Merlin Enters the Top 10 Ranking of the Largest Logistics Owners in Europe

19 June 2019 – Cinco Días

Merlin Properties has been a major player in the European office and shopping centre markets for several years. But now, the Socimi led by Ismael Clemente has entered the Top 10 ranking of the largest logistics owners on the Continent, with its portfolio of 1.6 million m2 under management, according to a report about the logistics market compiled by Deloitte.

The Top 10 ranking is led by the listed US firm Prologis (17 million m2); Logicor, the firm controlled by China Investment Corporation and Blackstone, (13.5 million m2); and the fund manager CBRE GI (7.7 million m2). They are followed by the logistics specialists Segro, P3 Logistics Parks and Goodman.

Merlin owns 1.1 million m2 of logistics space outright and holds a 48% stake in a company that owns another 469,000 m2 of logistics space in the port of Barcelona. It also has 1.254 million m2 of surface area under development.

Investment in logistics assets is currently breaking records across Europe and in Spain, in particular, boosted by attractive returns and the boom in e-commerce. With the rising demand, the availability of high-quality warehouses is decreasing, hence the need to build more. According to Deloitte, investment in warehouse purchases amounted to €1.5 billion last year, the second best year ever after 2017, when the figure reached €1.6 billion.

Merlin is planning to invest €484 million in its Best II and Best III logistics funds between now and 2022. Most will be targeted in Madrid and its surrounding areas (Guadalajara and Toledo) and Cataluña, but investment will also be made in Lisbon, Zaragoza, Sevilla and Vitoria.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation/Summary: Carmel Drake

Kronos Puts Land Worth c.€300M Up For Sale

16 May 2019 – Eje Prime

Kronos has engaged Deloitte to sell a batch of land worth between €200 million and €300 million ahead of the change in the economic cycle. In parallel, the property developer is also bidding for several other plots.

Kronos is keen to divest the land that does not fit with its business plan. It may sell the latest batch to a single buyer or split the portfolio into several lots.

Its divestment in Spain contrasts with its commitment to Portugal, where it has just acquired a plot of land in Lisbon for €100 million on which to build 240 homes. In total, the firm plans to spend €300 million buying up land over the next few years.

Since 2015, Kronos has invested €700 million in land with the capacity to build 12,000 homes.

Original story: Eje Prime

Translation/Summary: Carmel Drake

The Sale of FC Valencia’s Mestalla Stadium Stalls Due to Divergent Price Expectations

6 March 2019 – Las Provincias

FC Valencia was hoping to close the sale of its Mestalla stadium by March of this year with the help of Deloitte, but a deal now seems a long way off after the comprehensive selection process undertaken by the audit firm failed to identify any bids that meet with the price expectations of the Mediterranean Club.

FC Valencia was hoping to obtain around €120 million for the plot, funds that it planned to use immediately to resume the construction of its new stadium, whose development has been suspended since February 2009 due to a lack of money. Three final round candidates were selected by Deloitte but none of their offers reached €100 million, let alone €120 million. In fact, all three bids fell well below, ranging between €70 million and €85 million.

Bankia is watching this process closely given that the football club still holds debt with the financial institution (mortgaged on the land). Time is running out for the football club. According to the timetable agreed with the Town Hall, the stadium on Cortes Valencianas must be finished by May 2021 and the former Mestalla demolished by 2023.

Original story: Las Provincias (by H.E. & C. V.)

Translation: Carmel Drake

Regeneration in Madrid: the City’s Office Supply is Set to Increase by 25%

25 February 2019 – Eje Prime

The major urban development projects underway in Madrid are going to multiply the availability of office space in the capital. Madrid Nuevo Norte, the real estate plan from Aena and the work being planned in Las Tablas, Valdebebas and Pegaso will add 3.3 million m2 of office space to the existing supply in the capital. In this way, an increase of 25% is expected, according to a report compiled by Deloitte and reported by Expansión.

Currently, Madrid has an office surface area spanning 13 million m2, of which 9.5% is unoccupied. The average rent in the financial district amounts to €33/m2/month. Together with Barcelona, the city accounts for 85% of all office inventory in Spain, and is the largest business centre in the country by surface area, with more than twice as much space on offer than the Catalan capital.

