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

French Guru To Build Giant Shopping Centre In Torrejón

25 April 2017 – El Confidencial

After four years of negotiations, the French multinational Compagnie de Phalsbourg has received the definitive green light to launch its first project in Spain. And it’s going to be a giant, with a gross leasable area of more than 100,000 m2, which promises to revolutionise the nature of shopping centres in the country.

The project will comprise an Open Sky complex and The Village outlet, two concepts that the French group has decided to combine in the same space for the first time in their history. Last week, the Town Hall of Torrejón de Ardoz granted the construction licence for the former, which had already received its urbanisation permit and, just three weeks ago, ING sold the French company the adjoining plot for the development of the outlet.

With these two milestones under its belt, Compagnie de Phalsbourg has put its foot down on the accelerator to begin construction of Open Sky next month and has already started marketing The Village. The aim of these two parallel lines of action is to inaugurate the complex in time for Christmas 2018 and to bring a new shopping centre concept to Spain, with the architecture taking on a starring role, including vast green spaces and water games.

The project presents a real challenge for this area in the northeast of Madrid, which just a few weeks ago saw the rejection of another major investment that had planned for this area, Cordish’s new Eurovegas, by the President of the Community, Cristina Cifuentes. The French group’s project, on the other hand, has already received the blessing of the local administration, which will allows it to enter and compete at the height of a period of transformation in the sector, following changes of ownership and the relaunch of Plenilunio, Cuadernillos and Alcalá Magna, as well as the upcoming sale of Parque Corredor.

The new Open Sky, designed by the architect Gianni Ranaulo, will be an outdoor shopping centre, with a gross leasable area (GLA) of 80,000 m2, containing 100 stores and 3,500 parking spaces, where numerous fashion houses will sell their wares along a walkway measuring more than 1.5 km The site will also have a navigable central lake, where light and water games will be held.

New giant

50% of the retail space has already been leased to firms such as Merkal, Adidas, Reebok, Soloptical, Kiwoko, Orchestra, Druni and Movistar, and an agreement with the Inditex giant is pending confirmation. (…).

Meanwhile, The Village, an outlet designed in the style of a villa by Philippe Starck, will cover a surface area of 22,000 m2 and will house 120 stores and restaurants, and 1,500 parking spaces. (…).

With these two developments, in which Compagnie de Phalsbourg plans to invest more than €100 million, the French group is beginning its expansion plan in Spain, where it plans to spend more than €500 million launching around half a dozen new projects over the next few years.

Founded in 1989 by Philippe Journo, the French group owns assets amounting to €1,240 million, as well as shopping centres (in operation) covering 600,000 m2, and shopping centres under construction covering 350,000 m2 in France. With rental income of €72 million per year, the company focuses its activity on the development, management and sale of both shopping centres and residential complexes (…).

Original story: El Confidencial

Translation: Carmel Drake

TH Real Estate Negotiates With Intu To Buy 50% Of Xanadú

21 April 2017 – Expansión

Intu has found a partner for its mega-investment in the Madrilenian shopping centre Xanadú, which it purchased from Ivanhoé Cambridge in March for €530 million. Specifically, the British fund is holding advanced negotiations with TH Real Estate to transfer it 50% of the shopping centre.

According to sources in the market, TH Real Estate, which bid for the asset by itself in the tender, has engaged Cushman & Wakefield to advise it in this operation. The fund manager declined to make any comment about the deal.

The purchase of Xanadú by Intu was partially funded through a five-year loan from Santander, BBVA, Credit Agricole and CaixaBank, amounting to €263 million. Intu contributed the rest of the investment using its own funds.

The shopping centre, excluding the management company and the Snowzone, was valued in February this year at €526 million, which represents an initial net return of 4.4%.

The asset, located in the Madrilenian municipality of Arroyomolinos, sparked interest amongst several investors, although only Intu and TH Real Estate reached the final round, and the latter may now become an ally in the deal anyway.

The purchase of Xanadú represented the largest operation involving a shopping centre in the history of the market in Spain, ahead of the €495 million that Deutsche Bank paid for Diagonal Mar (in Barcelona) in August, the €451 million that Intu paid for Puerto Venecia (Zaragoza) and the €375 million that Klépierre paid for Plenilunio (Madrid).

