CBRE: Investor Interest in High Street Stores Skyrockets

5 July 2018 – Cinco Días

Stores on the most commercial streets of Spain have become an object of desire for investors in the real estate market. Large funds and insurance companies alike are investing in these types of assets and experts predict that a new record is going to be set in the segment this year.

Investors are expected to spend around €1.1 billion on these types of commercial premises in 2018, according to forecasts from the consultancy CBRE. That figure would exceed the amount invested in high street stores in 2017 by €300 million, equivalent to a growth rate of 36.9%. Of interest are shops on commercial thoroughfares such as c/Preciados and c/Serrano in Madrid and Paseo de Gracia and Portal de l’Àngel in Barcelona. In fact, those two cities accounted for 79% of total investment last year. “Nevertheless, other cities in Spain are on the rise and there is growing demand for investment products in cities such as Bilbao, Valencia, Sevilla and Málaga”, according to the report “The Keys to Retail in Spain”, published by CBRE yesterday.

Investors regard these types of well-located assets as a good option for placing their money, a solid alternative in the context of low-interest rates and because these high street stores perform better (than other commercial assets) in the face of competition from online retailers. Currently, according to CBRE; the returns on these properties amount to 3.5% in Barcelona and to 3.25% in Madrid; in other cities (with more risk), the returns are greater.

The stars of these acquisitions are mainly the large funds. Hines, M&G, AEW, Thor, Union Investment, CBRE GI and Deka. “In 2017, in addition, an insurance company entered the high street sector for the first time: Generali acquired the Pull & Bear store on Calle Preciados in Madrid”, according to the report. Other active players include the Socimis, such as Tander, Ores, and Silicius, which have started to express interest.

In terms of large operations so far this year, in January, the German fund Deka acquired 16 Inditex stores for €400 million. Another significant operation was the acquisition of Mercado de San Miguel by the Dutch fund Redevco, for €70 million.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

CBRE GI Invests €10M in Star Project in Plaza de Colón (Madrid)

21 June 2018 – Eje Prime

CBRE Global Investors (CBRE GI) is increasing its commitment to Spain with its latest project. The investment arm of the CBRE group is going to invest €10 million in the project to renovate the building at number 1 Plaza de Colón and, to this end, the multinational firm has engaged one of the most sought-after architects in the world, Norman Foster. The new property, which is going to be constructed on the site of the former Barclays headquarters, will become the star of CBRE GI’s growth plan in Spain.

The asset manager acquired the former Barclays headquarters in 2017. In November of the previous year, the financial institution started to sound out the possibility of selling the building on Plaza de Colón (at the intersection of Paseo de la Castellana and Paseo de Recoletos) to move to another location and, three months later, in January, it sealed the deal.

Three years after the acquisition, CBRE GI is preparing to transform the building, a project that has formed part of its plans since it completed the operation. The former Barclays headquarters is now beginning a renovation that will convert it into Axis, where offices and a commercial area are going to be opened on the four floors that will comprise the new asset.

This project forms part of an investment plan that will amount to €800 million. The company has almost one hundred properties in its portfolio, spread across the retail, office, logistics and hall of residence markets.

Nevertheless, in May, the company announced that it is going to enter the residential sector in 2018. The consultancy firm’s investment fund wants to access that segment through the rental market (…).

The company’s objective for this year is to repeat or even exceed the investment figure recorded last year. In 2017, the manager closed transactions amounting to €1.3 billion.

In addition, CBRE GI, which works with eight investment funds in Spain, manages a portfolio of assets worth €3.2 billion (…).

Original story: Eje Prime (by J. Izquierdo)

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

TH Real Estate Changes its Focus in Spain to Purchase Logistics Properties, Offices & Alternative Assets

11 June 2018 – Eje Prime

After ten years in Spain, TH Real Estate is changing its focus in terms of acquisitions. The company, which has historically purchased retail assets in the country, is going to change strategy to strengthen its portfolio with logistics properties, office buildings and alternative assets, such as halls of residence for students. That is according to Marta Cladera (pictured below), Director General of TH Real Estate Iberia, talking to Eje Prime in an interview.

“Traditionally, and due to the type of active funds, we have been very focused on the purchase of retail products” – said Cladera – “Now, we want to nurture our portfolio with logistics buildings, offices and alternative assets, such as halls of residence”. “We are analysing the market, we have a good track record in other types of assets, and so we will be able to create a portfolio with new types of assets and we will begin this year”, she added.

