Hines & Emperador Bid For Edificio España

2 March 2016 – El Confidencial

Two of the largest real estate investors in the world want to buy Edificio España. The US giant Hines and the Philippine group Emperador, which has just acquired Torre Espacio, have already taken up their positions in the sales process launched by the Wanda Group for the skyscraper, according to several sources close to the operation.

The Chinese group has engaged the consultancy firm JLL to find a new owner for the property, which it has decided to sell after failing to reach an agreement with the Town Hall of Madrid regarding the handling of the renovation.

Not even the meeting held yesterday between Manuela Carmena and Laurent Fischler, Wanda’s Global Head of Real Estate, managed to put a stop to JLL’s sales mandate, although the consultancy firm declined to make any comment. This meeting was held at the request of the mayoress, anxious about the earthquake unleashed by the Asian group’s decision to leave Madrid. But the only thing she managed to agree with Wang Jianlin’s envoy was the firm’s willingness to remain in the capital, provided the town hall gives something in return.

Nevertheless, there are only a handful of investors with the capacity to undertake the purchase, which could range between €250 million and €300 million (Wanda paid €265 million two years ago), a quantity to which another €100 million should be added for the subsequent construction work to renovate the property.

And that figure is mounting, because the final cost of the renovation will depend heavily on the agreement that the Town Hall of Madrid approves, and the survival of Norman Foster’s project, who has threatened to take Wanda to court if it breaks the agreement signed to develop the architecture project.

The reality is that Wanda inherited this contract from Banco Santander and in theory, the buyer would also be subrogated to it, according to real estate sources. But that honour has discouraged some of the large international funds from bidding for Edificio España, as they prefer to avoid large firms because they make the construction work more expensive.

Giants in the market

By contrast, the profile of Hines and Emperador fit well, given that their investments typically focus on iconic buildings, located on the main thoroughfares of large capital cities and, in many cases, linked to unique architectural projects. Ingredients which, if the negotiations with the town hall are unblocked, are present in abundance in the case of Edificio España.

The US firm Hines is an expert in this kind of development and is currently involved in a growth plan in Spain, which has led to the signing of two operations – for the Desigual store next to Portal del Ángel in Barcelona and number 44, on Madrid’s Gran Vía – in less than two months, for a combined total of €78 million.

And its future plans are even more ambitious, as shown by the fact that it is actively seeking out large transactions in both Madrid and Barcelona. With $87,000 million (€80,000 million) in assets under management, Hines is the fourth largest real estate investment management company in the world.

Meanwhile, Grupo Emperador is one of many companies that comprise the business empire of the Philippine-born Andrew Tan, one of the richest people in the world according to Forbes. (…).

Despite all of these possessions, Tan was virtually unknown in our country until last November when he acquired Torre Espacio with a bid for €558 million, an amount that he largely financed in cash and with a syndicated loan for €280 million from ING Wholesale Banking.

This operation is just the tip of the iceberg of the group’s plans. Emperador has also set itself the objective of multiplying its investments in Spain, both in the real estate sector, as well as in those markets linked to the world of spirits, where it has worked in conjunction with González-Byass for many years.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Carmena: Town Hall In Talks With Wanda Over Edificio España

27 January 2016 – El Economista

At a press conference yesterday (Tuesday), the mayoress of Madrid, Manuela Carmena, announced that the Town Hall of Madrid has made “a new proposal” to Wanda regarding its Edificio España project…and she added that she does not expect the Chinese investor group to abandon the project, given that it is continuing to participate in negotiations. (…).

Representatives from the Town Hall of Madrid reportedly met with the Chinese investor group last week and the conversations are on-going. (…).

At no point has the possibility of demolishing the façade and rebuilding it brick by brick been entertained, given that it is something that is actually technically unfeasible. The solution involves aligning legal compliance and maintaining the protected features, with the transformation of building that Wanda wants to undertake. (…).

Lots of options

In light of the widespread media attention, Carmena said that “our conversations with the group are on-going” and she added that the Town Hall “is very interested in the fact that this group may construct a hotel in Plaza de España”. (…).

The delegation pointed out that the protected features are not determined by the Town Hall, but rather by the Local Heritage Committee, in which the Town Hall participates and which is chaired by the Community of Madrid, which holds the majority. At the time, thhat body ruled that “it was feasible to undertake the building work, whilst maintaining the protected features”, in other words, it ruled that the proposal to demolish the façade was not an option. (…).

José Manuel Calvo, from the Department for Sustainable Urban Planning, insisted that the project was progressing “as normal”, given that talks are on-going with the company, just as they are with other companies. This normality manifests itself by the fact that the Town Hall has already prepared the compulsory detailed study and that it will process the initial approval as soon as the investor group gives them the go ahead. The Town Hall “will be delighted” to proceed. Following that approval, construction work may begin within two or three months.

The representative of the Department for Sustainable Urban Planning added that if the construction work begins, the Town Hall reserves the right to “secure guarantees” from Wanda to ensure the progress of the work. (…).

Meanwhile, Manuela Carmena answered that “of course she was unable” to guarantee that the renovation of Edificio España would be completed before the end of her term in office because she doesn’t even know how long the construction work will take. (…).

When asked about whether the Town Hall would be more flexible in the face of the hypothetical exit of the investor, Carmena answered that the Town Hall “is not afraid”, but does have a “responsibility” to ensure that Madrid is a more “beautiful and prosperous” city. (…).

Original story: El Economista

Translation: Carmel Drake

Edificio España: Renovation Prohibited So Wanda May Sell

13 January 2016 – Expansión

The Chinese company Dalian Wanda is considering putting the iconic Edificio España building on the market. It acquired the property from Santander for €265 million in 2014, but is not being allowed to completely renovate it and convert it into a luxury hotel, with a retail space and homes.

The group founded and led by Wang Jianlin wanted to pull down the tower, located in Plaza de España (Madrid) and reconstruct its façade with a design that is identical to the current one, however the new Town Hall of Madrid, led by Manuela Carmena, has rejected those plans, on the basis that the façade must be protected as it forms part of the city’s artistic heritage.

After months of fruitless negotiations between the Asian company and the Town Hall to begin the construction work, Wanda has now decided to sell the building, according to several sources consulted by this newspaper.

As a preliminary step, Wanda Madrid Development has decided to close the office that it opened in the Spanish capital to carry out the remodelling of the iconic building, which has stood empty for many years.

Following the commotion caused by the plans set out by Jianlin, the wealthiest businessman in Asia, the Town Hall of Madrid said yesterday that it was not aware of any plans for the building to be sold.

Meanwhile, the PP’s spokesperson at the Town Hall, Esperanza Aguirre, asked the municipal Government to “think twice” and allow Wanda to demolish and reconstruct Edificio España from scratch, because losing the investment (opportunity) and the jobs that would result from the Asian group’s plans would have “very serious consequences”. The spokesperson for Cuidadanos, Begoña Villacís warned that, if the decision is confirmed “Madrid could become an investment desert” since it is “a city with lots of development projects on the table and investment opportunities that we must not miss out on”.

Background

Despite the disagreements, Dalian Wanda, which also paid €45 million for a 20% stake in Atlético de Madrid last year, reaffirmed “its commitment” to “the citizens of Madrid” in October last year, as well as to the restoration of an “icon of the urban landscape”. The group confirmed that it was willing to hold “open and transparent dialogue, provided safety and the law are put first above everything else”.

At the end of November, the councillor for Urban Planning at the Town Hall, José Manuel Calvo, confirmed that the plans were moving ahead to enable the renovation work to start “as soon as possible”, although the administrative procedures must first be completed.

Madrid’s local historic heritage committee issued a binding ruling, which resolved that the façade must not be demolished or dismantled, but Wanda insisted that maintaining such a tall façade during the renovation work would be unsafe, which is why the company proposed that it be dismantled and then reconstructed.

Original story: Expansión (by R.R./A.F.)

Translation: Carmel Drake

Axa Buys The Cine Rex Building On Gran Vía For €42M

11 December 2015 – El Confidencial

Another high profile operation on Gran Vía. Axa Real Estate, the real estate arm of the French insurance company, has just added another property to its portfolio on the most sought-after thoroughfare in Madrid. This week, the company has reached an agreement to acquire the building that houses Hotel Rex and the historical cinemas of the same name, for €42 million.

The entity won a sales process that was launched at the start of the year by the firm Equity Inmuebles SL, controlled by the Mazon, Calero (owner of the Vincci hotels) and Briones families, which opened the bidding at around €28 million, but which, thanks to the huge appetite that exists to purchase assets on this street, has ended up selling the property for 50% more, according to comments made by several sources in the know.

This is the second operation of this kind that the French firm has closed on this thoroughfare, which last year acquired the former Avenida cinema, at number 37 Gran Vía for almost €80 million. It paid that high figure thanks to the “sweetener” afforded by having the Swedish fashion chain H&M as a tenant; it opened its most iconic store in the capital there in 2009.

For this new operation, Axa’s plans to remodel the building, which measures around 9,000 m2 and to operate it by combining its two current uses as a hotel and retail space. Moreover, the entity is willing to respect the protected nature of the cinemas, which have been closed for several years and which occupy a surface area of almost 700 m2.

Currently, the building houses a 3-star hotel with 147 rooms, managed by the owners of the property. Axa’s idea is to open a high-class establishment, which will add to the resurgence that Gran Vía is experiencing thanks to the boost that Operación Canalejas is generating in the whole area.

Hotel fever

The real estate development, which is being led by OHL Desarrollos, includes the opening of the first Four Seasons hotel in the capital. The hotel chain is proving to be a real magnet, attracting brands of high standing to the Gran Vía area. In fact, experts expect that Grupo Wanda will end up choosing a chain of such standing to manage the hotel that it will open in the Edificio España, although for the time being, the only clue is that it will be a 5-star establishment.

The majority of the new hotels being planned on this thoroughfare are 4-star and 5-star properties, such as: the one due to be opened in the building on Calle Montera, 25-27, owned by the Díaz Estrada family; Gran Vía, 10, which houses the Ministry of Education and which has been acquired by Generali for conversion into a hotel operated by Vinnci; and the Barceló, which has been opened in Torre de Madrid in Plaza de España.

Through this operation involving the Edificio Rex, Axa Real estate joins several other high profile players in the hotel business in the centre of the capital and diversifies its interests, which until now have been very concentrated in the office sector, above all after it acquired 381 Santander branches from the Socimi Uro and after it purchased the headquarters of the Generalitat de Catalunya.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Wanda Not Allowed To Demolish Edificio España’s Façades

14 October 2015 – El Mundo

Wanda cannot “dismantle” the façade of Edificio España and subsequently proceed with its “reconstruction”. The Local Historical Heritage Commission (‘Comisión Local de Patrimonio Histórico’ or CLPH) of the municipality of Madrid has ruled out the plans set out by the Chinese business group, alleging that the “technical impossibility” of carrying out the renovation work on the skyscraper whilst retaining its protected features “has not been attested”.

According to the conclusions linked to this public body, which comprises representatives from the Community and Town Hall of Madrid, the Asian company will now have to draft a new project that includes an alternative solution to its complete demolition. That solution will have to be adapted to the “applicable law” and ensure the “necessary level of safety” for the renovation.

In July, Wanda requested permission from the CLPH to go ahead with the “dismantling” of the façades of Edificio España, which is grade 3 listed, and subsequently rebuild them “using the same materials, in the same way and with the same dimensions as the originals”. To support the “exceptional nature” of this proposal, governed by article 4.3.9.7.c) of the Town Planning Regulations of the General Urban Development Plan, the company owned by Wang Jianlin provided “technical reports and studies prepared by independent professionals”, attesting that it was materially impossible to carry out the renovation work whilst retaining the exterior walls, given the risk that the structure will collapse.

Meanwhile, Madrid’s Town Hall commissioned two other reports on the subject, one from the former dean of the College of Architects of Madrid, Ricardo Aroca and the other from Hugo Corres, Professor of the Structural Concrete Teaching Unit at the University of Vaelancia. Both studies concluded that the comprehensive renovation of the property in Plaza de España to construct a hotel, shopping centre and luxury homes is “technically and economically viable” without the need to demolish its protected features.

After analysing this opposing information, the CLPH considers that Wanda’s request to remove the façades of the building is “not viable”, since alternative proposals exist for carrying out the building work. As such, the criteria applied in the end is that originally presented by the Department for Sustainable Urban Development, which insisted from the beginning that it would be “impossible” to dismantle a concrete building. (…).

The proposed solutions

The technical studies commissioned by the Town Hall of Madrid, to which this newspaper has had access, propose solutions for maintaining the protected features of the building, whilst proceeding with the building work.

One involves “respecting two parallel bays” (‘crujías’ or spaces between the supporting walls) of the outer wall overlooking Plaza de España and “one bay” on the side walls, “which will enable it to use the existing beams to ensure the most effective way” of keeping the structure upright.

The other proposal involves “bringing forward the construction of the future building in such as way that a part of its structure that does not interfere excessively with the demolition process can serve to ensure its stability against the force of the wind”. (…).

Original story: El Mundo (by Marta Belver)

Translation: Carmel Drake

‘Dear Hotel’ Overtakes Wanda In Plaza de España

2 March 2015 – Expansión

In Madrid’s Plaza de España, the hubbub of construction work is accompanying tourists as they journey into the commercial heart of the capital: Gran Vía. The Edificio España remains in tact (for the moment), as Wang Jianlin, the owner of Dalian Wanda, finalises the designs for his megaproject, which will include a hotel, shopping centre and homes.

The site that will house the future Hotel VP Plaza de España remains empty, but scaffolding is now up on the Torre Madrid, where Metrovacesa is refurbishing the building that will house a Barceló hotel – on one of the corners that Plaza de España shares with Gran Vía.

Plaza de España is also where the first of the hotels that is intended to revitalise the area will be opened. The area has been in decline since 2005, when Intercontinental closed its Hotel Crowne Plaza, which was located into the Edificio España building. Now, work is nearing completion on the Dear Hotel, a property that the Sebrango family acquired in 2012, after exercising a call option that Renta Corporación held over the building. The Sebrango family, which also owns the Hotel Chiqui (in Santander) have designed a four star hotel, with 162 rooms and it is scheduled to open on 15 May, on the day of San Isidro, one of the most important fiestas in the Spanish capital.

Roof terrace

The Dear Hotel project, which will have its entrance on Gran Vía, 80, has required an investment of €30 million – including the purchase of the building and the work required to refurbish it. Previously, the property housed homes and offices.

The hotel will have 12 floors and there will be a roof terrace and restaurant on the top floor, which its owners hope will become an iconic space for the hosting of special events in the capital. The style (of the property) will be elegant and modern, and in terms of prices, the average room will cost between €150 and €160 per night. The price of the suites will range between €250 and €300 per night and the hotel will create between 70 and 80 new jobs.

“It will be a four star hotel due to the individuality of the building, but the service and quality will be on a par with a luxury establishment”, explains its director, Francisco Sebrango. According to the owner’s forecasts, more than 60% of the hotel’s guests will be foreigners.

Since purchasing the building, the Sebrango family has received numerous offers to sell or transfer the operation of the hotel. Nevertheless, they have decided to pursue their original strategy and operate the hotel themselves. “We considered the option of a franchise agreement, but in the end we ruled that out. We want to create a unique hotel and we believe that it has the most value in our hands”.

Original story: Expansión (by Yovanna Blanco)

Translation: Carmel Drake

Wanda’s Plans For Edificio España Get Green Light

30 January 2015 – Expansión

Yesterday, the Governing Board of the Community of Madrid gave the green light to the refurbishment of the Edificio España, owned by the Chinese group Wanda, controlled by the magnate Wang Jianlin.

The businessman, who also owns 20% of the football club Atlético de Madrid, will invest €114 million in the renovation of the property, located in Madrid’s Plaza de España, which it purchased from the Santander Group for €265 million. Inside the Madrid skyscraper, he will create a luxury hotel, more than 300 homes and a retail space, which he plans to expand to 15,000 sqm.

The permission to refurbish the Edificio España has been granted in parallel to the negotiations that the Wanda Group’s team is conducting with the Madrid and central Governments to create a macro-complex on the site of the old barracks in Campamento, in Madrid.

To this end, the Secretary of State for Defence, Pedro Argüelles, met yesterday with the CEO of the Wanda Group, Laurent Fischler, to discuss the purchase of that land, which covers around 200 hectares, and where Jianlin plans to invest €3,000 million in the development of a residential, housing and leisure complex.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake

Jianlin Presents His Plans For Edificio España

29 January 2015 – Expansión

The Wanda Group, controlled by the Chinese magnate Wang Jianlin, will invest €114 million on the refurbishment of the Edificio España in Madrid and a further €30 million on the project to regenerate the surrounding area.

The plans of the Chinese businessman Wang Jianlin, owner of the Wanda Group holding company, to convert the Edificio España in Madrid into a luxury hotel, residential and retail complex, take an important step forwards today. The Executive of the Community of Madrid will discuss the modification to the General Urban Development Plan at their Government Board meeting. Following approval by the Town Hall of Madrid, it is expected that the Government of Ignacio González will also vote favourably.

The proposal, presented by the Santander Group (which owned the building until last summer, when it sold it to Wang Jianlin for €265 million) and supported by Wanda Madrid Development (which formalised the purchase of the building before a notary of 30 July) will result in changes not only to the historical building in the capital, but also to the area surrounding it.

Jianlin has committed, together with other businesses, such as the VP Group, controlled by Vicente Pérez, to finance some of costs of the area’s regeneration, which includes the expansion of the pedestrian area (by 12,500 sqm) and the construction of an underground walkway between Calle Ferraz and Calle Bailén. Jianlin will contribute around €30 million of the total €79.5 million to be invested, according to sources close to proceedings. 51% will be borne by the concessionary companies to be awarded the new car park in the area, according to the Town Hall.

In addition to the €265 million Wanda paid Santander to acquire the property and the €30 million it will invest in the regeneration of the plaza, the Chinese group will invest a further €114.085 million in the renovation of the building, designed by the architectural firms Foster and Lamela, which have worked together before on other projects, such as the construction of Terminal T4 at Madrid’s Barajas airport.

Comprehensive renovation

The Edificio España will be fully refurbished on the inside (the building will be completely gutted), whilst on the outside, only the main façade will remain, together with part of the sides and the existing chamfer on the rear façade (located between Calle los Reyes and Calle Maestro Guerrero).

The new project will put an end to the rear façade, designed as a “comb”, which creates five interim patios and provides access to the San Marcos church and the neighbourhood of San Bernardo from Plaza de España.

In addition, the new Edificio de España will have almost 10,000 sqm of underground space, which will be used to expand the parking area, increasing it from its current size of 2,473 sqm to 12,000 sqm, which will result in 318 more parking spaces.

In exchange for the extension of the car park, Wanda must grant 10% of this space to the Town Hall for public use or pay for that space separately. According to the proposal presented to the town hall, the Chinese investor will choose the second option.

The size of the residential area, which will include around 380 homes, and the hotel space will barely change: decreasing from 40,883 sqm to 37,916 sqm in the case of the former and from 22,720 sqm to 22,000 sqm in the case of the hotel.

The main change proposed by Wanda will affect the retail area, whose space will be increased from 3,687 sqm to almost 15,000 sqm. The aim is to create a “large retail space” between the ground floor and the third floor. “We expect to house a variety of retail activity, primarily clothing and accessory stores”, they say in the proposal.

The building work will take place between 2016 and 2020 and it is expected that the homes will be completed between 2019 and 2021. The construction work is expected to create almost 4,000 jobs, between direct and indirect roles. Once completed, 185 people will work in the hotel and retail space in the Edificio España.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake