Loss Of €195M Expected On Imperial Plaza Sale

26 January 2016 – El Confidencial

The Imperial Plaza shopping centre on the outskirts of Zaragoza has been put up for sale, in what may be Spain’s most disastrous real estate operation to date. The asking price has been set at €35 million, significantly lower than the €230 million that it cost to construct the property, which will mean a loss of €195 million. The failure of Imperial Plaza proves that, despite the economic recovery, the property hangover is still affecting the majority of the Spanish market. It is also proof that senseless urban planning can ruin any investment project.

The developer of this shopping centre is the company Procom Desarrollo Comercial de Zaragoza, which is now controlled by the Dutch bank SNS. According to the “Heraldo de Aragón”, Deloitte has been appointed to handle the sale of the asset. The exit plan involves converting the property into a giant “outlet” centre, but that will require additional investment (€23 million), which would mean even lower proceeds from the final sale.

To put the scale of this tragedy into context, it is worth remembering that Procom and Eroski bought the land from the Town Hall of Zaragoza in 2004 for €67 million. Now, 14 years later, the completed centre is being put on the market for half of that figure. In other words, a total disaster.

Imperial Plaza is a failure that comes at the end of a long string of other failures. First, there was the failure of Arco Sur, a new residential neighbourhood in Zaragoza, half of which was going to be VPO (social) housing. 21,000 homes were going to be constructed in total, but only 2,000 were actually built, according to real estate sources. And without Arco Sur, there was no need for a super shopping centre for its residents, such as the one proposed for Imperial Plaza.

The project was also wrecked by urban planning – Imperial Plaza was awarded more than 132,000 m2 of leasable surface area in 2005, when the Town Hall of Zaragoza freed up retail land, a year after it had sold the plots for Imperial Plaza. But that liberalisation of land also benefitted other projects and so Puerto Venecia was constructed. The authorisation of Europe’s largest shopping centre in Spain’s fifth largest city (by population) did not seem to ring any alarm bells with anyone, and especially not with the socialist mayor Juan Alberto Belloch, who governed the city for 12 years. But someone was going to have to pay the price: specifically, the owners of Imperial Plaza. Plaza was big, yes, but Puerto Venecia was built to measure 206,000 m2. (…).

Store closures

As soon as Puerto Venecia opened, the companies that had opened stores in Imperial Plaza with such great enthusiasm started to close their doors. Zara was one of the first to leave, but it was not the only one. The departure of Primark to Puerto Venecia was devastating. Sport Zone, Amichi, Women’s Secret, Massimo Dutti, Merkamueble, Nautalia, Sunglass Hut, Kaymo and Movistar all left too. The last firm to flee was FNAC, which, of course, left Imperial Plaza to move to Puerto Venecia. A shopping centre has never fizzled out so quickly. (…).

Collateral damage

The crisis at Imperial Plaza will have collateral damage beyond its sale at a loss. The Town Hall of Zaragoza is currently stalling Pikolin, one of the largest industrial companies in the autonomous region, regarding its project to create a large “outlet” centre in its former mattress factory, according to real estate sources. If Imperial Plaza wants to reinvent itself as a major discount centre, it will face serious problems, especially if it is up against an identical project in a city that has just 664,000 inhabitants.

Original story: El Confidencial (by Marcos Lamelas)

Translation: Carmel Drake

Encore+ Acquires Shopping Centre In Bilbao

4 December 2015 – Expansión

The real estate fund Encore+ has completed the purchase of the Bilbondo shopping centre in Bilbao. The property has a surface area of 40,000 m2 as well as 2,000 parking spaces, and was previously owned by another international fund, CBRE Global Investors.

Encore+ has closed the purchase through its management company LaSalle Investment, which shall manage this shopping centre alongside Aviva Investors. The establishment’s main appeal is its high occupancy rate in an area of influence that spans one million people.

The property was acquired from Eroski in 2010 by the then real estate arm of ING (now CBRE Global Investors) for around €50 million. Now, Bilbondo has been transfered for €60 million. “We are very happy to be incorporating this real estate asset into our portfolio, whereby expanding our exposure in Spain, where we expect to see considerable growth”, explains Gil Bar, the fund manager for Encore+ at Aviva.

