Madrid’s Office Market in 2019: Stable Yields & Investment of €3bn

20 February 2019 – Eje Prime

Investment in offices in Madrid is on the rise. Total investment of €3 billion is forecast in the office market in the Spanish capital this year, which will see it maintain the yield for prime offices at 3.75%. In terms of office rents, a boom of 9.8% is forecast, along with a decrease in the availability rate, which is set fall from 11.6% in 2018 to 9% in 2021. Modest growth forecasts for the sector, with a lower supply of prime spaces, are going to contribute to an increase in rents.

With this data, Madrid is positioning itself amongst the capitals with the lowest yields on its luxury offices, with a figure comparable to those of Singapore (3.34%), Amsterdam (3.35%) and Paris (3%), but well below those of Moscow (8.5%) and Washington DC (6.2%), according to the Global Outlook 2019 report, compiled by Knight Frank.

In terms of the growth forecast for office rents, the Spanish capital is expected to maintain stable growth (…).

In terms of the availability rate, Madrid is forecast to decrease from 11.6% in 2018 to 9% in 2021, placing it amongst the cities with most available offices, well below Berlin, with a forecast rate of 2.2% (…). Available prime offices will also decrease, which will lead to a rise in rents. According to the study, this is the result of the recovery of the residential market, which is also sparking interest amongst investors.

One of the greatest opportunities in the sector are the coworking offices, which are transforming conventional offices into new spaces for working and incentivising employees. “Whilst some markets are reaching maturity, at the global level, we expect to see a boost to this business in 2019”, say the authors of the report.

In summary, the office market in Spain is expected to be relatively stable during the year ahead, despite global challenges (…).

Original story: Eje Prime (by Marta Casado Pla)

Translation: Carmel Drake

GMP’s Profits Rose by 81% YoY in H1 to €111.8M

26 October 2018 – Eje Prime

GMP has seen its profits soar and its revenues remain stable. The group recorded a profit of €111.8 million during the first half of 2018, up by 80.9% compared to the same period in 2017, according to a statement filed by the company with the Alternative Investment Market (MAB).

On the other hand, the company recorded revenues during the first six months of €49.5 million, in other words, 0.8% below the figure registered during the period from January to June 2017. Similarly, the EBITDA of GMP was €33.7 million in H1 2018, up by 4.3% compared to the previous year.

Founded in 1979, GMP specialises in the development, investment and management of prime offices and business parks in Madrid. The company, which made its debut on the MAB in July 2016, bases its business on the rental of the properties that it owns.

Currently, the Socimi has a portfolio of sixteen assets, which comprise a total of twenty-seven buildings and have a combined gross leasable area (GLA) of 360,000 m2. All of them are located in Madrid, as is the buildable surface area spanning 65,105 m2 that the group owns and which is concentrated in the urban developments of Valdebebas and Las Tablas.

GMP’s project portfolio also includes a residential tourism development in Alicante, which goes by the name of Las Colinas Golf&Country Club. Nevertheless, one of the company’s most recent operations involved the disbursement of €24 million for the construction of a prime office block in Madrid (see photo).

GMP was a family-owned company until September 2014 when GIC Private Limited, which has a presence in other companies in the Spanish real estate sector, such as in the P3 Logistic Parks group, entered the shareholding by acquiring 32.9% of the share capital. That operation included an investment amounting to €200 million, capital that has allowed the company to go for gold in the Madrilenian office market.

Original story: Eje Prime

Translation: Carmel Drake

Barcelona’s Prime Office Rents Now Exceed Their 2007 Levels

20 March 2018 – Eje Prime

The rental prices of prime offices in Barcelona are returning to their pre-crisis levels. Specifically, to their 2007 figures. That is the conclusion drawn by Cat Real Estate, the real estate consultancy firm, which confirms that in the most expensive areas of the office market in the Catalan capital, demand has risen again and assets have gotten more expensive.

Specifically, the Catalan company recently closed an operation involving the sale of a 450 m2 office on Paseo de Gracia for €6,500/m2. That transaction shows that in Barcelona, “we have returned to 2007 prices in terms of the value of office purchases in the main commercial areas”, says Nacho Castella, CEO of the consultancy firm.

The buyer of that asset on Paseo de Gracia was an international fund. In this regard, Cat Real Estate explains that “the improvement in consumption has reactivated interest in domestic operations above all from international players keen to take positions on the high street once again”

“Barcelona continues to be an important location for overseas investors”, says Castella. Cat Real Estate forecasts that the real estate market will continue to rise in 2018. During the first quarter of the year, the consultancy has already brokered forty operations involving a volume of real estate assets under management of €480 million.

