BNP Paribas: RE Investment Rose by 8% in 2018 to €11.6bn

9 January 2019 – El Periódico

The volume of annual investment in the Spanish real estate sector amounted to €11.63 billion in 2018, which represented an increase of 8% compared to 2017. If we add the corporate operations with underlying real estate to that volume, then the figure increases to €19 billion, which represents an investment record since the end of the crisis, according to the latest report from BNP Paribas Real Estate in Spain. The report highlights that interest from investors in the Spanish real estate sector in 2018 was at its highest level for a decade.

During the fourth quarter of the year, the volume of direct investment in real estate assets – offices, logistics warehouses, hotels, retail and residential – amounted to €3.7 billion in total, which represented an increase of 58% YoY. The evolution of investor activity, therefore, exceeded the expectations of the sector at the beginning of the year.

“The good times that the fundamentals of the market are enjoying, with occupancy levels at maximums and rents that are stable or expanding in the most consolidated markets, together with the surplus capital and the limited alternatives offered by other financial products, have fostered a frenetic pace of activity in the investment market”, explains the report.

By type of asset, the commercial sector (retail) was the star of the year. The volume invested in commercial assets during 2018 amounted to €4.28 billion, which represents an increase of 23% compared to 2017. During the fourth quarter, investment reached €1.26 billion, and so the sector achieved a quarterly market share of 35%. The largest operation during the final quarter of the year was the purchase of a portfolio of three shopping centres – Max Center, Gran Casa and Valle Real – by Sonae Sierra and Perter Varbacka for €485 million.

Commercial yields

Demand from investors for high street retail assets was high, given that they consider them to be a very stable product. Similarly, there was a high interest in land for the development of retail parks, in light of the scarce supply of this type of asset. The yields continued at 3.00% for prime premises; between 5.00% and 5.25% for prime shopping centres; and at 5.75% for prime retail parks.

In terms of the office market, the investment volume recorded during the fourth quarter was €986 million taking the total figure for the year to €2.228 billion. That represented a slight YoY decrease of 4%. The shortage of products for sale meant that fewer operations materialised in 2018 than in 2017. The prime yield in the office market remained at 3.25% in Madrid and 3.50% in Barcelona.

The logistics market continues to rise. The increase in e-commerce and the strong performance of the consumer sector and the economy, in general, have encouraged investment in this type of asset. The investment volume registered during the fourth quarter of the year amounted to €400 million, whilst the total figure for the year (€1.3 billion) represented a new investment record, and an increase of 30% compared to 2017. The shortage of products, combined with the high investment pressure resulted in a considerable adjustment in yields, which amounted to 5.30% in the prime logistics market in the fourth quarter of 2018.

Investors

Investment funds were the great stars of the market, representing 61% of the total volume transacted in 2018. Socimis have been very present in the investment market, both on the buy and sell sides in the main land transactions to develop new products. Finally, the presence of family offices (private investors) stood out, with acquisitions, in general, for volumes of less than €50 million.

Alternative investments remained in the spotlight of investors, who were mainly attracted by student residences, clinics and nursing homes for the elderly. The cumulative volume invested in those types of assets amounted to €600 million in 2018.

Original story: El Periódico (by Max Jiménez Botías)

Translation: Carmel Drake

French Group Primonial Buys 6 Nursing Homes in Spain for €35M

5 March 2018 – Eje Prime

Primonial is buying more assets in Spain. The French fund manager has signed an agreement with the nursing home management group La Saleta Care (owned by the Belgian group Armonea) to purchase six of its nursing homes in the Community of Valencia for €35 million, according to explanations provided by the group in a statement.

The fund has acquired six La Saleta nursing homes, containing 800 beds and day places in total, in the Community of Valencia, with a combined surface area of almost 21,500 m2. The six centres are going to continue to be leased to the operator La Saleta Care, through a new commercial lease with a fixed duration of 25 years.

This is the second operation that the group has signed in Spain. The company, which owns a portfolio containing more than €10.7 billion of assets under management, purchased the Sant Antoni Clinic, located in La Marina del Port, in Barcelona, last September, for €20 million.