Through this deal, the fund, which focuses its investments in continental Europe, joins the long list of international companies that have closed purchases of commercial assets in Spain in the last year, such as HIG and Kennedy Wilson, amongst others.

Hotel

Meanwhile, Mazabi Gestión de Patrimonios, the Spanish group that manages more than €750 million of real estate assets for several large, wealthy Spanish investors, has closed the acquisition of two hotels, the Iberostar Santa Eulalia in Ibiza and the Iberostar Costa del Sol, in Estepona (Málaga) for €60 million.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake

Lar Buys Eroski Hypermarket In Alicante For €7M

11 June 2015 – Expansión

The Socimi Lar España Real Estate has acquired a hypermarket in the ‘Portal de la Marina en Ondara’ shopping centre (Alicante) from Altadena Invest for €7 million.

As a result of this operation, conducted through its subsidiary Global Brisulia, Lar España has added a gross leasable area (GLA) of 9,924 m2 to its portfolio. The consideration for the transaction has been disbursed “entirely from own funds”.

In October 2014, Lar España acquired a 58.78% stake in the company Puerta Marítima de Ondara, which owns the shopping centre in which the acquired hypermarket, operated by Eroski, is located.

The Socimi has indicated that this purchase “consolidates its position” in the “iconic” shopping centre in the region of Marina Alta (Alicante).

The company has explained that this acquisition “reaffirms” its objective to “realise long-term investments in the Spanish real estate sector, with a special focus on first class commercial assets”.

In this sense, its CEO, Roger Cooke, has underlined that Lar España “has strengthened its position in the face of future decisions to enable greater value to be added to the shopping centre, through the active management of the property”.

Original story: Expansión

Translation: Carmel Drake

Caprabo’s Former Owners Put 33 Supermarkets Up For Sale

7 May 2015 – Expansión

The Carbó, Botet and Elías families, i.e. the former owners of the supermarket chain Caprabo, have decided to cash in (some of) the real estate assets they own through their investment vehicle Caboel.

This company was created by Caprabo’s three founding families in 1986, in order to manage the real estate assets owned by the supermarket chain. The Carbó family and its partners excluded the retail premises, warehouses and other properties from the transaction when they sold the company to Eroski in 2007.

Now, Caboel has put a batch of 33 supermarkets up for sale (around a third of the total number they own), most of which are located in Barcelona and its metropolitan area, with a total surface area of 88,410 square metres. The portfolio, known as Blue Box, contains properties that generate annual rental income of €6.93 million.

All of the premises continue to be leased to Caprabo, under long-term contracts (the majority expire on 31 December 2028 and at the end of 2033). The 33 properties include shops measuring just over 500 square metres and one store measuring 18,500 square metres in El Masnou. In addition to the retail space, the properties up for sale include more than 3,000 parking spaces.

Caboel has engaged the consultant CBRE to manage the sale. This lot has generated a lot of interest in the market, due to its “unique” nature. Possible buyers include several Socimis, the real estate division of Generali, Zaphir and Drago Capital, said sources close to the process. Bids (are expected to) amount to around €100 million, explain market sources.

It is expected that binding offers will be received within the next few weeks and that transaction will close before the summer.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake

Eroski To Resume Expansion And Open 100 Supermarkets Per Year

20 February 2015 – Deia

The supermarket chain will invest €400 million over 4 years.

The retail distribution group Eroski (….) is planning to open one hundred new supermarkets per year – primarily in the north of the Iberian Peninsular – over the next four years. During this period, the Basque group, chaired by Agustín Markaide, expects to invest around €400 million, according to the strategic plan presented by the cooperative group to its shareholders yesterday in an extraordinary shareholders meeting held at the BEC in Barakaldo.

The Chairman of Eroski presented the proposed updates to the Strategic Plan 2013-2016 to the 500 shareholders present, once the definitive agreement for the refinancing of its bank debt has been agreed and stated that “it is time to look to the future, to progress more quickly with the expansion of our new ‘Contigo’ or ‘With you’ campaign and to recover investments to strengthen our most strategic businesses to create a new, more profitable Eroski”.

This more competitive Eroski has focused on its traditional markets in Euskadi, Galicia, Cataluña and the Balearic Islands, as well as in its respective hinterlands. It has also promoted the formula of franchised stores to recover market share lost as a result of the divestments that it has been forced to undertake in Spain to finance its debt payments.

One of Eroski’s key commitments in this new phase is that of extending its ‘Contigo’ commercial model to more than 200 stores under the second part of its Strategic Plan 2013-2016, by opening and refurbishing premises. According to Eroski executives, the reason for this approach is the success that has been obtained through the ‘Contigo’ campaign in all of the locations in which it has been implemented. It currently operates in 66 stores and its results show “a very positive response from consumers, with a 9% increase in sales in supermarkets and a 6% increase in the fully refurbished hypermarkets”. This improvement in sales has exceeded double digits in the case of fresh produce.

In terms of the (more than) one hundred stores per year that Eroski is planning to open over the next few years, a mix of owned stores and franchises is envisaged. The franchise formula will be used in the markets in Andalucía, Extremadura, Madrid and Levante, regions where the group, which has its headquarters in Elorrio, will open shops with a surface area of between 300 m2 and 500 m2.

Another one of its key commitment involves energy saving. The Basque group plans to open the first energetically self-sufficient supermarket in Europe, measuring 2,000 square metres in Gasteiz in 2016, which will be powered using renewable energy sources.

(…)

Original story: Deia (by Xabier Aja)

Translation: Carmel Drake

DIA Pays €146 Mn For 160 Stores of Eroski

6/11/2014 – El Mundo

Food and grocery store chain DIA has purchased 160 establishments from another food network Eroski. The shops operate under the trademarks of Eroski Center, Eroski City and Caprabo and they are located mostly within the Community of Madrid region. DIA sealed the transaction in cash, putting €146 million for the entire package.

The sale will have no impact on the employees as their contracts will be subrogated by the new manager, Eroski told the National Stock Exchange Commission (CNMV).

In 2013, total revenues from the 160 supermarkets amounted to €487 million.

The purchase allows DIA to empower on the Iberian market and fix its market share at 9.5%. In the capital, it holds 9.8% and advances from the fourth to the second position in terms of sales.

In turn, Eroski will intend the proceeds from the sale for trimming its liabilities and improving overall profitability thanks to separation of underperforming assets.

Although the portfolio Grupo Eroski lost on weight, the chain still owns 90 hipermarkets, 831 supermarkets and 448 retail franchises all over the country.

Apart from Madrid’s Community, the stores are found in the regions of Andalusia, Extremadura, Castille – Leon and Castille – La Mancha. Of the 160 establishments, 152 are rented and 8 owned.

 

Original article: El Mundo

Translation: AURA REE

Eroski to Open 300 Franchises

4/02/2014 – Expansion

Eroski decided to expand the network throught franchises while negotiating its massive debt that forces the company to gather centers in its common presence markets, like in the Basque Country, Galicia, Navarra, Catalonia and the Balearic Islands.

With a thousand of own establishments and more than 500 franchised, the supermarket chain led by Agustín Markaide targets at opening more than 300 franchises all over Spain.

Last year, Eroski opened 46 shops following this kind of business structure with a €14 million total investment. In 2014 the inaugurations is bound to be doubled. During this year, the franchising emphasise will be put on Andalusia, Madrid, Castilla-La Mancha and Catalonia, and the two new destinations: Extremadura and Levante.

The administratives of the distribution goup highlight that an average franchise shop will be of 300 – 500 square meters and will be run by enterpreneurs in cities and towns inhabited by more than 1.500 residents. (…).

Eroski is at the verge of finalizing renegotiations on its €2.500 million debt with 22 financial entities. The company hires 38.000 people and cooperates with 12.600 partners.

The group has over 2.100 establishments, including super- and hipermarkets, gas stations, travel offices, optics, sports shops, perfumieries and 21 logistic platforms.

Original article: Expansión (T.F.)

Translation: AURA REE