Tag: office portfolio

Villar Mir to Invest in Portfolio of Office Buildings

16 August 2019

Villar Mir, through its subsidiary real estate company Espacio, is planning to build a portfolio of office buildings. The firm’s strategy includes development of acquisition of existing assets for rehabilitation and the development of new buildings.

Villar Mir has a land bank valued at 220 million euros on which it intends to build office buildings. The company’s objective is to create a cash flow that will provide it will a secure position during the coming economic cycle.

The group’s first project will be a turnkey development on a 25,000-square-meter plot of land it owns in Valdebebas, Madrid.

Original Story: Eje Prime

Adaptation/Translation: Richard D. K. Turner

AEW Acquires Four Office Buildings in Madrid and Barcelona

15 July 2019 – Richard D. K. Turner

AEW acquired four office buildings in Madrid and Barcelona from Inmobiliaria Norte Sur. The assets have a total area of ​​25,000 square meters. Two are located in the two cities’ prime business districts, at  Calle Claudio Coello 124 in Madrid and Calle Comte d’Urgell 143 in Barcelona. These assets have an occupancy rate of 87%. The other two are in the Mas Blau shopping centre, in Prat de Llobregat, and in Sant Joan Despí, both in Barcelona.

Original Story: EjePrime

Starwood Capital Finalises the Purchase of an Office Portfolio for €125M

24 January 2019 – Expansión

The fund Starwood Capital is seeking to strengthen its presence in Spain with the purchase of a portfolio of offices in Madrid and Barcelona. Specifically, Starwood is finalising the purchase of an office complex in Madrid, comprising four buildings, and another one in Barcelona from the Socimi Autonomy for €125 million, according to explanations from market sources speaking to Expansión.

In the case of Madrid, the four office blocks are located in the north of the city, inside the Omega business park, in the Arroyo de la Vega area. They span a combined surface area of 33,458 m2 and have 940 parking spaces.

The Omega Business Park, which is home to the headquarters of companies such as Samsung, BP and Allianz, is located next to the airport of Madrid and has become one of the most established areas in the north of the capital.

Besides the offices in Madrid, the operation also includes a new build property in the 22@ district of Barcelona, with a surface area of 12,596 m2.

The building in Barcelona comprises two towers connected by a common entrance hall, with twelve and four floors, respectively. The building also contains commercial premises and 216 parking spaces.

The building on Calle Pallars is occupied by tenants such as Regus, General Electric and Ticketmaster. The operation has been advised by the real estate consultancy CBRE, on the vendor side, and by Drago Capital, which has advised the buyer and which will manage the properties (…).

Original story: Expansión (by R. Arroyo)

Translation: Carmel Drake

Blackstone Negotiates Sale of the Ilunion Portfolio with Zurich for c. €100M

13 November 2018 – Cinco Días

The real estate giant Blackstone is pushing ahead with several divestments from its recently acquired Socimi Hispania. The US fund is negotiating with the insurance company Zurich regarding the sale of a portfolio of office buildings, which are occupied by Ilunion as a tenant, according to confirmation from sources in the real estate sector. The price of the operation will exceed €100 million.

Blackstone acquired Hispania through a takeover launched in the spring, which valued the Socimi at almost €2 billion. The US fund completed the operation because it was primarily interested in the company’s hotel assets, given that it owned 13,100 rooms across 46 hotels, the largest owner in the country in that segment. The US giant wants to create a hotel platform in Spain and, in fact, has already ceded the management of those establishments to its company HI Partners, the manager of other hotels purchased from Sabadell.

In total, Hispania’s portfolio has a gross asset value (GAV) of €2.811 billion. The most residual part, Hispania’s housing, is already being managed by another company owned by the fund, Fidere. And for the office component, the strategy is to divest the assets.

When Blackstone acquired Hispania, it broke off an agreement that the Socimi had with the British fund Tristan Capital Partners to divest the entire office portfolio for more than €500 million. That was the second time that the sale had been thwarted, previously Swiss Life was the buyer, in that case at the end of the summer in 2017, when the uncertainty surrounding the Catalan sovereignty process meant that the conditions of the insurance company were more demanding.

By contrast, the strategy now is to put this portfolio up for sale in a piecemeal fashion. The most advanced process relates to four properties in Madrid, which are all occupied by Ilunion, the holding company of the ONCE, as the tenant.

The largest property is the Torre 30 Building, appraised at €50 million at the end of 2017. Located next to the M-30 by the junction with the A-2, it was constructed in 1968, renovated in 2006 and has a surface area of 11,417 m2.

The sale also includes the Mizar Building, a property next to Torre 30, where in addition to Ilunion, Eysa and Paramount also have their headquarters, according to Hispania’s public documents, and which is worth €27.4 million. They are joined by the Pechuán building in Plaza Sagrado Corazón de Jesús next to Príncipe de Vergara, worth €19 million. Finally, the portfolio contains a property on Calle Comandante Azcárraga in the Pio XII area, worth €10.1 million.

Those four buildings had a combined appraisal value of €106.5 million as at 31 December 2017. Their current value is unknown but it is expected to be higher given that in May, Hispania revalued its assets upwards by 5.7% on average.

The rest of the office portfolio is not officially up for sale, but given that they are not strategic assets for Blackstone, the expectation is that it will receive offers for them, as a group or in different sub-portfolios.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Lar puts its Office Portfolio up for Sale for €110M

5 October 2018 – Eje Prime

Lar is strengthening its plan to divest its non-commercial assets. The Socimi has placed its office portfolio on the market for €110 million. The package comprises two buildings, one located in Madrid and the other in Barcelona.

The two properties span a combined gross leasable area (GLA) of 23,800 m2. The building in Madrid is located on Calle Eloy Gonzalo and has a surface area of 6,363 m2. The Socimi acquired the asset in December 2014 for €12.7 million, according to Expansión.

The office building in Barcelona has a surface area of 8,610 m2 and is located on Calle Joan Miró. The property cost Lar €19.7 million in total when it purchased it in June 2015.

This operation follows other divestments that Lar has been carrying out since September 2017 when it sold its office building on Calle Arturo Soria in Madrid to Colonial for €32.5 million. Similarly, last July, the Spanish Socimi completed the sale of its logistics portfolio to Blackstone for €120 million.

To date, the divestments carried out by the company amount to €265 million, more than half the figure established in Lar’s business plan to 2021. In parallel, the Socimi plans to continue investing in shopping centres and retail parks. The group’s most recent acquisitions have included the purchases of the Rivas Futura shopping centre in Madrid for €62 million and the Adadía shopping arcade in Toledo for €14 million.

Original story: Eje Prime

Translation: Carmel Drake

Catalana Occidente Injects €31M into its Real Estate Subsidiary to Buy Assets

20 September 2018 – Eje Prime

Catalana Occidente has given a boost to its real estate subsidiary to handle new purchases. Grupo Catalana Occidente Activos Inmobiliarios has carried out a capital increase amounting to €31.1 million, which has been fully subscribed by several group companies. Those funds have been earmarked for the acquisition of the WIP office building and the Bellesguard Tower, both located in Barcelona, according to sources at the company speaking to Eje Prime.

With this operation, the real estate arm of the insurance group is dealing with the strong investment activity in the real estate sector, with a cumulative investment of more than €200 million in two years. Following the increase, the share capital of Grupo Catalana Occidente Activos Inmobiliarios is set at more than €69 million.

In July, Catalana Occidente purchased the WIP office building from the property developers Castellví Group and the funds Stoneweg and 1810 Capital for €20 million. The property, located at number 121 Calle Ciutat de Granada, in the 22@ district of Barcelona, has a surface area of 4,400 m2 and is leased to the multi-national WeWork.

WIP is located next to two other buildings, Luxa Silver and Luxa Gold. They have a surface area of 10,000 m2 and 7,000 m2, respectively, and have formed part of Catalana Occidente’s asset portfolio since September 2017. The group spent €90 million on the purchase of the Luxa office complex, which is leased to Amazon and WeWork.

These three new buildings have been added to the one that the company purchased at the beginning of last year, also in the 22@ technological district, when it acquired the La Llave de Oro building, which houses the Atos headquarters, for €21 million.

A clear commitment to the office market

The other asset behind this capital increase is the Bellesguard Tower, a modernist building located in Barcelona and constructed by Antonio Gaudí. In July, Catalana Occidente reached an agreement to acquire that property, owned by the Guilera family, for €30 million.

The operation responds to the group’s intention to “add value to the company, and is exceptional nature”, according to a statement from the insurance company, which also plans to finance the conservation and restoration of the tower, which is open to the public.

At the end of 2017,  Catalana Occidente had real estate assets worth more than €1.17 billion. Its portfolio mainly comprises offices (95%), a strategy that seems to have a lot of potential. In fact, in the last two years alone, the company has spent €208 million on the purchase of six business buildings located in prime areas of Madrid and Barcelona.

Original story: Eje Prime (by B. Seijo)

Translation: Carmel Drake

Hispania Will No Longer Be a Socimi & Blackstone Will Channel its Future Profits via the Cayman Islands

13 June 2018 – El Confidencial

Following the green light granted by the CNMV – Spain’s National Securities and Exchange Commission – for Blackstone’s takeover of Hispania, the countdown has begun for the US fund to take control of the company, a milestone that is dependent upon it obtaining 50% plus one share and which, if no rival offer prevents it, could start to take shape on 13 July, when the term for the acceptance of the offer comes to an end.

From that moment on, Blackstone plans to exclude the Socimi from the stock market, which means that it will lose the benefits of the special tax regime, whereby it has been exempt from paying corporation tax in exchange for distributing at least 80% of its profits in the form of dividends, which are taxed at between 19% and 23%.

Blackstone’s decision will, therefore, have a direct impact on the public coffers, given that the conversion of Hispania into a limited company (SA) means that it will now be taxed as a company. Nevertheless, as is typical amongst these large investment vehicles, the fund has created a company structure aimed at financially optimising its tax bill for the duration of the investment period.

According to confessions made by Blackstone itself to the CNMV, the offer is being made through the company Alzette Investment Sarl, which was constituted on 2 February in Luxembourg for the purposes of this operation. Its only shareholder is Alzette Holdco Sarl, also a Luxembourg-registered company and itself wholly owned by BRE/Europe 9NQ Sarl, which is in turn controlled by BREP Investment 9NQ LP, an exempted limited partnership registered in the Cayman Islands.

As such, the ultimate parent company operates under a tax haven that ensures that it will be free from paying taxes for 50 years (…). In fact, the shareholders of BREP Investment 9NQ LP are different offshore companies owned by Blackstone, which are also covered by the exempted limited partnership structure of the Cayman Islands, with the exception of two, which are headquartered in the US tax haven of Delaware, and which are the entities that really benefit from this structure.

Flagships of opportunistic investment

Blackstone’s BREP funds are the US giant’s “flagships of the opportunistic investment funds”, according to its own definition in the takeover prospectus “with USD 75 billion of investment capital, a net return of 16% since 1991 and 1% of losses over 27 years”.

In order to raise the €1,589.6 million that Alzette will have to hand over if all of Hispania’s shareholders accept the terms of its offer (the fund already controls 16.5% of the share capital after it acquired the stake previously owned by George Soros), the different Blackstone funds have committed to contributing the money, either through capital, shareholder loans or other intra-group financing instruments.

In these types of company structures, the different loans arrangements made between the parent companies and their subsidiaries allow them to decrease the overall tax bill in the different countries in which the corporate chain operates in the form of the interest payments that the funds make to themselves and which allow them to “repatriate” the money invested to the Cayman Islands, at the same time as reducing the profit, and with it, the tax charge.

In the case of the takeover bid for Hispania, in addition, Blackstone is also planning to resort to lenders to raise financing amounting to €850 million, referenced to 3-month Euribor, plus a margin of up to 2.25% per annum, and with a maturity date of 15 May 2021, and with the option of being renewed for one more year.

Business plan

Similarly, in order to acquire the stake from Soros, Blackstone signed a financing agreement with Morgan Stanley for a maximum amount of €250 million, although in the end it only drew down €128.6 million. In terms of the financial commitments that Hispania currently has (€894.8 million), Alzette says that it is analysing different refinancing options, including both raising new debt and increasing the level of leverage.

In terms of the business, Blackstone’s plans for Hispania include completing the sale of the office portfolio, which the Socimi had to put on hold at the last minute, even though it had already reached an agreement with Tristán to sell it for more than €500 million, due to the presentation of the takeover bid.

By contrast, in terms of the hotel assets, which are the jewel in the Hispania’s crown, its intention is to hold onto the majority of them for between three and seven years, and transfer their management to the team at HI Partners, the company that the US fund acquired last year for €630 million and which it will likely end up merging with the Socimi.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Starwood & Carlyle Bid for San Fernando Business Park (Madrid)

11 May 2018 – Expansión

One of the major real estate operations of the year in the office segment is entering the home stretch.

The US fund Oaktree, which engaged the real estate consultancy CBRE to coordinate the sale of San Fernando Business Park, has been receiving binding offers for this office complex, located in San Fernando de Henares, in the east of the Community of Madrid.

The international investors that have expressed their interest in the asset include the investment fund Starwood Capital and the private equity firm Carlyle, both of which have submitted binding offers and so entered the final round of bidding for the business park.

Oaktree acquired the San Fernando Business Park three years ago, when the US fund purchased a portfolio of unpaid debt worth €750 million from the German bad bank FMS Wertmanagement (FMS WM), which included, in addition to the office complex: luxury hotels, such as the Arts Hotel in Barcelona and another establishment in Cascais (Portugal); five shopping centres, including two in Madrid (Plaza Éboli and Heron City Las Rozas); several storeroom buildings; and other residential and industrial assets.

San Fernando Business Park comprises 13 buildings and spans a total surface area of 86,000 m2, as well as 2,500 parking spaces.

Moreover, the business complex boasts 40,000 m2 of green space and recreational areas. San Fernando Business park is accessible directly from the A2, M45 and M50 motorways and its onsite facilities include a gym, banks, a children’s nursery, meeting rooms and an auditorium.

Office market

As we wait to see how the sale of Hispania’s office portfolio pans out, which is worth almost €600 million but which is up in the air due to the takeover bid (OPA) that the US fund Blackstone launched for the Socimi, the purchase of San Fernando Business Park looks set to be one of the most important operations of the year in the office segment.

Investment

Last year, investment in the office segment amounted to €2.3 billion, less than half the previous year, due to less activity by the Socimis, a shortage of supply in good locations and the challenge for investors to find the desired returns.

So far this year, investment in the office segment has accounted for 42% of the total transacted volume, reaching €1.72 billion, given that the figure includes Colonial’s takeover of Axiare, which was successfully closed in February and which has caused the investment figure to soar.

More than 600,000 m2 of office space was leased in Madrid last year, which represents the best figure in the last decade, whilst in Barcelona, 345,000 m2 of office space was leased during the same period.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

BNP Paribas: RE Inv’t Amounted to €2.45bn in Q1 2018

6 April 2018 – Expansión

The rate of growth of real estate investment in Spain is slowing down, although it retained its strength during the first quarter of 2018. The volume transacted during the 3 months to March amounted to €2.45 billion, having decreased by 27.5% with respect to the same period last year (€3.38 billion), a figure that included record operations such as the purchase of the Xanadú shopping centre for €560 million, which caused investment volumes to soar.

According to a report compiled by the consultancy firm BNP Paribas Real Estate, the retail segment led the investment ranking during the first three months of the year to account for 44% of the total volume transacted, in other words, around €1.08 billion. That was thanks to operations such as the sale of a portfolio of stores by Inditex to the German fund Deka for €370 million; the sale of Parque Corredor, in Torrejón de Ardoz (Madrid), for €200 million; and the sale of the Las Habaneras shopping centre in Orihuela (Alicante), for €160 million.

Retail was followed by the office and hotel segments, with a volume of around €350 million each, and the logistics segment with 10% of the total.

Residential assets also accounted for 10% of the total investment figure thanks to operations such as the purchase of a portfolio of 1,500 homes by Testa from CaixaBank for €228 million, whilst alternative assets gained traction to account for 7% of the total volume invested.

Assets

By type of investor, funds are becoming established as the main buyers of real estate, unseating the Socimis, which remain immersed in the asset management process and which are preparing to dispose of some of their assets.

David Alonso, Director of Research at BNP Paribas Real Estate, explains that the high volume operations currently in the pipeline indicate that the total investment figure for the year as a whole may well reach, or even exceed, the investment volume recorded in 2017.

The aforementioned operations include the portfolio of offices that Hispania has on the market, which has an estimated closing price of between €500 million and €600 million; three shopping centres that Sonae Sierra and CBRE Global Investors have up for sale worth around €500 million; a portfolio of four shopping centres owned by Unibail Rodamco; and several large office complexes in Madrid and Barcelona located in good areas of the market.

More caution

Luis Nuño, Director of Office Investment at BNP Paribas Real Estate, indicates that the market remains optimistic about the evolution of real estate investment in Spain, although with “more caution” than in previous years.

“Investors are going to have to propose more imaginative formulae and be more flexible if they want to access certain operations. Vendors’ expectations have been increasing gradually in recent years, making it more difficult to achieve the returns demanded by investors”, he said.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Hispania’s Shareholders Approve Block Sale of its Office Portfolio for €600M+

4 April 2018 – Eje Prime

Hispania is putting the sale of its office portfolio back on the table. Today,  at its General Shareholders’ Meeting, the Socimi will submit to approval the block sale of its rental office portfolio, a set of 25 buildings worth €603 million. It is a divestment that the Socimi, in which George Soros holds a stake, launched a year ago, suspended in October 2017, and which it has now resumed.

Hispania’s assembly is also going to approve the distribution to shareholders of an extraordinary dividend of €1.97 gross per share linked to the completion of that divestment. The payment will be charged against the issue premium and will involve distributing €215 million in total. This dividend will be added to the ordinary remuneration to shareholders, which will amount to €0.87 per share this year, the first payment of which, amounting to €0.41295 gross per share, was already made in March.

Besides Soros, who holds a 16.6% stake in the firm, the other main shareholders are other overseas institutional investors, such as Fidelity, with a 7% stake, Conepa, with another 6% stake, and Bank of Montreal and BlackRock, with 3% each. The Socimi chaired by Rafael Miranda is framing the sale of its office portfolio within its strategy to focus on the hotel business.

Other items on the agenda at Hispania’s General Shareholders’ Meeting include the re-election of the directors to their roles as the Chairman of the firm and another five members, including Concepción Osácar, José Pedro Pérez-Llorca and Joaquín Ayuso. Hispania will also approve its accounts for 2017, which reported a net profit of €222.82 million, down by 27.7% compared to the previous year.

Original story: Eje Prime

Translation: Carmel Drake