7 May 2018 – Eje Prime
The insurance company Mapfre is still interested in the Spanish real estate sector, but it is divesting certain assets that it considers to be non-strategic in the country. The company sold properties worth €130 million in the Spanish market last year, according to information presented in the group’s annual report for 2017. The most high profile sales were carried out in Madrid and included the Luchana building, amongst others.
During the year, divestments amounting to around €130 million were carried out in Spain and Portugal. Highlights include the sale of a plot of land in Valdemarín (Madrid) for €5.5 million and two plots in Palma de Mallorca for €22.5 million, plus a series of other smaller assets for €24.5 million in total.
One of Mapfre’s main divestment operations last year was the sale of the Luchana building to GMP for €72 million. It is an exempt asset, dating back to the beginning of the 1980s, located just six minutes from Paseo de la Castellana by foot.
GMP is currently renovating that property, which spans a gross leasable area of 14,424 m2, spread over eleven above ground floors in total, ten office floors and one commercial-use floor at street level. Its main tenant is Mapfre, which houses the headquarters of its General Regional Management team for Madrid and Verti in this building.
In total, all of the operations signed in the Iberian Peninsula generated gains of more than €65 million for Mapfre, according to the annual report.
Investment in its asset stock in Spain
But Mapfre has not only been selling assets in Spain, it has also been feeding its portfolio by investing in the renovation of its properties. The insurance group has undertaken improvement work on its portfolio in Madrid, where it has finished work on an asset it owns on Calle Sor Ángela de la Cruz amounting to €8 million, where the General Regional team for Madrid is located; and work on Plaza de la Independencia amounting to €7.39 million. That building has already been leased out for the most part (70% of the leasable surface area).
In addition, Mapfre has started refurbishment work on the facilities of its property on Calle Mateo Inurria, a building that has been leased in its entirety to the Ministry of Finance for a rental cost of €5.04 million per year. Improvement work on its offices on Calle General Perón is still underway with an investment of €5.81 million in 2017. Work is also still underway on the tower in Barcelona amounting to €22 million in 2017, which is expected to be completed during the first half of 2018.
At the end of 2017, the market value of Mapfre’s real estate investments in Spain amounted to €2.945 billion, “with latent capital gains of more than €750 million”, explains the group. Of the total, approximately 58% corresponds to properties for own use, and the remaining 42% relates to properties that are rented out to third parties or are on the market for sale. The occupancy ratio of the rental properties amounts to 83%, considering that at the moment, more than 7,500 m2 of its space is being renovated for repositioning on the market from 2018 onwards.
Commitment to Europe
In March, the insurance group announced its partnership with GLL to launch a fund to invest up to €300 million in the purchase of prime offices in Europe over a two to three year period.
The new vehicle launched by Mapfre and GLL aims to enter large capitals cities across the continent (Germany, France, Italy, the Netherlands and Belgium) with the aim of achieving returns of between 4% and 6% per year and diversifying its portfolio against other types of financial assets (…).
Original story: Eje Prime
Translation: Carmel Drake