TH Real Estate will carry out these purchases through its fund European City Fund, which is one of the most active at the moment in terms of acquisitions and which has sufficient resources to undertake new purchases. By type of asset, the plans in terms of alternative assets involve not only the purchase of properties but also “teaming up with other operators, which may be from other parts of Europe”. In this way, TH Real Estate will follow in the footsteps of other funds such as CBRE GI and Axa, which, in their strategy to enter the hall of residence business, purchased Resa, the largest student hall company in Continental Europe.

In terms of the office sector, Cladera assures that “the competition is fierce” and the supply “is scarce”. “We are looking for buildings costing upwards of €50 million, but the supply that we are finding is not prime and those that are prime due to their location need a lot of renovation work, and that is something that holds us back, given that the numbers have to make sense for us to proceed and we have to focus on returns”, said the director.

Currently, TH Real Estate manages a portfolio worth €103 billion around the world, although Spain represents a small proportion of that, accounting for just 2% of its total business. In the Spanish market, the company owns assets worth €2 billion. “Although it is small compared to other markets, you have to look at the evolution: when we arrived in 2007, the portfolio was worth €200 million, as such, the growth over the last ten years has been significant”, she said. TH Real Estate’s team in Spain comprises nine people.

Socimi: under consideration 

Although this move is still in an embryonic phase, TH Real Estate does not rule out joining the Socimi party that is raging in Spain with some of its assets (…).

Currently, TH Real Estate owns fifteen assets across the Iberian Peninsula, of which fourteen are located in Spain and one in Portugal. Of those, two are logistics assets (acquired in 2017), and the rest are retail properties. One of the formulae that the group has used in the country has been to create joint ventures with different players for the acquisition of assets. Such was the case of the purchase of 50% of Xanadú from Intu for €264.4 million, for example (…).

Original story: Eje Prime (by Custodio Pareja)

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

CBRE GI to Invest €800M in Spain in 2018

18 May 2018 – Expansión

The real estate asset manager CBRE Global Investor (CBRE GI) is redoubling its commitment to Spain. After ending last year with a record investment of €800 million and starring in several mega-operations, the firm wants to establish a new record this year, exceeding the milestone set in 2017. From its offices in Madrid, CBRE GI manages assets worth €3.2 billion in the retail, office, logistics and student hall sectors, located in Spain and Portugal, and is getting ready to enter the residential sector.

“Last year was very important given the significant transaction activity undertaken, of which €800 million corresponded to purchases. This year, we hope to match that figure and even exceed it”, explained Antonio Simontalero, Head of Operations for Spain and Portugal at CBRE GI, speaking to Expansión.

The firm works with eight funds and owns a portfolio comprising 19 shopping centres, 37 logistics platforms, three office buildings and 33 halls of residence for students.

Although retail is still the main market for the manager, accounting for 70% of its portfolio, CBRE GI has decided to attack new businesses. Thus, last year, it entered the market for student halls with the purchase, together with AXA IM Real Assets and Greystar, of Resa, the market leader in Spain, for €400 million. “We are continuing to analyse opportunities in the student hall market. We want to grow the portfolio and increase our exposure”, says Antonio Roncero, Head of Transactions for Spain and Portugal at CBRE GI.

Another milestone in 2017 was the consolidation of the manager in the logistics sector following the joint venture signed with Montepino for the development and promotion of logistics assets. “The initial objective of the investment in the joint venture with Montepino was €300 million, but we hope to exceed that figure soon. With the developments underway, we have 80% of the investments committed”.

Simontalero points out that CBRE already had 700,000 m2 of logistics assets under management and the agreement with Montepino will allow the firm to exceed the 1 million m2 threshold. The logistics sector is thereby becoming the manager’s second segment by volume, accounting for almost 15% of its total assets. “The differentiating feature of this joint venture is that all of the assets are going to be latest generation, which is what the main operators require”, adds Roncero.

Rental homes

In terms of next steps, CBRE GI is preparing to attack a new market, specifically, the residential rental market. “We are analysing various options with different partners, either through the development of new-build properties or by investing in a business through the purchase of portfolios”, say the directors.