Xanadú, constructed in 2003, is currently home to more than 220 establishments. It has a surface area of 153,000 m2 and 8,000 parking spaces. The shopping centre – one of the largest in Spain – receives almost 13 million visitors per year and generated sales of around €230 million last year.

Original story: Expansión (by R. Arroyo and R. Casado)

Translation: Carmel Drake

Sareb Finalises Sale Of Parque Corredor To Redevco & Ares

6 April 2017 – El Confidencial

One of the most entangled real estate operations in recent times is about to see the light. Namely, the sale of the Parque Corredor shopping centre, a giant in the retail sector, with a surface area of 123,000 m2 and 180 stores, located in the Madrilenian town of Torrejón de Ardoz, which Sareb has been trying to sell for four years.

It is the commercial jewel in the crown of the entity chaired by Jaime Echegoyen. The bad bank is the main shareholder, with 40% of the share capital, which it inherited from Catalunya Caixa. But, until now, that stake had been insufficient to convince any buyer, given that it does not guarantee control over the centre. Nevertheless, Sareb has teamed up with Perella to sell their shares to Redevco and Area Group en bloc, a move that will allow the new owners to acquire almost 60% of the share capital. All of the parties have declined to make comments.

The operation has been on the cards for months and although it has not been completed yet, according to the sources consulted by El Confidencial, conversations are in an advanced stage and are likely to come to fruition. El Corte Inglés may play an important role in the outcome given that together with Alcampo, it owns another 25% of the centre’s share capital, and their stake could also end up forming part of the transaction.

Sareb is being advised in the operation by Knight Frank, Perella is being advised by Cushman & Wakefield, whilst Redevco and Ares are working with Deloitte.

Depending on the total percentage that ends up being acquired, the final amount of the operation could reach €120 million, whereby valuing the entire centre at around €200 million, an amount that would allow Parque Corredor to join the growing number of shopping centres whose sales have exceeded €100 million, such as Xanadú (€530 million), Diagonal Mar (€495 million), Puerto Venecia (€451 million), Plenilunio (€375 million), Gran Vía Vigo (€145 million), Nassica (€140 million) and L’Aljub and Alcalá Magna (both €100 million).

Shopping centre alliance

Redevco and Area Management decided to join forces a year and a half ago, when they created a joint venture, Redevco Iberian Ventures, endowed with €500 million of capital and with the aim of acquiring shopping centres in Spain and Portugal. The new company was constituted with six assets, contributed by the two shareholders, and the objective of closing several acquisitions. The first was completed last spring, when it purchased six shopping centres in Extremadura and Andalucia, with a combined surface area of 84,250 m2, from Bogaris for €95 million. (…).

With Parque Corredor, the joint venture is acquiring a great asset near to the Spanish capital, but it needs significant renovation work, and the associated investment is estimated to amount to around €15 million, according to real estate sources. (…).

The shopping centre receives 10 million visitors per year and its tenants include Primark, H&M, Kiabi, Alcampo, Toys “R” Us and Cinesa cinemas. (…).

Original story: El Confidencial (by R. Ugalde)

Translation: Carmel Drake

Deutsche Bank Buys Diagonal Mar For €493M

10 August 2016 – Expansión

Deutsche Asset Management’s real estate investment division for Iberia, a subsidiary of Deutsche Bank, has confirmed its purchase of the Diagonal Mar shopping centre in Barcelona for €493 million.

Although the final price has been adjusted downwards with respect to the non-binding offer presented by the entity (which valued the asset at €505 million), it still exceeds the €451 million that Intu Properties paid for Puerto Venecia (Zaragoza) and the €375 million that Klépierre spent on the acquisition of Plenilunio (Madrid).

The operation also generates significant capital gains for Northwood, which acquired the property from the Irish bad bank Nama for €150 million in 2015. CBRE has advised this operation on the sell-side, whilst Deloitte advised the buy-side. (…).

Original story: Expansión

Translation: Carmel Drake

Deutsche Bank Buys Diagonal Mar For €495M

2 August 2016 – Expansión

Yesterday, Deutsche Bank completed the purchase of the Diagonal Mar shopping centre from Northwood for around €495 million, making it the largest shopping centre transaction in the history of the Spanish market.

