Klépierre to Invest €45M in Expansion of Maremagnum Shopping Centre in Barcelona

3 May 2018 – Eje Prime

The world’s shopping centre giants are very much focused on Spain. Whilst at the beginning of the year, Unibail-Rodamco announced that it was putting up for sale four non-strategic shopping centres in Spain, today, it is another French firm, Klépierre, who is picking up the gauntlet and redoubling its commitment to the country. The company is going to invest €45 million in the expansion of its Maremagnum shopping centre, located in Barcelona, according to sources at the company speaking to Eje Prime.

The group estimates that it will spend €45 million to increase the complex by 8,000 m2, space that will be added to the second floor and sides of the shopping centre. According to the company, the building work will begin in the coming months, although it is not expected to be completed until the second half of 2021. This is the only renovation or expansion project that Klépierre currently has planned in Spain for the next few years.

Maremagnum is one of the jewels in the crown of Klépierre. Located in one of the most touristic enclaves of Barcelona and where a large number of cruise ships disembark every day, the complex was launched in 1995 and was renovated in 2012.

Currently, Maremagnum has a total surface area of 22,542 m2, of which 18,800 m2 are dedicated to commercial activity. More than 154 brands operate in the shopping centre, including the Swedish giant H&M, the majority of the Inditex chains, the US firm Victoria’s Secret and restaurant operators such as McDonalds.

Maremagnum has formed part of Klépierre’s portfolio since 2015 when it completed the purchase of the Dutch company Corio for €7.2 billion. The French group completed the acquisition of Corio after launching a public exchange offer in October 2014 for 93.6% of the shares in circulation.

The objective of the French real estate company with that purchase was to expand its presence in countries such as France, Italy, Spain and Portugal, given that Corio owned complexes in seven counties and in urban centres such as Amsterdam and Istanbul, as well as in cities such as Madrid, Rome, Turin, Utrecht and Berlin.

Specifically, following that merger, Klépierre took ownership of an asset portfolio comprising 178 shopping centres spread over 16 European countries with a combined asset value of €21 billion. In this way, after the merger, Kléperre’s portfolio in Spain comprised around twenty shopping centres, worth more than €2.26 billion, and which generate a profit of €110 million for the group (…).

Good results for the sector in Spain 

In macroeconomic terms, shopping centres are performing well in Spain at the moment. Turnover for these types of assets rose 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 home, leisure and restaurant sectors, with increases of 5%, 3.7% and 2.7%, respectively, according to a report from Cushman&Wakefield.

According to the real estate consultancy, new additions such as customer advisory services and sensory and emotional perception, which create new experiences for users, have helped this increase in shopping centre sales figures and visitor numbers. Nevertheless, consumer electronics stores saw their sales fall by 1.8% last year, with respect to 2016.

The occupancy rate of the assets analysed was 91% in 2017, three points above the level last year. The higher demand for retail space also led to increases in rents in shopping centres, which saw rental prices rise by 1.4% last year.

Original story: Eje Prime (by Custodio Pareja)

Translation: Carmel Drake

KKR Gets Ready To Launch €525M RE Fund In Europe

3 May 2016 – El Economista

The US investment firm KKR is finalising its fundraising ahead of the launch of its new fund, which will focus on the real estate sector in Europe. To date, it has already managed to raise USD 598 million (€525 million).

The usual size of KKR’s investment vehicles ranges between USD 500 million and €1,000 million (approximately €439 million and €878 million), a range that the directors of the US firm hope to reach. The new fund’s key investors include Maine Public Employees Retirement System, which has contributed USD 50 million (€44 million) to the firm’s new vehicle.

Just like the other international investment companies, KKR decided to gradually diversify its portfolio of investments. In fact, its specialisation in the real estate sector culminated in 2011, when the US company created a team dedicated especially to that business segment. In the last year, KKR has strengthened its teams in the USA and Europe focused on the real estate sector.

Opportunities in Europe

In the words of one of the directors of KKR, Scott Nuttal, “We are seeing plenty of opportunities to invest in the real estate segment in Europe”. In fact, currently, the US investment firm owns several assets in France, the UK and Spain.

Its first foray into the property sector in France was made in September 2013, when it acquired an office building in the Paris region of River Plaza. A year later, it bought four shopping centres from Corio for €104 million.

In the UK, the US group’s first operation was the purchase of the three- and four-star hotel chain Queens Moat in 2012. During 2013 and 2014, KKR acquired a package of shopping centres located in Oxford, Glasgow, Sunderland and Birmingham.

In Spain, KKR acquired two shopping centres in September 2014: the Nassica in Madrid and Vista Alegre in Zamora. Those assets were previously owned by British Land and KKR spend €90 million on their purchase.

In the rest of the world, the US investment firm controls several assets distributed all over the world. Specifically, in the USA, it owns eight assets (three shopping centres, one residential development, offices and a portfolio of assets relating to the health sector). Moreover, it owns the World Trade Centre in Melbourne (Australia) and the K Tuin towers in Seoul (South Korea).

Original story: El Economista (by Araceli Muñoz and Rubén Esteller)

Translation: Carmel Drake

Klépierre Is Willing To Invest Another €400M In Spain

16 July 2015 – Expansión

Some “very exciting” years. That is how Luis Pires, the Portuguese CEO of Klépierre’s Spanish division, defines his six years in office.

During this period, the French company, which specialises in shopping centres, has undergone a profound transformation to become one of the leading players in the sector, with 19 properties across the country. “For Klépierre, Spain is a natural market. We entered in the year 2000 with the acquisition of Carrefour’s shopping centres. Now we are very established, with more than a hundred employees and some very dynamic assets. We want to continue growing”, said Pires.

At the end of 2013, Klépierre sold the 126 shopping centres it had bought to Carrefour for €1,900 million; 63 were located in Spain. (…).

In recent years, Klépierre has closed large operations that have converted it into the largest shopping centre specialist in Europe, with assets worth €21,000 million.

Merger with Corio

Last January, following the divestment of those stores, Klépierre purchased one of its competitors, Corio, after launching a takeover bid in October 2014 for €7,200 million. As a result of the fusion of the two groups, the French real estate company became the leader of the real estate sector in Europe, with 178 shopping centres. (…).

The integration also affected Spain, where Klépierre started to manage other new properties, including Príncipe Pío in Madrid and Maremagnum in Barcelona. (…).

The firm’s most recent major transaction in Spain, the purchase of Plenilunio from Orion for €375 million (…), fits perfectly within its strategy to back high profile shopping centres. Following that purchase, Klépierre’s portfolio of retail properties in Spain now comprises 19 premises. And that figure could rise soon.

“We want to expand our presence in Spain. The group is happy with the results in the country and we see potential for growth. If a multi-million euro opportunity presents itself tomorrow, we will go for it, and if we need to invest another €400 million in Spain, then we will”. (…).

During the first half of 2014, sales at its properties in Spain grew by 6.38% on average, with an increase of 9.05% at La Gavia, in Madrid; 10.85% at Nueva Condomina in Murcia; and 9.87% at Ruta de la Plata, in Cáceres.

During the first quarter of 2015, Klépierre recorded revenues of €320.1 million, of which €17.3 million was generated by its Spanish portfolio.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Intu’s €2,500m Plan To Dominate The Retail Sector In Spain

16 February 2015 – Expansión

The group Intu Properties is completing the exercise of its call option over a real estate project in Málaga, as part of a €2,500 million investment program launched by the British company to become the leading shopping centre operator in Spain.

The developer, which last year spent €613 million on the acquisition of Parque Principado (Asturias) and Puerto Venecia (Zaragoza) expects to hand over €41 million to the Peel Group for the purchase of a plot of land near Torremolinos, which has a licence for the construction of a retail and leisure complex measuring 175,000 square metres. According to the company, subsequent investment in this development, which will take three years to construct, will amount to €250 million.

In addition, Intu is considering other options to develop shopping centres in Vigo, Valencia and Mallorca. “Our objective is to become the market leader in the ownership, development and management of large regional (shopping) centres across Spain”, said the group. It is looking to replicate its model in the UK, where it operates 18 retail complexes all over the country.

HSBC estimates that the six shopping centres that Intu now owns or plans to acquire in Spain represent a total outlay of €2,500 million; the bank financed €320 million of the acquisitions in Asturias and Zaragoza. Stephen Bramley-Jackson, an analyst at the entity, said that “Intu’s real estate portfolio in Spain has the capacity to equal that of the current market leader for this type of property, Unibail-Rodamco, in terms of total investment”.

The Franco-Dutch group now has 16 (shopping) centres in Spain, after it sold the ones it owned in Albacete and Torrevieja last year. The average size of their shopping centres is smaller than those of Intu, which seeks to focus its investment in complexes measuring more than 100,000 square metres. In 2014, Unibail-Rodamco generated revenues of €147.1 million from the rental of its Spanish properties. Rental income from Parque Principado and Puerto Venecia amounted to €28.6 million.

The two other major players in this sector are Klepierre and Corio, which have invested around €500 million in shopping centres in Spain in recent years.

To maintain its role as market leader, Unibail-Rodamco has invested €600 million in several projects: it plans to expand two centres in Barcelona and construct two new centres in Palma de Mallorca and Benidorm. However, the firm has put the brakes on the development of the Oceania centre in Valencia.

Unibail and Intu seem set to share the market without competing directly in the same geographical areas. Intu, for example, has not yet launched any projects in Madrid or Barcelona, whereas its rival has a significant number of properties there. Meanwhile, Unibail does not have any centres in Asturias, Zaragoza, Malaga or Galicia. The slow down in the development of Oceania leaves the way open for Intu to develop its gigantic Puerto Mediterráneo centre, measuring 300,000 square metres in the Valencian town of Paterna. The two companies have parallel plans in Mallorca only, although Unibail’s Palma Springs centre is more advanced and looks set to open at the end of 2016.

According to Intu, the opportunity that it sees in Spain to launch new projects is focused on the regions “where ownership of shopping centres is fragmented and there is not currently a dominant destination for retail and leisure”.

With a market value of GBP 4,800 million (€6,480 million) and debt amounting to GBP 4,000 million, according to analysts at Investec, the British company is looking for partners for its Spanish ventures. The pension fund manager Canadian Pension Plan Investment Board acquired 50% of Parque Principado and may participate in other projects, according to HSBC. In addition, Intu Properties is evaluating the possibility of publicly listing its Spanish subsidiary or some of its (shopping) centres to secure foreign capital.

Some analysts wonder whether Intu has arrived too late in Spain, given that property prices are already recovering. The expected rental yield at Puerto Venecia (acquired in December 2014) is 5%, compared with 7.2% for Parque Principado, which was purchased in October 2013.

In terms of the next steps, Intu’s shareholders must approve the group’s purchase of the project in Malaga.

Original story: Expansión (by Roberto Casado)

Translation: Carmel Drake