2015: A Record Breaking Year For RE Investment

3 December 2015 – Expansión

Real estate investment in Spain will close 2015 at record breaking levels. According to the consultancy CBRE, the purchase of hotels such as the Ritz in Madrid, shopping centres such as Plenilunio and offices such as Torre Espacio, as well as operations such as the purchase of Testa, have driven up investment volumes in the sector to reach €12,250 million by 1 December. CBRE expects the sector to close the year with volumes of around €13,000 million, a figure never seen before in the Spanish market.

“2014 was a record year in terms of tertiary investment (non-residential assets). This recovery in the market saw investment volumes of more than €10,000 million, which equalled those seen in 2007 – the previous record-breaking year -. 2015 has not only seen a strengthening of this trend, it has also seen growth of 25%”, said Mikel Marco-Gardoqui, Head of Investment at CBRE España. “Moreover, it is worth noting that asset prices are now 30%-40% lower than they were in 2007”, adds Julián Labarra, Director of the real estate consultancy.

This record level has been boosted by the largest operation ever seen, namely the Socimi Merlin Properties’s purchase of the real estate company Testa for €1,800 million. Testa holds a portfolio of assets – mainly offices – worth more than €3,000 million. Nevertheless, even excluding that transaction, investment is growing at “an exponential rate”, with increases in the purchase of all types of assets. (…).

Offices, which continue to be investors’ preferred asset, have now reached an investment volume of €5,600 million, thanks to purchases such as Torre Espacio, by the Philippine businessman Andrew Tan for €558 million, and Castellana 89, by Corporación Financiera Alba for €144 million.

Currently, these properties in Spain offer investors minimum yields of between 3% and 3.75% in the case of well-located commercial premises and maximum yields of 6.5% in the case of specific logistics assets.

Hotels

Hotels, in particular, have experienced a significant boost this year. “In 2014, hotel investment volumes amounted to around €1,100 million and so far this year, that figure has already surpassed €1,900 million, which means that we expect to close the year with an investment volume of €2,000 million”, says Marco-Gardoqui.

The boost from investors has not only been felt in the purchase of non-residential assets, interest has also increased in the acquisition of land and property developments for joint promotion with local property developers. (…).

Looking ahead to next year, the experts at the consultancy firm expect that interest from the funds will continue. “We think that investment will amount to around €10,000 million in 2016, because although there will be fewer operations, prices will increase. Many funds are still raising funds, with specific amounts earmarked for Spain”, says Heriberto Terual, Director of Corporate Finance at CBRE.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

GreenOak Recruits Zarrabeitia From CBRE

16 July 2015 – Expansión

International funds still regard Spain as one of their favourite destinations for investment. As such, one of the most active firms, the US fund GreenOak, has just strengthened its team in Spain to boost its commitment to the market.

The fund, which specialises in the real estate sector, has recruited Javier Zarrabeitia, former director of CBRE España. Zarrabeitia, the son of the CEO of Testa Inmuebles, is a specialist in capital markets. Before joining CBRE, he advised large real estate transactions, such as the sale of BBVA’s building on Castellana, 77 to GMP for €90 million. In fact, GreenOak was one of the finalists in that auction.

In addition to Zarrabeitia, GreenOak is planning to hire three or four other people over the coming months at its offices in Madrid. The firm currently has a team of ten professionals dedicated to the Spanish market, although most of them are based in London.

Francesco Ostuni leads the Spanish team – he is the European Director of Acquisitions at GreenOak, and was formerly a director at Morgan Stanley and before that at the Qatar sovereign fund. In turn, Ostuni reports into the founding director of the fund, John Carrafiell, who led Morgan Stanley’s real estate strategy for several years, and closed operations such as the purchase of Canary Wharf. (…)

GreenOak, which has assets under management amounting to $5,000 million (€4,533 million) around the world, has already made several real estate investments in Spain during the last year.

Background

The US fund took its first big step in Spain last year, when it purchased seven shopping centres from the Dutch group Vastned Retail for €160 million. Subsequently, it tried to enter the office market – it participated in the process to purchase not only Castellana 77, but also Castellana, 89 – Ahorro Corporación’s headquarters – which was ultimately purchased by Corporación Financiera Alba, owned by the March family.

In recent months, GreenOak has been adding to its portfolio of Spanish investments, with the purchase of five logistics assets in the Community of Madrid, encompassing 200,000 m2. The US fund paid between €60 million and €75 million to close that acquisition.

The firm plans to close new operations in the short term, mainly in the logistics segment – where it has agreed to buy three more assets – , as well as the market for shopping centres and offices, after its two previous failed attempts.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

CBRE: RE Investment Grows By 51% To €5,264M In H1 2015

6 July 2015 – Expansión

Five star hotels, commercial premises on the country’s most iconic streets, large shopping centres and office buildings. All of these assets have changed hands in recent months in the Spanish real estate market, which has been extremely active in recent months.

