Wanda To Resume Renovation Of ‘Edificio España’

21 April 2016 – Expansión

The Town Hall of Madrid and Wanda wrote another chapter in their tug-of-war story that began back in July 2014, when the Chinese Group purchased Edificio España from Banco Santander for €265 million, with the aim of converting it into a luxury hotel, shopping centre and homes.

The main sticking point in the negotiations between Manuela Carmena’s town hall team and Dalian Wanda has centred around the Town Hall’s requirement to maintain the façade of the landmark building, an idea that Wanda opposes. The group has threatened to look for alternative solutions and even to abandon the project.

But now, it seems that Wanda has accepted Carmena’s conditions to go ahead with its plans. In the face of the uncertainties generated by the Chinese company’s position, the Town Hall of Madrid sent a letter to Michael Qiao, the CEO of the Asian Group, on 6 April, asking him to confirm the decision regarding their plans for the building within 15 days. The councillor for Sustainable Urban Development, José Manuel Calvo, announced yesterday that the Asian firm has responded to the letter indicating that it still intends to construct a hotel and that, following this confirmation, it expects the project to resume “shortly”. Nevertheless, Calvo was wary of discussing timeframes.

In parallel, the Chinese group still has a mandate with the consultancy firm JLL to sell the property and its efforts to find a potential buyer are on-going, according to sources close to the process.

Other interested parties

As part of this process, the US fund Hines and the Philippine Group Emperador have both expressed their interest in the property. JLL declined to make any comment about the matter. (…).

The councillor for Sustainable Urban Development confirmed that “there is no way” that the property “will be demolished”, although “it is perfectly reasonable for any one element that is in poor condition to be replaced”.

Calvo referred to the leaked letter and highlighted that it contained the urban planning rules and corresponding exceptions, but insisted that “no-one has had to resort to selling out or changing any laws”.

At the beginning of March, the multinational company confirmed to the mayoress that it intends to stay in Madrid and implement its plans for Edificio España, after weeks of speculation regarding the possible abandonment of the project, which were fuelled by the Chinese group’s decision to close its headquarters in Madrid.

At the beginning of the year, Wanda Madrid Development decided to close the office that it had opened in the Spanish capital to undertake the remodelling of the landmark building, which has been empty for years.

The Town Hall has always maintained that Wanda purchased the building knowing that the building was a partial level 3 listed property, due to its historical-artistic value, which prevents it from being knocked down.

The Local Historical Heritage Commission, in which the Community of Madrid and the Town Hall participate, agreed to relax the requirements to promote the sale of the building, which is very run down due to inactivity, provided the façade is respected.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Ortega Purchases Gran Vía, 32

27 January 2015 – Cinco Días

Amancio Ortega will be the landlord of one of Inditex’s competitors, the Primark Group. The founder of Zara has acquired Gran Vía, 32, the building in Madrid where the Irish company will open its flagship store in Spain.

A consortium of funds comprising PSP, APG, Phoenix Group and Sun Capital, led by Drago Capital, has announced the sale of Gran Vía 32 to Pontegadea, the real estate company owned by Amancio Ortega. PSP Investments – the public pension fund of the Canadian armed forces and one of the largest pension managers in this country – holds a 50% stake in Longshore (the company that currently owns the building); the management team of Drago Capital, the company that manages the assets, also holds a minority stake. The remaining 50% is owned by the real estate investment fund Drago Real Estate Partners, in which a number of companies hold stakes, including the Dutch firm APG (the largest pension fund in Europe), the British insurance group Phoenix Group (formerly Pearl Assurance) and the British investment company Sun Capital Partners.

Previously, the building was owned by Grupo Prisa, which sold the property to Drago Real Estate in 2008.

Spokemen of the various companies involved in the sale were not willing to disclose the amount paid, but sector sources estimate that the price would be around €400 million.

The building on Gran Vía 32 has a total floor space area of 36,376 square metres, divided into nine floors above ground, plus the ground floor and basement.

Four of the largest fashion companies in the world will share the building, and its new landlord, in Madrid. Gran Vía 32 already houses H&M, Mango and Lefties (Inditex) stores. The Irish chain Primark plans to open its largest store in Spain in the building at the end of this year, where it will have 9,000 square metres of retail space across three floors.

Primark is owned by the Associated British Foods group and now has 41 stores in Spain, after entering the market in 2006.

Madrid, Barcelona, London

Pontegadea, a company that also receives dividend income that Amancio Ortega earns from Inditex, recorded a profit of €93.3 million in 2013, an increase of 32% compared with 2012, according to information published in the El País newspaper last August, based on data extracted from the company’s accounts filed at the Commercial Registry.

The company recorded rental income of €98.5 million, an increase of €4.3 million. The volume of assets on its balance sheet amounted to €4,519.5 million. The company reduced its bank debt by €73.8 million down to €325.1 million.

In recent years, Amancio Ortega has invested in property in Madrid, Barcelona and London, although he has also done business in New York.

Pontegadea owns several landmark properties, including the Torre Picasso in Madrid, which it acquired at the end of 2011 from the FCC group for €400 million; and a building located on Manhattan’s West Side, which it bought at the end of 2013 for €69 million.

Last year, Pontegadea purchased two buildings from Sareb – the property that used to house the headquarters of Banesto, in Plaza Cataluyna, Barcelona, for €44 million and the building that houses the Apple store in Valencia, for €23.5 million.

Recently, it also purchased Rio Tinto’s headquarters in London. At the beginning of 2013, it completed the purchase of Devonshire House, in London, a building that houses 16,000 square metres of offices and retail space. In 2006, it bought another building in London, 100 Wood Street, for GBP 140 million and in 2011, it acquired an office building on Oxford Street for GBP 220 million.

Original story: Cinco Días (by Alberto Ortín Ramón)

Translation: Carmel Drake