CPPIB Puts Valencia’s Largest Hall of Residence Up For Sale

25 April 2018 – El Economista

The Canadian pension fund CPPIB is going to take advantage of the investor appetite that currently exists for student halls of residence by placing the “For Sale” sign up over one of its assets in Spain. Galileo Galilei is the largest accommodation block for students in Valencia and one of the largest in the country, according to confirmation from several sources speaking to this newspaper.

With more than 500 beds, the asset will come onto the market during the course of the next month, given that its owner has entrusted the sales process to the international consultancy firm Savills, which declined to comment.

Currently, this hall of residence, which is the only one located on the campus of the Universidad Politécnica de Valencia, forms part of the Liberty Living portfolio, one of the largest managers of student halls of residence in the United Kingdom. CPPIB acquired the British group in March 2015 for GBP 1.1 billion (around €1.2 billion) and continued to grow its portfolio.

In December 2016, CPPIB closed an important operation with Blackstone, which divested a portfolio of 13 student halls, located in the United Kingdom, Germany and Spain, which included Galileo Galilei. For that package, comprising 6,484 beds, the pension fund paid around GBP 460 million (€536 million) to the US firm.

Almost a year and a half later and with the sector in Spain in full boom, CPPIB has decided to put this property on the market in an operation that, according to the experts, could amount to €32 million.

Galileo Galilei currently has 520 beds spread across individual, double and triple rooms, which range in price from €515/month to €846/month. That figure includes all consumption, restaurant services, doctors, cleaning and sports activities.

In addition, the hall of residence offers supplementary services such as laundry, sheet and towel changes, a university support academy for all subjects, IT and nutritional advice, amongst others. Moreover, on the ground floor, the property houses a shopping arcade with restaurants and cafeterias offering special prices for students and various local shops such as a beauty salon, a hairdresser, a print shop, a travel agent, a newsagent, a driving school and a language academy.

With these features and its high occupancy rate, Galileo Galilei is expected to arouse significant interest amongst investors looking to gain positions in the alternative asset market in Spain in the main university cities, such as the case of Valencia. “Since 2016, the city has appeared in the Top 100 ranking of the QS Best Student Cities, which highlights the best cities in the world for students. It is also one of the most sought-after locations by European students participating in the Erasmus program,” says Patricio Palomar, Senior Investment Consultant at Aire Partners.

In fact, the expert highlights the growth potential of the supply in this market, which in its metropolitan area “has around 165,000 students matriculated, a mobility rate of approximately 29% and just 4,123 beds in colleges and halls of residence, which results in a supply rate that falls below the Spanish average”, Moreover, Palomar points out that “the process of economic recovery currently being seen in this area is expected to lead to an increase in demand from domestic and international students alike, and this situation of imbalance may be accentuated even further”.

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake

Gorbea Puts FCC’s HQ on the Market for €150M

30 November 2017 – El Confidencial

The headquarters of FCC, located in the Madrilenian neighbourhood of Las Tablas is on the verging of changing hands. Its owner, Gorbea Arrendamientos, has decided to cash in its holding and, to this end, has engaged CBRE to launch an express sale process. The intention is to choose a winner before the end of the year. Sources at the consultancy firm declined to comment.

This operation is set to be the most important of the year in the office segment, since the vendor aims to close the sale for around €150 million, according to market sources. That amount has not been reached so far by any of the other office transactions closed in 2017.

Gorbea Arrendamientos is owned by the Hernández-Beitia family, which acquired the land where the headquarters of the company controlled by Carlos Slim is now located for €80 million from FCC seven years ago.

Then, the infrastructure group signed a 20-year lease contract, of which almost 13 years still remain. Specifically, this rental commitment is the main feature of the operation, given that it guarantees the future buyer a stable income in one of the fastest growing areas of Madrid.

When Gorbea acquired FCC’s headquarters, a return of 7% was estimated on the basis of the rental contract. However, the new buyer will see that yield decrease to around 3%-4%. That range that makes this purchase a classic operation for conservative investors, such as insurance companies and pension funds.

Cinematographic fortune

The Gorbeas, as the family behind this real estate group is popularly known, amassed their real estate portfolio as owners of important cinemas in Madrid, including Roxy B on c/Fuencarral, Lido on c/Bravo Murillo and Renoir on c/Narváez. From there, they leapt into the office segment, where they are known for naming many of the buildings they own after their parent company, Gorbea.

Despite the box office crisis that caused so many cinemas to close, this family group still owns several subsidiaries linked to the world of cinema, such as Cines Floridablanca, Cines Retiro and Cines Princesa, in the centre of Madrid, as well as several multiplex companies in Majadahonda, Zaragoza and Guadalajara.

Construction of FCC’s headquarters, which cost €48 million to build, was completed five years ago and, since then, the building has housed more than 1,000 employees from the infrastructure group.

The building has a surface area of 21,000 m2, spread over 3 inter-connected buildings, which occupy an entire block and form an H-shape. They have two basement floors and a ground floor, with capacity for 400 parking spaces, as well as six office floors and a rooftop.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Ryanair Opens its Digital Hub in Madrid’s Eurobuilding II

30 November 2017 – Expansión

Ryanair has arrived in Azca. The Irish low-cost airline has leased 2,000 m2  of space in the Eurobuilding II, located in the heart of the Spanish capital’s financial district for its largest technological hub.

“It is an ideal location in one of the largest technological cities, with highly qualified people; plus, it is home to some of the greatest technological innovators in Europe”, said sources at the airline.

Ryanair, which avoided specifying the amount that it will spend on the new offices, chose Spain for the launch of its third digital innovation centre – it has two others in Dublin and Wroclaw – back in May.

The project will result in the creation of 250 jobs – 50 people have already started – with the aim of streamlining the low-cost airline’s web and the app. Travel Labs Spain is looking for all kinds of profiles, from data engineers to developers to experts in social media.

In the new offices, Ryanair’s employees have rest areas with pool tables, table football and a Star Wars game.

Prime area

The building, located at number 69 Calle Orense, is located in the capital’s Central Business District.

According to data from the consultancy firm JLL, the average rent in the CBD of Madrid amounted to €30.75/m2/month at the end of the third quarter of the year. The owner of the Eurobuilding II is the Mutualidad General de la Abogacía, the pension fund of Madrid’s lawyers’ association, which had more than 194,000 members at the end of 2016 and more than €5.9 billion of resources under management.

The other tenant of the building, which is very close to Paseo de la Castellana, is the Vaughan Language School, which leases more than 4,500 m2 of space for teaching, with more than 95 classrooms.

The Eurobuilding II was acquired by the Mutualidad General de la Abogacía in 2003 for €30.9 million. According to the latest available appraisal report, the value of the property amounts to €43.8 million.

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

Translation: Carmel Drake

Renta & APG’s Socimi Buys 2 Residential Complexes For €25M

15 June 2017 – La Vanguardia

The Socimi created by Renta Corporación and the Dutch pension fund APG has closed its first operations in Spain with an investment of more than €25 million.

Specifically, the vehicle, which was launched at the end of April, has acquired two residential complexes in the Madrilenian towns of Navalcarnero and Rivas-Vaciamadrid, which together cover a surface area of 20,891 m2 and contain 335 rental homes.

In Rivas-Vaciamadrid, the Socimi, which is managed exclusively by Renta Corporación, has purchased a building located on Calle Jovellanos, with a surface area of 12,743 m2, which is divided into 200 homes, parking spaces and storerooms.

In Navalcarnero, the new company has completed the acquisition of a property located at number 5 on Calle Pino Negro, which has a surface area of 8,148 m2, spread over 135 homes with parking spaces and storerooms.

According to a statement issued yesterday by the Catalan real estate company, the homes in both buildings are leased almost in their entirety and the Socimi plans to continue this arrangement over the medium and long-term.

This operation represents the launch of the Socimi’s activity in the Spanish market, where it will focus its activity in Madrid, Barcelona and the main provincial capitals, with an investment capacity of €250 million to acquire residential rental assets.

The company, which is currently in the market analysis phase, is working to close new acquisitions over the coming months and to become “a major player in this segment”.

The Socimi’s aim is to debut on the stock exchange within the next two years and accumulate properties worth more than €1,000 million.

The Socimi allows Renta Corporación to expand its market and obtain higher recurring revenues, whilst for APG this move represents its entry into the Spanish market.

Original story: La Vanguardia

Translation: Carmel Drake

Hotel Investment Is Thriving In Valencia & Alicante

2 December 2016 – Levante-EMV

Hotel investment has increased by 162% and profitability has soared by 17.5% in Valencia and by 27.5% in Alicante, driven by the tourist boom. According to sources in the hotel and real estate sector, the owners of buildings are aware of the increase in investor demand; and offers for buildings up for sale and rent in Valencia have multiplied. Specifically, three properties in iconic locations have come onto the market in recent weeks for €15 million and another three have been put up for rent. Several operations have also been signed, including the Valencian chain Casual Hotel’s purchase of the former Hotel Londres in the Plaza del Ayuntamiento for €6 million and the acquisition by the chain Myr of the Café Madrid building, in an operation amounting to €12 million.

According to the consultancy firm CBRE, the increase in the number of operations is due to “strong demand from investors to buy and capitalise hotel assets, and benefit from the clear recovery in the real estate sector in Spain and the strengthening of the economy, which is expected record GDP growth of 3.1% this year. Moreover, international tourism in Spain is expected to exceed the 70 million visitor threshold for the first time this year”.

Sources in the sector explained that one of the properties that has been put up for sale (for €6 million) is on one of the streets adjacent to the Plaza del Ayuntamiento; another, located on Calle Ballesteros is on the market for €3.5 million; and another one, next to the Palacio del Marqués de Dos Aguas, is up for sale for €9 million. In addition, the German property developer Ratisbona (linked to the Vice-President of Bayern de Munich, Rudolf Schels) has acquired an office building on Calle María Cristina (next to the Plaza del Ayuntamiento) for €3 million, which it plans to convert into a hotel.

Above all, hotel operators are interested in leasing properties as an alternative to buying them. Real estate sources state that there are three high-profile projects in the rental market at the moment: the property at number 1 on Calle Colón; the former headquarters of CAM on the corner of Pascual y Genís with Martín Cubelles; and the former Telefónica building on Calle Isabela Católica.

The building on Calle Colón 1 was the former headquarters of the Social Security agency. The Dénia-based property developer Enrique Pla and the Valencian-based businessman Enrique Ballester acquired the nine-storey property for €14.2 million a year ago and sold the lower three floors in the summer for €20 million (where a Pull and Bear store is due to be opened). The two businessmen have now decided to generate returns from the rest of the building and are converting it into a hotel with the aim of leasing it to a chain.

The former headquarters of the CAM is an office building belonging to employees of Banco Sabadell through their pension fund. The same real estate sources said that the building is not up for sale, but that the owners are looking for a hotel operator who may be interested in operating it (amongst other options). (…).

The former Iberdrola building on Calle Isabela Católica has been closed for years and its owners are also trying to turn it into a hotel. Iberdrola sold the building to a group of local real estate companies led by Gesfesa for €24 million before the collapse of the real estate market.

Original story: Levante-EMV (by Ramón Ferrando)

Translation: Carmel Drake