Merlin Invests €55M to Reposition its Assets in Azca (Madrid)

24 May 2018 – Expansión

Merlin has launched an ambitious renovation plan for two of its buildings located in the heart of Madrid’s financial district, the Azca complex, one of the capital’s most important commercial and business areas.

Specifically, the Socimi led by Ismael Clemente is going to invest €55 million to refurbish the building located at number 83 and 85 Paseo de la Castellana and another property located in Plaza Ruiz Picasso. The company plans to start the renovation work in 2020.

In the property located at numbers 83 and 85 Paseo de la Castellana, the company is planning a complete renovation of the façade and entrance lobby, which will have a triple height ceiling. Similarly, the refurbishment of the building will include the common areas and other installations.

This building, the current headquarters of Sacyr, has a surface area of 15,254 m2 spread over the ground floor, 11 above ground floors and two underground floors. The aim of the Socimi is to strengthen the space dedicated to retail.

Comprehensive renovation

The Socimi will invest €25 million in that renovation project, which will require almost the entire building to be vacated. “It is one of the best buildings in Madrid and we hope that it will be the doorway to the future reconfigured Azca that we are working on”, said Ismael Clemente, CEO of Merlin, speaking a few days ago at the General Shareholders’ Meeting. In addition, Merlin will invest €30 million to reposition the property in Plaza Ruiz Picasso and to create a building with “the most extensive and best-equipped floor space in all of Azca”.

That asset, which has a surface area of 31,576 m2, will have dual access, from Calle Trías Bertrán and Plaza Ruíz Picasso, and will contain various retail spaces. “This building is almost invisible at the moment but that situation will change after the renovation. The location is crying out for it”, said Clemente.

The director explained that the property has an “exceptional” parking provision for an office building, given that, initially, it was conceived as a shopping centre. Merlin is working with the Spanish architecture studio Fenwick Iribarren to renovate this building (…)

These two buildings owned by Merlin live alongside Torre Titania, the skyscraper owner by El Corte Inglés (…). Meanwhile, Castellana 81 and Torre Ederra, located at number 77 Paseo de la Castellana, are owned by the Socimi GMP; Torre Europe is controlled by Infinorsa; whilst Torre Picasso belongs to Pontegadea, the investment vehicle owned by Amancio Ortega (…).

The Landmark I Plan

The renovation of these two properties forms part of a larger project, the Landmark I Plan, which comprises a total investment of €250 million in office buildings over the next four years.

Within the framework of the Landmark I Plan, Merlin is going to handover Torre Glòries in Barcelona and Torre Chamartín. Over the next few years, the Socimi is also going to renovate the properties located at numbers 38 and 40 Calle Alcalá, Castellana 93, Alfonso XI and Princesa 5-7 in Madrid;  as well as Diagonal 605 in Barcelona; and Monumental and Marqués de Pombal 3 in Lisbon.

“Over the next 12 to 18 months, there is going to be more demand than supply in the market due to the volume of obsolete products. At that point, rents will enjoy a sweet moment, and will move significantly upwards”, say sources at the Socimi.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

ECI Sells 40% Of Torre Serrano To Infinorsa For €50M

14 September 2017 – Expansión

El Corte Inglés has sold 40% of the company Iberiafon, owner of the Torre Serrano building in Madrid, to the real estate company Infinorsa for €50 million, according to sources at the distribution giant.

The firm that has acquired the property, which is owned by several European funds, already owned 60% of Iberiafon’s share capital and also owns other buildings in Madrid, such as Torre Europa.

This operation, which forms part of the distribution group’s divestment plan, effectively assigns a value of €125 million for 100% of the property. The building’s current tenants include the Masaveu Group and the firms GVC Gaesco and Beka Finance, amongst others.

Located at number 47 on one of the most exclusive shopping arteries in Madrid, next to the El Corte Inglés department store on Calle Serrano, the tower has 13 floors, which have a combined surface area of 20,000 m2, including a 5,700 m2 car park.

Half of the total space is used for offices, whilst the shopping area occupies 4,300 m2, which will continue to be leased to the group chaired by Dimas Gimeno, according to the press release.

El Corte Inglés closed its last tax year, from March 2016 to February 2017, with a 2.4% increase in its net profit, to €161.86 million. That saw the group record three consecutive years of growth, whilst the gross operating profit (EBITDA) soared by 7.5%, to reach €981 million, according to the distribution giant.

Specifically, the profit, the highest in the last three years, has been affected by €178 million relating to “disengagement plan”, which has affected 1,341 people.

Original story: Expansión

Translation: Carmel Drake

Rents In Azca’s Towers Exceed Those In The Cuatro Torres

12 September 2017 – El Economista

The Cuatro Torres skyscrapers, to the north of Madrid, are no longer casting a shadow over Azca, which is establishing itself as the iconic business district in the city. With views overlooking the Paseo de la Castellana and just a stone’s throw from the Santiago Bernabéu Stadium and the Nuevos Ministerios transport hub, this business centre has managed to renew itself, to avoid being left behind compared with other areas of Madrid. So much so, that the rents for its recently renovated skyscrapers are 16.6% higher per square metre than the most expensive space in the Cuatro Torres, to the north of the city.

Castellana 81, the historical headquarters of BBVA, leads the ranking in terms of rental prices in Madrid, given that its empty space is being marketed for between €27 and €35 per square metre per month. This tower, designed by the prestigious architect Sáenz de Oiza, has been subjected to a comprehensive renovation by its owner, the Socimi GMP, which spent €30 million renovating one of its most iconic properties in Azca and on Madrid’s skyline.

The asset, which became a multi-tenant property when it first came onto the market, has already managed to conquer new companies following the departure of the banking entity, which moved to its own financial city, in Las Tablas, to the north of Madrid. Thus, in the last few months, rental contracts have been signed with Teka and Hays.

At the forefront of design

Castellana 77, which is also owned by the Montoro family’s real estate company and the Singapore sovereign fund, GIC, has been the subject of another of the major renovation projects that has been carried out in Azca and which has positioned the business district at the forefront of design. Its façade is covered with slats that protect it from direct sunlight and which are lit up at night in a diverse range of colours.

The tenant that decides to lease the office space in this building, which spans 16,200 m2 over 18 floors, will be able to choose the colour of the tower, which has more than 200 parking spaces as well as charging points for electric cars. With these features, this property has the second highest rents in Azca, which range between €28 and €33 per square metre per month.

And it is followed closely by Torre Europa, which housed the headquarters of the professional services firm KPMG for many years. Following the move of that consultancy firm to the Cuatro Torres, the tower has been renovated to turn it into the first intelligent and connected office building in Spain. Infinorsa, the majority owner of this skyscraper, which overlooks the Santiago Bernabéu, has invested €20 million on a facelift of the façade, which had not been changed for 30 years, and above all, on the renovation of the interior, which has given a radical about-turn to the essence of this 121m-tall tower (…).

Rents in this tower now range between €27 and €32 per square metre per month. Its renovation has already captivated one of the large international law firms, Freshfields (…). The US firm AOL has also decided to move its Spanish corporate headquarters to Torre Europa, as well as a pharmaceutical company (…).

Torre Picasso, the tallest skyscraper in Azca, at 156m, has not undergone such a comprehensive renovation as its neighbours, but following the departure of the consultancy firm EY to Torre Titania, 15,000 m2 of space there was left vacant. Some of that space in the tower owned by Pontegadea – the investment arm of Amancio Ortega – will be leased to Deloitte, which will thereby become its largest tenant. After several improvements to the property, the highest floors are now being marketed for €31/m2/month (…).

Rents in the Cuatro Torres barely reach €30/m2/month

Nevertheless, in the new financial district located in the north of Madrid and known as Las Cuatro Torres, only one of the towers manages to charge a rent of €30/m2/month, even though the buildings are much younger, given that they were inaugurated between the years 2008 and 2009.

Office space in Torre Espacio ranges between €29 and €30 per square metre per month. The Philippine group Emperador, which owns this skyscraper (…) renewed the image of the tower at the end of last year and launched a new marketing plan with the aim of finding tenants for the 8,800 m2 that were vacant in the building at that time.

Next in the ranking is Torre Cepsa, for which Amancio Ortega (…) paid €490 million last year. It is occupied almost in its entirety by the oil and gas company whose name it bears; the cost of the 15,000 m2 of space that is available ranges between €23 and €28 per square metre per month.

Meanwhile, Torre de Cristal, the tallest skyscraper in Spain, at 210m, is the most affordable of its neighbours, since its available space is being marketed for between €25 and €27 per square metre per month. Last year, KPMG left the Azca area and moved to this property, where it leases around 23,000 m2 (…).

Next door is Torre PwC, leased to the consultancy firm whose name it bears and the five-star hotel Eurostars. Its owner is the Socimi Merlin Properties (…) and PwC reportedly pays €19/m2/month.

The Cuatro Torres complex is now getting ready to receive a fifth tower, Torre Caleido. That property, which is currently being constructed (…), will be leased to IE Business School and Grupo Quirón-Salud (…), who will reportedly pay between €15 and €18 per square metre per month (…).

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake

Deloitte: Spain’s Office Sector Gets A Makeover

3 March 2017 – Expansión

The office markets in Madrid and Barcelona are getting ready to unveil their new image. They are preparing themselves to attract tenants that want not only good locations, but also new, high-quality products that meet the demands of today’s professionals.

At the end of 2016, the stock of offices in Madrid had a combined surface area of 12.9 million m2, whilst in Barcelona, the stock amounted to 5.9 million m2. Although still below the peaks seen before the crisis, the volume of new supply registered in Madrid and Barcelona grew by 56% during 2016 and the market is expected to recover over the next few years.

In this way, the office market will see more than 420,000 m2 of new office space opening up in these two cities between now and 2018, in addition to the 155,000 m2 of space that was added in 2016, thanks to new builds and renovations, according to a report compiled by Deloitte.

Projects underway

Specifically, this year, 180,000 m2 of new office space is expected to become available in Madrid, almost twice as much as last year. For example, Infinorsa, the main owner of Torre Europa, launched a complete overhaul of the building last year, following KPMG’s departure, which, until it moved to Torre de Cristal in March 2016, was the property’s main tenant.

The building – constructed in 1985 – is joining the league of smart skyscrapers, which are tailored to suit the needs of clients in the 21st century.

And just few metres away, on Paseo de la Castellana 77, the real estate group GMP is working on the complete renovation of Torre Ederra, with the renewal of its facilities and the transformation of all 18 of its floors.

What’s more, Madrid is not only renewing its existing supply, it is also welcoming new developments. One of the projects under construction is the property located on c/Estébanez Calderon, which is owned by Colonial. The building, which will have a surface area of just over 10,000 m2, is due be completed in the second half of 2017.

Colonial has also launched another construction project in the business district of Madrid, Specifically, the property located on Príncipe de Vergara will have a surface area of 11,300 m2 and 109 parking spaces.

Also in the capital, the family office Mazabi is restoring a building. The property located on Calle Velázquez 123 has a surface area of 2,346 m2 and benefits from a prime location in the heart of the Salamanca neighbourhood. Meanwhile, Mapfre is renovating a property on Plaza de la Independencia. The building, acquired in July 2015 from the Mutualidad Notarial for €82 million, has a total surface area of 12,000 m2, of which 4,000 m2 corresponds to three underground parking floors with more than 100 parking spaces.

In the same way, Barcelona is also reactivating its new office supply in response to the lack of available space.

According to Deloitte’s report, in addition to the six construction and renovation projects that were launched in 2016, the Catalan Capital expects to see two new projects in 2017, covering a surface area of 37,000 m2 and eight new projects in 2018, covering a surface area of 93,000 m2.

Amongst the new developments underway, the Castellví Group has initiated the construction of a new business complex on the corner of Calles Tánger and Badajoz in the 22@ district. (…).

Also in Barcelona, Colonial has launched a project next to Plaza de las Glòries and adjacent to Avenida Diagonal. (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

The March Family & GreenOak Compete To Buy Ahorro Corp’s HQ

13 April 2015 – Expansión

The financial group has given investors two weeks to submit their final bids. The leading candidates are the March (family), GreenOak, Colonial and Infinorsa.

Ahorro Corporación has prompted a new battle for real estate in the business district of Madrid. And it is proving to be the winner. The financial group is now on the home stretch in the sale of its headquarters, located on Paseo de la Castellana, 89; and the offers received to date have far exceeded the company’s initial expectations. The bids received are approaching €140 million, almost 50% higher than the price offered two years ago (€90 million – €100 million).

Ahorro Corporación and its advisor Aguirre Newman, have now made a shortlist of three candidates to buy the property. According to sources consulted, the investors with the strongest bids are Corporación Financiera Alba, controlled by the March (family), the fund GreenOak, the investor group Infinorsa – which owns Torre Europa – and the real estate company Colonial.

The improved macroeconomic environment (in Spain) and the war waged by these investors to acquire the main properties in Azca, have led to the rise in property prices. The over-supply of funding has also led to greater competition.

The price offered (€140 million) is at the high end of the consideration sought by Ahorro Corporación. Nevertheless, market sources say that the price may decrease slightly – to around €130 million – once the binding offers, which must be submitted in a couple of weeks, have been finalised. Ahorro Corporación has extended the initial deadline due to a request for new information from the interested parties.

100% occupancy rate

The financial group purchased the property from Banco Zaragozano in 2003 for €93.5 million. The building has a surface area of 20,000 square metres, spread over 14 floors and 530 parking spaces. As well as Ahorro Corporación itself, the building’s tenants include Sareb, the French opticians Alain Afflelou and Deloitte. The ground floor of the building is leased to restaurant chains including Lateral, Maki, Wagaboo and New York Burger. The building was constructed in 1977 and refurbished in 2008.

This is not the first battle between real estate investors in recent months. In January, BBVA sold the Torre Ederra, on Paseo de la Castellana, 77 – also in the Azca financial district – for €87 million. On that occasion, the real estate company GMP beat Infinorsa in the final round.

The sale of its headquarters is just another one of a number of divestments undertaken by Ahorro during its redefinition process, which KPMG is advising.

Over the last year, the financial entity has carried out transactions such as the sale of its fund manager, ACGestión to Abanca; the transfer of its infrastructure funds to GEDCapital; and the sale of its securisation manager, Ahorro y Titulización (AyT) to Haya Real Estate, owned by Cerberus.

The group is continuing to focus on its strategic businesses, namely fixed income and equity brokerage and advisory services.

Ahorro is focused on the international diversification of its business in the face of the disappearance or absorption of its former shareholders and clients – the savings banks – by other financial groups.

This group will have to face the remodelling of its shareholder base in the short-medium term, given that some of its shareholders, such as Bankia, will be forced to exit. Other shareholders that holds stakes in the group include: Cecabank, CaixaBank, Kutxabank, Liberbank, BMN, Ibercaja, Unicaja, Abanca, BBVA, Sabadell, Ontinyent and Pollença.

Original story: Expansión

Translation: Carmel Drake

GMP, Infinorsa, GreenOak Make It to the Final Bidding For Saint Gobain Skyscraper

9/12/2014 – El Confidencial

Next great battle is taking place in the Azca complex. One of its real estate jewels, known as Torre Saint Gobain and situated at 77 Castellana street (pictured second from the left), will soon get to know the name of its new owner.

Few days back, an alluring plot in this area was acquired by El Corte Inglés for 136 million euros.

The property up for grabs belongs to BBVA. Of the juicy bids it had received, the bank has picked three finalists: GMP, Infinorsa and GreenOak. Their offers are said to oscillate around €90 million, an upper-level in the 70-to-100 million euro range established by the property’s underwriters, the entity and CBRE Spain.

In the meantime, such industry tycoons as Colonial or Pontegadea were left out of the tender process.

GMP is the owner of the Torre BBVA black tower (first on the left), located just in front of the building for sale. In turn, Infinorsa holds Torre Europa, next eye-catching skyscraper of the office area. However, the most prominent building belongs to aforementioned PontegadeaTorre Picasso.

Sources from the market assure that submitted prices indicate rents of some 35 euros a square meter, in order to obtain good return rates. To compare, today’s prices in the complex vary from 20 to 25 euros per square meter.

The building is nearly 70 meters tall, has 18 stories above the ground level and a 16.000 square meter area. Apart from that, it disposes of six underground stories destined for parking lots, storage rooms, facilities and services.

In 2003, the property was bought by a real estate fund of BBVA for 87.5 million euros. However, more than ten years later, the unit is in need of a comprehensive refurbishment, a cost to be borne by the buyer.

The Ederra building, as it is called inside Azca, once housed the Saint Gobain Cristalería glassware group‘s Spanish headquarters. Last year, the firm’s rental agreement expired and the French tenant moved to its new premises at 132 Principe de Vergara street.

 

Original story: El Confidencial (by R. Ugalde & E. Sanz)

Translation: AURA REE