Tag: Diagonal Mar

Inv’t In Retail Assets Exceeds €1,800M In YTD16

8 September 2016 – Expansión

So far this year, transactions amounting to more than €1,800 million have been completed (in the retail sector). Moreover, the development market is expected to be reactivated.

After years of low and moderate activity in the retail sector, the exit from the crisis represented a turning point and the last two years have been particularly intense in terms of investment in shopping centres and retail parks. In addition, experts forecast that sales growth will continue during 2016, along with the development of new projects.

In this way, whilst investment in the office segment has moderated during 2016, following the significant activity that was registered there last year, activity continues a pace in the shopping centre sector and, records are being broken, such as, for example, with the sale of Diagonal Mar (Barcelona) for €493 million in August.

Growth in income

Thus, during the first eight months of the year, investments amounting to more than €1,800 million have been made. The big four have strengthened their position as advisors to these types of operations. For example, Deloitte was the buy-side advisor in the Diagonal Mar deal, whilst CBRE advised on the sell-side.

Growth in the economy, as well as an improvement in consumption have represented a wake-up call for shopping centres and, in 2016, sales are expected to grow and the promotion of new projects is expected to be reactivated. Moreover, given that sales are growing at a faster rate than the volume of visitors to shopping centres, the ratio of spend per visitor is also improving. Thus, as a result of the good results and the demand for premises, rents in prime shopping centres increased in 2015 for the first time since the outbreak of the crisis, by between 5% and 10% on average, according to a report from CBRE.

Last year, investment in shopping centres and retail parks exceeded all expectations, with a total volume of €2,650 million. In terms of the profile of investors, the Socimis were the major players, with Merlin and Lar leading the charge, along with fund managers.

According to CBRE, although the economic and political uncertainty is concerning buyers, it has not affected investment activity in retail assets. The consultancy firm estimates that 2016 could end with a total investment volume of €2,000 million in the shopping centre sector.

“Opportunistic funds that invested between 2012 and 2014 are busy divesting in 2016, having reached their target returns much sooner than expected. Institutional investors, which have a much lower cost of capital, are now taking over the reins, now that the yield offered by shopping centres in the rest of Europe is lower than in Spain, despite the fact that the evolution of the consumer environment is less favourable than in our country. We have never before enjoyed such a favourable environment for completing transactions in Spain”, explained Javier García-Mateo, Partner in Financial Advisory at Deloitte.

For José Manuel Llovet, the Director of Retail in Spain at Lar, shopping centres have great potential. “Sales are increasing along with consumption, which means that shopping centres are managing to achieve much higher rent increases than offices, which have not ended up experiencing the improvements that were expected at the beginning of the recovery”, explained Llovet.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Deutsche Bank Buys Diagonal Mar For €493M

10 August 2016 – Expansión

Deutsche Asset Management’s real estate investment division for Iberia, a subsidiary of Deutsche Bank, has confirmed its purchase of the Diagonal Mar shopping centre in Barcelona for €493 million.

Although the final price has been adjusted downwards with respect to the non-binding offer presented by the entity (which valued the asset at €505 million), it still exceeds the €451 million that Intu Properties paid for Puerto Venecia (Zaragoza) and the €375 million that Klépierre spent on the acquisition of Plenilunio (Madrid).

The operation also generates significant capital gains for Northwood, which acquired the property from the Irish bad bank Nama for €150 million in 2015. CBRE has advised this operation on the sell-side, whilst Deloitte advised the buy-side. (…).

Original story: Expansión

Translation: Carmel Drake

Deutsche Bank Buys Diagonal Mar For €495M

2 August 2016 – Expansión

Yesterday, Deutsche Bank completed the purchase of the Diagonal Mar shopping centre from Northwood for around €495 million, making it the largest shopping centre transaction in the history of the Spanish market.

In this way, although the final price has been adjusted downwards with respect to the non-binding offer presented by the entity (which valued the asset at €505 million), it still exceeds the €451 million that Intu Properties paid for Puerto Venecia (Zaragoza) and the €375 million that Klépierre spent on the acquisition of Plenilunio (Madrid).

The operation also generates significant capital gains for Northwood, which acquired the property from the Irish bad bank Nama for €150 million in 2015. CBRE has advised this operation on the sell-side, whilst Deloitte advised the buy-side.

Background

The shopping centre, located in district 22@ in Barcelona, has passed through many hands since the real estate company Hines was awarded the mixed use project at the end of the 1990s. The project included a residential area, offices, hotels and a large shopping centre, with a constructed surface area of 100,500 sqm and a gross leasable area (GLA) of 87,000 sqm, as well as 5,000 parking spaces.