Original story: Eje Prime

Translation: Carmel Drake

Lone Star Puts Isla Chamartín Business Park Up For Sale

2 February 2017 – El Economista

In just a few days time, Lone Star will hang the For Sale sign up on one of the most attractive office asset in its Madrid portfolio. The asset in question is the Isla Chamartín business park, located in the north of the capital, opposite the studios owned by the production company Zeppelin Televisión.

The complex, which comprises four office buildings with a surface area of more than 9,000 m2 each, is located on Avenida de Manoteras 20 and, according to comments from sources in the sector, will be put on the market for more than €110 million.

The US fund generated revenues of €380 million at the end of last year from the sale of the Adequa business park, which neighbours Isla Chamartín. That is a mixed use complex, covering more than 100,000 m2, which is now owned by the Socimi Merlin and which includes land on which two more buildings are going to be constructed.

The two complexes entered Lone Star’s portfolio in 2015, when the fund foreclosed a debt package amounting to more than €600 million from Bami Newco, the real estate company owned by the late Joaquín Rivero, which filed for liquidation that same year.

The Isla Chamartín complex was finished just a few months before the real estate bubble burst – its four buildings were inaugurated between February 2007 and June 2008.

In total, the properties that comprise the park have a combined surface area of 38,134 m2, plus 930 parking spaces. Their tenants include Iberdrola Ingeniería y Construcción, BBVA Consultoría and Aernnova Engineering Solutions Iberica.

Over the last few weeks, Lone Star has been organising the sales process to select the agents that will take care of the marketing side. In the end, the fund has engaged the consultancy firms Knight Frank and CBRE, which are expected to launch the official sales process at the beginning of February.

Experts believe that this asset, located just seven minutes by car from Madrid Barajas Adolfo Suárez airport, with two Metro stops and easy access to the M-11 and A-1, will be well received by investors. (…).

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake

Colonial’s Profits Rose By 17% To €249M In YTD Sept16

15 November 2016 – Expansión

Colonial earned €249 million during the first nine months of the year, up by 17% compared to the same period last year. The company chaired by Juan José Bruguera said that this improvement was a direct result of the growth strategy employed by the firm, which specialises in the prime office sector, as well as an overall improvement in the market.

The real estate company recorded an increase in recurrent revenues of 21%, to €205 million and growth in EBITDA of 29%, to €166 million. During the nine months to September, Colonial signed lease contracts covering a GLA of 73,160 m2 and the occupancy rate of its assets amounted to 97%. The firm’s share price fell by 0.21% on the stock market yesterday, to €6.12 per share.

Original story: Expansión (by G. Trindade)

Translation: Carmel Drake

Perry Will Pay Colonial A Bonus If It Launches Axiare Takeover

27 October 2016 – El Economista

Perry Partners has kept an ace up its sleeve during the sale of the 15.09% stake that it held in the Socimi Axiare to Inmobiliaria Colonial. The British fund, which is currently being wound up, is now playing a card that would allow the real estate company to record higher revenues (from the sale) if it decides to launch a takeover bid (OPA) for the Socimi, as explained by sources familiar with the negotiations.

The unstated objective of Colonial is to increase its stake in the Socimi’s share capital to acquire, at least, 25%, according to the same sources consulted, however the pressure in the market points to an offer or, at least, an effort to try and provoke one.

Meanwhile, the real estate company, chaired by Juan José Bruguera, said at the time that this purchase was a “quick and opportunistic gesture” by Colonial, which wants to strengthen its portfolio of prime office assets.

As this newspaper went to press, Axiare had notified the CNMV of its intention to look for investment banks and legal advisors “to analyse and study the possible effects of Inmobiliaria Colonial’s recent share purchase”.

This move by the Socimi’s Board of Directors may respond, according to sources in the sector, to the Board’s need to demonstrate that it is analysing the surprise operation, which clearly affects the company’s shareholders, given that Colonial is now Axiare’s majority shareholder. Similarly, Axiare may try to veto the inclusion of a board member from Colonial given that the firm is a competitor.

The move came on Friday 14 when the real estate company acquired 15.09% of the Socimi, off market, at a price of €12.50 per share, for a total investment of €135.6 million. Colonial paid a premium of 11.18% above the closing share price on Friday, but Banco Sabadell’s analysts said that the price represented an 8% discount compared to its estimate of Axiare’s NAV and an 11% discount on the target share price, which amounts to €14.10, compared with the closing share price on the day of the purchase (€11.18).

As a result of this operation, the real estate company will have a guaranteed flow of income in the form of dividends from Axiare, which, given its Socimi status, is obliged to distribute at least 80% of the profits from rental income to its shareholders. Colonial is hereby replicating the model that it has applied in France for years, where it is a shareholder of the Socimi Société Foncière Lyonnaise, with a 57.7% stake.

Original story: El Economista (by Rubén Esteller, Alba Brualla and Araceli Muñoz)

Translation: Carmel Drake