M&G European Property Fund Expands Portfolio in Spain

29 May 2018 – Real Assets

M&G European Property Fund has expanded its portfolio with the acquisition of industrial and retail assets in Spain.

The €3bn core European property fund, managed by M&G Investments’ real estate arm, said it bought two industrial and two retail assets for €80m.

The two retail acquisitions are H&M Reyes Catolicos in Granada and Gran Via 68 in Madrid.  Both sites, which total 3,668sqm, are leased.

The industrial sites Teka Logistics Platform and a further asset in the Getafe logistics corridor are both in Madrid. The sites have a combined size of 55,092 sqm.

Fund manager David Jackson, said: “Our latest research suggests the Spanish economy will continue to perform well, with its recovery having accelerated in 2017.

“This extends to the commercial real estate market, where we predict average rental growth in both industrial and retail will range between 3% and 4% per year for the next three years in Madrid.”

Jackson said these new acquisitions fit perfectly with our strategy to increase our exposure to Continental Europe by investing in core assets in strong growth markets.

“We see a strong correlation between the level of rental growth and tourist spend in major tourist destinations across Europe; Madrid and Granada are very good examples of this trend.”

Federico Bros, a director of asset management for Spain and Portugal, said: “We have seen strong demand for high street retail in prime locations across Spain. Both of the retail sites we have purchased are in established locations and offer great rental growth prospects.

“The industrial sector in Spain also offers strong rental growth prospects as online activity accelerates and these acquisitions help us diversify our portfolio in key sectors.”

M&G European Property Fund was launched in 2006, with a mandate to invest in a globally diversified portfolio of assets in mature European markets outside the UK.

Original story: IPE Real Assets

Translation: Carmel Drake

Acciona Hires Morgan Stanley To Sell Its RE Arm

20 July 2015 – El Confidencial

Acciona has decided to translate its words into action and accelerate the sale of some of its assets to clean up its ailing accounts. And, to that end, the energy, construction and service company has entrusted the sale of its real estate division to Morgan Stanley, the US bank that closed some of the largest property-related transactions during the real estate boom.

The holding company, owned by the Entrecanales family…has appointed Morgan Stanley, which is led by Luis Isasi in Spain, to list or sell its property-related assets, which were valued at €1,042.6 million at the end of 2014, according to Grupo Acciona’s own accounts. Based on appraisals performed by Savills Consultores and the Instituto de Valoraciones, the portfolio would have a price of €712 million, with land being the largest single item.

Nevertheless, other sources close to the group say that the book value of all of the real estate assets – which include several hotels, university halls, office buildings and 900 homes for rent in Madrid – may reach €1,500 million. “They may sell off the portfolio in parts because some of the businesses have nothing to do with each other”, said Morgan Stanley.

Morgan Stanley is going to sound out the market to decide which is the best option – i.e. whether to launch an IPO through a Socimi or to find a buyer that would take on the whole business. The operation will be similar to the one recently closed by Sacyr for its subsidiary Testa, which was acquired by Merlin Properties, for just over €1,800 million. (…).

With this decision, Acciona begins the divestment of its non-strategic businesses, which it announced at the beginning of the year after recording the worst results in its history. The group owned by the Entrecanales family, which recorded losses of €1,972 million in 2013, managed turn things around in 2014 and make a profit of €185 million, thanks to cost saving initiatives, the suspension of investments and the sale to a third party of its international energy business – this improved trend has continued in 2015 to date. (…).

Of the sales that the company announced at the beginning of 2014 – Bestinver, Trasmediterránea, real estate and energy – only the last one has taken place and then only partially. This has prevented the group from reducing its debt, which remains very high and is even growing (€5,300 million net at 31 March 2015).

Original story: El Confidencial (by Agustín Marco)

Translation: Carmel Drake