In the short and medium term, 400,000 m2 of new space will be handed over in Madrid and almost 375,000 m2 in Barcelona, according to Deloitte. For the owners, it is not only important to create new supply, but also to attract new tenants, as well as to increase rents and the valuation of buildings through the transformation of spaces.

Of the major urban development projects underway in Madrid, Valdebebas is probably the most ambitious. It constitutes a business district, called Valdebebas Fintech District, spanning more than 1 million m2, which is also going to include hotel services. Besides that program, there is also a business centre being planned in Madrid Nuevo Norte, with three skyscrapers measuring 250m, 230m and 190m tall, respectively.

The renovation of the space also forms part of the regeneration project. Over the next four years, more than 300,000 m2 of office space in Madrid will be restored. In parallel, the owners of offices in Barcelona are planning to replace buildings with a surface area of more than 58,000 m2.

Original story: Eje Prime

Translation: Carmel Drake

Aena Mobilises Mega-Investments in Barajas & El Prat Amounting to €4.2bn

29 November 2018 – El Confidencial

The largest property developer in Spain is not a real estate company, it is AENA, a company that does not depend on the real estate sector for its business, on the contrary. It has started a race, together with external partners, to mobilise investments worth more than €4.2 billion focused on two projects: the urban development of Barajas and El Prat, annexes of the airports in Madrid and Barcelona. Together they represent the largest real estate project in Spain, and they are very focused on logistics due to the proximity to both airport centres, but also on offices. In office space, alone, the firm wants to promote almost 1 million m2 across the two urban areas.

This contradiction that the largest property developer is not an agent of the real estate sector is due to the fact that AENA is a very large landowner. For years, all of its plots have aged as if they were wine. The airport city in Barcelona, for example, was projected more than 14 years ago. But only now has Deloitte been engaged to look for international funds to mobilise that investment and Garrigues been contracted for legal advice about the monumental project.

And it is a long-term project. In the case of Barcelona, the most advanced of the two, it plans go out 20 years. In Barajas, the proposal is twice as long, 40 years. Moreover, according to sources in the sector, of the 622 hectares of net plots in Barajas, 396 hectares are awaiting development.

Given that the blocks of land are so close to the airports of the two capitals, logistics is the fundamental basis of the proposals. According to the latest report from Jones Lang Lasalle, logistics assets are generating yields of between 6% and 7%, a high rate when interest rates are so low. In the case of Barajas, for example, the planned logistics development represents the bulk of the project, 1.2 million m2 of constructed space, which will be the largest logistics centre in Spain, with the added synergy of connecting the current airport cargo area with the so-called Corredor del Henares.

In terms of office space, the plans also involve enormous dimensions. At El Prat, 362,000 m2 of constructed space is planned, almost as much as in the whole of the 22@ district promoted to date (…). And in the case of Madrid, it is even larger. At Barajas, the volume of planned offices is triple that figure, although it will have to be constructed over four decades.

In addition, there will be hangars, commercial areas, hotels and cargo services for aeroplanes. In practice, it will be like building two new cities, one in Barajas and the other in El Prat.

The immediate plans

The closest projects are the phases that have been planned for the next five to eight years. At the airport in Barcelona, the phase that AENA has called “catalysing” spans the first five years, during which time €387 million will be invested in total to promote almost 400,000 m2 in different types of urban planning projects.

These investments will run in parallel to the airport projects that have already been approved. In this way, AENA has already committed investments amounting to €690 million in El Prat, which include a new satellite terminal (…), to be carried out over the next four years.

This phase is longer at Barajas. It will last for eight years and will involve a forecast investment of €953 million, according to the Adolfo Suárez Madrid-Barajas Real Estate Plan. During this phase, more than 500,000 m2 will be constructed (…).

Original story: El Confidencial (by Marcos Lamelas)

Translation: Carmel Drake

Neinor & Ática Pull Out of the Bidding for the Mestalla Plots

14 November 2018 – Eje Prime

Neinor and Ática have pulled out of the bidding for the Mestalla plots. The two property developers have decided not to formalise their interest in the land that Valencia Football Club has put up for sale during the period for the presentation of non-binding offers, which terminated on Tuesday.

In the case of the property developer led by Juan Velayos, the listed company has decided not to formalise its interest due to the high percentage of land assigned for tertiary use that VFC has put on the market; it is not offering the option for interested parties to bid for each use separately. Of the 100,000 m2 in total, approximately 40% will have to be used for commercial purposes or as offices or hotel rooms.

The withdrawal of Grupo Ática, by contrast, is based on the complexity of the operation. In its case, the candidates, which were thought to include a fund as a financial partner for the Valencia-based property developer, have considered the transaction to be too high risk, according to sources speaking to València Plaza.

The candidates that are still aspiring to take over the land include the Valencian investor group Atitlán, the fund Cerberus, the property developer Aedas and the Valencian construction company Bertolín. Nevertheless, Deloitte is planning a new bidding period during which the candidates who want to continue in the process will have to convert their bids into binding offers, a commitment that they will have to make before the end of the year, on the basis of what has been seen to date.

Until now, the club has not set a price for its plots, but it estimates that the land is worth around €120 million.

Original story: Eje Prime

Translation: Carmel Drake

Cerberus, Aedas & Neinor Compete to Acquire the Mestalla Plots in Valencia

5 November 2018 – Eje Prime

Three great players want to score a goal on the grounds of the Mestalla stadium. The US fund Cerberus and the Spanish property developers Neinor Homes and Aedas Homes are interested in acquiring the more than 100,000 m2 of residential and tertiary land that Valencia Football Club is going to release when it demolishes its stadium, according to València Plaza.

The process to sell the land, which is being led by the consultancy firm Deloitte, has already received interest from up to 25 companies, as the Director General of Valencia FC, Mateu Alemany, explained to the press last week. The value of the plots amounts to €120 million, although the club has not revealed the exact price for which it plans to sell them.

Located on Avenida Aragón, the Mestalla land will have a new owner before long. The funds and property developers that want to invest in this operation have until 8 November to place their non-binding offers on the table, with the obligation to convert them into binding offers by the end of the year.

The interest from Neinor and Aedas in these plots is in line with their investments in the Community of Valencia. In the case of the property developer led by Juan Velayos, the company already has €200 million committed in the region. Last week, Neinor announced the launch of its first 48 homes in the provincial capital, where it is now working to obtain the licence for a second development comprising one hundred homes in Quatre Carreres.

Meanwhile, Aedas is planning to build 500 homes in the Community of Valencia and has already started marketing 120 units, distributed over two blocks, which are going to be built very close to the Ciudad de las Artes y las Ciencias. The US firm Cerberus would undertake this purchase through its property developer Inmoglacier, which opened its first office in the city opposite the Mestalla stadium at the end of October.

Several local players including Atitlán, the investment firm owned by Roberto Centeno and Aritza Rodero, Grupo Ática and the construction firm Bertolín are also on the list of candidates who want to buy Valencia FC’s former grounds.

Original story: Eje Prime

Translation: Carmel Drake

CaixaBank Considers Selling Torre Sevilla Following its Opening

4 October 2018 – Eje Prime

CaixaBank is considering divesting Torre Sevilla. The financial institution is working on the sale of the mixed-used complex a week after the opening of its shopping centre. The bank, which is whereby pushing ahead with the divestment of its real estate assets, will assess offers upwards of €265 million.

Torre Sevilla has a surface area of 77,000 m2 spread over 37 floors for offices and a shopping centre. Although sources at CaixaBank confirm that the sale of the complex has not been initiated, they acknowledge that it is a “non-strategic” asset and that some funds are interested in acquiring it, according to reports from El Confidencial.

If the sale goes ahead, it would be the largest operation in the south of Spain in recent years by type of asset and asking price. The financial institution would retain ownership of the Caixaforum only, which is located on the lower levels of the shopping centre and which officially opened in 2018.

CaixaBank has injected a total of €110 million into the complex over the last six years, bringing the total cost to €320 million. The skyscraper was inaugurated in 2016 and the shopping centre was opened last week. Currently, tenants of the building include the Sevilla Chamber of Commerce, Deloitte, the technological firms Chakray, Everis, Active Business&Technology and Optima, and also Hotusa, which occupies 17 floors of the property with a hotel. The Catalan bank also has several subsidiaries and services on a number of floors.

Original story: Eje Prime 

Translation: Carmel Drake

Azora, CBRE GIP & Madison Create a Fund with €750M & 6,500 Homes

10 September 2018 – Expansión

The real estate companies Azora, CBRE GIP and Madison have constituted a joint venture for residential rental properties in Spain. They have created it with 6,458 homes and €750 million in own funds in order to expand the portfolio to 10,000 homes over the next two or three years.

In a statement, the three companies have announced the joint venture agreement, with an initial asset value of €870 million. The fund’s 6,458 homes are located in 65 buildings and 70% of them are located in the metropolitan area of Madrid.

Azora’s new subsidiary for residential rental has emerged from the recapitalisation of another previous one, Lazora. The investment and integral management of the new fund will be borne by Azora, which has also acquired a minority stake in the entity.

The Director for Continental Europe at CBRE Global Investment Partners, Alexander van Riel, said that “the residential market in Spain is very fragmented, and so this portfolio and its size are unique in that it acts as an important consolidator in the sector”.

“This investment increases CBRE GIP’s exposure to the residential sector in Europe to more than €2.5 billion and is in line with our key strategy: to follow demographic and real estate development trends in markets with a scarcity of products”, added Van Riel.

Meanwhile, the co-head of the securities portfolio at Madison International Realty, Derek Jacobson, said that the investment “represents a unique opportunity to acquire a large-scale and high-quality residential portfolio located primarily in the Spanish capital”.

The head of the residential area at Azora, Javier Rodríguez-Heredia, said that the intention is to hold onto the 6,458-rental unit portfolio for 15 years.

“Rather than opting for the liquidation and sale of these units, through this strategic association with CBRE GIP and Madison, we have not only found a way of ensuring that these homes remain available for families, we are also going to increase the investment in the rental products to build a new supply over the long term”, added Rodríguez-Heredia.

CBRE GIP and Madison have been advised by Jones Day, Pérez-Llorca, PwC, Howden, CBRE, Arcadis and Knight Frank, whilst Kempen, Freshfields and Deloitte have advised Lazora.

Last May, Azora postponed its planned debut on the stock market and, in August, its management contract with the real estate firm Hispania was terminated, as a result of which it agreed to receive €224.5 million from Blackstone, which had acquired 74% of Hispania through a takeover.

Original story: Expansión 

Translation: Carmel Drake

Barings Acquires Five Office Buildings in Avalon Business Park in Madrid

    

Barings Real Estate has acquired five office buildings within Avalon Business Park, Madrid, Spain, as part of a Pan European value add investment strategy on behalf of an institutional investor. The seller is Meridia Capital. The five office buildings comprise 24,495sqm and are best in class in this submarket. The buildings are 97% occupied with more than 20 tenants mainly from the IT/technology and engineering sectors. Additionally, there are 1,291sqm of retail space and 421 underground parking spaces.

The Avalon Business Park comprises in total nine office buildings with 46,952sqm. The business park is located in Julian Camarillo, a 950,000sqm, consolidated office sub-market within the city of Madrid, one of the largest submarkets in terms of take-up in 2018. Formerly an industrial area, Avalon Business Park has already undergone big changes in the past years. It is in very close proximity to the city centre and the airport (15 minutes by car to each). The metro station is within eight minutes walking distance, and the property is served by several bus lines.

“We are delighted to announce our seventh acquisition in Spain and our first investment in the Madrid office market, where we see significant rental and value growth over the coming years. This is a new milestone in the development of our investment strategy in the Iberian Peninsula after a significant capital deployment in both the retail and the logistic markets. As our local team grows, we continue broadening our investment horizon, not only across different asset classes but also in terms of risk profile, from core product to value-add and opportunistic transactions,” Adolfo Favieres, Country Head Real Estate, Spain at Barings, said.

Barings was advised by Dentons (Legal), Deloitte (Financial), Arcadis (Technical) and Knight Frank (Valuation). Meridia Capital was advised by Garrigues and Savills Aguirre Newman.