26 March 2018 – Cinco Días
Spain was the setting for the largest real estate operation in the world in 2017. The stars were Santander, as the vendor, and Blackstone, as the buyer. The object of desire was the property portfolio that took down Popular. The price: no less than a valuation of €10 billion.
The purchase of Popular’s property portfolio (containing real estate assets and loans with real estate collateral) led last year’s ranking of the largest operations in the sector involving a single asset or portfolio, compiled by Real Capital Analytics (RCA). Of the largest transactions, those undertaken in China stand out in particular, as well as a handful of deals completed in the United Kingdom. The classification excludes operations involving the purchase of companies.
The operation to sell Popular’s portfolio, announced in August, after Santander took control of the entity in June, was structured into a company worth €10 billion, in which Blackstone controls 51% and the rest remained in the hands of the bank chaired by Ana Botín.
Following that purchase, as well as others, such as Catalunya Caixa’s portfolio, Blackstone is now one of the largest owners of real estate assets in Spain. Another major operation of this nature was closed a few months later when Cerberus purchased 80% of BBVA’s real estate portfolio worth €5.5 billion (…).
In total, around the world, last year, deals worth USD 143.2 billion were closed, which represented an increase of 14% compared to the previous year.
China starred in the majority of the largest operations last year. China Vanke acquired an enormous land portfolio for real estate developments in Cantón for €7.1 billion, which constituted the second largest transaction of 2017. The next largest sale in the Asian country was the purchase of part of an office and retail development in Shenzhen by the company Kingboard, which is headquartered in Hong Kong (…).
In Europe and the USA, the focus was on alternative investments, such as student halls of residence, hospitals and logistics warehouses.
In fact, the third largest transaction in the world last year involved an alternative investment. Specifically, the sale of a stake in a portfolio of hospitals and 200 nursing homes in the USA and UK, which was purchased by the Chinese insurance company Taikang Insurance Group.
In Europe, in addition to Popular’s portfolio, the next largest deal saw the sale of the Bluewater shopping centre in the United Kingdom, worth €2.1 billion, in which Royal London Mutual Assurance acquired a stake.
In terms of office buildings, the sale of the Leadenhall Building in London, popularly known as the “cheese grater”, also stood out; it was acquired by the investment group CC Land, from Hong Kong, for more than €1.3 billion.
Typically, the large buyers include the largest investment managers, such as Blackstone, Brookfield, Deka, THI, Axa, Invesco and Morgan Stanley, whose clients tend to include sovereign funds from Norway and Abu Dhabi, as well as universities (for example, the Harvard investment fund) and workers’ unions or pension funds (German doctors, public sector workers from Korea and Ontario…).
In terms of 2018, for example in Europe, Borja Sierra, Executive Vice-President of Savills Aguirre Newman, believes that the clearest trend will be investment in the residential rental sector as a form of institutionalised real estate investment. “With the scenario of rising interest rates and measures from Trump that favour the renewal of infrastructure in the USA, I think that we will see a migration towards infrastructure funds, a move that will somewhat reduce investment pressure on the real estate sector. Nevertheless, the year has started with volumes that exceed those recorded in 2017, and so we expect a good year”.
Original story: Cinco Días (by Alfonso Simón Ruiz)
Translation: Carmel Drake