CBRE: Inv’t In Industrial & Logistics Assets Totals €386M In H1 2015

15 July 2015 – Misnaves.es

Investment in industrial and logistics assets in Spain amounted to €386 million during the 6 months to June 2015. This figure is considerably higher than the one recorded during the same period in 2014, when only €113 million was invested, according to data from CBRE, the leading global consultancy and real estate service company.

Several factors have contributed to this increase, including the greater ease of access to financing and the expectation that rents will rise.

International investors are continuing to see Spain as an attractive market, based on their analysis of location and type of asset. Investment funds and Socimis have been the main purchasers.

Madrid and Guadalajara accounted for the majority of the activity, although one-off transactions were also recorded in other Spanish cities. These include Merlin Properties’ purchase of Testa’s portfolio, spread across several regions, with a total surface area of 209,000 m2. They also include Rockspring’s purchase of two logistical warehouses, still under construction, in Montepino and Torrejón de Ardoz, with a surface area of 49,000 m2, which will be completed during the first quarter of 2016.

Two transactions were also recorded in Barcelona, including Baraka Global Invest’s purchase from Inbusa of Alstom’s facilities in Santa Perpetua de Mogoda, with a surface area of 370,000 m2 and a price of €60 million.

Both the increase in liquidity and purchasing activity, as well as the scarcity of supply in the market, has led to the compression of prime rental yields since 2012, to their current levels of between 6.5% and 7%.

Original story: Misnaves.es

Translation: Carmel Drake

Merlin To Sell Testa’s Hotel & Residential Portfolios

7 July 2015 – Cinco Días

Merlin wants to focus on its core business, specifically offices and shopping centres, and so it will divest all other kinds of assets from its portfolio. That was the announcement made yesterday by Ismael Clemente, the Chairman of the Socimi Merlin Properties, at an event in Barcelona.

Clemente revealed that Merlin will sell off Testa’s residential and hotel portfolios, which represent around 15% of the company’s total assets. However, it will retain Torre PwC, which houses the Hotel Eurostars Madrid Tower, since that is an iconic mixed-use building, which is also home to the offices of the consultancy firm PwC.

At a lunch meeting in the Círculo Ecuestre in Barcelona, about the challenges facing the real estate sector, Clemente said that following the Testa transaction – which has been structured in phases to compete before June 2016 – Merlin will continue to focus on offices, logistics assets and shopping centres.

Last year, Testa’s annual report valued its hotels at €430 million and its residential assets for rent at €276 million, from a total asset portfolio of €3,180 million.

Merlin Properties’ acquisition of Testa will create the largest Socimi and one of the largest real estate companies in Spain. The new company will have assets amounting to €5,500 million, which will generate gross rental income of around €290 million per year. The total consideration for the transaction will amount to €1,793 million, which will be disbursed in three phases until mid-2016.

AC, Tryp and NH

Sources at the company say that they have not yet decided any of the details about the divestment plan for the assets, which include, amongst others, the AC Forum, the Eurostars Grand Marina, the Tryp in Barcelona and the NH Sanvy, as well as the Eurostars Gran Madrid in Spain’s capital. However, they did confirm that Torre PwC will remain in the hands of the new company following the acquisition of Testa, because it would not make any sense to sell almost half of the building that houses the Eurostars Hotel.

In the residential business, the company will divest developments available for rent, both social housing, as well as “free” homes, primarily in the municipal districts of the Community of Madrid.

Moreover, the CEO from Extremadura considers that the acquisition of Testa will place Merlin firmly on the map, as one of the leading real estate companies in Spain, barely a year after it was founded as a Socimi.

He also predicted that the Socimi sector in Spain will grow from its current situation, of four listed companies, with a combined market capitalisation of €8,000 million, and will undergo a five-fold increase, with mergers between companies driving this growth, like has happened in the UK (22 companies with a market capitalisation of €69,069 million), France (33 with a market capitalisation of €75,041 million) and the USA (231 with a market capitalisation of €825,493 million).

Original story: Cinco Días

Translation: Carmel Drake

GreenOak Buys 5 Logistics Assets In Madrid For €75M

24 June 2015 – Expansión

GreenOak hereby completes its second major deal in Spain. Over the last few months, the US fund has closed the purchased of five logistics assets in the Community of Madrid, which cover a surface area of 200,000 m2 (100,000 m2 of facilities and 100,000 m2 of land).

Based on the prices of these assets in the market, GreenOak must have paid between €60 million and €75 million for the five assets, according to various real estate sources.