Both operations form part of the trend by international funds to acquire alternative assets in Spain. In each case, the real estate consultancy JLL has brokered the operations.

Original story: Eje Prime

Translation: Carmel Drake

Fiatc Invests €27M to Grow its Nursing Home Business

28 November 2017 – La Vanguardia

The insurance company Fiatc is going to give a fresh boost to its nursing home business, with the opening of two new centres, one in Vall Park and the other in the former Sant Josep clinic. Altogether, the firm is going to make an investment amounting to €27 million. Meanwhile, it is also considering growing its business as an operator of buildings built for this purpose.

Joan Castells (pictured above), President of the insurance company, explained that, in the end, they have opted to convert the former Sant Josep del Putxet clinic into a nursing home and day centre. “We want to build an above-ground complex measuring 4,500 m2 and we are negotiating the plans with the Town Hall to decide whether to demolish the building and construct a new one or conserve the existing structure and restore it”, he explained. The centre will focus on elderly people who have a certain degree of personal independence and the firm wants to obtain the necessary municipal permits to begin construction in 2018. Fiatc purchased the property from Building Center in the summer for €4.1 million and plans to invest €15 million in the project in total.

Meanwhile, according to Castells, Fiatc is also finalising the municipal permits to start construction work on a new nursing home in Vall Park, above the Ronda de Dalt in Gràcia. That property will have 150 beds and will require an investment of more than €12 million. The firm wants to grow in the sector, including as an operator, and is also considering taking over the management of a residence owned by a private group in Terrassa.

The insurance company started to operate nursing homes for elderly people in 2006, with Blau Almeda, a complex measuring 8,600 m2 with 144 beds. It then added the Cugat Natura complex in Sant Cugat, which includes 32 sheltered apartments and a nursing home with 172 beds. Its most recent project, in 2014, was in Les Masies de Mollet, with 148 beds and 40 spaces in the day centre.

Fiatc recorded revenues from premiums of €539 million last year, up by 7.9% compared to 2015, and a profit of €3 million. In recent years, the insurance company has focused on growing its life division, which grew by 23% in 2016, to account for 30% of its total portfolio. Life now exceeds the health insurance division (27%), whilst the automobile division, where the firm first started out, accounts for just 14%. The company now has 50% of its business outside of Cataluña, as well as 60% of its 517,000 members.

The insurance company currently employs 850 people, although that figure rises to 1,450 for the group as a whole, including the Diagonal clinic in Esplugues de Llobregat, two medical centres in Barcelona and another one in Vilanova i la Geltrú. According to Castells, the company bases its growth on its network of exclusive agents: it has 54 branches located all over Spain and a network of 1,700 agents, as well as agreements with around 3,000 brokers.

Original story: La Vanguardia (by Rosa Salvador)

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

Former SARquavitae Director Creates Fund With Oaktree

1 December 2016 – Expansión

The former CEO of SARquavitae, Jorge Guarner, has joined forces with Oaktree Capital to launch a new fund, Healthcare Activos, an investment vehicle specialising in real estate assets in the healthcare sector. The fund has a minimum size of €100 million, according to sources in the sector.

Healthcare Activos, which is headquartered in Barcelona, places its focus on acquiring real estate assets such as hospitals, clinics and other medical centres, both in Spain and overseas. The vehicle has not made any purchases to date.

The project is led by Guarner, who served as the CEO and Director General of the nursing home and services group between 2003 and 2015.

Guarner is an expert in the field of healthcare. He is currently a Director of the group Confide Correduría and a partner at the international consultancy firm Sphera Global Healthcare. At a more institutional level, he is a member of the Board of Directors of the Spanish Association of Directors and a member of the advisory board for Esade’s Health and Pharmacy Club. Meanwhile, Oaktree is a fund that has starred in several major operations in Spain, such as the sale of Panrico to Bimbo.

The Board of Directors of Healthcase Activos includes Guarner as the Chairman; Karim Khairallah as the Director General of the investor group; and Carlos Gila as the expert in business restructurings. Sergio Sánchez Solé, a lawyer from Garrigues, has been appointed as the Secretary to the Board.

Original story: Expansión (by G. Trindade)

Translation: Carmel Drake