobiliario Ferrocarril and Gecopi; Alberto Fernández-Aller, Corporate Director of Prinex Real Estate; and Manuel del Pozo, Assistant Director of Expansión, were responsible for opening the forum ‘The New Era of the Real Estate Sector in Spain: Investment funds and Socimis’.

The event, organised by the newspaper Expansión, in collaboration with Drago Capital, Gómez-Acebo & Pombo, JLL, Neinor Homes and Merlin Properties, and with Prinex as the technological partner, served to highlight the evolution of the market in recent years and the impact the Socimis have had on the strong investment figures recorded in the sector.

46% of the capital invested in Spain so far this year has come from Socimis, an investment vehicle inspired by the REITs in the USA, first launched in the 1960s, which did not arrive in Spain until 2009. As the Corporate Director of Prinex Real Estate explained, they are “a mechanism that allow us to hold much more open asset portfolios, without any major legal or regulatory obligations and with great tax advantages”.

Partnerships

Moreover, the entry of international capital is also helping to professionalise the sector, as well as to support the recovery of Spanish property developers and real estate companies, hit hard by years of paralysis and lack of investment. “All of the funds coming into Spain are looking for support from companies that already know the environment. They are using their capital to undertake operations with Spanish developers”, said Fernández-Aller. “They generate capital movement, investment and jobs. The Socimis are helping to create a professionalised stock of homes for rent”, added the President of Grupo Inmobiliario Ferrocarril. (…).

Meanwhile, the participants highlighted the threat that political instability poses to the recovery of the real estate sector. One example, they indicated, is Madrid, where all of the major urban planning operations (Canalejas, Chamartín and Edificio España) are currently on hold.

Large cities

The recovery of the real estate market is happening in a very uneven way and, for the time being, is limited to the major cities only, such as Madrid and Barcelona, and some coastal regions. (…).

Meanwhile, Juan Velayos, CEO of Neinor Homes, emphasised the profound transformation that the Spanish real estate market has experienced over the last 18 months and said that he was convinced that the mistakes that led this sector – which accounted for 25% of the country’s GDP at its height – to the brink of disaster, will not be repeated.

“What we are seeing in Spain is an absolute transformation of the industry. I do not think that the banks will let what happened before with the RE bubble happen again. We are not going to see any projects without equity. It is going to be a sector that, for the first time, builds what customers actually want. If we do not understand that (basic premise), then customers are not going to buy homes from us”, concluded Velayos.

Original story: Expansión (by Javier G. Fernández)

Translation: Carmel Drake

Investment In Shopping Centres Exceeds €1,000M In H1 2015

1 July 2015 – El Confidencial

During the first three months of 2015, investment in shopping centres tripled to €520 million, compared with the €150 million recorded during the first quarter last year. In fact, in barely three months, the figures exceeded the sum of those recorded between 2010 and 2013. As such, the sector will close the first half of the year with total investment of just over €1,000 million and will reach €3,000 million within 19 months.

Those are the forecasts made by the consultancy Knight Frank, which expects that 2015 will close above the historical average, but that the investment volumes seen last year will not be repeated.

“Whilst 2014 and 2015 so far have been characterised by investment in prime shopping centres, of considerable size, the next few months will see investment opportunities involving smaller, core plus and value add products, in secondary cities”, says Elaine Beachill, Capital Markets Manager at Knight Frank. “Over the last 18 months, activity has focused on the best streets and areas of Madrid and Barcelona, but from now on, we will see transactions right across the country”.

In terms of the performance of shopping centres, Knight Frank highlights the strong results of smaller local centres, located in urban areas and secondary cities with a significant area of influence. The segment least affected by the crisis has been the prime High Street. Rents in retail stores on the main streets have remained stable and they have experienced low vacancy rates. “In fact, there is a significant shortage of space on the prime High Street and when a store becomes available, it is leased out very quickly”, says Félix Chamizo.

Nevertheless, established secondary sites – traditionally in less demand – have been the first choice for certain foreign brands setting up in Spain for the first time. That is the case of Hema, Dealz, Tiger and the Chinese retailers Mulaya and Okeysi. There is growing interest from retailers and investors in the area around la Puerta del Sol. Projects in the surrounding area, such as Canalejas, indicate a possible increase in rents in the area and certain retailers are already taking up position.

Original story: El Confidencial (by Elena Sanz)

Translation: Carmel Drake