The US fund is planning to continue its growth in this segment and has already agreed to purchase another three logistics assets, also in the Community of Madrid, which will add a further 100,000 m2 to GreenOak’s portfolio in Spain.

The fund plans to continue acquiring assets – in Barcelona, Zaragoza and Valencia as well – to reach (a surface area of) half a million square metres over the next 12 months.

All of the assets purchased by GreenOak are located in Getafe and in the Corredor del Henares and are currently leased out to companies such as Seur, Montfrisa and TransXtar. The vendors have been banks, other funds and family-owned companies.

“Logistics is an asset class where scale and experience make a difference. We are focusing on Spain, where we have the strongest interest”, says John Carrafiell, founding partner at GreenOak.

“Given our resources to undertake investments in the sector, our team on the ground and our real estate due diligence skills, GreenOak can close deals quickly, with investments of between €5 million and €100 million”, says Carrafiell.

The chief executive at GreenOak is leading the fund’s strategy in Spain first hand. Carrafiell is regarded as one of the gurus of global real estate investment. He used to lead Morgan Stanley’s business in this segment and in 2004 he closed one of the largest deals ever in the UK, the purchase of Canary Wharf.

Fund history

After leaving Morgan Stanley, Carrafiell created GreenOak in 2010. Since then, the fund has raised assets under management amounting to €4,751 million and has opened offices in USA, London, Seoul, Munich, Tokyo and Madrid.

GreenOak signed its first major purchase in Spain last year, with the acquisition of seven shopping centres from the Dutch group Vastned Retail for €160 million.

Moreover, in recent months, GreenOak has tried to enter the office market. It was in the running for the purchase of Castellana, 77, which was eventually sold to GMP; and Castellana, 89, which was acquired by Corporación Financiera Alba, owned by the March family. The fund expects to close the purchase of offices and shopping centres within the next few weeks.

 Original story: Expansión (by Jorge Zuloaga)

Translation: Carmel Drake

CBRE: Investment In Logistics Sector Equals €205M In YTD15

5 June 2015 – ABC

The industrial and logistics sector recorded an investment volume of €205 million during the 5 months to June, i.e. double the amount recorded during the same period last year, as a result of eight transactions, according to data from the real estate consultancy, CBRE.

One of the most important transactions was Rockspring’s purchase of two logistics warehouses under construction in Torrejón de Ardoz from Montepino, with a surface area of 49,000 m2, which will be completed during the first quarter of 2016.

The increase in purchase activity has resulted in a rapid compression of prime rents, which now stand at around 7%, down from 8.50%-8.75% in 2013.

Last year, the hiring of logistics space in Madrid reached almost 400,000 m2, the highest figure seen in the last 4 years; whilst in Barcelona, more than 200,000 m2 was hired during the first quarter of 2015, showing a strong performance even during the worst years of the recent crisis.

In this sense, CBRE believes that rentals in Barcelona during the first half of 2015 may equal the figure recorded for the whole of last year.

The Corredor del Henares continues to be the favourite area for logistics companies in Madrid; whilst in Barcelona, demand is still primarily distributed between the “segunda corona” or ‘suburbs’ (Vallés Oriental y Occidental) and the “tercera corona” or ‘greater metropolitan area’ (the provinces of Gerona and Tarragona).

CBRE expects the buy-side pressure to continue, with the entry of a greater number of players, all in an environment characterised by greater ease of access to financing.

Original story: ABC

Translation: Carmel Drake

Investors On The Hunt For Prime RE Assets

20 April 2015 – Expansión

Opportunities / The Spanish real estate sector has aroused interest from all types of purchasers, from those that are more opportunistic in nature to those that are seeking lower risk. Offices, shops and shopping centres are the most sought-after assets, but hotels and logistics centres offer the best returns.

The volume of investment has increased from just over €3,000 million to more than €8,500 million in only 12 months. That has been the evolution recorded by the non-residential real estate segment, which reflects the highest level of interest from all kinds of investors in Spain. Thus, the Spanish market has become the second most attractive country for investment in Europe, according to the consultancy CBRE.

But, what are these investors looking for in Spain? Based on the nature of the deals closed last year, offices and commercial assets (both shopping centres and high street stores) are the most sought after. “The transactions that spark the most interest have a value of between €40 million and €50 million, rely on financing for 50-60% (of the price) and generate an initial return of between 5% and 7%. Investors are looking for buildings with: occupancy rates of more than 70%; solvent tenants; and (lease) contracts lasting for around 6 years”, explain sources at JLL, based on data collected in a survey prepared together with the Iese Business School from more than 100 investors.

