BMO Debuts its New RE Vehicle in Spain with €1bn to Invest

15 May 2018 – Eje Prime

BMO Real Estate Partners is backing Spain with its new real estate investment vehicle. The international fund has just launched Best Value Europe II (BVE II), which will specialise in the high-street retail market. One of the company’s first purchases has been a prime asset in Madrid, which it bought together with another commercial premise in Verona (Italy): for the two properties, BMO paid €39 million.

Nevertheless, BMO’s new vehicle has the financing to spend a lot more. The fund’s initial plan involves creating a portfolio of assets worth €500 million, a figure that it plans to double to €1 billion over the medium-term, according to Business Inmo.

After its initial purchases in Madrid and Verona, the fund has also just closed its third acquisition in Lisbon. BMO has paid €15.2 million for that asset, which is located on Avenida da Liberdade, the main commercial thoroughfare in the Portuguese capital. The property, which has been completely renovated, is designated for mixed use as offices and retail space, and has a total surface area of 2,104 m2.

The path that BVE II will follow will be similar to that of the first vehicle that BMO launched for this market and which focused on finding high street premises on the most prime streets of the main European capitals. The predecessor of this new company has now invested more than 90% of its funds; it owns a portfolio containing 12 assets worth more than €700 million.

Original story: Eje Prime

Translation: Carmel Drake

Aguirre Newman: Tertiary RE Inv’t to Exceed €10bn in 2017

30 November 2017 – Expansión

After the odyssey experienced during the years of the crisis, with the drastic fall in the volume of investment, the tertiary real estate sector in Spain is now going through a stage of consolidation. As such, for the third year in a row, the volume of transactions involving non-residential assets is going to exceed the €10 billion threshold again in 2017.

According to the conclusions of a seminar organised by Aguirre Newman and KWM, which included presentations from some of the main players in the sector, this positive trend will continue for the next few years, despite certain risks in the environment, such as the political uncertainty, the inevitable rise in interest rates in Europe, the ageing population and the salaries that continue to stagnate.

At the meeting, which was attended by the main executives and directors of listed companies such as Merlin, Neinor, Aedas and Colonial, amongst others, as well as by property developers and investors such as Grupo Inmobiliario Roca, Morgan Stanley Investment Management, Grupo Ibosa, ASG Iberia and Stoneweg. Together, they discussed the evolution of the sector and the challenges for 2018, amongst other topics.

“The tertiary investment market is going through a growth consolidation phase after the deep recession that we suffered between 2008 and 2013. According to our estimates, the volume of investment in tertiary assets will exceed €10 billion for the third year in a row in 2017”, explained Susana Rodríguez, Director General of the Consultancy division at Aguirre Newman.

According to data from the consultancy firm corresponding to the first three quarters of this year, hotel assets have been one of the stars of the real estate sector, with investment of €1.9 billion during the 9 months to September, up by 29% YoY. The high street segment also experienced significant growth, of 37%, with an investment volume of €605 million. Whilst, investment in the logistics segment amounted to €665 million, up by 26% YoY. By contrast, investment in offices during the first three quarters decreased by 23% to €1.9 billion and investment in shopping centres decreased by 3% to €3 billion.

Slow down

In terms of the threat of a rise in interest rates in Europe, the experts agree that there will be at least one or two years of stability and that when the time comes for the rate hike, it will be managed in a moderate way: “They do not consider that it will affect the valuation of assets, given that we are in a phase of growing rents”.

Another one of the challenges facing the sector is caused by the political uncertainty generated in Cataluña following 1 October. The speakers agreed that, for another year, the country risk is going to be one of the issues that concerns investors.

Rodríguez said that the figures in the Catalan market are “very positive” at the end of the third quarter. Specifically, the leasing of offices in Barcelona rose by 8% to 265,470 m2 and the average prime rent rose by 9% to €18.25/m2/month.

“It is undeniable that, since October, we have felt a slowdown in the volume of real estate operations. Both business people and investors alike are postponing decision-making whilst they wait to see how the political tensions and uncertainties that are affecting the market today are resolved”, she added.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

CBRE: Real Estate Inv’t Will Exceed €13,000M In 2017

5 October 2017 – Expansión

Real estate investment in Spain is continuing to enjoy happy times, with on-going growth and record-breaking figures.

Between January and September, €10,300 million was spent on real estate assets, up by 58% compared to the same period last year, say sources at the real estate consultancy firm CBRE. Between July and September, the volume of investment moderated with respect to the “extraordinary figures” recorded during the first half of the year, to amount to more than €2,700 million. “This data is very positive and confirms investors’ appetite for the Spanish real estate sector”, said Adolfo Ramírez-Escudero, President of CBRE España.

By type of property, retail assets and hotels are the investment focus, accounting for 26% and 23% of the total, respectively, although all of the assets are experiencing growing interest. “Domestic and international investors are continuing to see Spain as a market with great potential and are showing interest in the full range of asset types”, say sources at CBRE.

In total, the retail sector accounted for €2,700 million of the total investment during the first 9 months of 2017, comprising both shopping centres and high street premises. Meanwhile, operations such as the purchase of Edificio España by the hotel chain RIU for €272 million increased investment in hotel assets during the first nine months of the year, by more than 122% with respect to the same period in 2016, to reach €2,390 million. Another type of asset that saw an exponential increase in its investment was the logistics business, which grew by 153%, to amount to more than €1,500 million. In the case of offices, investment rose by more than 38% to reach €1,542 million, whilst investment in residential assets fell by 32% to €617 million.

Buyer profile

By nationality, overseas investors accounted for 67% of the total volume spent, compared with domestic buyers (22%) and Socimis (10%) – which, although they are Spanish companies, are mostly financed by international capital -. “Last year, Socimis accounted for 43% of real estate investments. Nevertheless, this year, their role has been moderated and they have only participated in 10% of the transacted volume”, explain sources at CBRE.

The replacement of Socimis – which are focusing on managing their portfolios and selling their first non-strategic assets this year – is being led by foreign funds, with new profiles and nationalities closing operations in Spain. Such is the case of the Australian firm Macquarie, which has purchased Empark.

In fact, overseas investment in 2017 has been led by buyers from the Middle East and Asia Pacific, which account for 31% of the total volume of international investment. They are followed by US funds, which account for 18%, and buyers from France, with 17% of the total share, say sources at CBRE. “Overseas investment has increased by 73% with respect to the same period last year, to reach €6,747 million, backed by an increase in investment from most countries, with the exception of the USA and Germany, whose investment volumes have decreased by 36% and 48%, respectively.

Thanks to the good behaviour of the market during the first 9 months of the year, experts predict that 2017 will close with investment of more than €13,000 million, in line with the volumes registered in 2016 and 2015, which were characterised by several large corporate operations.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Ores Socimi Buys 4 Retail Assets In Northern Spain For €63M

4 October 2017 – Eje Prime

Ores is fattening up its portfolio of assets with some new purchases. The company, which had invested just over €60 million in the acquisition of commercial assets in Spain prior to August, has taken its chequebook out again and broken its own record. The Socimi, owned by Bankinter and the Portuguese firm Sonae Sierra, has purchased four commercial assets in the north of Spain for €63 million, according to confirmation from the company itself to Eje Prime.

Ores has acquired four hypermarkets in different parts of the north of Spain. It has purchased one commercial asset in Logroño, on Calle Rio Lomo, which is operated by Carrefour and which has a surface area of 14,912 m2. In Calahorra, Ores has bought a property operated by Eroski, located on the Logroño road, which has a surface area of 10,252 m2.

The Socimi has also carried out purchases in Tolosa and Guernica. In Guipúzcoa, the company has acquired a commercial establishment in Barrio de San Blas, measuring 4,147 m2, whilst in Guernica, it has bought a commercial asset measuring 4,348 m2 in the Txaporta neighbourhood. Both of those properties are operated by Eroski.

“With this acquisition, financed entirely using own funds, the company is continuing to fulfil the investment objectives set out in its business plan and in accordance with the financial parameters that we committed to our shareholders”, say sources at the group.

In recent months, Ores has been expanding its asset portfolio in Spain and Portugal. At the beginning of August, Ores acquired a property, which is leased to and operated by the supermarket chain Pingo Doce, located in Lisbon, Portugal. That asset has a gross leasable area of 2,200 m2 and is located in the Alta neighbourhood (…).

Ores is aimed at clients of Bankinter’s private bank segment. Although its portfolio of assets is limited, for the time being, the Socimi came to the stock market with the aim of investing €400 million in high street retail premises, supermarkets, retail parks (spanning a maximum surface area of 20,000 m2), bank branches and single assets with long-term leases and solvent tenants.

Bankinter and Sonae Sierra launched their new venture into the real estate business in record time. The two groups constituted Ores on 15 December last year, completed the process to create the vehicle and raised sufficient capital to give it a head start and debut on the stock market.

Ores was created with contributions from clients of Bankinter’s private banking segment (in other words, wealthy investors) through a capital increase amounting to €196.6 million. In this way, the private banking clients and some institutional investors control almost 86% of the company’s share capital. Meanwhile, the entity led by María Dolores Dancausa has retained a 10% stake, with Sonae Sierra holding onto just under 4% of the shares.

Original story: Eje Prime (by C. Pareja)

Translation: Carmel Drake

CBRE: RE Inv’t Rose By 38% To €6,100M In H1 2017

4 July 2017 – El Confidencial

Investor appetite for the Spanish real estate sector is continuing to rise and our country is getting ready to close yet another historical year in terms of investment volumes. For the time being, the first half of the year has seen record investment figures, with an investment volume of €6,100 million during the six months to June, up by 38% compared to the same period last year, according to data from CBRE.

There are five mega-operations behind this result, which have determined the strong start to the year: the purchase of the Madrid Xanadú shopping centre by Intu Properties, which paid €530 million for the property; the acquisition of the Buffalo portfolio, worth €300 million, by Blackstone; the sale of Edificio España to Riu for €272 million; the sale by GreenOak of the Acero logistics portfolio to GIC for €243.3 million; and the purchase of the Nueva Condomina shopping centre by Klépierre for €233 million.

And all indications are that between now and Christmas, there will be another similar run of operations, an expectation that allows experts to predict that investment will exceed the €10,000 million threshold for the third year in a row.

Some of the operations called to collaborate in the record-breaking figures are on course, such as Hispania’s sale of its office portfolio, for which the Socimi has received half a dozen offers for around €500 million; the sale of Parque Corredor by Sareb; and several portfolios that the banks are bringing onto the market; whilst others are well underway, such as the purchase of nine retail parks and properties that the South African fund Vukile Property has just agreed – it will acquire a portfolio of retail properties from the joint venture between Redevco and Ares for €193 million.

More appetite, lower returns

The main driver of investment during the first half of the year was the retail segment, which accounted for one-third of total investment (€1,900 million), boosted by the recovery in consumption. The other side of the coin corresponded to the residential segment, which saw a decrease of 20% with respect to the first half of last year, whereas the hotel sector continued to benefit from the boom in tourism and accounted for 29% of the total (€1,750 million).

Nevertheless, all of this buyer appetite means that returns are now at minimum levels…and they are still falling. The logistics and hotel sectors are the only markets capable of offering attractive yields, with average returns of 5.85% and 5.75%, respectively, although those numbers fall well below the figures achieved just two years ago (7% and 8%).

Yields on shopping centres have decreased to 4.25%; office returns have fallen to 4%, whilst the profitability of high-street premises barely reaches 3.5%. Despite this narrowing, international funds, which have been backing our country for a while and other new funds, which are just arriving, have Spain at the centre of their targets and are starring in these record figures.

In this way, whilst last year, the Socimis were the undisputable investment leaders, accounting for 43% of the total, this year, they represent just 14%; meanwhile, investment funds account for 34% of the total, with the US, British and French funds leading the ranking of overseas investors.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

JLL: RE Inv’t Amounted To €8,757M In 2016

13 January 2017 – Expansión

Between January and December, investors spent €8,757 million buying tertiary assets, according to data from the real estate consultancy JLL. This figure is the second highest in the last decade, and is €650 million below the volume of sales and purchases recorded in 2015. That was the year when the invasion of international funds into Spain and the consolidation of the Socimis took the real estate market to figures never seen before, with a volume of investment upwards of €9,400 million.

But, unlike the previous year, 2016 saw the rise of commercial assets (primarily, shopping centres and high street premises) to lead the ranking in terms of real estate investment by segment, accounting for almost €3,000 million (€2,977 million, according to JLL) compared to €2,806 million spent on offices.

Two operations, the purchase of Torre Foster by Amancio Ortega, for €490 million and Merlin’s acquisition of Parque Adequa for €380 million, boosted the investment figure in the office segment, which, although hasn’t completely lost its appeal for buyers, has been relegated to second place due to a shortage of available prime space. (…).

Funds are selling off assets

The opposite is happening in the case of large commercial establishments. International funds’ interest in selling the properties that they bought during the crisis led to a boom in major operations last year, including the sale of the Diagonal Mar shopping centre by Northwood, which was acquired by one of Deutsche Bank’s real estate funds for €493 million; and the sale of Gran Vía de Vigo, for which the Socimi Lar España paid the fund Oaktree €145 million. (…).

In the case of hotels, despite significant one-off sales, such as the operation involving Hotel Villamagna, which was acquired by the Turkish group Dogus for €180 million, overall the investment volume fell from €2,739 million in 2015 to €2,155 million last year. Even so, the figure for 2016 exceeds the investment volume recorded in 2006, which previously held the record, when hotel sales amounted to €1,600 million (out of a total non-residential investment volume of €8,482 million).

Although commercial properties led the ranking as the preferred asset for investors, logistics assets also performed very well. Between January and December, €819 million was invested in logistics warehouses, platforms and centres, according to JLL. This figure practically doubles the purchases completed in 2015, when investors disbursed €434 million on these types of properties, according to the consultancy.

The key behind this success is due to the fact that logistics assets still offer high returns, compared with other properties, such as offices and shopping centres, which have lost some of their investment appeal, due to the high degree of interest in these assets in Spain.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Merlin Buys 50% Of Arturo Soria Plaza Shopping Centre

16 November 2016 – Expansión

Merlin is continuing to make selective purchases following its merger with Metrovacesa. The Socimi, which presented its quarterly results to analysts yesterday, reported a net profit of €255 million during the 9 months to September, compared with losses in €130 million during the same period in 2015 – when it integrated Testa and Obraser. And today, it has announced the purchase of the remaining 50% stake in the Arturo Soria Plaza shopping centre from Acciona, as well as the acquisition of an office building in the same area, for (a combined price of) €44.2 million.

Merlin, which spent almost €30 million last year when it bought half of this shopping centre, located in Madrid, has now acquired the rest of the property a year later. Arturo Soria Plaza, which has a gross leasable area of 6,965 m2, is spread over four floors in total (two floors of shops and another two floors of parking), generates gross annual rental income of €4.5 million and has a 100% occupancy rate.

The firm, which has not consolidated Metrovacesa onto its balance sheet yet, given that the operation was only closed in October, owns assets worth €6,568 million according to the latest accounts. At the end of September, shopping centres accounted for 11.9% of its total asset value, behind offices (35.8%) and high street premises (30.8%).

During his presentation to analysts, Ismael Clemente highlighted Merlin’s presence in the A-1 corridor in Madrid, following its purchase of Adequa for €380 million. The company will complete the purchase of this complex, located in the Las Tablas area, in the northeast of Madrid, in December.

Adequa, which is home to the offices of firms such as Técnicas Reuindas, Renault and Costa Cruceros, has a gross leasable area of approximately 75,000 m2 (currently leased) and a licence to construct another two buildings with an aggregate surface area of almost 45,000 m2, including one 24-storey tower.

In addition, the firm has purchased an office building in Ática (Pozuelo de Alarcón) from Värde. As such, Merlin owns six of the seven buildings in that business park.

With these acquisitions, the company’s real estate portfolio contained 1,013 assets at the end of September, with a gross leasable area of almost 2.5 million m2.

In terms of Merlin’s plans for next year, Clemente explained to analysts that the company is going to analyse several options for its hotel assets, including the sale or spin-off of the business through a similar formula to the one applied in the case of Testa. Merlin’s hotel portfolio has grown considerably as a result of the merger with Metrovacesa.

Original story: Expansión (by R. Arroyo)

Translation: Carmel Drake