Redevco on the Hunt for Mixed-Use Buildings to Join the Rental Housing Bandwagon

3 June 2019 – El Confidencial

A few months ago, Redevco, one of the largest players in the commercial real estate sector in Europe, announced the launch of a €500 million fund aimed at creating a pan-European portfolio of 2,500 rental homes. The aim is to focus primarily on the Netherlands and Germany, but with Spain and the UK accounting for a significant share.

In Spain, the company is now analysing various operations with the aim of closing one or more during the second half of this year. The shopping centre specialist is considering all kinds of strategies, from acquiring properties already for rent to teaming up with property developers and buying assets to renovate.

It is mainly focusing on mixed-used properties in Madrid, Barcelona, Valencia and Bilbao, with an average investment volume of around €20 million per asset. Its aim is to acquire entire properties, rather than small or dispersed assets and it is looking for two-bedroom homes with an average monthly rent of €1,000.

In Spain, Redevco’s commercial portfolio comprises 32 properties worth €800 million. It also operates a joint venture with Ares to invest €500 million in shopping centres, which currently owns the Mercado de San Miguel and Parque Corredor, both in Madrid.

Original story: El Confidencial (by R. Ugalde)

Translation/Summary: 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

CBRE: Investor Interest in High Street Stores Skyrockets

5 July 2018 – Cinco Días

Stores on the most commercial streets of Spain have become an object of desire for investors in the real estate market. Large funds and insurance companies alike are investing in these types of assets and experts predict that a new record is going to be set in the segment this year.

Investors are expected to spend around €1.1 billion on these types of commercial premises in 2018, according to forecasts from the consultancy CBRE. That figure would exceed the amount invested in high street stores in 2017 by €300 million, equivalent to a growth rate of 36.9%. Of interest are shops on commercial thoroughfares such as c/Preciados and c/Serrano in Madrid and Paseo de Gracia and Portal de l’Àngel in Barcelona. In fact, those two cities accounted for 79% of total investment last year. “Nevertheless, other cities in Spain are on the rise and there is growing demand for investment products in cities such as Bilbao, Valencia, Sevilla and Málaga”, according to the report “The Keys to Retail in Spain”, published by CBRE yesterday.

Investors regard these types of well-located assets as a good option for placing their money, a solid alternative in the context of low-interest rates and because these high street stores perform better (than other commercial assets) in the face of competition from online retailers. Currently, according to CBRE; the returns on these properties amount to 3.5% in Barcelona and to 3.25% in Madrid; in other cities (with more risk), the returns are greater.

The stars of these acquisitions are mainly the large funds. Hines, M&G, AEW, Thor, Union Investment, CBRE GI and Deka. “In 2017, in addition, an insurance company entered the high street sector for the first time: Generali acquired the Pull & Bear store on Calle Preciados in Madrid”, according to the report. Other active players include the Socimis, such as Tander, Ores, and Silicius, which have started to express interest.

In terms of large operations so far this year, in January, the German fund Deka acquired 16 Inditex stores for €400 million. Another significant operation was the acquisition of Mercado de San Miguel by the Dutch fund Redevco, for €70 million.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Redevco & Ares Purchase 70% of Parque Corredor Shopping Centre

2 February 2018 – Expansión

Yesterday, after more than a year and a half of negotiations, Redevco Iberian Ventures – the joint venture formed by Redevco and Ares – closed the purchase of 70% of Parque Corredor (located in Torrejón de Ardoz, Madrid) for €140 million. The new owners are preparing to give the asset a makeover, with an additional investment of €40 million, which will be used primarily to renovate the asset. Until now, Parque Corredor had a very fragmented ownership structure (…) and although the asset has an occupancy rate of 95% and receives more than 10 million visitors per year, investment is required for its repositioning.

With the completion of this operation, which has been advised by Deloitte, Cushman & Wakefield and Simmons & Simmons, Redevco Iberian Ventures has acquired the 40% stake held by Sareb – the largest shareholder until now -; the 14.5% stake held by Aermont (previously Perella Winberg); the 3.6% stake held by El Corte Inglés; and the 3% stake held by Bowling, as well as almost 10% held by smaller shareholders. On the other hand, Alcampo will retain its 24% stake in Parque Corredor, as will the Town Hall of Torrejón de Ardoz, which owns a municipal court there, and Toys R’ Us.

Parque Corredor is the third largest shopping centre in the Community of Madrid, behind Xanadú and Parquesur, and one of the largest in Spain, with a surface area of 123,000 m2 and 3,800 parking spaces. In the past, the centre was controlled by CatalunyaCaixa, which foreclosed a loan that had been granted to Testa. That stake was subsequently passed onto Sareb.