Between January and June, real estate investment (which includes offices, shopping centres and retail premises, logistics warehouses, hotels and residential assets) amounted to €5,264 million, according to the consultancy CBRE. That figure soars to €8,434 million if we include the purchase of the real estate company Testa by the Socimi Merlin Properties.

The amount represents an increase of 51% compared with the first half of 2014, a figure that itself represented a two-fold increase with respect the previous year. Thus, total investment during the first half of the year increased from €697 million in 2012 to €1,455 million in 2013, to €3,475 million last year and to more than €5,200 million in 2015, according to CBRE. (…).

By quarter, the volume invested in the second quarter (from April to June) was slightly lower than during the first quarter: €2,337 million compared with €2,928 million. “The decrease in the second quarter was due to the fact that some transactions were delayed and also because some very large deals were closed during the first quarter, including Gran Vía 32 and Plenilunio”, explains Paloma Relinque, Investment Director at CBRE.

By asset type, offices and retail assets (both large shopping centres, as well as shops on the main streets of Madrid and Barcelona) have featured in the largest deals. In the case of offices, highlights include the sale of Ahorro Corporación and Sareb’s headquarters on Castellana 89 (Madrid) to the March family for €147 million. In terms of retail premises, in April, the insurance company Axa paid €308 million to the Socimi Uro Property for 400 Banco Santander branches.

There have also been important transactions in the hotel sector, including the sale of the Hotel Ritz, which was transferred for €130 million. (…).

Types of investors

Although the investment growth trend seen in 2014 was repeated during the first half of 2015, there was a change in the mix of investors by nationality. Whilst at the beginning of last year, the more opportunistic US funds accounted for 53% of transactions, compared with British and German funds, which accounted for 5% and 1% of deal respectively; during the first half of 2015, US funds accounted for just 21% of total volumes, whilst investors from the UK accounted for 22% of deals, followed by Canadian funds (9%) and German funds (6%), according to CBRE.

Moreover, the Socimis Lar España, Merlin Properties, Hispania and Axiare are still the major players in the market for real estate investment. “The Socimis are performing very well, which is great for the sector because they purchase office buildings, for example, to refurbish them and add value, which improves the real estate stock”, says Lola Martínez, Director of Analysis and Investment Strategies at CBRE.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

GreenOak Buys 5 Logistics Assets In Madrid For €75M

24 June 2015 – Expansión

GreenOak hereby completes its second major deal in Spain. Over the last few months, the US fund has closed the purchased of five logistics assets in the Community of Madrid, which cover a surface area of 200,000 m2 (100,000 m2 of facilities and 100,000 m2 of land).

Based on the prices of these assets in the market, GreenOak must have paid between €60 million and €75 million for the five assets, according to various real estate sources.

The US fund is planning to continue its growth in this segment and has already agreed to purchase another three logistics assets, also in the Community of Madrid, which will add a further 100,000 m2 to GreenOak’s portfolio in Spain.

The fund plans to continue acquiring assets – in Barcelona, Zaragoza and Valencia as well – to reach (a surface area of) half a million square metres over the next 12 months.

All of the assets purchased by GreenOak are located in Getafe and in the Corredor del Henares and are currently leased out to companies such as Seur, Montfrisa and TransXtar. The vendors have been banks, other funds and family-owned companies.

“Logistics is an asset class where scale and experience make a difference. We are focusing on Spain, where we have the strongest interest”, says John Carrafiell, founding partner at GreenOak.

“Given our resources to undertake investments in the sector, our team on the ground and our real estate due diligence skills, GreenOak can close deals quickly, with investments of between €5 million and €100 million”, says Carrafiell.

The chief executive at GreenOak is leading the fund’s strategy in Spain first hand. Carrafiell is regarded as one of the gurus of global real estate investment. He used to lead Morgan Stanley’s business in this segment and in 2004 he closed one of the largest deals ever in the UK, the purchase of Canary Wharf.

Fund history

After leaving Morgan Stanley, Carrafiell created GreenOak in 2010. Since then, the fund has raised assets under management amounting to €4,751 million and has opened offices in USA, London, Seoul, Munich, Tokyo and Madrid.

GreenOak signed its first major purchase in Spain last year, with the acquisition of seven shopping centres from the Dutch group Vastned Retail for €160 million.

Moreover, in recent months, GreenOak has tried to enter the office market. It was in the running for the purchase of Castellana, 77, which was eventually sold to GMP; and Castellana, 89, which was acquired by Corporación Financiera Alba, owned by the March family. The fund expects to close the purchase of offices and shopping centres within the next few weeks.

 Original story: Expansión (by Jorge Zuloaga)

Translation: Carmel Drake