Tag: intu properties

Recovery Has Investors Stocking Up On Spanish Malls

11 February 2015 – WSJ

The Spanish shopping experience is getting a multibillion-dollar makeover as the nation’s economy improves and foreign investment flows in.

After a year of tepid recovery from recession, consumer spending is picking up. Retail sales rose 1.9% in November from the same month in 2013, the fourth consecutive monthly increase, after six years of decline. Although nearly a quarter of the workforce remains unemployed, the economy is expected to expand by 1.7% this year, compared with 1.1% in the euro area as a whole, according to the Organization for Economic Cooperation and Development.

That, in turn, is helping to fuel investment in the retail property sector. In all, investment in retail real estate totalled €3.34 billion ($3.78 billion) in 2014, nearly triple the amount of the previous year and topping the record of €3.1 billion in 2006, according to property consultant JLL, formerly known as Jones Lang LaSalle. At least 67% of investments came from outside Spain. There was more investment in retail than in any other class of commercial real estate over the past year, according to JLL.

International investors are expected to pump more money into retail properties this year, including new construction, according to Adolfo Ramirez Escudero, president of property consultant CBRE Group Inc. in Spain.

Much of the money will go toward large-scale projects that mix shopping and entertainment, known as retail resorts, as well as outdoor outlet malls that resemble small cities where shoppers can find discounted designer brands.

Developers see opportunities for strong returns because prices of land and buildings are still depressed six years after the financial crisis. With the prices of many commodities at relatively lower levels and Spain’s unemployment so high, builders can also construct projects at a reduced cost. Meanwhile, the number of tourists to Spain is at a record, bringing with them money to spend.

The entrance of big global investors is a sign that the Spanish market is stabilizing, said Pedro de Churruca, general director of JLL in Spain.

“People are clearly coming back to shopping centers as a consequence of higher disposable income,” said Ismael Clemente of Merlin Properties Socimi SA, Spain’s largest real-estate investment trust, which in July purchased Marineda City shopping center in La Coruña from a local developer for €260 million. The three-year-old retail complex is the second-largest in the country.

The shopping center opened “in probably the worst possible moment in Spain,” said Mr. Clemente, referring to Spain’s economic doldrums. “We saw that there was a clear upward movement expected in rent, so we thought it was an interesting bet.”

The U.K.’s Intu Properties PLC purchased Spain’s largest shopping center, Puerto Venecia in Zaragoza, for €451 million in December. The British real-estate investment trust also announced a partnership with Spanish developer Eurofund to build four more retail resorts in Spanish cities as part of a plan to invest £1.2 billion ($1.8 billion) over 10 years.

Construction on the first of these projects, Intu Costa del Sol in the Malaga suburb of Torremolinos, —is scheduled to begin in the second half of 2015 and be completed by 2018. The 1.9-million-square-foot development will include amenities Intu is known for: a minitheme park, a surf lake, artificial ski slopes and a gourmet market, as well as shops and restaurants of high-end chains.

Intu owns 18 U.K. shopping centers, but Spain is the company’s first international market, which it entered in 2013 with the purchase of Parque Principado shopping center in Oviedo.

“We’re keen to keep growing, and if we focus on the prime, best shopping centers in the market, there are few opportunities in the U.K.,” said Martin Breeden, regional director of Intu. “Spain is a market that seemed open to international investment and where, frankly, there are not a lot of good shopping resorts in existence.”

Intu has purchase options on land for similar developments in Valencia, Vigo and Palma de Mallorca.

The Intu Costa del Sol site is about 3 miles from Malaga’s most-visited shopping center, Plaza Mayor, which opened in 2002. Sonae Sierra of Portugal, which owns and manages Plaza Mayor, has joined with U.K.-based McArthurGlen Group and U.S.-based Simon Property Group Inc. to expand the 572,400-square-foot shopping area to include a designer outlet mall. The €115 million development will add 324,000 square feet of leasable area and be the first large-scale outlet mall in Andalusia. Construction is scheduled to begin in the second half of this year, and the first phase is set to open in 2017.

Joan Jove, McArthurGlen’s regional development director, said Plaza Mayor is a “very strong, established retail scheme” and the planned adjacent outlet mall will be one-of-a-kind in the region. Mr. Jove said the project is mainly targeted at the 10 million tourists who visit Costa del Sol each year.

Intu’s Mr. Breeden said he wasn’t concerned about competition. “We’re very confident that there will be fantastic demand for our project.”

Sonae Sierra said it also plans to spend €55 million to update four of its other shopping centers around Spain within the next five years.

Elsewhere, TIAA-CREF, a U.S. money manager, has formed a joint venture with Neinver, a Spanish outlet-mall developer, to create TH Real Estate, which will own properties in Spain and other countries. Among their projects is the €80 million Viladecans The Style Outlets in Barcelona, which is scheduled to open in 2016.

“There is still plenty of money chasing product, and plenty of people with big debt who want to sell product,” said CBRE’s Mr. Ramirez. “I expect big volume this year.” He said large transactions could start to level off by next year as prices increase.

Original story: WSJ (by Shaheen Samavati)

Edited by: Carmel Drake

Spain’s Real Estate Sector Closed 2014 With A Record High

02/01/2015 – Expansión

The arrival of international funds and the implementation of large REITs have increased investments, with respect to previous years, up to 9 billion euros. Both the total figures and number of operations have skyrocketed. Well-located large shopping centers and office buildings have been the most desirable assets in 2014.

After more than five years of decline in business, the Spanish real estate sector predicted that recovery would arrive in the year 2014. However, the more optimistic reality has exceeded all expectations.

In anticipation of the year-end figures, this is already the second best year in the last decade, surpassed only by 2007, in the boom of the Spanish economy. “The market this year has been proportionally more active than in 2007. A higher number of assets have been purchased, and the prices, when compared with 2007 figures, are much higher,” explained representatives from the research department of JLL Spain.

So far this year, more than 6.18 billion euros have been invested in real estate for tertiary use (i.e. non-residential), according to Deloitte Real Estate.

This figure soars to 9 billion, according to the consultancy group, Aguirre Newman, if we take into account multiple debt portfolios whose securities were real estate assets, and the sale of land and housing.

These figures are double those recorded in 2013, 2012 and 2011, and are explained by a combination of several factors. “2014 was a year in which all the elements were present to favor real estate investment: the improvement of the overall economic situation, the emergence of new players with liquidity and the pressure to invest (the REITs), the return of funding and the need to sell certain closed funds,” says Javier Garcia-Mateo, director of Deloitte Real Estate.
New investors

The new players in the real estate sector, the REITs, are among the most influential reasons for investment growth. Only four major listed real estate companies, Merlin Properties, Hispania Real, Lar España and Axia Real Estate, have invested over 2.4 billion euros. Among their investments was the purchase of Marineda City, a shopping center located in La Coruña (Galicia), by Merlin Properties for 260 million euros, the largest purchase of a shopping center until December 24, 2014.

A few days ago, the British real estate company, Intu Properties, beat this record by paying 451 million euros for Puerto Venecia in Zaragoza. With these last transactions, investment in shopping centers in 2014 amounted to 3 billion euros, the same amount invested across the real estate sector in 2013.

Shopping centers are not the only commercial properties to be the star of large operations. Street storefronts have also been key players in investments. Thus, companies such as Mango bought property in Madrid and Bilbao to create large retail stores; while international funds, such as Axa Real Estate and Deka, bid for being the landlords of the main brands along the Gran Via in Madrid.

As for office buildings, investment has soared over 200% from January to September to 2.4 billion euros, according to CBRE. These figures are due to the purchase of portfolios such as the four buildings located in Barcelona and Madrid held by Blackstone, in addition to the other four buildings that the same fund bought from SAREB a few days ago.

Also noteworthy is the purchase of two properties in Barcelona — Torre Agbar and Paseo de Gracia 111 — which will be transformed into luxury hotels, and the numerous buildings sold by public administrations such as the Generalitat.

“A year of great investment activity has closed and the market should expect the same level of activity for the next year, albeit with some changes in the profile of investors,” says Jaime Pascual, Executive Managing Director of Aguirre Newman.

Original article: Expansión (by Rocío Ruiz)
Translation: Aura REE