The new owners plan to reposition the shopping centre, which opened its doors in 1996. Redevco and Ares plan to spend €40 million on the complete renovation of the asset, which will be undertaken in stages and will not result in the temporary closure of the shopping centre. The remodelling plan, approved in July last year by the community of owners of the centre, is supported by the tenants.

Renovation

The proposed renovation will involve increasing the size of the stores so that some of its main tenants can open flagship stores there and making the leisure area more attractive to increase the number of visitors. The renovation work may take between 12 and 18 months. Parque Corredor is home to 180 establishments, an Alcampo supermarket measuring 24,000 m2 and nine cinema screens managed by Cinesa. Currently, the fashion and accessories section accounts for 24% of the shopping centre, with tenants such as Primark, H&M, El Corte Inglés, Sfera and Mango, amongst other brands. Next comes the Alcampo hypermarket (24%), the restaurant area (14%), leisure (10%), services (9%) and food, perfume and cosmetics (9%).

Competition

Inside Parque Corredor’s area of influence, the French firm Compañía de Phalsbourg plans to open the Open Sky shopping centre, measuring 85,000 m2. The construction work on that centre started in October last year.

Redevco Iberian Ventures, created in September 2015, acquired the Mercado de San Miguel in Madrid last summer for €70 million. In addition, last year, the joint venture company sold a portfolio of nine shopping centres to Vukile Property Fund, a company listed on the Johannesburg Stock Market (South Africa) through its Socimi Castellana Property for €193 million.

The company owned by Redevco and Ares has funds amounting to €500 million allocated for identifying and acquiring assets.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

JLL: Retail Inv’t Will Soar To €4,000M+ In 2017

6 November 2017 – Eje Prime

The retail segment is attracting the attention of investment funds and is set a register a new record in 2017. Investment in retail assets is expected to soar by the end of this year to exceed €4,000 million, according to estimates from the real estate consultancy firm JLL. Operations such as the sale of the Mercado de San Miguel and the Mercado de Fuencarral, both in Madrid, will help this segment of the Spanish real estate sector record a new milestone this year.

So far this year, the commercial premises business has already broken all the records and registered the highest level of investment for the last fourteen years. During the nine months to September, the volume of investment in the retail sector amounted to almost €3,488 million, according to the Market Fundamentals report for Q3, compiled by the consultancy firm.

“The inter-annual footfall index in Spain rose by 1.7% in September and retail sales rose by 0.9% with respect to the previous month”, explain professionals in the retail business. This fact, together with the reality that prime rents are continuing to grow at a good pace, means that funds are looking very closely at retail premises.

The large operations involving portfolios of hypermarkets located across Spain stand out, as do the sales of the Mercado de San Miguel and the Gran Vía Alicante shopping centre. Other operations, such as the sale of Mercado de Fuencarral by Activum to AEW for €50 million have also helped to boost business in this segment in Spain.

“In terms of trends in the retail sector, over the last few months, we have seen how the traditional large format retailers are continuing to move into the city centres, convinced that their proximity to consumers will generate greater sales opportunities for them”, explain sources at JLL. Examples include Decathlon’s arrival on Calle Fuencarral and the opening of a Leroy Merlin store in the heart of Barcelona.

Another example is the case of Ikea on Calle Serrano. The Swedish group has just debuted its “test” of its new format, known as Ikea Temporary; it opened the doors of its first establishment in the centre of Madrid, in a building owned by the Loncito family office.

Moreover, last month, Media Markt opened its third urban store in Madrid, in the central Plaza del Carmen, close to the Preciados shopping street. In this way, Media Markt Preciados became the company’s 81st store in Spain and its 11th in Madrid.

Although the brand dedicated to the distribution of consumer electronics has now opened several stores under this “proximity format” in Valencia (Calle de Colón), Madrid (Calle de Alcalá and Paseo de la Castellana) and Barcelona (Plaza Cataluña and the Digital Store on Avenida Diagonal), the company is looking to further consolidate its arrival in Spain’s city centres with this latest opening.

Original story: Eje Prime (by C. Pareja)

Translation: Carmel Drake

JLL: RE Inv’t Amounts To €8,697M In 9 Months To Sept 17

2 October 2017 – El Mundo

The Spanish real estate sector is recovering in leaps and bounds to the position it was relegated from during the years of the financial crisis and is becoming an object of desire once more for domestic and overseas savers alike. Proof of this is the fact that investment in the sector to date this year amounts to €8,697 million. As such, it is already approaching the total volume of investment recorded in the whole of 2016 (€9,508 million). In other words, with three months to go until year end, the cumulative annual investment figure already represents 91.46% of the prior year figure (…), according to data compiled by the consultancy firm JLL about direct investment in the tertiary sector – hotels, logistics, retail and offices – and the residential segment.