In this way, although the final price has been adjusted downwards with respect to the non-binding offer presented by the entity (which valued the asset at €505 million), it still exceeds the €451 million that Intu Properties paid for Puerto Venecia (Zaragoza) and the €375 million that Klépierre spent on the acquisition of Plenilunio (Madrid).

The operation also generates significant capital gains for Northwood, which acquired the property from the Irish bad bank Nama for €150 million in 2015. CBRE has advised this operation on the sell-side, whilst Deloitte advised the buy-side.

Background

The shopping centre, located in district 22@ in Barcelona, has passed through many hands since the real estate company Hines was awarded the mixed use project at the end of the 1990s. The project included a residential area, offices, hotels and a large shopping centre, with a constructed surface area of 100,500 sqm and a gross leasable area (GLA) of 87,000 sqm, as well as 5,000 parking spaces.

In 2002, the German investment fund Deka paid around €240 million for the property, which, was subsequently sold, in 2006, to the Irish investment group Quinlan for €300 million, in its first operation in Spain. Nevertheless, following the burst of the Irish bubble, the asset was taken over by the banks.

Three years after that operation and in a very different economic environment, the property has generated a lot of interest. Specifically, 18 candidates submitted non-binding offers for the property, including Axa, Invesco, Hines, Unibail, the Singapore sovereign fund GIC, Blackstone and the Socimi Merlin, which was the only Spanish company that submitted an offer, for less than €450 million. Only four candidates participated in the final phase: CBRE Global Investment, ECE, Henderson TH and Deutsche Bank.

In order to reposition the asset, Deutsche Bank plans to invest €30 million over four years in a project that includes restructuring the top floor of the shopping centre to create more space for high-end fashion brands (€15 million), refurbishing the other floors with a budget of around €8 million and renovating the centre’s exterior façade for almost €7 million.

With this renovation, the purchaser expects to strengthen Diagonal Mar’s competitive position and increase its gross operating profit (EBITDA) over five years from €20 million in 2015 to more than €26 million.

Impact

The shopping centre, opened in November 2001, was designed by Jean-Louis Solal and the architect Robert A.M. Stern. Diagonal Mar is located in a prime spot, approximately five kilometres north east of the city centre. With more than 200 outlets dedicated to fashion, restaurants, leisure, a bowling alley and other services, the centre has 4,800 parking spaces and an outdoor space: La Terrassa del Mar. Diagonal Mar received 16.7 million visitors last year, up by 2.3% and generated net sales – excluding Alcampo (which falls outside of the transaction perimeter) – of €210 million, up by 8.5%. (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

GreenOak Purchases Las Mercedes Business Park For €140M

24 June 2016 – Expansión

The US fund GreenOak Real Estate has purchased the Las Mercedes business park in Madrid from Standard Life Investments for around €140 million, according to sources close to the deal.

In 2004, Standard Life Investments invested around €150 million in the construction of the business park, located on the outskirts of Madrid next to the A-2 motorway. The business park, located on Calle Campezo 1, opposite Madrid Barajas airport, is just a few metres away from the Plenilunio shopping centre – measuring 70,000 sqm – owned by Klepierre.

Covering 78,500 sqm, the business complex comprises nine office buildings and a private garden. Constructed on a plot of land measuring four hectares, the complex includes a common area with two cafeterias, a restaurant, a supermarket, a courier service and a gym. The business park is served by public transport and a shuttle bus, which connects it with Madrid. In addition, the business park has parking spaces with capacity for 1,652 vehicles.

The Las Mercedes business park is currently occupied by tenants such as Altran, Applus, la Agencia Española de Medicamentos y Reguladora and Xerox. Clifford Chance, Jones Lang LaSalle (JLL) and Gleeds have advised the buyers, whilst Gomez-Acebo &Pombo and CBRE have advised the sellers.

GreenOak, which opened its office in Madrid in 2015, has been very active in Spain. Last year, it acquired the Sevilla Factory shopping centre and a building on the Madrilenian Calle Fuencarral. In addition, in 2014, it joined forces with Baupost and Lar to purchase seven properties located in Madrid, Málaga, Barcelona, Burgos and Alicante.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Savills: RE Inv’t In The Retail Sector Totalled €2,400M In 2015

14 March 2016 – Cinco Días

Real estate investors really like the retail sector in Spain. In fact, last year, they demonstrated their interest through the purchase of shopping centres, hypermarkets, supermarkets and other retail outlets. In 2015, total investment in the sector amounted to €2,400 million, to reach a new peak in the historical series prepared by the consultancy firm Savills, which dates back to the year 2000.

This data is better than any recorded during the real estate boom years of the last decade. The figure represents an increase of 14% with respect to 2014 and of 10% with respect to the market peak to date, recorded in 2006.

In terms of the number of operations in this segment, the increase of 35% with respect to last year, with 46 investment operations, also marked a new record with respect to the level reached in 2014, when 35 operations were signed.

Moreover, sources at Savills say that the pace of activity does not seem to have slowed down so far in 2016 – the number of transactions to date is in line with the number recorded during the first quarter last year. Almost €600 million has been invested so far this year, which represents a level similar to the annual volume recorded during the years of the crisis, between the period from 2009 to 2013.

The consultancy firm calculates that the current portfolio of operations in the pipeline (pending signing) and assets that are going to come onto the market in the short term could amount to an additional €2,500 million.

On the investor side, Socimis have become key players, with new players such as Lar España, which has attracted hundreds of millions in foreign funding.

In any case, cross-border investment by European and US funds accounted for more than two thirds of the total in 2015 and almost all of the investment made so far this year. On the sell side, international firms also account for most of the activity. “Players who purchased at the low point in the cycle and those that are now looking to rotate their assets are taking advantage of the recovery to generate more profits”, say the sources.

The largest transaction last year involved the sale of the Puerto Venecia shopping centre in Zaragoza, which Intu acquired from the fund Orion Capital for €451 million. That was followed by the sale of the Plenilunio shopping centre, which Klépierre bought from the same fund for €375 million. In third place was the sale of a portfolio of Eroski supermarkets to Invesco for €358 million.

Original story: Cinco Días (by A. Simón)

Translation: Carmel Drake

Deloitte: Retail Assets Threaten Office Dominance

25 February 2016 – Expansión

Office buildings, which were the kings of the real estate investment market in 2015, may be knocked off their throne this year by the shopping centre and retail outlet segment.

Last year, investment in Spanish real estate assets increased by 37% in total, to amount to €11,700 million. 57% of those assets were located in Madrid and 45% (of the total) were office buildings.

However, according to a report prepared by Deloitte, negotiations are currently underway for the sale of real estate assets worth €6,000 million, and 58% of those assets are shopping centres and prime retail outlets.

According to Javier García-Mateo, Partner of the Financial Advisory team at Deloitte, “the real estate investment market is showing some very positive signs: there is currently around €8 billion of foreign capital seeking profitable properties in good locations, with potential for rent increases”.

The volume (of investment recorded) in 2015 is going to be hard to beat, primarily, because it was an exceptional year in terms of the size of the assets that were put up for sale. “The owners of large assets took advantage of the abundance of capital to put their properties up for sale, such as in the case of Torre Espacio. But it is not typical for so many properties of that size to be sold in the same year”, he said.

At the moment, the sales of numerous first-rate shopping centres and retail premises are being negotiated, “but none are on the same scale as the Plenilunio sopping centre, which was sold last year for €375 million; all of the assets have asking prices of less than €100 million”, confirmed García-Mateo.

Purchaser profile

With the return of more traditional funds to the Spanish real estate market over the last two years, the opportunistic investor has been losing influence and currently accounts for just 7% of purchases. Forecasts indicate that the majority of investments will be made in core and core+ assets in 2016. According to Deloitte’s report, buildings that need renovating and to find a tenant in order to generate added value are also included within that 7%.

The study also reveals a significant shift in the market for financing. According to Ana Granado, Senior Manager in the Financial Advisory team at Deloitte, “domestic banks have eased their financing conditions significantly, for both offices and shopping centres, as well as for logistics assets, regardless of whether they are located in prime areas or secondary regions”. Costs are lower; the level of indebtedness is higher; and the (repayment) terms are longer, say the sources at Deloitte.

Original story: Expansión (by Marisa Anglés)

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