Telefónica Finalises the Sale of its Catalan Headquarters

4 May 2019 – Expansión

Telefónica is on the verge of selling its headquarters in Barcelona for more than €150 million in a sale and leaseback operation that will see the group continue to occupy 8 floors of the property, but on a rental basis.

The 16-storey skyscraper, known as Diagonal 00, has a surface area of 34,000 m2 and is located next to the Fòrum on the edge of the 22@ district. The property was constructed by the Consortium of the Zona Franca in Barcelona (CZF) as a turnkey project for Telefónica, which moved in in 2011.

The telecommunications giant went on to purchase the property from CZF in 2014 for €107 million plus VAT (€129.4 million) and is now selling it as part of its debt reduction process, which has already seen it divest businesses in Central America and the insurance company Antares.

Original story: Expansión (by M. Anglés & I. del Castillo)

Translation/Summary: Carmel Drake

Testa Suspends the Rental of its Homes Following Approval of New Rental Act

24 April 2019 – El Boletín

Blackstone, the fund that has invested the most in the Spanish real estate sector over the last five years, has reportedly suspended the rental of hundreds of homes managed by its Socimi Testa following the approval of the new Rental Act by Pedro Sánchez’s government on 1 March.

The new decree lengthens rental contracts, giving tenants the right to remain in properties for seven years in those cases in which the landlord is a company, and prohibits rent increases above CPI.

Testa has more than 11,000 properties under management and Blackstone has owned a majority stake in the Socimi since last year after acquiring shares from banks and other groups.

According to professionals from intermediary companies that work for Blackstone, a decision was taken to suspend Testa’s activity following the approval of the decree, in light of the uncertainty generated. Activity is expected to resume in May, following the general election.

Blackstone already warned a couple of months ago that the new Rental Act is discriminatory and would only serve to increase rental prices.

Original story: El Boletín

Translation/Summary: Carmel Drake

Socimi Lar Sells its Last Office Building in Madrid to Swiss Life for €40M

24 April 2019 – Idealista

Lar España has sold the last office building left in its portfolio as it continues its strategy to specialise in the retail sector.

The Socimi has sold the property located at number 27 Calle Eloy Gonzalo, in the centre of Madrid, to the manager of the Swiss insurance company Swiss Life for €40 million. The building spans a surface area of 6,300 m2, distributed over 9 floors with various retail premises on the ground floor. The upper floors are leased in their entirety to the US coworking specialist WeWork.

Lar España acquired the property, which was constructed in the 1960s, for €12.7 million at the end of 2014.

Following this sale, the Socimi can now focus on the 14 assets in its retail portfolio (shopping centres and retail parks), which will become 15 after the summer, once the Lagoh shopping centre has been opened in Sevilla.

This represents the Swiss manager’s second purchase in Spain, following its acquisition of 13 retail premises from Corpfin Capital Prime Retail Assets in July 2018 for more than €83 million.

Various high-profile consultancy firms participated in the operation, with Cushman & Wakefield advising on the buy side and JLL and Knight Frank on the sell side.

Original story: Idealista (by Ana P. Alarcos)

Translation/Summary: Carmel Drake

Moraleja Green Gets a Makeover with 19 New Stores

7 March 2019 – Expansión

Moraleja Green, the shopping centre located in Alcobendas, in north  Madrid, saw its visitor numbers increase by 12% in Q4 2018, following the completion of a €12 million renovation project by its owner Kennedy Wilson. The US fund purchased the shopping centre, which has a surface area of 30,200 m2 and 1,300 parking spaces, from ING in 2015. Following its renovation, the medium-high end retail space opened 14 new stores last year and will welcome five more in 2019, with brands such as Mango, Dolores Promesas, Scalpers Women, Poete and Parfois all opening premises.

Shopping centres in Spain are enjoying something of a renaissance, despite the surge in online shopping. They offer consumers a plethora of in-person entertainment options besides retail, including gastronomic, leisure and sports facilities.

In particular, Moraleja Green’s renovation has allowed it to expand its gastronomic offering to include Tierra Burrito, Pizza Jardin and NYB restaurants, amongst others. The shopping centre also offers charging points for electric vehicles and access to wifi throughout its premises.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

The ‘Mercado de San Miguel’ Goes up for Sale Again for a Record Price: €100M

1 March 2019 – El Confidencial

The Mercado de San Miguel is up for sale again almost two years after being acquired by the joint venture between Redevco and Ares, which paid more than €70 million for the property. After repositioning the asset and increasing the rents, Ares has decided to exit the operation and reap the rewards of its investment (…). Nevertheless, the Dutch manager is not willing to divest its stake in this unique asset.

The expectations of the US fund in terms of the market value of the asset amount to around €100 million, which would represent a gain of 30%. If achieved, that figure would once again shatter all of the records in the real estate market. It is worth noting that the previous sale was the most expensive transaction per square metre ever paid in the Spanish real estate market.

For each one of its 1,200 square metres, the purchasers paid €60,000 (…). If another sale is signed, the records would be smashed again: at more than €80,000/m2.

The sources consulted by this newspaper explain that Ares has decided to divest the asset and that if Redevco wants to continue, then it will have to find another partner or acquire the fund’s stake. There is not going to be an organised sales process, but rather the operation is moving off-market (…).

Revaluation of the asset

As both companies announced in a statement in October last year, the joint venture has improved the yield on the property through their active management and has added value to the asset by attracting new gastronomic offerings, such as Rocambolesc by Jordi Roca, a 3-Michelin star pastry chef; Paella, by Rodrigo de la Calle, another chef with 1 Michelin star (…); Kirei, by Ricardo Sanz (…) and Tacos, Margaritas & Punto, by Roberto Ruiz, chef at Punto MX (…).

Those gastronomic offerings are provided alongside the traditional meat, fish and fruit stands, which offer first-rate products for which the market is so well known (…).

Original story: El Confidencial (by E. Sanz & C. Hernanz)

Translation: Carmel Drake

Drago Leases 1,300m2 of Office Space in San Fernando to Mitsubishi

28 February 2019 – Eje Prime

More engineering in San Fernando. The Madrilenian business park has signed the rental of 1,300 m2 of offices to Mitsubishi Electric. The operation has been closed just a month after Indra leased another 2,500 m2 in the business park for its subsidiary Prointec (…).

Mitsubishi Electric has signed a five-year contract to lease offices in the complex’s Europa building. The space in San Fernando is also going to house a training centre and a showroom. Savills Aguirre Newman has brokered the operation and its Savills Arquitectura department is going to take responsibility for the plans and implementation work.

Mitsubishi also has offices in Barcelona, located in the town of Sant Cugat del Vallès and regional offices in Sevilla, Vitoria, Palma, Bilbao, Valencia and Málaga.

With these operations, the San Fernando Business Park has absorbed almost 4,000 m2 of leasable office surface area, which represents 10% of the total office surface area leased in the Corredor de Henares area during 2018.

The park, located in San Fernando de Henares, was constructed in 1992 and expanded in 2009. Currently, it comprises a gross leasable area of 86,000 m2 and is home to giants such as Coca Cola, Volvo, Baxter and Continental.

In total, the complex has sixty tenants distributed across thirteen buildings. The park is located at the southern end of the Corredor de Henares, the capital’s main logistics and industrial axis.

The San Fernando Business Park changed hands in June 2018 when Oaktree Credit sold it for €120 million three years after acquiring it. Since July 2018, the park has been managed by Drago.

Original story: Eje Prime (by Roger Arnau)

Translation: Carmel Drake

Zambal Extends the Ministry of Foreign Affairs’ Rental in the Torres Ágora until 2023

26 February 2019 – Eje Prime

Zambal has renewed its contract with the Ministry of Foreign Affairs and has consolidated one of its main assets. The Socimi, managed by IBA Capital Partners, has signed a new rental contract with the public body for the Ágora Towers, the facilities that house most of the personnel assigned to the Ministry of Foreign Affairs, European Union and Cooperation.

The new rental contract will last for four years, of which the first two are mandatory, according to reports made by the real estate company to the Alternative Investment Market (MAB).

The Ministry of Foreign Affairs has been the tenant of the Ágora Towers, located at number 26 Calle Serrano Galvache in Madrid, since 22 October 2012 (…). Zambal has been the owner of the complex, which comprises two 15-storey twin buildings with three basement floors, since December 2013. The towers have a gross leasable area of 30,469 m2 and 469 parking spaces (…).

Original story: Eje Prime (by Roger Arnau)

Translation: Carmel Drake

Busining Leases 4,900 m2 in one of the Kio Towers to Open a Coworking

20 February 2019 – Eje Prime

Busining is going to create a new business centre in Torre Realia The Icon, one of the former Kio Towers in Madrid. The company, which specialises in coworking spaces, has leased 4,900 m2 of space from Realia, the owner of the property. The space is distributed over five floors in the iconic building located at number 216 Paseo de la Castellana where it is going to open offices and meeting rooms. The operation has been advised by Cushman&Wakefield.

The tower, known as The Icon, is one of the most iconic buildings in the Spanish capital and is considered to be the first skyscraper in the world to be built at a sloping angle. Its architect, Philip Johnson, was the first recipient of the Pritzker award.

With this operation, Busininng, which has five business spaces in Madrid, is expanding its offer in the business district of the Spanish capital. “This new operation is another example of the consolidation and growth of the coworking phenomenon in the Spanish market”, said Ignacio Oyarzun, Associate in the Business Space area at Cushman & Wakefield.

Original story: Eje Prime

Translation: Carmel Drake

Coworkings: the New King of the Real Estate Sector

15 February 2019 – Eje Prime

Millennials, flexibility, start ups…All of the socio-demographic trends are inevitably leading to one common place: coworking offices. Flexible workspaces have become the great promise of the real estate sector but their largest operator, IWG, generates just 15% of its revenues from them and WeWork is multiplying its losses year after year. What risks does the model have? Can it withstand a recession without the guarantee of the traditional five years of mandatory occupancy? And what if Amazon and Facebook, its tenants of today, end up becoming its main competition?

In 2017 alone, the total volume of flexible workspace in the twenty largest markets around the world grew by 30%, equivalent to 1 million m2. Since 2014, the sector has doubled, and in cities such as London, they account for 20% of the office space leased, according to a report from JLL. In Barcelona, that figure already amounts to 12%.

The consultancy firm forecasts that the European stock will grow by between 25% and 30% per annum on average over the next five years and will account for 30% of some corporate real estate portfolios by 2030. But those predictions hide the major challenges that are threatening the great promise of the sector.

One of the main challenges facing the model is that the operator is tied to a given property for at least five years, like in the case of a traditional office, but its tenants have contracts that last for months or even hours. When the next crisis hits, what guarantees does the owner have that the operator will be able to continue paying the rent?

“On paper, that does seem like a risk, but the reality is that the coworking phenomenon was launched during the crisis”, explain sources at Savills Aguirre Newman. All sectors suffer when there is a recession, but traditional offices are hit harder because whoever cannot bear those costs can afford a coworking space”, argue the sources at the consultancy firm.

Another of the risk factors is that coworking offices have capitalised on the lack of available office space in the centre of cities and also, on the shortage of appropriate spaces for the new ways of working within traditional companies (…).

“The players driving the sector are multi-nationals that are looking for appropriate spaces for their innovation teams or for project-based work”, says Manel de Bes, Director of the Office department at Forcadell.

But, what will happen when the offices of these large companies have adapted to the new scenario? “At the moment, most companies are in the experimental phase; if they consider that the trials do not meet their needs, they will be able to return to more conventional models”, explains JLL’s report (…).

From rock star to conservative player

Within the coworking phenomenon, the rock star is WeWork. The New York-based company, which became the largest lessee of offices in its home city last year, is worth USD 20 billion, but it recorded losses of USD 723 million in the first half of last year.

“Its model is based on taking over the best buildings, in the most prime areas and then competing with other operators on price: it is not sustainable”, argues a competitor in the sector. “Sooner or later, they will have to raise their prices”, he assures.

IWG’s model is more conservative. That firm has an umbrella of five brands and thirty years of history. “We have gone through three or four cycles and we cover our backs: first, by diversifying in terms of the type of tenant to minimise risk. We also ask the owners to invest and we do not select the best buildings or at any price”, said Philippe Jiménez, head of the group in the Spanish market (…).

De Bes from Forcadell forecasts that “Over the medium term, just four or five operators will remain: those that lease 200 m2 or 400 m2 in secondary areas will exit the market”. In fact, the market is already becoming more concentrated: since 2015, the five most important operators have accounted for 50% of all of the new flexible workspace in Europe (…).

Original story: Eje Prime (by Iria P. Gestal)

Translation: Carmel Drake

Vbare Has Accumulated Investments of €34.2M Since its Stock Market Debut

5 February 2019 – Eje Prime

Vbare is continuing its commitment to Spain. In 2018, the company invested €15 million in the purchase of residential properties. In January 2019 alone, the Socimi spent another €5.5 million on the purchase of number 94 Calle Vallehermoso, taking the firm’s total investment since 2016, the year it made its stock market debut, to €34.2 million.

The company’s most talked about acquisitions include the purchase of a building comprising 27 homes and 2 commercial premises in Madrid for €5.2 million. That was its second largest investment to date, after its purchase in October of another property on Calle Luchana for €10.5 million.

The trend demonstrates Vbare’s commitment to prime assets. The Socimi has purchased 29 properties in 2019 compared with the 52 that it bought in 2015. Nevertheless, the price of those investments is 41.03% higher. In other words, the cost per property has risen from €75,000 per unit to almost €190,000.

Nevertheless, and despite the investments undertaken in 2018, the group reduced its net result during the first nine months of last year. Its profit amounted to €1.84 million, down by 15.6% compared with the same period in 2017, according to a statement issued by the company to the Alternative Investment Market (MAB).

For this reason, the company now intends to increase its influence in Madrid, in terms of both square metres, as well as the number of units that it owns. In general terms, the group also plans to increase the occupancy rate of its buildings from 83% to 90%.

Original story: Eje Prime (by Marta Casado Pla)

Translation: Carmel Drake