For Simontalero, the size of the rental market vs. the purchase market in Spain is going to grow and will move into line with the rest of Europe. “There is latent demand that is not being fully satisfied with the current supply in the market”, he said.

For Roncero, the key is in the service. “We see an opportunity for offering a professionalised service in the rental home segment, providing security to the tenant and placing emphasis on the maintenance of properties”.

Roncero says that the objective of CBRE GI involves gaining “critical mass” in the sectors to which it is least exposed in order “to diversify and be more versatile”.

Sales

In addition to growing its portfolio with new properties, the company is continuing to rotate its assets. Specifically, last year, it sold four shopping centres (two in Spain and two in Portugal), and it is now preparing to sell three more – Gran Casa (Zaragoza), Valle Real (Cantabria) and Max Center (Barakaldo) – whose ownership it shares with Sonae.

“Our business involves identifying investment opportunities, managing them and selling them to generate returns for our investors”, he said.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Spain’s Student Halls are the Most Profitable in Europe with Yields of 5.5%

14 May 2018 – Eje Prime

As well as being the largest recipient of Erasmus students, Spain is now also one of the most attractive countries for funds and operators specialising in halls of residence. The high demand and shortage of existing supply multiplied the investment in this alternative market ten-fold in 2017, increasing from just over €50 million to €600 million in one year. One of the keys to this growth lies in the profitability of the segment: with a yield (…) of 5.5%, Spain offers the best returns on the whole continent, for nations with more than 1 million students, according to a report from the consultancy firm Cushman&Wakefield.

In this hall of residence boom, which has allowed investments in the segment to grow by 29% across Europe, Spain also led the ranking of the largest operations in 2017. The transaction involving Resa’s portfolio, which was sold by Azora to the funds Axa Real Assets and CBRE GI for €400 million was the largest deal closed on the whole continent last year. Moreover, Operation Rio, which involved the sale of Oaktree’s Spanish portfolio to GSA for €180 million, also ranked in the top 3, a podium that was completed by another deal involving GSA, in that case together with GIC, which acquired thousands of beds from LJ Capital in Germany for €250 million.

The increase in investment will be accompanied in 2018 by a greater number of projects under development. As Reno Cardiff, Director of Capital Markets Business Space at Cushman&Wakefield in Spain explained recently in an interview with Eje Prime, “there is a great appetite for this kind of asset, but there is a shortage of supply”.

Due to the lack of stock right across the continent, consultancy firms and real estate experts are promoting the construction of new halls of residence to receive students over the coming years. Moreover, Cushman&Wakefield highlights another change: interest has increased from institutions looking to construct properties to house students, a cohort that was traditionally forced to rent homes from owners who, in many cases, set abusive prices.

Nevertheless, the growing appetite from funds for halls of residence is not driven by social reasons, but rather as the coming together of a sea of opportunities. In addition, the yields, despite having fallen in the last year, are still higher than those of other segments, such as traditional residential, offices and commercial. Only the logistics market offers yields in line with those of university halls of residence (…).

Original story: Eje Prime (by J. Izquierdo)

Translation: Carmel Drake

IBA Capital & CBRE GI Sell Preciados 9 to Generali

15 March 2018 – Eje Prime

A new prime retail operation has been closed in the capital. The fund manager IBA Capital, together with CBRE Global Investment, has closed the sale of number 9 Calle Preciados in Madrid to the real estate vehicle of the insurance company Generali, Generali Real Estate. The Italian group has paid €100 million for the asset, which is going to be home to the future Pull&Bear store on that street, one of the most expensive in Spain for opening a store.

The property, which has a surface area of more than 3,000 m2, was the first building that El Corte Inglés sold in the Spanish capital and fired the starting gun for the policy of real estate divestments by the distribution group.

The asset, located in the so-called Golden Triangle of Madrid, was built in the 1940s. The building overlooks the confluence of the areas of Sol, Preciados and Gran Vía, and has a commercial surface area of more than 2,100 m2, distributed over six floors.

The operation, which has been brokered by the real estate consultancy Colliers, has been in the pipeline for six months, but the parties have not signed the agreement until now. In this way, IBA Capital is continuing to transform its asset portfolio in Spain.

Founded in 2013, IBA Capital is headed by Thierry Julienne and Jesús Valderrama, founders of the investment vehicle. The group has the capacity to manage all kinds of real estate assets and, currently, manages assets with a value of approximately €1 billion.