Excess demand for buildings, and for offices and shopping centres in particular, has led to “very competitive processes for star assets, i.e. those that are best placed in terms of location or that have high rentals, as well as good buildings that require management to improve their profitability”, explain sources at Catella. “Socimis and US funds are very active, along with institutional funds. All of them are creating strong investor pressure”, they add.

The fierce competition has meant that offices and commercial assets no longer offer such high returns, and so many investors have started to invest in other kinds of assets, such as logistics and industrial centres and hotels. Thus, whilst deals involving offices in prime locations offer a return of 5.5%, well-located industrial assets generate a return of 8.25% and logistics centres in secondary areas produce returns of up to 9.5%, explain sources at Deloitte Real Estate.

In the hotel segment, the experts predict that the volume of investment in 2015 will exceed that recorded last year (€1,081 million) thanks to deals involving distressed assets and the activity of debt portfolios, given the shortage of attractive assets.

Renovation

Another possibility being considered by investors looking to enter the Spanish market and make a good return is the recovery of out-of-date properties or those without good lease contracts, through their renovation. “On the one hand, Socimis are looking to purchase offices, logistics assets and shopping centres that guarantee a return of between 6% and 7.5%. On the other hand, we have the real estate funds owned by private equity firms, which are looking for riskers assets that offer higher returns, such as properties that require renovation or land that needs developing. The expected returns in those cases can exceed 15%”, explain sources at Deloitte RE.

“Investors are becoming increasingly sophisticated and demanding. As has happened in other European countries, the most efficient buildings are going to be the key and, in the case of the financial district in Madrid, they have the lowest availability rates in Europe for that type of asset, which opens an important niche, both for investment as well as for the renovation of existing properties”, say source at Knight Frank.

Original story: Expansión (by R. Ruiz and Y. Blanco)

Translation: Carmel Drake

Prologis: Sales Grow By 16% In 2014

20 February 2015 – Cinco Días

The logistics space developer recorded sales of €37 million in 2014 and increased its leasable area by 31%.

Prologis, the multinational developer of industrial land increased its turnover in Spain by 16% to €37 million in 2014. The company improved its sales after investing €124 million in the country in one year.

Gustavo Cardozo, Vice President of Prologis and Director of the subsidiary in Spain stresses that “2014 was a very positive year” in which, he considers “we exceeded all market expectations”. Cardozo argues that Spain is attracting interest due to the “improvement in its image and in its economy”.

The company has had a presence in Spain since the end of the 1990s. In the last three years alone, it has invested a total of €160 million and 2014 was its busiest year. According to Cardozo, the market has been boosted by an improvement in the trade balance. “Spain is no longer a country where the domestic market comes first”. Through these acquisitions, Prologis has increased its portfolio by 152,000 square metres, representing an increase of 31%.

Prologis’ main focus of activity has been along the A-2 corridor, with Madrid and Barcelona as the primary targets. Nevertheless, according to Cardozo, the company is going to begin operating in other areas, starting with the south of the capital and the north of the Catalunian city.

“We are open to investing in wherever we see has a future”, explains Cardozo, who does not put any limit on the acquisitions that his company may undertake. Nevertheless, he considers that it will be “very complicated” to repeat the investment volume achieved last year since that was “an extraordinary period”.

In the acquisition sphere, Cardozo sees “increased competition” following the arrival of overseas investment funds. He states that Prologis will focus on tailoring its properties to the specific needs of its clients in Spain, as it has done in previous transactions, such as the one undertaken with TNT Express at the end of last year.

Spain accounts for barely 1.7% of the multinational (group’s turnover), although Cardozo believes that “it will continue to grow”. Prologis has a strong presence in USA, Asia and Europe and generates global turnover of $1,700 million (approx. €1,500 million). Moreover, although the group’s total sales grew last year, “Spain outperformed the average”. The increase in the group’s turnover was driven by improved rental prices.

Prologis closed 2014 with an occupancy rate of 84.9% across the almost 900,000 square metres of space it owns (in Spain). The objective of the company is to close this year with an occupancy rate of 90%. To this end, the launch of the Prologis Park San Fernando in San Fernando de Henares (Madrid) will play an important role.

Original story: Cinco Días (by Diego Larrouy)

Translation: Carmel Drake