The data does not include indirect investment or corporate operations, however, it does reflect two of the trends that are marking the recovery of the real estate market in Spain: the boom in retail and the renewed interest in residential. Not in vain, investment in both sectors during the nine months to September has already exceeded the total for last year.

In terms of retail, major operations, such as the sale of the Mercado de San Miguel and the Mercado de Fuencarral in Madrid for €70 million and €50 million, respectively, contributed to boosting the investment volume to €3,267 million by the end of Q3, compared with €2,977 million for 2016 as a whole. Sources at the consultancy firm estimate that the total investment figure for the year may exceed €4,000 million and they forecast that it will be “a record year in the segment due to the number and volume of operations closed or in progress”.

Meanwhile, investment in the residential segment during the first 9 months of the year amounted to €1,188 million, compared to €802 million for the whole of last year. The data follows the positive trend of other indicators such as house prices – which rose by 5.6% in the second quarter of the year compared to the same quarter in 2016, according to the National Institute of Statistics (INE); sale and purchase operations, which grew by 14.7% during the same period; and the number of mortgages constituted, which rose by 32.9% in July in YoY terms (…).

It is not the only segment of the market to see such dynamism, given that the fever has also reached the office market. At the end of the third quarter, the sector had recorded investment of €1,759 million compared with €1,541 million during the same period last year. Sources at JLL highlight that the market in Barcelona, where the volume during YTD September (€714 million) is already 37% higher than 2016 as a whole, may end this year with double the investment figure recorded last year (…).

It may also be a record year for the logistics segment, where cumulative investment to date amounts to €578 million, around €100 million higher than during the first three-quarters of 2016 (…). The increase in consumption and the arrival of Amazon are marking the reconfiguration of that sector, especially in large urban areas (…).

Meanwhile, in the hotel sector, investment to September exceeded €1,900 million, which represents 85% of the figure recorded for last year as a whole. Changes in portfolios have been the stars in recent months, including transactions such as the purchase by Portobello Capital of a portfolio of resort hotels for €40 million.

Original story: El Mundo (by María Hernández)

Translation: Carmel Drake

Dutch Fund Acquires ‘Mercado de San Miguel’ For Record Price

28 July 2017 – El Confidencial

The Mercado de San Miguel has a new owner. A Dutch fund specialising in the real estate sector has just taken ownership of this historical and iconic building in Madrid. And it has done so for €70 million, a figure that, in absolute terms is not by any means one of the largest in the market, but which, nevertheless, represents the most expensive transaction per square metre that has ever been closed in the Spanish real estate market.

According to sources consulted by El Confidencial, for every one of its 1,200 m2, the buyer has paid €60,000, an amount that breaks all real estate records and which represents, for the founders and promoters of the project, several times their original investment.

The person that has led this project from the beginning is Montserrat Valle Hernández, the majority shareholder of the company that used to own the market, El Gastródomo de San Miguel. She was the architect behind the renovation of this iconic building, which last year marked its first century of life.

Sources consulted explain that prominent shareholders also included bankers such as Pedro Guerrero Guerrero (President of Bankinter), Salvador García Atance Lafuente (former President of Morgan Stanley in Spain), Paul Gomero Vaquero (Private Banking Partner at A&G), as well as the well-known journalist Guillermo Fesser and the businessmen Víctor Josue Alarcón, Pedro Gómez Blazquez and Juan Ramón Ramírez Lozano.

Aguirre Newman participated in the operation, which was signed on Thursday at a notary’s office on Calle Serrano in Madrid. Aguirre Newman led the sales process and studied the various offers that were received from domestic and overseas groups, to bring this deal to a successful conclusion. Sources at the consultancy firm declined to comment on the transaction.

A centenary building

The unique Mercado de San Miguel, located in the square of the same name, next to Plaza Mayor, was acquired more than a decade ago by a group of companies led by Monserrat Valle with the aim of restoring it and turning it into a gastronomic centre.

On 13 May 2009, it reopened its doors, restoring the splendour that it enjoyed in its heydey. The building was constructed between 1913 and 1916 and was designed by the architect Alfonso Dubé y Díez. Nowadays, it still retains its original iron structure dating back to the beginning of the 20th century, which stands out as one of its greatest features (…).

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake