Orion & Wizink Abandon Their Plans to Build a Macro Shopping Centre in Sevilla

Although the project received the green light in January, the opening of the Lagoh shopping centre in 2019 and the rise of e-commerce have forced a rethink.

The impact of the coronavirus pandemic on retail has led to the definitive abandonment of the plans by the investment fund Orion and Wizink to build the Sevilla Park macro-shopping centre. The firms had been planning a large investment in the project, of up to €300 million, according to ABC Sevilla.

The idea to build this 150,000-square-metre shopping centre was originally conceived by the French fund Orion – Neinor’s largest shareholder – and the cultural promoter Octagon – which manages the former Palacio de Deportes in Madrid (currently the Wizink Center) – back in 2014. It was called Sevilla Park and was going to house a large auditorium with capacity for 20,000 people on a site owned by the port of Sevilla and the CLH group.

Neinor Reports Profits of €90M, Exceeding its Own Forecast by 30%

9 January 2020 – El Confidencial

Nine months after issuing a profit warning, announcing a new roadmap and appointing a new CEO (Borja García-Egotxeaga (pictured below)), Neinor has reported profits of €90 million, up by 30% compared to the revised forecasts of €70 million.

The property developer handed over 1,269 finished homes last year, within its forecast range of between 1,200 and 1,700, and has another 200 ready to hand over this year. It plans to hand over half of those this month (January) and the rest during the course of the year, depending on its margins.

2020 is going to be a critical year given the looming change in the economic cycle, with stabilisation expected in terms of sales and prices. In 2018, prices rose by 8%; in 2019, they increased by 6-7%; and in 2020, the firm’s objective is to sell 1,700 homes and achieve a price increase of 3.5-4%. Thanks to these rises, the group’s margin amounted to 30% at the end of 2019.

By contrast, Neinor has not managed to fulfil its land purchase plan to date, although it expects to achieve its ambitious forecasts for 2020 when it aims to invest €110 million in total.

The property developer’s two largest shareholders, Orion (28%) and Adar are both keen to support the growth of the company and benefit from the consequent recovery of its share price.

Original story: El Confidencial (by Ruth Ugalde)

Translation/Summary: Carmel Drake

Intu’s New Strategy in Spain: to Change the Names of its Shopping Centres

16 May 2018 – Eje Prime

Intu is betting on branding to raise the profile of its name in Spain. The company, which has a vast presence in the United Kingdom, where it owns almost twenty shopping centres, is going to replicate its British strategy in Spain, by adding the word Intu to the name of its retail complexes. This week, the company announced that its shopping centre in Zaragoza, which has been called Puerto Venecia to date, is now going to be named Intu Puerto Venecia.

It was in 2014 when Intu reached an agreement with the fund Orion European Real Estate to acquire the Puerto Venecia complex, the largest shopping centre in Spain, for €451 million. The complex contains a retail park spanning 82,600 m2, which was inaugurated in 2008 and a leisure and fashion area measuring 130,000 m2, which opened in October 2012 (…).

Since the purchase by Intu, the British group has carried out a series of changes to the appearance and management of the shopping centre. But it has not been until now that the group has decided to complete the process by adding the word Intu to the name of the complex, whereby following in the footsteps of Intu Asturias.

Now, the next step will be for Intu to apply the same strategy to the Xanadú shopping centre. The British group completed the purchase of that shopping centre, located in Arroyomolinos (Madrid), from Ivanhoé Cambridge for more than €520 million in March last year. That acquisition was the largest operation since Deutsche Bank paid €495 million for Diagonal Mar.

In May of the same year, Intu created a joint venture with TH Real Estate to share the ownership of the Madrilenian shopping centre, transferring 50% of the complex to TH Real Estate for €264.4 million, half of the amount that it had paid for Xanadú.

That shopping centre, constructed in 2003, has a total surface area of 153,695 m2 spread over two storeys and with a total of 220 stores, making it one of the largest retail complexes in Madrid. Its tenants include Inditex, El Corte Inglés, Hipercor, Bricor, Decathlon, Primark and Apple. Xanadú Madrid receives almost 13 million visitors per year and generates sales of around €230 million.

Shopping centres on the rise in Spain

Intu’s commitment to Spain comes at a good time for this retail format in the country. Sales registered at these complexes rose by 3.5% in 2017, to exceed €43.5 billion.

Specifically, revenues in the sector amounted to €43.59 billion in 2017. The market share of shopping centres and retail parks rose to reach 17.9%. Last year, around 1,900 million visits were registered at these complexes.

Meanwhile, investment in the sector soared by 35% in 2017, to €2.7 billion. During the course of last year, 29 transactions were closed involving 36 assets, according to data from the Spanish Association of Shopping Centres and Retail Parks (AECC).

Original story: Eje Prime (by C. Pareja)

Translation: Carmel Drake

Octagon & Orion will Invest €400M in Sevilla Park

13 March 2018 – Eje Prime

Sevilla Park has a start date. Construction of the concert venue and shopping centre is going to begin in March 2019 and will involve an investment of €400 million by the promoters of the project, the marketing and entertainment agency Octagon and the investment fund Orion.

The two companies have reached an agreement with the Town Hall of Sevilla to start building work on land in the Port of the regional capital. Nevertheless, the President of Octagons S2, Xavier Bartrolí, said at a press conference that, if the deadlines are not adhered to, it will be very difficult for the project to continue in Sevilla.

“It is not that we lack energy, but there comes a time when you start to feel a little fatigued”, recognised the director, whose plan with Sevilla Park is for it to start operating in 2020, the year in which the first international artists will be hosted in the space following 18 months of construction work, according to ABC de Sevilla.

The obstacle that the property developers had found until now was the transfer of some CLH deposits to another location from the port, a pitfall that has now been overcome, although it has resulted in an extra cost of €30 million for the investors.

Original story: Eje Prime

Translation: Carmel Drake

Real Club Valderrama’s Members Buy The Golf Course For €28M

31 October 2017 – Expansión

La Zagaleta group, headquartered in London and created by the Spaniard Enrique Pérez Flores, has reached an agreement with the members of the Real Club Valderrama to sell them the Valderrama company, owner of the famous Valderrama Golf Course, located in Sotogrande (Cádiz). The members of Real Club Valderrama will buy the golf course for €28 million, the same amount the current owners paid for the asset when they bought it. Valderrama’s members had initiated an arbitration process, but that will be suspended as a result of this agreement.

In January 2016, La Zagaleta group, owner of the urbanisation of the same name, located in Benahavía (Málaga), bought the Valderrama group for €40 million. A year and a half later, it got rid of the sports facilities, the clubhouse, several residential plots and the Valderrama Golf brands, following months of negotiations, where the club members initiated an arbitration process claiming their preferential acquisition right over the course had been forfeited.

Arbitrage

“In March, Real Club Valderrama initiated an arbitration process against La Zagaleta, on the basis that we consider that we were cheated out of our preferential acquisition right by the operation that was closed in 2015. During the course of this process, we initiated a negotiation and the resultant agreement is that the members will pay the same amount that  La Zagaleta paid to the fund MGI”, explains Javier Reviriego, Director General of Real Club Valderrama talking to Expansión. In this way, for the majority stake (94%), the club’s members (around 450 people from 40 different nationalities) will pay €28 million. “The purchase of the shares in Valderrama SA has been made for €23 million, plus debt of €5 million”, he said.

The club will finance half the operation with contributions of €30,000 per member, whilst the rest will be covered by a mortgage loan and own funds from the sports entity, founded in 1985. “We will continue investing and doing everything possible to ensure that Valderrama has the best golf facilities in the world. I also think that being the owners of the golf course strengthens our position in the sector as a private club, a unique model in Europe”, he said.

Over the last 30 years, the club’s members have operated the facilities through a rental agreement: “Being the owners of the course was a historical revindication for the members. The framework contract and lease agreement that regulated the relationship of the club with the ownership of the facilities did not grant full independence to the club’s board of directors to make decisions or establish the club’s strategic direction. There are also financial motives; the club used to pay a high rent and it is more profitable for us to invest in the asset”.

Meanwhile, following the sale, La Zagaleta will focus on the development of the Valderrama 2 urbanisation. It will be constructed on a plot spanning 220 hectares of residential use located just a stone’s throw from the luxury urbanisation in Sotogrande. There, La Zagaleta plans to build a luxury urbanisation with around 200 homes, priced between €3 million and €5 million, as well as a new golf course and hotel.

The operation in Valderrama follows the sale of other golf courses linked to urban developments, such as the purchase of Sotogrande by Orion, says Pablo Callejo, Director of Alternative Assets at the consultancy firm CBRE.

Original story: Expansión (by Rocío Ruiz/Lucía Junco)

Translation: Carmel Drake

Orion Launches €1,500M Fund & Plans Its Return To Spain

3 May 2017 – El Economista

Orion Capital has raised €1,500 million for its fifth real estate fund, which is dedicated to purchasing assets across Europe. According to sources in the sector, the Dutch fund has placed its focus on Spain, where it plans to spend some of that money. “It has not set itself a fixed objective, but Spain is a country that is very attractive”, confirm the sources.

The fund used to own a significant portfolio of assets in Spain, nevertheless, between 2014 and 2015, it completed the divestment of the last properties that it owned and maintained only its stake in Sotogrande, which it owns jointly with Cerberus.

Now, Orion wants to restore its presence in the country and to that end, it is looking for high value-added operations, including renovations and new developments. According to the sources, the fund, founded by Aref H. Lahham, Van J. Stults and Bruce C. Bossom, also wants to increase its exposure to Spanish real estate in an indirect way by acquiring stakes in companies in the sector and by purchasing debt.

Orion’s interests span almost every segment of the market. In the case of offices, the fund will concentrate its efforts in Madrid and Barcelona, looking at both refurbishments and new developments. To acquire shopping centres, it will expand its geographical range and will analyse operations in smaller cities as well. In that case, the fund will only participate in a project under development if it is in an advanced stage, where no planning is required. “Everything should be ready to build”, explain the sources, given that the manager has a team of just three people in Spain. The hotel segment is also on its radar, as well as logistics, in which “it will probably operate by constructing new spaces”.

During its previous phase of intense activity in Spain, Orion starred in several major transactions, such as the purchase of the Plenilunio shopping centre (Madrid) in 2009 for €235 million, which it then sold in 2015 for €375 million. Similarly, it completed a high-profile divestment when it exited Puerto Venecia, in Zaragoza, by selling the largest shopping centre in Spain to Intu for €451 million. Orion hopes to start buying assets in Spain once again before the end of the year.

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake

Who Are The New Owners In Spain’s RE Sector?

11 April 2017 – Cinco Días

Two weeks ago, Neinor Homes debuted on the stock market, the first residential property developer to do so in a decade. (…). Who is behind the current transformation of the sector?

Neinor Homes was created just two years ago by the US fund Lone Star, which purchased the former real estate arm of Kutxabank for €935 million. The Texan firm injected capital, bought land, renewed the image and put its first cranes in place to surf the top of the wave of the recovery in the house construction segment. The company debuted on the stock market, much more quickly than it had initially planned, with a valuation of €1,300 million, and an excess of demand over supply of 4.3 x, from large investors.

The real estate company led by Juan Velayos, as CEO, and Juan Pepa, as Lone Star’s strong man in Spain, has demonstrated investors’ appetite for residential construction – the last segment to recover in the real estate sector. Experts indicate that demand for homes in Spain will amount to around 150,000 properties per year, compared with the 50,000 units that are currently being constructed. This is a space that nobody has occupied in recent years, following the death of classic developers such as Martinsa-Fadesa, Reyal Urbis, Astroc, Nozar and Habitat.

But Neinor is just the first of many. It is being followed by the US fund Värde Partners, possibly the most active in terms of purchases in Spain, which created Dospuntos using its own land and the basis of the former real estate business of Grupo San José. Last month, it starred in its latest large acquisition, purchasing Vía Célere, the property developer created by Juan Antonio Gómez-Pintado, for €90 million. (…).

And following both of them is Aedas, backed by the fund Castlelake, which is also proving very active in creating an enormous bank of land. These three real estate companies alone are expected to invest around €5,000 million in land, purchases and investments. And the latter two may well follow in Neinor’s footsteps with stock market listings.

These new property developers are replacing the Socimis in the newspaper headlines (…), which since 2014 have been active in the first segment to experience the recovery, namely, rental assets: large office buildings, commercial premises, shopping centres, hotels and industrial warehouses.

The leader in that sector is Merlin Properties, which has become one of the leading real estate companies in Europe, with a portfolio of assets worth €9,800 million. (…).

The other large Socimi that has attracted international capital since 2014 is Hispania, managed by Grupo Azora, a Spanish fund backed by Concha Osácar and Fernando Gumuzio. (…). It has become the largest purchaser of hotels in Spain, with a giant portfolio worth €1,800 million.

Lar España, managed by Grupo Lar, and Axiare, chaired by Luis López de Herrera-Oria are the other large Socimis on the main stock market, which have created net assets worth more than €1,200 million in record time. But they are not the only ones. Attracted by the tax benefits, many wealthy families have also used this legal structure to organise their assets. Examples include the Montoro Alemán family with the Socimi GMP (…).

Not to mention the large international real estate funds, such as Blackstone, Cerberus, Iba Capital, TH Real Estate, Orion, HIG and GreenOak, which, together with the Socimis, have been and are the most active players in terms of acquisitions.

The Barcelona-based firm Inmobiliaria Colonial has also undergone a comprehensive clean-up, with the segregation of its toxic land and residential business, to become the second-largest real estate company in the country, after Merlin. (…).

Meanwhile, Metrovacesa has headed in the opposite direction. After transferring its tertiary business to Merlin, it is now getting ready to become one of the major players in the residential sector, with the backing of BBVA and Santander. Similarly, the Mexican magnate Carlos Slim has revived Realia, also giving new life to the dead activity of house construction.

Other key players in recent years have been the banks’ platforms or servicers, such as Aliseda, Anida, Solvia, Altamira and Servihabitat, which have been managing the real estate portfolios of the financial institutions and promoting housing developments. (…).

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

The Seven: Sotogrande Unveils Its Latest Ultra-Luxury Villas

11 April 2017 – Cinco Días

Unless you have €5,000 a month to spent on the service charge, then these exclusive villas are not for you. In fact, they are a concept that has rarely been seen anywhere in the world: a residential development comprising seven homes, each of which is going to be designed by an internationally-renowned architect, in a natural setting designed by a famous landscaper. The development is called The Seven. And it is the latest ultra-luxury initiative in Sotogrande, San Roque (Cádiz).

Sotogrande is undergoing a complete transformation. Established in 1962 by the millionaire Joseph Rafael McMicking, a businessman of Filipino origin, it quickly became one of the poles of attraction for domestic and overseas millionaires alike. Following the purchase from NH Hoteles in 2014 by the funds Cerberus and Orion, for €225 million, the management company has spent a while reflecting on what this urban complex in the Mediterranean should look like in the future. And the answer came from the past. “When you look at the history of Sotogrande, everything revolves around exclusivity and quality”, explains Marc Topiol, CEO of the company. (…).

The villas will crown a small outcrop in one of the highest areas of Sotogrande, with views over the sea, in the closed reservation of La Reserva, spanning 467 hectares. Construction of these dream homes, in the middle of this natural setting, will begin this year, with the aim of selling the properties by 2020.

The company has chosen seven internationally renowned architects to integrate their designs into The Seven (…).

A home in The Seven will cost between €14 million and €18 million. Each property will have a surface area of between 1,800 m2 and 2,400 m2, with the main bedroom measuring more than 120 m2. All of the homes will be equipped with everything a millionaire could wish for: a private spa, indoor and outdoor swimming pools, a cinema and gym. “We will take care of everything. From paying bills to maintaining the garden and the home, opening up the home when the owner so requests, daily room service, chef, shopping, cleaning, restaurant reservations, transport, it will be live living in a hotel”, says Topiol. All for €5,000 per month (excluding extras).

In addition, residents will enjoy use of the shared facilities that Sotogrande has designed for La Reserva: a spa resort, one of the largest navigable lakes in Europe, tennis courts, golf, an artificial beach, a beach club….in an investment made by the company amounting to €40 million. Not to mention the well-known facilities at the urban complex, such as the Santa María Polo Club, horse riding facilities, the port and the famous golf courses, such as Valderrama and Real Club de Sotogrande. (…).

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Deloitte: Inv’t In Shopping Centres Exceeded €1,500M In 2015

26 January 2016 – Expansión

Shopping centres are once again the most desirable assets for real estate investors, together with offices. The decrease in the price of all assets in general and the outlook for the recovery in consumption have placed shopping centres at the top of the list for funds and Socimis once again.

Although the final operations from last year have not been formalised yet, Deloitte calculates that investment in shopping centres amounted to €1,500 million in 2015, a figure than may increase by a further €100 million as a result of the transactions currently being closed, according to a study by its Financial Advisory team.

“29 operations were closed in 2015 and two or three more deals may be added to the list, once the final numbers have been formalised, which would increase total investment by around €130 million”, says Javier García-Mateo, Partner in the Financial Advisory team at Deloitte.

During the 10 months to October, investment in shopping centres in Spain amounted to €1,196 million, which fell below the figure recorded during the same period in 2014 (€2,247 million), but was higher than the amount spent in 2013 (in €867 million). Over the last three years, purchases of shopping centres accounted for around 25% of total investment volumes.

Highlights in this segment in 2015 include: the acquisition of the Plenilunio shopping centre in Madrid, for which the French group Klépierre paid the fund Orion €375 million. Lar España’s purchase of the Megapark in Bilbao, which also came in above the €100 million mark – the Socimi paid €170 million for that shopping centre. “The types of investor are very varied. Socimis and private equity funds are dominating the stage, but private investors are also making sizeable acquisitions in light of the ever lower yields being offered in the market for high street premises”, says García-Mateo.

Revaluations

The progressive increase in the interest for shopping centres has resulted in a decrease in the yield on these operations, which has fallen by 100 points in the last year, to reach 4.75%. As such it is now in line with the yields seen in other large European real estate markets such as Belgium (4.75%) and the UK (4.5%).

Another consequence has been the revaluation of this type of property. In less than two years, some shopping centres have experienced revaluations of more than 20%, says Deloitte.

Another key is the return of bank financing for the purchase of these assets. “The Spanish banks are positioning themselves strongly as financing sources against the funds of debt that have been financing shopping centre purchases until now”, added García-Mateo.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake

Barceló, NH & Meliá Have Sold Assets Worth €1,000M In 2 Yrs

7 January 2016 – Expansión

The large Spanish hotel chains, led by Barceló, NH and Meliá, are continuing to slim down their real estate portfolios and to opt for lease and management contracts – over the last two years, they have sold assets worth more than €1,000 million with a dual objective: to clean up their balance sheets and to finance the growth and modernisation of their properties.

Barceló leads the ranking, by volume, thanks to the creation of the Socimi Bay together with Hispania. The hotel chain transferred 16 hotels and two shopping centres to the new entity in 2015. Hispania holds a 76% stake in Bay, having invested €458 million in the company. In parallel, between 2014 and 2015, Barceló sold other assets in the USA, Latin America and Spain – including the Hotel Barceló Santiago to the Chinese company Chongqing Kandge – for €212 million.

The intention of the group controlled by the Barceló family was to reduce its real estate exposure, which had reached a historical peak. The effect of these divestments has been partly offset by the purchase of its competitor Occidental, also in 2015. Currently, Barceló owns 45% of the 118 hotels that it operates.

Meanwhile, NH signed the largest divestment operation seen in the last two years. In 2014, it transferred the Spanish business of Sotogrande to Cerberus and Orion for €225 million. The hotel chain still has projects in Italy, Mexico and the Dominican Republic, but they may be removed from its portfolio in the medium term, given that it has now placed its focus on hotel management.

Strategy

Both NH and Meliá, whose strategy at the beginning of the crisis involved signing the highest number of low value transactions, is now seeking out juicier, more selective deals. Thus, last year, Meliá joined forces with the fund Starwood Capital to create a company to which it transferred seven hotels worth €176 million. The chain owned by the Escarrer family, which holds a 20% stake in the new company, will manage the hotels for 15 years. Moreover, it also sold the Calas Mallorca complex, which has 875 rooms, for €23.6 million.

Unlike NH and Meliá, which have chosen to replicate the Anglo-saxon model and reduce their real estate risk, other chains such as Iberostar and RIU are continuing their commitment to own their properties and so their divestments are happening in dribs and drabs. In 2014, RIU sold the Hotel Waikiki in Gran Canaria for €24 million and it sold Hotel Olivina in Lanzarote to Mazabi, which Iberostar now manages under its Olé brand. Last year, Mazabi also acquired two Iberostar hotels (the Santa Eulalia and the Costa del Sol) for €60 million.

Meanwhile, Iberstar’s last known divestment was made in 2013, when it transferred a hotel in Mallorca through a finance leasing operation. When that contract terminates, it will recover the ownership of the property, which it is continuing to manage.

In 2016, the experts expect that NH and Meliá will continue to carry the baton, but that there will not be any major operations, since their deleveraging has now been reduced. NH’s debt decreased by 16% between 2010 and September 2015. Meanwhile, Meliá’s debt, which exceeded €1,000 million in 2011, had fallen to €840 million by September (2015).

Original story: Expansión (by Yovanna Blanco)

Translation: Carmel Drake