Investors Unleash a Buying Frenzy on Madrid & Barcelona’s High Streets

28 August 2018 – Cinco Días

E-commerce is having an unexpected effect in that it is boosting the main high streets of Madrid and Barcelona. A number of operators are opening flagship stores to compete with online sales, whilst at the same time, there is a great deal of interest from investors wanting to acquire these types of properties since they represent assets with high returns.

During the first six months of the year, the main high streets of Madrid and Barcelona sparked a buying frenzy amongst real estate investors. They spent €700 million on the purchase of stores during H1 – that figure was 44% higher than they spent during the whole of 2017, according to the High Street report published by the consultancy firm Savills Aguirre Newman.

In an environment of low returns on other investment alternatives, given the context of low interest rates and enormous liquidity in the market, significant capital flows are being channelled towards property. Within the sector, the high street segment (stores on the most commercial streets) of Madrid and Barcelona are attracting investors.

The yield or return in the best commercial neighbourhoods of Madrid and Barcelona amounts to 3.25%, and in secondary areas, that figure rises to between 4.5% and 4.75% (the better the area, the higher the cost of operations and so the lower the returns). In large towns, the yield on prime stores reaches 4%.

Institutional investors (large real estate and pension funds) have been the most active players, accounting for 76% of all operations, according to Savills Aguirre Newman, with the remaining 24% involving insurance companies, private firms, family offices and Socimis (…).

“Institutional investors continue to focus on the best commercial thoroughfares of the large cities, where the purchase tickets typically exceed €20 million”, says the study. Meanwhile, private investors are more active in opportunities in the cities in which they reside, where they are local experts.

Madrid has accounted for a large number of the operations seen in recent months, with the acquisition by the fund Hines of Preciados 13 (..) and Redevco’s purchase of the Mercado de San Miguel. Meanwhile, AEW bought the Mercado de Fuencarral; Generali acquired Preciados 9; Thor Equities snapped up Gran Vía 30, and M&G Real Estate purchased 68 on the same street. Nevertheless, a lot of the investment this year has been due to one transaction involving a portfolio of Inditex stores, which were acquired by the German fund Deka for €400 million.

For investors, another attractive feature of the Spanish market is the improvement in the rents that tenants are paying, which have clearly risen in recent years since the crisis. Prices on Calle Preciados, for example, have risen from €270/sqm/month two years ago to €277/sqm/month in 2018. Gran Vía has also seen a €10/sqm/month increase to €240/sqm/month, according to data from the consultancy firm.

In Barcelona, prices on the most expensive street in Spain, Portal de L’Angel, have grown by 5.5% during the same period to €285/sqm/month. Nevertheless, prices on Paseo de Gracia are rising the fastest, by 15%, to reach €260/sqm/month (…).

One of the major changes that is being seen is the concentration and opening of large flagship stores in the centre of the two cities through which the operators are seeking to counter the strength of online shopping, by offering what they call a shopping experience (…).

In this vein, as Cinco Días revealed last week, the Chinese technology firm Huawei is going to open a flagship store on Gran Vía 48 in Madrid, in the former C&A store. On the other hand, the Sfera brand, owned by El Corte Inglés, is leaving Gran Vía 30, given that it has recently reorganised its business in the centre of the city to focus on its larger and recently renovated megastore on Calle Preciados.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Primark to Open a Megastore in Barcelona’s Plaza Cataluña

12 July 2018 – Idealista

Primark is finally entering the centre of Barcelona. The low-cost fashion company is going to open a flagship store at number 23 Plaza Cataluña, in a building owned by the fund manager IBA Capital, according to confirmation from real estate sources speaking to Idealista News. Until now, the property has been occupied by the El Corte Inglés department store group, but now the Irish chain is going to take over the 7,393 m2 property.

IBA Capital acquired the building in 2013 for €100 million and, over the last six months, since it has been on the market, the asset has attracted attention from the main fashion groups in Europe, including H&M, Primark, Inditex and the Japanese firm Uniqlo.

The building has a gross leasable area of 7,393 m2 and is located at the junction of Plaza Cataluña and Las Ramblas, one of the new commercial thoroughfares in Barcelona following the opening of establishments by the Galician giant Inditex there, as well as by operators such as Mango, Apple and Urban Outfitters.

The building was leased in its entirety to El Corte Inglés until a few months ago, which operated it through a multi-brand concept with firms such as Gap, Tommy Hilfiger, Guess, Diesel, Maje, Sandro, Stefanel and Desigual.

The property was renovated in 1998 and used to house the former headquarters of Banco Central and one of the only stores that the British firm Marks&Spencer used to have in Spain. Following the purchase by IBA Capital, El Corte Inglés and the fund signed a sale and leaseback contract, which expired in 2018.

IBA Capital in the Spanish market

Founded in 2013, IBA is led by Thierry Julienne and Jesús Valderrama, the founders of the investment vehicle. The fund manager has the capacity to manage all classes of real estate assets and its portfolio is currently worth €1 billion.

The portfolio comprises more than a dozen assets situated in first-rate locations in Madrid and Barcelona. Its properties include number 18 Gran Vía, number 9 Preciados and the ABC Serrano shopping centre, which have been acquired for subsequent renovation.

The other assets are office buildings including the property at number 96 Calle Santiago de Compostela, in Madrid and the Tripark Business Park, in las Rozas. Moreover, the fund owns the Vodafone Building, located at number 115 Avenida de América, and the Manoteras Leisure Park, also in the Spanish capital.

Original story: Idealista (by Custodio Pareja)

Translation: Carmel Drake

Banco Santander Sells Office Building in Bilbao to M&G for €50M

23 April 2018 – Mis Oficinas

Banco Santander is continuing with its divestment strategy and, to that end, has reached an agreement with the British fund M&G to sell one of its buildings located in Bilbao, for which it expects to receive €50 million.

Santander has undertaken several divestments in recent years. To tackle the crisis, it sold ten buildings for around €418 million and, in 2008, it carved out other important properties in Boadilla del Monte, in the Community of Madrid, for €1.9 billion.

It is currently holding negotiations regarding the sale of a building that is located on Bilbao’s central Gran Vía for around €50 million. The property spans 4,967 m2 and houses some of Santander’s subsidiaries.

The British fund M&G already owns the Nao building in Barcelona, which it purchased from Axa for €30 million. That property spans 9,000 m2 and is home to the headquarters of Servei d´ Ocupacio de Cataluya. Now, the fund has set its sights on Bilbao where real estate operations are on a roll; BBVA has also got caught up in the fever and is holding negotiations for the sale of its office tower, also located in Gran Vía.

Original story: Mis Oficinas

Translation: Carmel Drake

BBVA Continues to Obtain Juicy Profits from the RE Market

17 April 2018 – Merca2

Bilbao. Gran Vía, 1. One of the most iconic buildings in the Vizcayan capital has been located at that address since 1969. Comprising 21 storeys and measuring 86 m tall, it was the giant of the city until the arrival of Torre Iberdrola. Headquarters, at the time, of Banco de Vizcaya, the entity known nowadays as BBVA has just put the property up for sale. The price? Around €100 million.

This is a new milestone in the process to divest iconic buildings that the entity chaired by Francisco González has been carrying out for several years and which has been generating some juicy profits. This money for the coffers is a godsend for the balance sheet.

Another example, the most recent on the long list, saw the sale of Torre Puig in 2017 to the Catalan perfume group of the same name. That building, which ended up in BBVA’s hands after its acquisition of Catalunya Caixa, was sold for €60 million, at a gain of €30 million.

Also prior to this latest operation on Bilbao’s Gran Vía, which is expected to be closed before the summer, in 2015, BBVA sold the office block known as Torre Ederra in Madrid, located at number 77 Paseo de la Castellana, to Gmp (owned by the Montoro Alemán family and the sovereign fund of Singapore GIC). Spanning 21,000 m2 and spread over 18 floors, BBVA acquired that property in 2003 for €87.5 million from the French group Saint Gobain. The sales price paid by Gmp exceeded €90 million.

BBVA and its €300 million gain

There are several reasons behind BBVA’s decision to divest a series of buildings; some of them have significant value, not only financial but also in terms of their history and architectural beauty.

One of the reasons is to finance the cost of the creation of BBVA City (Ciudad BBVA). The new headquarters, popularly known as La Vela due to its most iconic tower, also comprises another seven horizontal buildings. It cost around €700 million to build and was constructed to reduce by one third the operating cost of having around 6,500 employees spread across a dozen properties, amongst other reasons.

Another building that was sold, for example, was the work of the architect Francisco Javier Saénz de Oiza. Constructed at number 81 Paseo de la Castellana, measuring 100 m tall, and spanning more than 49,000 m2 over 30 storeys, that property was sold in 2007, also to the real estate group Gmp.

That same year, BBVA reduced its portfolio further by placing other buildings in Madrid on the market, such as those located on Calle Goya 14, Calle Alcalá 16 and on Gran Vía de Hortaleza. In total, more than 108,000 m2 of space was sold, which saw these last four buildings generate gains of €300 million for the entity chaired by González (…).

Another operation that was different was BBVA’s sale, at the end of 2017, of its real estate division to the fund Cerberus Capital for around €4 billion. That deal was carried out at a discount of 61%: the gross book value of the 78,000 real estate assets that form part of the deal is €13 billion.

In this case, the operation involved divesting the bank’s exposure to property, in part “imposed” or “recommended” by the Single Supervisory Mechanism (SSM) of the European Central Bank (…).

Which assets are being spared? So far, the former headquarters of Argentaria, located on Paseo de Recoletos in Madrid, which currently houses the headquarters of Fundación BBVA. For the time being, no “for sale” sign has been put up there. But it could only be a matter of time.

Original story: Merca2 (by Valentín Bustos)

Translation: Carmel Drake

BBVA Puts its Former HQ in Bilbao Up For Sale Again, For €100M

13 April 2018 – Eje Prime

BBVA wants to divest one of its last assets in Bilbao, the city where the bank was founded. The financial institution has put on the market the office block that it owns on Gran Vía, in the centre of the financial capital of Euskadi, after several unsuccessful attempts (to sell it in the past). The skyscraper has been displaying the “for sale” sign since March and has been valued at more than €100 million.

The bank chaired by  Francisco González is thereby seeking to get rid of an asset that has more than fifty years of history and that was, until the construction of Torre Iberdrola, inaugurated in 2012, the tallest building in Bilbao, standing 88 metres tall.

The Spanish company hopes to sell the asset, which comprises 21 storeys, during the first half of this year. One of the main features of the building is the mega-store that Primark is planning to open on the first six floors of the skyscraper, according to El Economista.

This rental contract is significant for the operation, given that the fashion retail franchise has signed a contract to lease space in the property for the next thirty years. This agreement means that the future owner is guaranteed of having at least 10,000 m2 of the surface area occupied under a long-term lease contract.

The total constructed surface area of the building amounts to 23,935 m2 and, given that it is located on one of the most central and busiest streets in the city, it may be of interest to both the office and hotel sectors.

There is no doubt that what was once the headquarters of the Spanish bank is going to need a major overhaul. This factor could further define the profile of investor that may be interested in acquiring a tower that for half a century has been considered one of the jewels in the crown of Bilbao’s real estate.

Original story: Eje Prime

Translation: Carmel Drake

Triuva Wants to Spend €100M in Spain Following Its Integration into Patrizia

3 April 2018 – Eje Prime

The German fund Triuva is looking for opportunities in Spain. The company, which has just completed its integration into another German real estate company, Patrizia, is going to allocate around €100 million to the acquisition of new assets in the Spanish market. The group is currently finalising the renovation of a building on Calle Serrano, 90 in Madrid, and has already leased the 6,300 m2 of retail and office space to Maisons du Monde and Natixis, respectively.

The fund is still hungry for new assets in Spain, and so it is considering the acquisition of office buildings, commercial assets and even hotels. Currently, the Spanish arm of Triuva is fully integrated into the Spanish business of Patrizia, which has its offices on the Madrilenian street Calle Génova.

Patrizia purchased the entire Triuva business in November last year, whereby creating a real estate giant of more than €30 billion. Triuva manages some forty funds around the world and has teamed up with more than eighty institutional investors in recent years.

Triuva has around 270 assets under management, worth €9.7 billion. In Spain, the fund owns three properties in prime locations. The first, acquired during the first quarter of 2015 for €70 million, is located on Calle Preciados, 4, and is leased to the fashion chain Sfera, itself owned by the Madrid-based department store group El Corte Inglés.

Last year, the fund acquired the Adidas flagship store located on Gran Vía, 21, also in Madrid, which had been owned until then by Iberfin Capital, which is in turn, owned by Medcap Real Estate. The consideration paid for that operation was not disclosed (…).

Serrano 90, its latest project 

The Serrano 90 building, also owned by Triuva, is located in the heart of Madrid’s golden mile. 70% of its total available space is allocated to offices and the remaining 30% to commercial use; the property also has a parking lot on its lower floors. According to sources in the sector, the fund has spent around €10 million on the renovation of the asset.

At the beginning of this year, Triuva closed the rental of 6,300 m2 of retail and office space. The retail premises have been leased to the French firm Maisons du Monde, which is going to open its first flagship high street store in Madrid, to accompany the store it already has in central Barcelona.

The household furniture and accessories firm is going to lease 1,860 m2 of space in the building spread over three floors (…). Similarly, the property is going to house the headquarters of Natixis, a French corporate and investment bank, whose offices are currently located in Recoletos. Triuva and the banking institution have signed a rental agreement for 2,940 m2 of office space, as well as the terrace and 34 parking spaces in the Serrano 90 building.

Original story: Eje Prime

Translation: Carmel Drake

Medcap Diversifies & Allocates €50M to Alternative Investments & Portugal

19 March 2018 – Eje Prime

Medcap is starting 2018 by making new investments and entering new markets. Diversification and alternative assets are going to be the focus of the group over the coming months, which has just invested €50 million on its entry into Portugal and the launch of a healthcare assets investment division, according to explanations provided by Dimas de Andres, the group’s CEO to Eje Prime.

One of the main operations that Medcap is going to carry out this year, as well as continuing “to keep an eye on opportunities in the prime retail sector, which is one of the fund’s main activities” is going to be the launch of two out-of-town retail parks in the Portuguese market, specifically, in Lisbon and Porto.

The company has invested €30 million in the purchase of 2 plots of land, one spanning 19,000 m2 and the other measuring 27,000 m2, for the complete development of two commercial areas, which are going to be leased in their majority to a supermarket group, according to explanations from Medcap.

Medcap Real Estate, a company owned by the De Andrés Puyol family, has also explained that it is going to back alternative investments this year. The company is currently involved in a healthcare project in the Community of Valencia. With an investment of between €15 million and €20 million, Medcap is going to construct the building with all of the needs that a healthcare operator may have, in order to put it on the market and lease it or resell it.

With these types of assets, the company is going to focus its efforts on Valencia and Cataluña. “We are not afraid to continue buying in Spain: our investments in Madrid and Barcelona are still intact”, explains the CEO of the company. “We are long-termists and we are not afraid of the political situation”, he says.

In addition to its investments, the group is also starting a divestment phase in 2018. The company has already sold the NH Murcia Hotel, located in Cartagena, and a supermarket, also located in Cartagena, for €12.5 million. “At the end of the day, divestment forms part of our business too”, say sources at the company.

MedCap, ten prime assets

At the beginning of 2015, the De Andrés Puyol family constituted Medcap Real Estate to manage its portfolio of assets, formed as a result of the contribution by Inversora del Reino de Valencia of one of its branches of activity, which included all of the urban assets leased or offered as rental properties, as well as all of the shares of the subsidiary specialising in managing operations relating to prime retail.

Medcap’s shareholders have a long history in the real estate business, with extensive experience in the search for, development of and letting of assets. Medcap focuses its activity mainly on the prime segment given the greater stability of that sector. Nevertheless, it also has a portfolio of rental properties for operation such as supermarkets in more secondary areas.

Medcap has a pipeline of assets in different stages of development or study in Spain, the Netherlands and Italy. Its most noteworthy properties include the building at number 80 Paseo de Gracia, where the luxury firm Louis Vuitton has its flagship store in the Catalan capital, as well as the Desigual megastore on Plaza Cataluña and the Apple store on Paseo de Gracia, according to the firm’s annual accounts.

In Madrid, until January, the group was the owner of the Adidas flagship store at number 21 Gran Vía (pictured above), which it sold to Triuvua; and the Louis Vuitton flagship store at number 66 Calle Serrano in Madrid, amongst others. The valuation of Medcap’s prime retail assets exceeds €475 million, according to the most recent valuation performed by the company.

Original story: Eje Prime (by Custodio Pareja)

Translation: Carmel Drake

IBA Capital & CBRE GI Sell Preciados 9 to Generali

15 March 2018 – Eje Prime

A new prime retail operation has been closed in the capital. The fund manager IBA Capital, together with CBRE Global Investment, has closed the sale of number 9 Calle Preciados in Madrid to the real estate vehicle of the insurance company Generali, Generali Real Estate. The Italian group has paid €100 million for the asset, which is going to be home to the future Pull&Bear store on that street, one of the most expensive in Spain for opening a store.

The property, which has a surface area of more than 3,000 m2, was the first building that El Corte Inglés sold in the Spanish capital and fired the starting gun for the policy of real estate divestments by the distribution group.

The asset, located in the so-called Golden Triangle of Madrid, was built in the 1940s. The building overlooks the confluence of the areas of Sol, Preciados and Gran Vía, and has a commercial surface area of more than 2,100 m2, distributed over six floors.

The operation, which has been brokered by the real estate consultancy Colliers, has been in the pipeline for six months, but the parties have not signed the agreement until now. In this way, IBA Capital is continuing to transform its asset portfolio in Spain.

Founded in 2013, IBA Capital is headed by Thierry Julienne and Jesús Valderrama, founders of the investment vehicle. The group has the capacity to manage all kinds of real estate assets and, currently, manages assets with a value of approximately €1 billion.

IBA Capital’s activity is divided into three lines of business. The company is continuing to acquire new assets following a phase of “prior selection of opportunities and a process of internal analysis”, according to sources at the company. IBA Capital also manages and sells assets, as well as controls the Socimi Zambal.

Its current portfolio comprises more than a dozen assets situated in prime locations of Madrid and Barcelona for the most part. They include number 18 Gran Vía and the ABC Serrano shopping centre, which have been acquired for their subsequent renovation and enhancement.

Original story: Eje Prime (by C. Pareja)

Translation: Carmel Drake

Oaktree Sells 49 Luxury Homes on Madrid’s Gran Vía

9 March 2018 – Eje Prime

Oaktree is successfully completing its luxury development on Madrid’s Gran Vía. The US fund has managed to sell the 49 homes that comprise the project, whose keys will be handed over at the end of 2018.

The good health of the residential sector in Spain, accompanied by the country’s period of economic boom, has allowed the fund to take full advantage of this promotion. Not in vain, the commercialisation of the building, located at number 68 Gran Vía, has reached prices of up to €10,000 per square metre, according to El Economista.

The consultancy firm Magnum&Partners has operated as the delegated promoter for this residential project, which first went on the market in September 2016, with prices as low as €6,000 per square metre, for properties without a parking space.

Due to demand, that figure has increased by 10%. The new homes in the renovated property will have surface areas of between 79 m2 and 247 m2. Moreover, the building will have a panoramic roof terrace with a swimming pool, as well as a gym.

The most expensive home in the building has been sold for an approximate price of €3 million. The tenants of the development, designed by the architecture studio Fenwick Iribarren, will be mostly Spanish, given that 87% of the buyers are nationals, and half of them are resident in Madrid.

Original story: Eje Prime 

Translation: Carmel Drake

JD Sports to Open Spanish Flagship Store in Thor Equities’ Puerta del Sol Property

27 November 2017 – Eje Prime

JD Sports is going to open its Spanish flagship store between Puerta del Sol and Calle Preciados. The British sports equipment retailer has reached an agreement with the US fund Thor Equities to lease the building at number 11 on the Madrilenian square, which has a surface area of 1,129 m2. Two years ago, Thor acquired the property from El Corte Inglés for €65 million.

The formal agreement is expected to be signed within the next few weeks so that JD Sports can move into the new store as soon as possible, according to El Confidencial. This operation represents an accolade for Puerta del Sol,  the kilometre zero of Spain’s streets, which has aspirations to become the retail hub of the domestic market. In recent times, the square has undergone some radical changes with the arrival of powerful retail franchises; they are investing in an area that is becoming more expensive by the day.

The British group will occupy its new space under a long-term lease contract, after beating off several important rivals in the negotiation phases, including the multinational sports equipment firm Nike.

Until 2015, the building housed the bookshop of El Corte Inglés. Spread over three floors, it is one of the most sought-after buildings in Puerta del Sol due to its location.

With this operation, Thor will see its asset value rise ahead of a future sale, such as the deal it is already negotiating for number 9 in the same square, where it hopes to build a large shopping centre. In recent years, the commercial value of the centre of Madrid has risen, as shown by the arrival of Primark in Gran Vía and the conversion of the former El Corte Inglés toyshop on Calle Preciados into a Pull&Bear store.

Rents for premises in the area have increased since 2015, now amounting to €300/m2/month in the central core, making it one of the most expensive places to lease a store in Madrid.

Moreover, Thor Equities is the owner of number 5 Puerta del Sol, for which it paid almost €50 million in February, as EjePrime revealed. The New York-based fund owns a portfolio of assets worth more than €9,000 million, spanning more than 20 million m2, in the United States (it owns several assets on New York’s Fifth Avenue), as well as in Canada, Mexico, the Caribbean and Europe, in France and the United Kingdom.

Original story: Eje Prime

Translation: Carmel Drake