In 2002, the German investment fund Deka paid around €240 million for the property, which, was subsequently sold, in 2006, to the Irish investment group Quinlan for €300 million, in its first operation in Spain. Nevertheless, following the burst of the Irish bubble, the asset was taken over by the banks.

Three years after that operation and in a very different economic environment, the property has generated a lot of interest. Specifically, 18 candidates submitted non-binding offers for the property, including Axa, Invesco, Hines, Unibail, the Singapore sovereign fund GIC, Blackstone and the Socimi Merlin, which was the only Spanish company that submitted an offer, for less than €450 million. Only four candidates participated in the final phase: CBRE Global Investment, ECE, Henderson TH and Deutsche Bank.

In order to reposition the asset, Deutsche Bank plans to invest €30 million over four years in a project that includes restructuring the top floor of the shopping centre to create more space for high-end fashion brands (€15 million), refurbishing the other floors with a budget of around €8 million and renovating the centre’s exterior façade for almost €7 million.

With this renovation, the purchaser expects to strengthen Diagonal Mar’s competitive position and increase its gross operating profit (EBITDA) over five years from €20 million in 2015 to more than €26 million.

Impact

The shopping centre, opened in November 2001, was designed by Jean-Louis Solal and the architect Robert A.M. Stern. Diagonal Mar is located in a prime spot, approximately five kilometres north east of the city centre. With more than 200 outlets dedicated to fashion, restaurants, leisure, a bowling alley and other services, the centre has 4,800 parking spaces and an outdoor space: La Terrassa del Mar. Diagonal Mar received 16.7 million visitors last year, up by 2.3% and generated net sales – excluding Alcampo (which falls outside of the transaction perimeter) – of €210 million, up by 8.5%. (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Deutsche Finalises Purchase Of Diagonal Mar For €505M

11 July 2016 – Expansión

Largest operation in the retail sector for 10 years / The German group has outbid the other candidates, including CBRE, ECE and Henderson.

The process to purchase Diagonal Mar is entering the final stretch. With nothing but the final details left to finalise on what will be the largest real estate operation in the shopping centre segment for ten years, Deutsche Bank has taken the lead by outbidding CBRE Global Investors, ECE and Henderson Real Estate, the other three candidates left in the contest.

Market sources have informed Expansión that Deutsche Bank’s offer, for €505 million, could be signed at the end of this month.

If this operation goes ahead, Northwood Investors will get rid of this property, which it acquired from the Irish bad bank Nama (National Asset Management Agency) in 2013 for €150 million.

Changes of ownership

It is not the first time that this property has changed hands. The real estate company Hines was awarded a mixed use project at the end of the 1990s, which included a residential area, offices, hotels and a large shopping centre with a constructed surface area of 100,500 sqm and a GLA of 87,000 sqm, plus 5,000 parking spaces.

In 2002, the German investment fund Deka paid around €240 million for the property, which it subsequently sold to the Irish investor group Quinlan for €300 million in 2006, in its first operation in Spain. Nevertheless, after the Irish bubble burst, this asset was sold to the banks.

On 7 June, a process was opened whereby investors were invited to submit non-binding offers for the property. 18 offers were submitted in total, including one from the Socimi Merlin (the only Spanish firm to participate in the auction). In the end, only four candidates were selected to go through to the final bid: CBRE Global Investment, ECE, Henderson TH and Deutsche Bank.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Incus Capital Puts 3 Shopping Centres Up For Sale

6 July 2016 – El Confidencial

The retail market is on a roll. Whilst a few weeks ago, it was revealed that the British fund Northwood is looking for a buyer for Diagonal Mar, the second largest shopping centre in Cataluña; now, another investor, Incus Capital, wants to unwind some of its positions and raise funds through the sale of three commercial assets, which it purchased three years ago from Morgan Stanley for €30 million.

The assets for sale, which have been baptised as “the good”, “the bad”, and “the ugly” are: El Mirador de Cuenca (Cuenca), Los Alcores (Alcalá de Guadaíra-Sevilla) and Alzamora (Alcoy-Alicante). Morgan Stanley and Grupo Lar purchased these three centres in 2007 for €116 million just before the real estate bubble burst, and sold them to Incus Capital six years later, at a loss of €80 million.

According to several market sources, these three assets are back on the market once again, although no offers have been received yet, since the sales process is still in its preliminary phase. The sources consulted state that Incus will successfully close the operation before the end of the year with significant profits, in other words, for more than €30 million. CBRE is advising Incus Capital on the sale, but neither of the companies wanted to make any comments about it.

The three assets are on the market together once again. “Investors buzzing over Spain are looking for reasonably-sized transactions, and so it makes more sense to sell these assets together than separately. Investors prefer to make one purchase amounting to €30 million, than three amounting to €10 million each”, said one expert in the sector, who explained that, although these are not prime assets, given that they are located in smaller cities, they are dominant in their respective regions and do not face any competition, which makes them very attractive. In addition, Incus has carried out a very active management (of the assets), which means that they now have higher occupancy rates and are in a better condition than three years ago”.

The shopping centre segment has been particularly dynamic in the last two years and, according to experts in the real estate market, total investment in 2016 may exceed the figures recorded in 2015 (€2,000 million). During the first quarter of this year alone, retail investment amounted to between €750 million and €800 million, with several high profile transactions, including the purchase of the Festival Park shopping centre in Mallorca for €100 million and the fund Invesco’s purchase of a portfolio of Eroski supermarkets for just over €350 million.

Incus Capital was created in 2013 and these three shopping centres became its first portfolio of assets in the Spanish market. The firm was created by Andrew Newton (ex-Lehman Brothers) and Alejandro Moya (ex-Morgan Stanley).

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

TH Real Estate Offers €450M For Diagonal Mar

14 June 2016 – Expansión

The owner of the shopping centre Diagonal Mar, the British fund Northwood, has received a binding offer amounting to €450 million from TH Real Estate. This amount almost triples the €160 million that Northwood paid for the Barcelona-based shopping centre in 2013.

It is not the only offer that has been presented, given that TH Real Estate’s proposal was accompanied by two others from funds whose name has not been revealed. The sale of the asset is being brokered by the consultancy firm CBRE, which has declined to comment on the deal, along with TH Real Estate.

Diagonal Mar is the largest shopping centre in Cataluña, with a surface area of 87,500 sqm. Nevertheless, not all of the property is up for sale, given that 27,000 sqm are owned by Alcampo (which will hold onto its space).

Northwood acquired the centre at the worst time of the crisis, in 2013, from the Irish bad bank, which means that it could end up generating capital gains of €290 million in less than three years.

The investor

TH Real Estate is owned by the financial services provider TIAA. The origin of the company dates back to the London-based real estate manager, Henderson Real Estate, which was absorbed by the US group TIAA in 2014 to create TH Real Estate, which is also headquartered in the USA.

TH Real Estate manages real estate assets all over the world, covering 26,800 sqm, for around 50 investment funds and other operating mandates.

As well as TIAA’s assets in the USA, this platform integrates properties worth €83,900 million in total, which makes it one of the largest property managers in the world.

In Spain, TH Real Estate owns several shopping centres, including Islazul, in Madrid, measuring 90,000 sqm; Nervión in Sevilla, measuring 25,000 sqm; and Bulevar Getafe in Madrid, measuring 27,150 sqm. It also owns an industrial park in Alovera (Guadalajara) measuring 42,000 sqm.

The company has been present in Spain since 2007 and its Madrilenian headquarters is headed up by Manuel Martín. In recent years, as well as investments in operating assets, TH Real Estate has also undertaken co-investment projects, such as in the case of the Viladecans outlet (in Barcelona), where it joined forces with Neinver.

Original story: Expansión (by Marisa Anglés)

Translation: Carmel Drake

Northwood Puts Diagonal Mar Shopping Centre Up For Sale For €500M

9 May 2016 – Expansión

The US investment firm Northwood has put the Diagonal Mar shopping centre in Barcelona up for sale, for an estimated price of €500 million, according to sources close to the deal.

CBRE, the agency responsible for the management and leasing of the shopping centre since it was opened in 2001, has been appointed to manage the sale. Sources at the real estate consultancy declined to make any comment. The investment firm bought the shopping centre in May 2014 from a group of investors represented by Avestus Capital Partners, however that retained the asset management of the property.

Diagonal Mar – one of the largest shopping centres in Cataluña – covers a surface area of almost 88,000 sqm, including 27,100 sqm owned by Alcampo.

Opened in November 2001, the centre was designed by Jean-Louis Solal and the architect Robert A.M. Stern. Diagonal Mar is located in a prime position, situated approximately five kilometres to the north west of the city centre, in the 22@ district.

This centre has more than 200 stores dedicated to fashion, restaurants, leisure, a bowling alley and other services, as well as 4,800 parking spaces, provided free of charge for three hours.

Moreover, the shopping centre has an open air leisure and restaurant area, “La Terrassa del Mar”, which is open to customers, neighbours, employees from the office towers and tourists from nearby hotels in the area.

More than 3,000 jobs

Diagonal Mar received 16.7 million visitors last year, which represented an increase of 2.3% with respect to the previous year, and resulted in a 9% increase in sales during the period.

The centre owned by Northwood employs more than 3,000 people. The centre’s current tenants include Media Markt, Fnac, Primark, Zara, H&M and Cinesa, amongst others.
In addition, brands such as Revlon, Napapijri and the toy store Drim have opened shops in the centre within the last year.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake