Socimi Tander Signs a €55M Loan to Finance New Purchases

11 June 2018 – Eje Prime

Tander Inversiones wants to continue nurturing its asset portfolio and for that it requires capital. The company, owned by a fund in which the Canadian manager Première Alliance holds a stake, has just signed a €55 million loan to carry out new purchases, according to explanations provided by Clara Casales, Property Manager of the Socimi, speaking to Eje Prime.

Last week, the company agreed, under the framework of its Ordinary General Shareholders’ Meeting “to repay and cancel the debt that it has subscribed to date, also cancelling all of the guarantee instruments relating to it, with the aim of refinancing, expanding and unifying the company’s debtor position under a new financing arrangement amounting to €55 million”, explain sources at the Socimi.

Tander will allocate these new funds to the purchase of new assets in the Spanish market. The Socimi has established an investment plan of up to €25 million for 2018 with the aim of expanding to more cities in Spain, with Madrid as a priority, according to comments made to Eje Prime. Tander’s objective is to purchase between three and four assets this year.

The Socimi concentrates its current investments in Barcelona, where it has five assets in prime areas of the Catalan capital. The sixth asset in the portfolio with which it leapt onto the Alternative Investment Market at the beginning of 2018 is located in Santander. When it rang the bell, the value of Tander’s portfolio amounted to €80.3 million.

Now, Tander’s aim is to expand its investments to the main cities in Spain. Some of the areas that the Socimi is analysing include Bilbao, Valencia, Sevilla and San Sebastián, although it is also interested in Málaga and A Coruña. Tander is analysing different operations, but it does not have anything identified yet.

From Vía Laietana to Paseo de Gracia

Tander’s current portfolio in Barcelona is distributed around the main shopping area of the Catalan capital. The Socimi’s largest asset is an office space at number 6-20 Calle Casp, which has a surface area of 3,457 m2. It houses the offices of Cadena SER, owned by Grupo Prisa, just above the Teatro Tívoli.

Very close by, at number 15 Paseo de Gracia, the manager owns a retail premise measuring 527 m2, which is currently leased to FC Barcelona, which has opened a flagship store there. On the same street, at number 27, the Socimi leases a 792 m2 store to the Cos brand, part of the H&M group.

Tander completes its portfolio in the central area of Barcelona with part of number 47 Vía Laietana, an office building in which the Socimi leases 1,100 m2 to Banco Sabadell. This financial institution also leases a 155 m2 branch at number 171 Travessera de Gracia, which is also owned by Tander Inversiones.

Original story: Eje Prime (by Custodio Pareja)

Translation: Carmel Drake

Amancio Ortega’s Real Estate Offensive

2 February 2015 – Expansión

The owner of Zara has bought the former headquarters of Prisa. The founder of Inditex has allocated €1,215 million to the expansion of his non-residential asset portfolio in Spain since 2010 and is now the second largest investor, behind Merlin.

Amancio Ortega’s scouts are back out on the streets of Spain. The founder of Inditex resumed his real estate activity in Spain last week, with the purchase of Gran Vía 32, the former headquarters of Prisa, which is now being refurbished. The property will house the largest store of the fashion retailer Primark in Spain.

Pontegadea, owned by Ortega, acquired the building from Drago Capital for €400 million.

Through this transaction, the owner of Zara, who was advised by Aguirre Newman and Broseta, reactivated his real estate offensive in Spain. Since 2010, Ortega has spent €1,215 million on the expansion of his non-residential assets in Spain (office buildings and high street shops). Pontegadea holds these properties to benefit from their rental yields and to generate profits from their sale.

This outlay makes Ortega the second largest investor in non-residential assets during this period, according to data provided by Real Capital Analytics. He is exceeded only by Merlin Properties, the largest Socimi currently listed in Spain.

Pontegadea has also acquired properties overseas during this time, in the USA, Canada, France, Italy, Germany and Great Britain, amongst others. Altogether, the book value of his investment property amounted to €4,207 million in 2013, the latest data available. His investments outside of Spain amounted to €2,536 million.

The market value of these assets is unknown, but sources close to Ortega estimate it amounts to €6,500 million.

Most of his spending in recent years has been used to buy office buildings, as well as retail outlets and hotels. Pontegadea diversifies its risk across a variety of non-residential assets and has a more stable profile than other companies that invest only in a single segment, such as offices.

The businessman always acquires assets that have intrinsic value, due to their strategic location and because they have first-rate tenants. This allows him to generate an average annual yield of between 4% and 7%, according to market sources, at a time when interest rates are at around 0%.

In some cases, the Galician businessman’s company leases his non-residential assets to the various Inditex brands. Nevertheless, he also leases stores to Inditex’s competitors, such as in the case of the former headquarters of Prisa, which will be leased to Primark. His annual rental income amounts to around €200 million.

Pontegadea pays for the real estate assets it acquires with liquidity that it obtains from the clothing business, above all with dividends from Inditex. Ortega is the majority shareholder of the clothing business; he holds 58% of its total equity. The businessman also relies on debt from credit institutions to pay for his purchases. At the end of 2013, bank debt amounted to €748 million. The real estate company had mortgaged assets amounting to €1,237 million to support this debt.

“Ortega diversifies his assets and has a significant international presence in another sector. As an investor, he benefits by acquiring properties at the best time and he almost always pays in cash” and therefore buys cheap, explains Manual Romera, Director of the Financial Sector at IE Business School.

Pontegadea paid €400 million for the Torre Picasso, when valuations of the Madrid skyscraper prior to the sale were rounding the €800 million mark. Ortega’s offer prevailed over the one made by the American real estate giant Tishman Speyer, owned by the business tycoons Robert Tishman and Jerry Speyer. Pontegadea took ownership of the skyscraper that Esther Koplowitz, shareholder of FCC and the former owner, was loath to sell.

With the Torre Picasso, he is guaranteed rental yields of around 6%.

The real estate company is led by Roberto Cibeira and headquartered in A Coruña. The Board is support by Pontegadea executives in each country, including Marcos Fernández (US) and Manuel Criado (UK). In addition, Ortega engages legal counsel (Broseta) and real estate advisors, such as Aguirre Newman, which advised on the purchases of Torre Picasso, Gran Vía 32 and Rio Tinto.

Original story: Expansión (by Gemma Martínez)

Translation: Carmel Drake

Ortega Purchases Gran Vía, 32

27 January 2015 – Cinco Días

Amancio Ortega will be the landlord of one of Inditex’s competitors, the Primark Group. The founder of Zara has acquired Gran Vía, 32, the building in Madrid where the Irish company will open its flagship store in Spain.

A consortium of funds comprising PSP, APG, Phoenix Group and Sun Capital, led by Drago Capital, has announced the sale of Gran Vía 32 to Pontegadea, the real estate company owned by Amancio Ortega. PSP Investments – the public pension fund of the Canadian armed forces and one of the largest pension managers in this country – holds a 50% stake in Longshore (the company that currently owns the building); the management team of Drago Capital, the company that manages the assets, also holds a minority stake. The remaining 50% is owned by the real estate investment fund Drago Real Estate Partners, in which a number of companies hold stakes, including the Dutch firm APG (the largest pension fund in Europe), the British insurance group Phoenix Group (formerly Pearl Assurance) and the British investment company Sun Capital Partners.

Previously, the building was owned by Grupo Prisa, which sold the property to Drago Real Estate in 2008.

Spokemen of the various companies involved in the sale were not willing to disclose the amount paid, but sector sources estimate that the price would be around €400 million.

The building on Gran Vía 32 has a total floor space area of 36,376 square metres, divided into nine floors above ground, plus the ground floor and basement.

Four of the largest fashion companies in the world will share the building, and its new landlord, in Madrid. Gran Vía 32 already houses H&M, Mango and Lefties (Inditex) stores. The Irish chain Primark plans to open its largest store in Spain in the building at the end of this year, where it will have 9,000 square metres of retail space across three floors.

Primark is owned by the Associated British Foods group and now has 41 stores in Spain, after entering the market in 2006.

Madrid, Barcelona, London

Pontegadea, a company that also receives dividend income that Amancio Ortega earns from Inditex, recorded a profit of €93.3 million in 2013, an increase of 32% compared with 2012, according to information published in the El País newspaper last August, based on data extracted from the company’s accounts filed at the Commercial Registry.

The company recorded rental income of €98.5 million, an increase of €4.3 million. The volume of assets on its balance sheet amounted to €4,519.5 million. The company reduced its bank debt by €73.8 million down to €325.1 million.

In recent years, Amancio Ortega has invested in property in Madrid, Barcelona and London, although he has also done business in New York.

Pontegadea owns several landmark properties, including the Torre Picasso in Madrid, which it acquired at the end of 2011 from the FCC group for €400 million; and a building located on Manhattan’s West Side, which it bought at the end of 2013 for €69 million.

Last year, Pontegadea purchased two buildings from Sareb – the property that used to house the headquarters of Banesto, in Plaza Cataluyna, Barcelona, for €44 million and the building that houses the Apple store in Valencia, for €23.5 million.

Recently, it also purchased Rio Tinto’s headquarters in London. At the beginning of 2013, it completed the purchase of Devonshire House, in London, a building that houses 16,000 square metres of offices and retail space. In 2006, it bought another building in London, 100 Wood Street, for GBP 140 million and in 2011, it acquired an office building on Oxford Street for GBP 220 million.

Original story: Cinco Días (by Alberto Ortín Ramón)

Translation: Carmel Drake