Tag: intu properties

Marathon Finalises Purchase Of 8 Shopping Centres In Spain & Italy

6 June 2017 – Expansión

The US fund Marathon Asset Management is negotiating the purchase of a new European portfolio to incorporate into its list of real estate investments. The company, one of the star shareholders of the Spanish property developer Vía Célere, together with Värde, is finalising the purchase of a portfolio, known as Bronze, comprising eight shopping centres located in several towns in Spain (2) and Italy (6).

These centres were acquired by the Pradera European Retail Fund between the end of 2006 and the middle of 2009 and their current market value amounts to €326 million. Six of the retail establishments are located in Italy. The largest, Domus Shopping Centre, has a gross leasable area (GLA) of 26,795 m2 and is located in Rome. Moreover, another is located in Formia, measuring 23,422 m2, called Itaca, and the Prato Sardo Shopping Centre, measuring 15,724 m2, is located in Nuoro, on the island of Sardinia. Three of these shopping centres are fully occupied, whilst the occupancy level of the property in Rome is 77%.

Spain

In the case of the Spanish component, Pradera is selling the La Marina shopping centre, located in Benidorm; and the Llobregat centre, located in Barcelona. La Marina covers a retail surface area of 35,599 m2 and its occupancy level stands at around 94%. Meanwhile, the Llobregat centre is smaller, with a GLA of 14,160 m2, and its occupancy rate amounts to around 66%.

The value of the Spanish establishments amounts to around €95 million. La Marina was one of the first properties to be purchased by Pradera’s retail fund, which spent €525 million on nine operations in Spain and Portugal in December 2006.

In fact, initially, Pradero included a Spanish third shopping centre in the sales process: the Travesía de Vigo centre. Acquired in 2007 for €40 million, this property, with a GLA of almost 10,000 m2, is currently worth €26 million. Although Pradera initially planned to sell, in the end, it has decided to exclude it from the batch for sale, explained sources close to the process.

Marathon already owns one shopping centre in Spain, given that at the beginning of last year, it acquired Bahía Azul in Málaga for €18.5 million.

Record investment

The operation by the US fund reflects the interest from real estate investors in shopping centres, after investment figures reached record levels in the last two years.

In 2016, investment in shopping centres amounted to €3,500 million, up by 59% compared to a year earlier. During the first three months of 2017, investment in commercial assets reached €1,365 million, which represented a significant proportion of the total investment in non-residential real estate (€2,326 million). Of that figure, several operations stand out, such as Intu Properties’ purchase of the Xanadú shopping centre, in Arroyomolinos (Madrid), for €530 million.

Recent purchases by international investors include the operation closed by the British management company Schroders, which spent €52.5 million on the acquisition of the Metromar shopping centre, in Sevilla.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

CBRE: RE Inv’t Amounted To €3,417M In Q1 2017

6 April 2017 – Expansión

Investors’ appetite for real estate assets in Spain is continuing in 2017. After two record-breaking years, the pace has been maintained during the first three months of this year, with real estate purchases amounting to €3,417 million, according to the consultancy firm CBRE.

This figure represents an increase of 50% with respect to the same period last year. “The figure in 2017 reflects the fact that interest in buying in Spain has not slowed down at all and that although 2016 closed with a fast pace, there are still a lot of investors out there and a lot of liquidity in the Spanish real estate market. Moreover, the political and economic uncertainties of 2016 have now disappeared”, explained Mikel Marco-Gardoqui, Head of Investment at CBRE España.

Amongst this buyer furore, international investors are playing a leading role, accounting for 70% of the total volume disbursed during Q1, according to the consultancy firm’s report.

Of those, the most active have been the US funds, such as GreenOak, CBRE Global Investors (which acquired the Barclays offices in Plaza de Colón), Hines (the new owner of Popular’s headquarters in Barcelona) and HIG Capital, in terms of tertiary assets, and Värde (the majority shareholder of the property developers Vía Célere and Aelca) and Blackstone in the case of purchases in the residential sector. “International investors are primarily looking for opportunities in retail (both shopping centres and high street stores) and offices, although increasingly more funds are looking for opportunities in residential land and logistics”, said Marco-Gardoqui.

After the US funds, investors from the United Kingdom have been the most active in 2017, accounting for 29% of the total investment figure. Of those, Intu Properties stands out the most. The British company, which specialises in shopping centres, starred in the largest ever purchase in the Spanish retail market, by paying €530 million for the Madrid Xanadú shopping centre, in Arroyomolinos. “Core and core plus investors account for around 40% of the money invested in Spain, whilst those dedicated to adding value represent another 40%; by contrast, opportunistic funds now account for the remaining 20%.

By type of properties, retail assets (shopping centres and high street stores) have been the star products in the investment market, accounting for purchases amounting to €1,365 million in Q1. The sale and purchase of offices amounted to €646 million, according to CBRE’s figures, whilst investment in hotels stood at €564 million, followed by residential assets (€457 million) and logistics properties (€241 million) – the remaining €124 million corresponds to individual assets. “The figure in the hotel sector is noteworthy, given that during the first three months of 2017, the sector has achieved almost 30% of the record-breaking figure it registered in 2016 (€2,000 million)”, said Lola Martínez, Head of Research at CBRE.

Socimis

The Socimis, the other active profile alongside the foreign funds, spent €643 million buying up assets during the first quarter of 2017. Of that figure, Merlin accounted for almost half (around €300 million), with two significant operations: the purchase of a logistics portfolio from Saba and the acquisition of Torre Agbar, after the project to convert that property into a five-star hotel failed to materialise. “The Socimis continue to be major players in the investor market, and they will continue that role, with their respective specialisation strategies”, predicts the expert from CBRE.

Whilst international funds have starred in operations amounting to more than €100 million, domestic investors (primarily family offices) have become the major competitors against the insurance companies in operations ranging between €30 million and €40 million, accounting for 11% of the total volume, according to Marco-Gardoqui.

After a record investment volume of €14,000 million in 2016, the experts believe that this year, the figure will amount to around €10,000 million, which was the volume achieved at the height of the boom (2007).

Original story: Expansión (Rocío Ruiz)

Translation: Carmel Drake

Deutsche Bank Buys Diagonal Mar For €495M

2 August 2016 – Expansión

Yesterday, Deutsche Bank completed the purchase of the Diagonal Mar shopping centre from Northwood for around €495 million, making it the largest shopping centre transaction in the history of the Spanish market.

In this way, although the final price has been adjusted downwards with respect to the non-binding offer presented by the entity (which valued the asset at €505 million), it still exceeds the €451 million that Intu Properties paid for Puerto Venecia (Zaragoza) and the €375 million that Klépierre spent on the acquisition of Plenilunio (Madrid).

The operation also generates significant capital gains for Northwood, which acquired the property from the Irish bad bank Nama for €150 million in 2015. CBRE has advised this operation on the sell-side, whilst Deloitte advised the buy-side.

Background

The shopping centre, located in district 22@ in Barcelona, has passed through many hands since the real estate company Hines was awarded the mixed use project at the end of the 1990s. The project included a residential area, offices, hotels and a large shopping centre, with a constructed surface area of 100,500 sqm and a gross leasable area (GLA) of 87,000 sqm, as well as 5,000 parking spaces.

In 2002, the German investment fund Deka paid around €240 million for the property, which, was subsequently sold, in 2006, to the Irish investment group Quinlan for €300 million, in its first operation in Spain. Nevertheless, following the burst of the Irish bubble, the asset was taken over by the banks.

Three years after that operation and in a very different economic environment, the property has generated a lot of interest. Specifically, 18 candidates submitted non-binding offers for the property, including Axa, Invesco, Hines, Unibail, the Singapore sovereign fund GIC, Blackstone and the Socimi Merlin, which was the only Spanish company that submitted an offer, for less than €450 million. Only four candidates participated in the final phase: CBRE Global Investment, ECE, Henderson TH and Deutsche Bank.

In order to reposition the asset, Deutsche Bank plans to invest €30 million over four years in a project that includes restructuring the top floor of the shopping centre to create more space for high-end fashion brands (€15 million), refurbishing the other floors with a budget of around €8 million and renovating the centre’s exterior façade for almost €7 million.

With this renovation, the purchaser expects to strengthen Diagonal Mar’s competitive position and increase its gross operating profit (EBITDA) over five years from €20 million in 2015 to more than €26 million.

Impact

The shopping centre, opened in November 2001, was designed by Jean-Louis Solal and the architect Robert A.M. Stern. Diagonal Mar is located in a prime spot, approximately five kilometres north east of the city centre. With more than 200 outlets dedicated to fashion, restaurants, leisure, a bowling alley and other services, the centre has 4,800 parking spaces and an outdoor space: La Terrassa del Mar. Diagonal Mar received 16.7 million visitors last year, up by 2.3% and generated net sales – excluding Alcampo (which falls outside of the transaction perimeter) – of €210 million, up by 8.5%. (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

CPPIB Buys 50% Of Puerto Venecia From Intu For €225.4M

3 June 2015 – Expansión

The Canadian fund has paid €225.4 million to the British real estate company Intu Properties for half of Puerto Venecia, the largest shopping centre in Spain.

Intu Properties and the Canadian Pension Plan Investment Board (CPPIB) have strengthened their partnership in Spain, through the creation of a joint venture to manage Puerto Venecia, the largest shopping centre in the country, located in Zaragoza, which has a constructed surface area of 200,000 m2.

According to a statement issued yesterday, CPPIB is going to pay €225.4 million to Intu for 50% of Puerto Venecia, although – “the operation is subject to certain conditions, including regulatory approval”.

The valuation of the shop and restaurant complex, located in Zaragoza, is the same as the one used by Intu in January when it purchased 100% of the property from the fund Orion Capital for €451 million. Then, the British real estate company announced that it was going to look for a partner, and several analysts identified CPPIB as a possible ally. PwC has advised the Canadian pension fund in its purchase.

Intu and CPPIB already share the ownership (50% each) of the Asturian shopping centre Parque Principado, which they acquired in 2013 for €162 million from CBRE and Sonae Sierra. Therefore, the Puerto Venecia operation “extends this alliance to include two of the ten largest shopping centres in Spain” said Intu Properties.

The British bank HSBC has financed the acquisitions of Puerto Venecia and Parque Principado with two mortgage loans amounting to €320 million in total.

Andrea Orlandi, CPPIB’s Director of RE Investments in Europe, sais that “the joint venture with Intu represents an opportunity to increase the fund’s presence in Spain’s commercial real estate market. Puerto Venecia complements our European portfolio”.

According to David Fischel, CEO at Intu, the revenues from this transaction will allow his company to develop other projects in Spain. The real estate firm has acquired a plot of land in Malaga for the construction of a shopping centre measuring 175,000 m2 and it is also evaluating options to develop other projects in Vigo, Valencia and Palma de Mallorca.

Intu intends to involve partners in these new projects as well, and may even create a holding company for its Spanish properties in the future, and list it on the stock exchange.

Intu’s share price fell by 2% during trading in London yesterday. Its market capitalisation amounts to GBP 4,380 million (€6,050 million).

Original story: Expansión (by Roberto Casado and Rocío Ruiz)

Translation: Carmel Drake

Savills: Bumper Crop Of RE Mega-Transactions In 2015

27 May 2015 – Cinco Días

Sales amounted to €1,340 million during the first three months of 2015.

“Lots of investors are interested in Spain” say Savills.

2015 is going to be a bumper crop year for large real estate transactions. Given the lethargy in the market in recent years, due to the economic crisis and lack of financing, the non-residential sector is experiencing the start of a new golden age. Investors do not want to miss out on the emerging recovery in the sector and showing their commitment to Spain.

Mega-transactions in Spain increased fivefold during the first quarter of the year with respect to the same period in the previous year, according to a report from the real estate consultancy Savills. During the first three months, these acquisitions (those over €100 million) amounted to €1,340 million and involved four purchases.

These large transactions accounted for 60% of all transactions. With respect to all types of transactions in the tertiary sector (including small deals as well), Spain is ranked fourth in terms of the increase in investment volume in the European market, which is led by the United Kingdom and Germany. This segment includes office buildings, retail stores, shopping centres, hotels, as well as logistics and industrial warehouses.

The largest transaction at the beginning of the year in Spain was the sale of the Puerto Venecia shopping centre for €451 million, which was purchased by the British company Intu Properties. That was followed by the purchase of the Madrid building at Gran Vía, 32, which houses shops such as H&M and Primark (from Autumn 2015), for €400 million. In that case, the purchaser was Pontegadea, the family office of Amancio Ortega, owner of Inditex, and the vendors were various investors led by the fund Drago Capital.

The third transaction was the sale of the Plenilunio shopping centre, for €375 million, purchased by Klepierre, the French store management company, from Orion Capital. Finally, in fourth place was General Electric’s real estate portfolio, which was sold to the fund Meridia for €120 million.

Better prices than in London and Paris

“Lots of investors are interested in Spain. Change is apace in the country and moreover, in other markets, such as in Paris and London, assets are more expensive. Private equity firms are now focusing on Southern Europe. Spain is the best candidate because a change in the cycle has begun and prices are still attractive”, says Luis Espadas, Director of Capital Markets at Savills.

Spain also benefits from the macroeconomic conditions in the market. The prospects for growth are positive in Europe, given the low oil prices, the injection of liquidity by the European Central Bank and the depreciation in the euro against the dollar, highlights the report. In fact, the volume of investment in commercial assets amounted to €49,700 million during the first three months on the European Continent, i.e. 38% higher than the average of the last five years.

“One of the factors that is making Spain more attractive is the price of assets, which are 40% lower than before the crisis. In other markets, prices are already very high. Moreover, the banks have started financing transactions again”, says Espadas. This report from the consulting firm predates the results of the municipal and regional elections and therefore the effect that the electoral swing to the left will have on institutions is unknown. With an exceptionally good start to 2015, the trend seen last year continues, when the record for this type of sales was broken, with transactions worth more than €7,000 million, a level not reached since 2008. “The arrival of Socimis (Listed real estate investment companies) has been one of the main factors driving this improvement in the market” says the report.

In Europe, the growth of these mega-transactions increased by 18% with respect to the first quarter of 2014. Investors in the UK, USA and Germany accounted for 62% of movements. The largest transaction in the sector was the purchase of a portfolio of student residences (halls) in the UK, for which the Canadian pension fund CPPIB paid €1,500 million. It was followed by the acquisition of Corio’s shopping centres in France following its merger with Klepierre. In Italy, the sovereign fund Qatar Holdings paid €1,000 million to the property developer Hines and the insurance company UnipolSai for 60% of the financial district Porta Nuova in Milan.

“Given the low interest rates and the ECB’s purchase program, real estate demand is going to continue to grow and volumes are expected to reach or exceed the levels seen in recent years, especially in the strongest markets such as Germany and France and those that are recovering, such as Spain, Ireland and Holland, says the report from Savills.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Objects Of Desire: 16 Shopping Centres Up For Sale

14 May 2015 – Expansión

Between January to March (2015), funds and Socimis have invested €988 million in the purchase of large shopping establishments; and that figure that could reach €2,500 million for 2015 as a whole.

The 682 shopping centres in operation in Spain have become objects of desire for all investors interested in the Spanish real estate market. Thus, between January and March, these investors spent €988 million on the purchase of all kinds of shopping centres. “In January 2014, institutional investors did not want to purchase in Spain and now we have a very wide range of buyers: from institutions, which do not mind paying more for a good property, to opportunistic funds”, explains Vitor Pacheca, Senior Consultant of Retail Capital Markets at JLL España.

Last year, the Spanish market was the fourth favourite in Europe for investors interested in shopping centres and retail parks, with transactions as significant as Puerto Venecia in Zaragoza, which the British group Intu purchased for €451 million, having purchased Parque Principado in Asturias in 2013. Those are not the only real estate projects being pursued by the British real estate firm in Spain; it is currently developing two (shopping) centres, one in Malaga and the other in Valencia.

The most high profile case in 2015 has been Plenilunio. The Madrilenian property was acquired by the French operator Klépierre for €375 million on 17 March. The As Termas shopping centre in Lugo also changed hands; it was purchased by the Socimi Lar España. And AireSur in Sevilla was acquired by the fund CBRE Global Investors. “Last year, 28 (shopping) centres were bought and sold, representing a total investment volume of €3,200 million. In 2015, we expect that more centres will be sold but for a smaller total amount, around €2,500 million”, says Pacheco.

Although the flurry of transactions is not expected until the final quarter of the year, several shopping centres are scheduled to change owner shortly. “There are around 16 shopping centres for sale in Spain at the moment. We estimate that as many as 30 such assets may change hands between now and the end of the year”, say sources at JLL.

Doughty’s centres

That is the case of El Rosal in León and Plaza Éboli (pictured above) in Pinto (Madrid). The private equity firm Doughty Hanson is finalising the sale of those two properties, whose ownership will be transferred over the next few weeks.

The Plaza Éboli shopping centre, which was opened in 2005 and measures 62,000 m2, will be acquired by the US investor HIG for €30 million. In the case of El Rosal, which measures 151,000 m2, the new owner will be the Socimi Lar España, which has already purchased other shopping centres such as L’Anec Blau in Castelldefels (Barcelona) and Albacenter in Albacete. The Socimi will pay €90 million for El Rosal.

Another one of the 16 shopping centres up for sale is Moraleja Green in Alcobendas (Madrid). The property is on the market again after it was sold to ING by CBRE Global Investors last year. Now, the real estate division of the Dutch bank is putting it up for sale, after paying €68 million.

The Heron City shopping centre in Barcelona is also up for sale; it opened in 2011 and occupies a surface area of 101,000 m2, of which 36,358 m2 is dedicated to retail space.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

UBS Finalises Its Purchase Of The Zielo Shopping Centre

20 March 2015 – Expansión

The Swiss bank’s real estate fund is offering €73 million for the Madrilenian shopping centre, exceeding the expectations of its current owner, Hines, which has invested more than €100 million in its construction.

Another shopping centre is expected to change hands soon. After the French company Klépierre closed its purchase of the Plenilunio shopping centre in Madrid this week, another Madrilenian property will soon have a new owner.

The property in question is the Zielo shopping centre, located in the town of Pozuelo de Alarcón, in Madrid. The building was designed by the real estate company Hines, which took out a loan of €50 million to construct the property. Conceived at the height of the boom (it was opened in October 2009), Hines invested more than €100 million in its development.

The centre, designed by the architect Alberto Martín Caballero, has a surface area of 50,000 square metres, of which 15,537 m2 is dedicated to retail over three floors. It also has more than a thousand parking spaces, the majority of which are indoors.

Five years later, Hines put the “for sale” sign up on its Madrilenian shopping centre in January. The initial asking price was set at €65 million. The Houston-based real estate company decided to sell the property through a restricted (tender) process rather than open it up to all of the interested investors in the Spanish market. Thus, its advisors reached out to the large Spanish Socimis (Merlin Properties, Axia Real Estate and Lar España), as well as the more institutional investment funds such as Deka Inmobilien and the (fund) manager Tiaa Henderson. In the end, the real estate fund owned by the Swiss bank UBS made the best offer and is now negotiating the finer details of the transaction in an exclusive process with Hines.

According to sources close to the process, UBS is offering €73 million. A price that means that the yield on the transaction amounts to less than 5%, a very low figure compared with the figure of 10% that was achieved on the first deals involving the sale and purchase of shopping centres following the burst of the bubble, in 2013.

Zielo Shopping is not the only commercial property that is currently on the market in Spain. According to Deloitte Real Estate, around 80 shopping centres will come onto the market over the next 12 months. Some transactions, such as the purchase of Puerto Venecia in Zaragoza and Plenilunio in Madrid have already been closed. In total, €3,500 million could change hands in this market alone.

Possible buyers include the British real estate company Intu Properties, which is finalising a call option on a real estate project in Málaga, as part of its €2,500 million investment program, and the fund manager CBRE Global Investors, which plans to invest €600 million in shopping centres and retail outlets in the Spanish market.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

CBRE To Invest €600M In The Spanish Market In 2015

16 March 2015 – Expansión

Real estate assets / The former subsidiary of ING is looking to improve its portfolio through refurbishments and asset purchases.

After more than two decades in the market, the fund manager CBRE Global Investors has become a major player in the Spanish real estate sector thanks to its intense asset rotation policy.

The company, which manages property in this market (primarily shopping centres) worth €2,000 million, closed the sale of various assets last year: Urbil, in Guipúzcoa, which it sold to Axa Reim for €60 million; Alcalá Magna, in Madrid, which it sold to Incus Capital for €85 million; Gran Vía de Vigo, which it sold to the US fund Oaktree for €100 million and Modoo, in Asturias, which it sold for €45 million.

In 2013, CBRE Global Investors was involved in the first major sale of a shopping centre following the outbreak of the crisis, when it sold Parque Principado in Asturias for €141.5 million to the British real estate company Intu Properties. “Between 2008 and 2014, we rotated the portfolio we had created during the previous two decades. Thus, we sold Parque Principado, which was a mature asset, but we purchased other assets. In total, we bought and sold assets worth €1,000 million last year”, explains José Antonio Martin-Borregón, CEO at CBRE Global Investors in Spain and Portugal.

The (property) management company made its first investments in Spain between 1992 and 1993 and three years later, it opened its first offices. Through its five funds, it currently manages 19 shopping centres, including Bilbondo in Bilbao; Vallereal in Maliaño (Cantabria) and Parc Central, in Tarragona. “We started out as the investment vehicle for National Nederlanden, which wanted to invest in properties outside of Holland that were not for its own use. We have maintained this philosophy for 20 years. Our traditional clients are institutional investors”. The latest addition to the portfolio was La Zenia in Alicante, which was acquired using money from the Alaska pension fund.

Advantages

The goal of the Head of CBRE Global Investors is to repeat the transaction volume (recorded last year) during 2015 but with a greater focus on purchases. “We would like to close transactions amounting to €1,000 million this year with a 60:40 split in terms of purchases and sales”, he says. “We have a portfolio of mature assets and therefore we are interested in buying properties that we can add value to”.

In total, the (property) manager expects to invest €930 million in Spain and Portugal. “Demand exceeds supply, which means that prices have increased and new rules are in play. It is not going to be as easy (as it once was) to target successful investments”.

Nevertheless, the Head of CBRE GI does not fear competition from the multitude of investors and institutional funds that have arrived in the Spanish market attracted by the decrease in real estate prices and the expected economic recovery. “As a (property) manager, we try to maximise the opportunities that the market offers, leveraging on our competitive advantage, which is our local knowledge”, says Martín-Borregón. “As a (property) manager, we have more access to capital, which allows us to move (more) quickly to close transactions”, he adds.

The (property) manager is also considering investments in premises (shops/stores) on the street and in strengthening its logistics platforms (it already owns 15). “We will buy logistics assets in new areas and we will sell old warehouses”, he explains.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Intu Will Invest €425m In Its Shopping Centre In Málaga

2 March 2015 – Expansión

The British company Intu Properties confirmed yesterday that it plans to invest €425 million in the construction of a new shopping centre in Málaga, as part of its plan to create a large network of leisure and retail complexes in Spain.

In March, as a preliminary step, the group is going to ask its shareholders to approve the purchase of land close to Torremolinos for €42.1 million, where it will build the centre, which will have a gross leasable area of 175,000 square metres. The shopping centre is expected to open in 2018.

Since 2013, Intu has acquired two operational shopping centres in Spain: Parque Principado (in which the Canadian fund CPPIB holds a 50% stake) in Asturias, for €162 million and Puerto Venecia, in Zaragoza, for €451 million.

As well as the project in Málaga, the company is also considering developing centres in Valencia, Vigo and Palma de Mallorca. It expects to make its largest investment in the Oceania de Valencia complex, which could amount to €750 million.

In its results for 2014, Intu increased the valuation of its 50% stake in Parque Principiado from €81 million to €106 million. The firm is now looking for a financial partner for Puerto Venecia.

Original story: Expansión (by Roberto Casado)

Translation: Carmel Drake

Intu’s €2,500m Plan To Dominate The Retail Sector In Spain

16 February 2015 – Expansión

The group Intu Properties is completing the exercise of its call option over a real estate project in Málaga, as part of a €2,500 million investment program launched by the British company to become the leading shopping centre operator in Spain.

The developer, which last year spent €613 million on the acquisition of Parque Principado (Asturias) and Puerto Venecia (Zaragoza) expects to hand over €41 million to the Peel Group for the purchase of a plot of land near Torremolinos, which has a licence for the construction of a retail and leisure complex measuring 175,000 square metres. According to the company, subsequent investment in this development, which will take three years to construct, will amount to €250 million.

In addition, Intu is considering other options to develop shopping centres in Vigo, Valencia and Mallorca. “Our objective is to become the market leader in the ownership, development and management of large regional (shopping) centres across Spain”, said the group. It is looking to replicate its model in the UK, where it operates 18 retail complexes all over the country.

HSBC estimates that the six shopping centres that Intu now owns or plans to acquire in Spain represent a total outlay of €2,500 million; the bank financed €320 million of the acquisitions in Asturias and Zaragoza. Stephen Bramley-Jackson, an analyst at the entity, said that “Intu’s real estate portfolio in Spain has the capacity to equal that of the current market leader for this type of property, Unibail-Rodamco, in terms of total investment”.

The Franco-Dutch group now has 16 (shopping) centres in Spain, after it sold the ones it owned in Albacete and Torrevieja last year. The average size of their shopping centres is smaller than those of Intu, which seeks to focus its investment in complexes measuring more than 100,000 square metres. In 2014, Unibail-Rodamco generated revenues of €147.1 million from the rental of its Spanish properties. Rental income from Parque Principado and Puerto Venecia amounted to €28.6 million.

The two other major players in this sector are Klepierre and Corio, which have invested around €500 million in shopping centres in Spain in recent years.

To maintain its role as market leader, Unibail-Rodamco has invested €600 million in several projects: it plans to expand two centres in Barcelona and construct two new centres in Palma de Mallorca and Benidorm. However, the firm has put the brakes on the development of the Oceania centre in Valencia.

Unibail and Intu seem set to share the market without competing directly in the same geographical areas. Intu, for example, has not yet launched any projects in Madrid or Barcelona, whereas its rival has a significant number of properties there. Meanwhile, Unibail does not have any centres in Asturias, Zaragoza, Malaga or Galicia. The slow down in the development of Oceania leaves the way open for Intu to develop its gigantic Puerto Mediterráneo centre, measuring 300,000 square metres in the Valencian town of Paterna. The two companies have parallel plans in Mallorca only, although Unibail’s Palma Springs centre is more advanced and looks set to open at the end of 2016.

According to Intu, the opportunity that it sees in Spain to launch new projects is focused on the regions “where ownership of shopping centres is fragmented and there is not currently a dominant destination for retail and leisure”.

With a market value of GBP 4,800 million (€6,480 million) and debt amounting to GBP 4,000 million, according to analysts at Investec, the British company is looking for partners for its Spanish ventures. The pension fund manager Canadian Pension Plan Investment Board acquired 50% of Parque Principado and may participate in other projects, according to HSBC. In addition, Intu Properties is evaluating the possibility of publicly listing its Spanish subsidiary or some of its (shopping) centres to secure foreign capital.

Some analysts wonder whether Intu has arrived too late in Spain, given that property prices are already recovering. The expected rental yield at Puerto Venecia (acquired in December 2014) is 5%, compared with 7.2% for Parque Principado, which was purchased in October 2013.

In terms of the next steps, Intu’s shareholders must approve the group’s purchase of the project in Malaga.

Original story: Expansión (by Roberto Casado)

Translation: Carmel Drake