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

Neinor Expands Overseas & Finalises Purchase of 3 Plots in Lisbon

26 December 2017 – El Confidencial

The dream of making the leap overseas is increasingly closer to becoming a reality for Neinor. The property developer led by Juan Velayos is holding advanced talks to acquire three plots of land in Lisbon, according to sources familiar with the deal. Provided nothing goes awry, the deal is expected to close between the end of January and the beginning of February.

With this move, the company will fulfil its objective of entering the Portuguese market, where it first placed its focus several months ago in order to take advantage of the recovery happening in the country. The evolution there is expected to be similar to the recovery that Spain has been enjoying in recent times.

Neinor’s objective is to acquire sufficient plots of land to enable it to build 300 homes per year, a volume that would justify the opening of a dedicated office in Lisbon.

The acquisitions that the property developer currently has on the table would justify its debut in the neighbouring country, although the same sources also indicate that, currently, Neinor is in the “due diligence” phase and that all three plots must pass the test for it to go ahead with the agreement.

Although the entry into the Portuguese capital would represent Neinor’s international debut, the property developer regards the move in the context of the entire Iberian Peninsula representing a single market, albeit taking account of the Portuguese cultural, legal and regulatory rules.

In light of this commitment to urban housing, Neinor and its main shareholder, Lone Star, have taken the decision to not transfer to the property developer the plots of land that the fund acquired two years ago in the Algarve from Catalunya Banc.

The plots in question house the Vilamoura tourist complex, which spans a surface area of almost 2,000 hectares and a buildable area of 700,000 m2. More than 5,000 apartments and homes are going to be constructed there and the US fund engaged CBRE last autumn to start selling them.

During the first nine months of 2017, Neinor invested €275 million in buildable land, which means that it now has land for the immediate development of around 12,000 homes. It also generated revenues of €169.4 million, with a gross margin of €40.7 million.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Metrovacesa Puts Merlin On The Shopping Centre Map

29 November 2016 – Expansión

Ismael Clemente presented an ambitious proposal to his shareholders on 15 September 2016. The Socimi, which debuted on the stock market in July 2014, without any assets on its balance sheet, submitted the decision to absorb the traditional real estate company Metrovacesa, to the scrutiny of its investors, led by Santander and BBVA (…).

And having obtained the general support of the shareholders, Clemente is now working on managing the largest real estate company in Spain and one of the largest in Europe, with assets worth €9,400 million and annual gross revenues of €450 million. “The immediate focus is to successfully complete the post-merger program with Metrovacesa, which was registered on 26 October 2016 and whose shares have now been admitted for trading. Technically and legally, the operation has been completed, but now the business side begins, with the launch of three workstreams to manage the integration of the systems, human resources and operations”, said Clemente.

The Executive…defines Metrovacesa’s portfolio as “fantastic”. “And that’s not a coincidence, it is a historical company. It has been punished by relative inactivity in recent years, but it has a incredible intrinsic quality”.

Critical mass

Clemente highlights Metrovacesa’s shopping centre portfolio as the key to understanding the transaction. “For us, the over-riding purpose of the operation is, above all, the shopping centres, which clearly put us on the map. Before, we were in the middle of nowhere and now we have sufficient critical mass to allow us to negotiate better with our commercial operators. We have also grown in the office segment, and although that was not a primary objective, the purchase of Metrovacesa places us in a completely different class in terms of space (in m2), in spectacular locations, which really strengthens the position of leadership that we already held”.

Through the integration of Metrovacesa, Merlin has incorporated 14 shopping centres into its portfolio, worth more than €1,000 million, placing it second in the market behind only Unibail-Rodamco; as well as 37 office buildings covering 574,781 m2, worth €1,835 million.

In terms of challenges for next year, Clemente has earmarked making improvements to the occupancy rates of the offices it has inherited from Metrovacesa and acting “decisively” with respect to its shopping centres to secure occupants and sales.

In addition, Merlin will also look to either create a specialist Socimi or sell its portfolio of hotels as a whole. “We will analyse the book value and decide whether a direct divestment of the portfolio as a whole is possible. If not, we will probably decide to create a subsidiary, look for partners and constitute a company, with a majority, minority or equal stake shareholder structure”.

Following the integration with Metrovacesa, Merlin has 24 hotels with a gross value of €654 million. By number of rooms, the union between the two companies has given rise to a hotel leasing giant with almost 4,500 rooms, behind only Hispania.

In addition, he points to a surprise benefit from the operation with Metrovacesa: the strengthening of Testa Residencial, the subsidiary created with residential assets proceeding from the purchase of Testa: “A by-product has emerged, which has a life of its own. At first, we were exploring the market for potential buyers but, now, we are talking with our shareholder banks and other firms because we believe that this vehicle has the potential to be the star of the residential rental market in Spain”.

Original story: Expansión (by R.Arroyo and R. Ruiz)

Translation: Carmel Drake

Hispania’s Hotel Socimi Evaluates Potential New Partners

14 May 2015 – Cinco Días

Bay, the hotel vehicle created by Hispania and Barceló, wants to strengthen its growth. The Socimi, which specialises in the Spanish holiday hotel segment, is seeking to expand its assets and obtain a critical mass with which to debut, first on the MAB, and then on the main stock exchange.

The head of the hotel sector for Hispania, Javier Arús, has acknowledged that the Socimi is interested in continuing its purchase of assets in the Canary Islands, the Balearic Islands and on the coast. For the time being, the vehicle owns 11 hotels and 3,946 rooms, expandable to 2,151 more, as the result of an agreement with Barceló, which has required an investment of €421 million. According to Arús, this amount (of total investment) will have to increase to €1,000 million to ensure the appropriate “critical mass” for floatation on the stock exchange.

A few weeks ago, Hispania revealed that it had secured €545 million to invest in assets after completing a capital increase, which involved the accelerated placement of 27.53 million shares. This financial muscle will allow it to make the upcoming purchases amounting to €200 million that it announced recently. Within the hotel sector, Hispania announced in November that it was in the advanced stages of studying a transaction amounting to €40 million involving a hotel asset in the Canary Islands with 700 rooms.

At a conference about hotel investment in Spain organised by Garrigues and Cehat (la ‘Confederación Española de Hoteles y Alojamientos Turísticos’ or the ‘Spanish Confederation of Hotels and Tourist Accommodation’, Arús said that Bay is (currently) analysing the entry of family hotel groups, either through cash or hotel assets. “There is a huge opportunity to grow in (terms of the number of) rooms”, said the executive, who pointed to the possible scaling up of Bay’s model within the Spanish holiday segment.

The investment vehicle created by Hispania and Barceló expects to own assets managed by different operators, not just the Mallorcan group. In fact, Arús revealed that Barceló is not expected to operate the next few hotels that the Socimi acquires.

As well as creating the Socimi with Barceló last year (and taking a 80.5% controlling stake), Hispania purchased the Hotel Melia Jardines del Teide for €36 million, two NH hotels in Madrid for €42.15 million and the Hotel Guadalmina in Marbella for €21.5 million, as well as a hotel from the Vincci chain. The company has not ruled out transferring these assets to Bay during the second half of this year.

Original story: Cinco Días (by L.S.)

Translation: Carmel Drake