IBA Capital’s activity is divided into three lines of business. The company is continuing to acquire new assets following a phase of “prior selection of opportunities and a process of internal analysis”, according to sources at the company. IBA Capital also manages and sells assets, as well as controls the Socimi Zambal.

Its current portfolio comprises more than a dozen assets situated in prime locations of Madrid and Barcelona for the most part. They include number 18 Gran Vía and the ABC Serrano shopping centre, which have been acquired for their subsequent renovation and enhancement.

Original story: Eje Prime (by C. Pareja)

Translation: Carmel Drake

Itaroa Shopping Centre (Navarra) Goes Up For Sale

15 March 2018 – Expansión

The shopping centre sector is still red hot. After the intense investment activity of last year, which has continued during the first few months of 2018, new assets are still coming onto the market. The latest is Itaroa, a shopping centre located in Huarte (Navarra), which has hung up the for sale sign, according to market sources speaking to Expansión.

The asset, managed by the local property developer Javier Gómez, has a surface area of 42,000 m2 and contains a Hipercor, owned by El Corte Inglés, which would not form part of the sales process. To search for potential buyers, the owner has engaged the consultancy firm Colliers International Spain, formerly Irea.

The vendor is asking around €90 million for the asset. The Itaroa shopping centre is mortgaged to the German financial institution Aareal Bank by way of guarantee for a €71 million loan. The mortgage was constituted in 2003 and has been renewed on several occasions, according to the latest information available from the Mercantile Registry.

Last year, Itaroa launched a renovation of its leisure and restaurant area to expand and improve the offer at the centre with the incorporation of new brands. It spent €4 million on that expansion.

Itaroa’s tenants in the fashion and accessories sectors include brands such as Zara, Sfera, Merkal, Bershka and Décimas. The shopping centre is also home to a Yelmo cinema.

This move comes in addition to the sale of a portfolio by Sonae Sierra and CBRE GI comprising three assets and the sale of the Ballonti centre (Vizcaya). Last year, the investment market for shopping centres reached a volume of around €2.7 billion, thanks to record operations such as the purchase of Xanadú, in Arroyomolinos (Madrid), for €530 million. The investor appetite is expected to continue this year, which has led some owners taking advantage of the situation to divest.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel

Azora Engages UBS to Prepare Its IPO

13 March 2018 – Expansión

Azora wants to take advantage of the investor appetite in the real estate sector and the euphoria on the stock market to make its public debut. The manager, led by Concha Osácar and Fernando Gumuzio, has engaged UBS to prepare its IPO, in an operation that will allow it to raise capital to invest in new assets.

With this move, the company seeks to create a portfolio, primarily, comprising hotels with properties both in Spain, as well as overseas, and to generate returns on the capital invested, taking advantage of opportunities in a bullish market, explain market sources speaking to Expansión.

As a next step, Azora will meet with analysts this week to explain its plans to them. Sources consulted at the manager limited themselves to indicating that the Board of Directors is considering different strategic alternatives, in addition to the creation of new private investment vehicles to accelerate its growth. “In this context, all of the options that would allow us to achieve the company’s objectives are being evaluated. Nevertheless, no specific decisions have been taken yet in this respect”, they add.

Azora has a long track record in the sector and experience in the stock market, given that it manages Hispania, the Socimi in which George Soros holds a stake, which made its stock market debut in March 2014. With more than 200 professionals, it has raised more than €2.2 billion in own funds and has €4.4 billion in assets under management. Specifically, in 2004, it launched its first investment vehicle, Lazora, to invest in homes and student halls in Spain.

Portfolio

The manager used to control, together with Corporación Financiera Alba, the leading operator in the student hall of residence market, Resa, before it sold it in September to a joint venture formed by AXA Investment Managers, CBRE GI and Greystar.

Lazora has become one of the leading specialists in rental housing in Spain with €1.6 billion in assets under management. In the office segment, Azora has invested in buildings in Spain, Poland and the Czech Republic, whilst in hotels, it manages €2.2 billion in assets.

With this move, Azora is set to join other groups that have made their stock market debuts in recent months, such as the property developers Neinor, Aedas and Metrovacesa, as well as those that are planning to do so in the near future, such as the property developer Vía Célere and the financial asset management firm Haya Real Estate.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake