Merlin to Build a Logistics Warehouse for DSV in Zaragoza

17 January 2020 – La Vanguardia

Merlin Properties has agreed to build a warehouse in Zaragoza for the Danish transport and logistics company DSV. The Socimi led by Ismael Clemente will lease the 12,000 m2 property to DSV for ten years.

Original story: La Vanguardia 

Translation/Summary: Carmel Drake

Merlin to Make its Portuguese Stock Market Debut on 15 January

9 January 2020 – Europa Press

Merlin Properties, the Socimi led by Ismael Clemente (pictured below), is going to make its debut on the Lisbon stock market on Wednesday 15 January.

Merlin will thus fulfil its objective, announced in 2019, of trading its shares in Portugal (as well as on the Ibex in Madrid), given that it is a strategic market for the entity.

Specifically, the Socimi already owns 9 offices, 2 shopping centres and 1 logistics warehouse in the neighbouring country, assets which together account for 8% of its total portfolio. They span a combined surface area of 113,000 m2 and generating €44 million in annual revenues.

Original story: Europa Press 

Translation/Summary: Carmel Drake

Merlin Enters the Top 10 Ranking of the Largest Logistics Owners in Europe

19 June 2019 – Cinco Días

Merlin Properties has been a major player in the European office and shopping centre markets for several years. But now, the Socimi led by Ismael Clemente has entered the Top 10 ranking of the largest logistics owners on the Continent, with its portfolio of 1.6 million m2 under management, according to a report about the logistics market compiled by Deloitte.

The Top 10 ranking is led by the listed US firm Prologis (17 million m2); Logicor, the firm controlled by China Investment Corporation and Blackstone, (13.5 million m2); and the fund manager CBRE GI (7.7 million m2). They are followed by the logistics specialists Segro, P3 Logistics Parks and Goodman.

Merlin owns 1.1 million m2 of logistics space outright and holds a 48% stake in a company that owns another 469,000 m2 of logistics space in the port of Barcelona. It also has 1.254 million m2 of surface area under development.

Investment in logistics assets is currently breaking records across Europe and in Spain, in particular, boosted by attractive returns and the boom in e-commerce. With the rising demand, the availability of high-quality warehouses is decreasing, hence the need to build more. According to Deloitte, investment in warehouse purchases amounted to €1.5 billion last year, the second best year ever after 2017, when the figure reached €1.6 billion.

Merlin is planning to invest €484 million in its Best II and Best III logistics funds between now and 2022. Most will be targeted in Madrid and its surrounding areas (Guadalajara and Toledo) and Cataluña, but investment will also be made in Lisbon, Zaragoza, Sevilla and Vitoria.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation/Summary: Carmel Drake

Merlin Launches an Innovative Nocturnal Business

11 April 2019 – Valencia Plaza

Merlin Properties is launching a new and innovative business. The Socimi is converting the parking lots of its office buildings into logistics centres overnight, in such a way that logistics operators will be able to use them as last mile centres for organising the delivery of packages during the day.

According to Merlin’s CEO, Ismael Clemente (pictured above), his firm has already signed agreements for this initiative with firms such as Dasher, CityLog, FM Logistic and GLS.

The firm is offering its parking lot space to logistics operators that already lease properties in its logistics warehouse portfolio. In this way, it is making available the parking lots to its logistics customers between 23h and 7h30.

This initiative forms part of a wider effort that the largest Socimi in the country is making in the logistics sector, where it plans to invest €300 million in the construction of new facilities to meet the booming demand.  Merlin is planning to branch out from the traditional logistics centres (Madrid, Barcelona) and invest in warehouses in new places such as Zaragoza, Valencia, País Vasco, Sevilla and Lisbon.

Original story: Valencia Plaza

Translation/Summary: Carmel Drake

Merlin to Add 13,000 m2 of Coworking Space in Madrid & Barcelona by 2020

28 February 2019 – Idealista

Merlin Properties is expanding in the coworking sector, where it operates under the Loom brand. The Socimi led by Ismael Clemente currently has three shared offices in Madrid, spanning 3,500 m2 in total, and it is planning to open its next space, spanning 1,200 m2 on Calle Eucalipto, 25, also in the Spanish capital, in June.

The listed company also intends to open 1,600 m2 of coworking space in Torre Glóries, the office block that it owns in Barcelona, where its tenants will work alongside several high-profile operators, such as Facebook, Dynatrace and Oracle.

In September, Merlin is going to open 2,000 m2 of coworking space in the Salamanca neighbourhood of Madrid and before the end of the year, it will add 1,500 m2 of shared office space in WTC Alameda in Barcelona.

In 2020, the Socimi is also planning to open 1,100 m2 of shared work space in Torre Chamartín in Madrid and another 2,000 m2 in the 22@ district of Barcelona.

Merlin owns 31% of Loom House, which is managed by the siblings, Paula and José Almansa.

Original story: Idealista (by Custodio Pareja)

Summary translation by: Carmel Drake

Merlin Finalises its First Major Property Sale & Negotiates with Apollo, Amongst Others

22 January 2019 – Voz Pópuli

Merlin Properties has been negotiating the sale of a portfolio of assets with Apollo for several months and it looks like the operation is beginning to take shape. Project Juno comprises assets in secondary locations, which the Socimi does not classify as core, according to financial sources consulted by this newspaper.

The portfolio includes assets such as Miniparc, in La Moraleja; Európolis, in Las Rozas; a building on Calle Josefa Valcárcel and another one on Ronda de Poniente. The portfolio has a market value well below €300 million, given that it comprises assets that are not located in the financial centre of Madrid.

In parallel, the Socimi has created Project Jupiter, a better quality portfolio than Juno, but “very dry”, worth around €300 million.

In that portfolio, Merlin has included the Trianon business park, on Vía de los Poblados; another business park in Las Tablas on Calle Federico Mompou; another building located in Campo de las Naciones; the Elipse building (Manoteras) and the Ulises building, in Arturo Soria.

Merlin Properties is also looking to create a third portfolio following the sale of those two portfolios and whereby unify it with the assets that it does not manage to sell. The Socimi has decided not to award a mandate for these portfolios in order to market them with the greatest discretion possible.

Merlin’s plan

Merlin Properties wants to increase the presence that it has in the office market in Lisbon and acquire other buildings to add to the six properties that it already owns in the Portuguese capital.

The commitment of the Socimi led by Ismael Clemente to the Portuguese market forms part of the slight rethink in the structure of the assets owned by the group.

Currently, office buildings account for 46% of the company’s assets, followed by commercial properties, which represent 40%, and logistics assets, which represent 14%. But given the pull of the logistics market right now (…), Merlin expects to increase the weight of its logistics division to 20%.

At the time of its IPO, four years ago, Merlin reported that logistics assets would account for 15% of its total portfolio.

Original story: Voz Pópuli (by David Cabrera)

Translation: Carmel Drake

Loom to Open 10 Co-Working Offices in 2019 including a Centre in Barcelona

5 November 2018 – Eje Prime

Loom is on a mission. The company specialising in shared work centres is planning to open a dozen new co-working spaces in 2019. The assets identified, all of which are owned by Merlin, are distributed between Madrid, Barcelona and other Spanish capitals, such as Málaga, Alicante and Valencia, according to Paula Almansa, co-founder and CEO of the company, speaking to Eje Prime.

Currently, the operator is finalising the details for the launch of its third co-working office in Spain. The space, located at number 38, Calle Don Ramón de la Cruz, in the Salamanca neighbourhood of Madrid, will open its doors between May and June next year, after the renovation work on the property has been completed.

Another of Loom’s objectives in the short term is to take its co-working concept to new parts of the country, in particular, to the Catalan capital. “One of the areas that we currently have in mind is the 22@ district”, said Almansa. In this sense, Merlin’s portfolio of assets plays in the company’s favour. In fact, the Socimi has a gross leasable area (GLA) of 31,337 m2, distributed over four office buildings in that district.

One year after it acquired 31% of Loom, the group led by Ismael Clemente has decided to merge it with Twisttt, the brand that it created to debut in the co-working market in 2017. “It is a decision that we have taken together; it did not make sense for us to promote two brands separately when, at the end of the day, we were both pursuing the same objective”, said the director of Loom.

Merlin is now consolidating its position as the main landlord of the company led by the siblings Paula and Jose Almansa, who are already starting to take advantage of the large number of assets that the real estate giant owns all over the Iberian Peninsula. Málaga, Valencia and Alicante are the next destinations in which Loom plans to launch between 2019 and 2020, hand in hand with local partners, followed by Lisbon, “a city that we do not rule out launching in in the future”, said the co-founder.

For now, the company has three co-working spaces in Madrid: one at number 5 Calle Princesa, another at number 11 Calle Huertas and the final centre at number 1 Calle Vandergoten, in the Real Fábrica de Tapices. Nevertheless, the company is not limiting itself when it comes to choosing new locations and it is open to backing areas that “are not considered prime nor are home to too much competition”.

Loom’s project is a long-term venture, although they are aware that the wind will not always blow in their favour. “The co-working industry still has a long way to go, but it is also true that recently, many spaces of this kind have been opened and very high rents are being paid”, explained Almansa, who also believes that it is important to take advantage of moments of crisis to attract more users.

Original story: Eje Prime (by B. Seijo & J. Izquierdo)

Translation: Carmel Drake

El Corte Inglés & Merlin Negotiate an Alliance to Create a Real Estate Giant

11 October 2018 – El Confidencial

El Corte Inglés wants to fulfil the commitments it has made to the financial ratings agencies as soon as possible. At its recent, first-ever bond issue, it promised that it will reduce its €4 billion debt by half over the next 18 months. To this end, Jesús Nuño de la Rosa, President of the distribution group, has decided to expedite the sale of some of its real estate assets, the jewel in the crown of the holding company. According to financial sources, the company is negotiating an operation with Merlin Properties, the largest listed company in the real estate sector in Spain.

The same sources have confirmed the conversations between Jesús Nuño de la Rosa and Ismael Clemente, the CEO of Merlin Properties, the real estate Socimi in which Banco Santander holds a stake and which has assets under management worth €7.7 billion as at 30 June 2018. The negotiations are very open and cover all of the property types that comprise El Corte Ingles’s portfolio, appraised by Tinsa at €17.1 billion for the most recent annual report. Sources close to Merlin declined to comment on this information, whilst official sources at El Corte Inglés indicated that “the firm has not reached a global agreement with any operator”.

According to other sources, the most recent meetings have focused primarily on the purchase and management of the logistics assets owned by the department store company, which were already offered to several agents in the sector almost two years upon the advice of Morgan Stanley. Those conversations did not prosper due to the diversity of the portfolio, which comprises shopping centres, shops and logistics docks, some of which were worth very little at the time and so distorted the value of the portfolio.

But now, having made a commitment to Standard & Poor’s, Moodys and Fitch to reduce the group’s debt, De la Rosa has set himself the priority of divesting all of the assets needed to reduce the liability by around €2 billion. Through that, it will manage to reduce the ratio of debt to operating profit or EBITDA to 2x, compared to the current figure of 4x, which would give it an investment grade rating.

That would represent a very considerable change, which would allow the entity to obtain financing in the markets at cheaper interest rates – now it has paid 3% – given that its bonds could be purchased by all types of investors and not only by those looking to speculate such as now, given that fund managers that only acquire fixed income or equities with a minimum solvency and without risk of default are prohibited from subscribing to below investment grade securities.

Merlin Properties is the entity that is holding the most advanced negotiations with El Corte Inglés, which wants to close an agreement before the end of 2018 or, before 28 February 2019, at the latest, the date that marks the end of its financial year. The current proposal involves the acquisition of some of El Corte Inglés’s real estate assets and the signing of a contract as the manager of the portfolio. The distribution group’s portfolio comprises 94 properties, most of which are in Spain, of which 87% are shopping centres.

Of the total portfolio whose valuation amounts to €17.1 billion, almost €15 billion correspond to points of sale. But the physiognomy of those centres is very heterogeneous, as shown by the fact that whilst four of them are worth €2 billion, most of the assets could be sold for between €100 million and €200 million. But almost one third of the total are what El Corte Inglés itself calls unproductive. In other words, sites where they lose money. The group has tried to convert them into outlets for large brands, but the truth is very few of them have the characteristics to be able to be transformed into places of the calibre of Las Rozas Village and Factory.

In terms of the points of sale considered unproductive, the following stand out: Leganés (Arroyosur), Jaén, Oviedo, Elche, Guadalajara, Talavera, Albacete and Eibar. In addition to these shopping centres (which make losses), the company has another seven sites breaking even, such as those in Cádiz, Castellón, Córdoba and Arroyomolinos. The value of these shopping malls, as they are known in the sector, is more doubtful, given that a sale and leaseback contract could not be signed since the revenues do not cover the debt. Moreover, given their physical structures, most of them do not have windows, their transformation into offices, the main market of Merlin Properties, or hospitals would be more difficult.

Of the €7.7 billion in assets that Merlin manages, €5.5 billion correspond to offices, €934 million to shopping centres and €403 million to commercial premises on high streets.

Original story: El Confidencial (by Agustín Marco)

Translation: Carmel Drake

Blackstone Buys 50% of Testa from Merlin, Santander & BBVA

17 September 2018 – Eje Prime

Blackstone is strengthening its commitment to Spanish property. The US fund, which has been very active in the domestic real estate market in recent years, has just completed the purchase of 50.01% of Testa from Merlin, Santander and BBVA, according to a statement issued by the parties.

Testa is the largest manager of rental homes in Spain, with 10,615 real estate assets in its portfolio and a turnover of €85 million in annualised gross income. Most of the shares of the Socimi, which has been listed on the Alternative Investment Market (MAB) since July, will now be owned by Tropic Real Estate Holding, a company managed by Blackstone.

One of the largest shareholders of the company, the real estate firm Merlin, has pocketed €321 million from this operation, which means valuing the own funds of Spain’s largest Socimi at €1.895 billion. With the funds obtained, the company led by Ismael Clemente plans to reduce its debt, within the framework of the company’s objectives.

Following Merlin’s exit from the company, Acciona Inmobiliaria, the real estate investment arm of the energy firm, has been left as the main domestic shareholder of the listed company.

Testa’s homes are primarily located in Madrid, although the firm also has a presence in other major cities in the country such as Barcelona, San Sebastián, Valencia, Las Palmas de Gran Canaria, Valencia and Palma, amongst others.

Testa, created in 2001 by the construction company Sacyr, invested €228 million in March in the purchase of 4,500 homes from the BuildingCenter, the real estate arm of CaixaBank. Moreover, following its incorporation onto the MAB, one of its largest shareholders, Acciona Inmobiliaria studied the possibility of becoming a reference shareholder of the Socimi.

Original story: Eje Prime 

Translation: Carmel Drake

Juan Pepa: “The Recovery of the RE Sector Has Solid Foundations”

29 June 2018 – Eje Prime

Spain is doing well. At least that is according to the heads of the domestic and international funds that participated in the Square forum, a business meeting that is being held at the moment in Ibiza and which has brought together the leaders of the Spanish real estate sector to discuss new concepts and disruptive models.

Under the slogan “money never stops”, Javier Faus, founder and CEO of Meridia Capital, said at Square that “money will continue to be invested in the Spanish real estate sector for at least the next ten years”.

For the Catalan businessman, real estate is “growing” and he pointed out in a debate about investments at the meeting, moderated by Stephen Newman, the CEO of Savills Aguirre Newman, that “Spain has always been unique: despite the economic crises or threat of Cataluñan independence, and now the change of Government, large funds have always come here to invest”.

Of the same opinion is Juan Pepa, another of the guests at the roundtable organised by Square. Perhaps, the main driver behind the IPO of the property developer Neinor Homes, in his capacity as the former senior director of the fund Lone Star in Spain, Pepa highlighted that “the recovery of the real estate sector has solid foundations”. “You just have to look at the way in which the banks are now lending money in the residential sector: they are being very cautious”, said the now co-Managing Partner of Stoneshield.

In this regard, Faus added that in the market where his corporation dominates the most, the office segment, “we are not going to see rents return to their 2007 levels for another five years”. Therefore, according to the director, there is still scope for growth in a sector that in Barcelona and Madrid is looking very strong, taking advantage of the pull of the economic recovery and the arrival of international companies to the country.

Logistics and alternative assets, the great desires

“Now, everyone wants to invest in logistics”. That is how one international heavyweight committed to Spain summed up the target of the funds. Evan Carruthers, Managing Director of Castlelake, recognises that for his opportunistic fund, those types of assets are not attractive, given that “there is too much money looking for logistics assets”, he said.

His investment firm, which, amongst others, controls the listed property developer Aedas Homes, remains faithful to the residential market, in contrast to the other experts around the table.

For Juan Pepa and his fund, student halls, one of the most sought-after alternative assets at the moment, are very attractive “and so too are logistics assets, but we don’t touch them because we are small”.

In the appeal of halls of residence, the Argentinian business agrees with Brookfield, “the largest real estate company in the world”, according to the Spanish leader Ismael Clemente, CEO at Merlin and one of the promoters behind Square’s debut this year. The Director of Investments in Europe at the US giant, Brad Hyler, added that the problem on the continent is political instability but he did not assess in any detail the Spanish market, where his firm does not yet have a presence.

Those who are investing a lot of capital in Spain, and it seems that they will continue on this path over the coming years, are Latin American property companies and family offices. Pepa said in his intervention that “we will see much more money from Latin Americans investing in the country”.

In his closing comments on the second of three days, Clemente wanted to point out that in a real estate world in which the fashionable term is “to create experiences”, real estate “is, without doubt, the most human productive sector: we create employment and there is a healthy atmosphere between us”.

Original story: Eje Prime (by Jabier Izquierdo)

Translation: Carmel Drake