Investors On The Hunt For Prime RE Assets

20 April 2015 – Expansión

Opportunities / The Spanish real estate sector has aroused interest from all types of purchasers, from those that are more opportunistic in nature to those that are seeking lower risk. Offices, shops and shopping centres are the most sought-after assets, but hotels and logistics centres offer the best returns.

The volume of investment has increased from just over €3,000 million to more than €8,500 million in only 12 months. That has been the evolution recorded by the non-residential real estate segment, which reflects the highest level of interest from all kinds of investors in Spain. Thus, the Spanish market has become the second most attractive country for investment in Europe, according to the consultancy CBRE.

But, what are these investors looking for in Spain? Based on the nature of the deals closed last year, offices and commercial assets (both shopping centres and high street stores) are the most sought after. “The transactions that spark the most interest have a value of between €40 million and €50 million, rely on financing for 50-60% (of the price) and generate an initial return of between 5% and 7%. Investors are looking for buildings with: occupancy rates of more than 70%; solvent tenants; and (lease) contracts lasting for around 6 years”, explain sources at JLL, based on data collected in a survey prepared together with the Iese Business School from more than 100 investors.

Excess demand for buildings, and for offices and shopping centres in particular, has led to “very competitive processes for star assets, i.e. those that are best placed in terms of location or that have high rentals, as well as good buildings that require management to improve their profitability”, explain sources at Catella. “Socimis and US funds are very active, along with institutional funds. All of them are creating strong investor pressure”, they add.

The fierce competition has meant that offices and commercial assets no longer offer such high returns, and so many investors have started to invest in other kinds of assets, such as logistics and industrial centres and hotels. Thus, whilst deals involving offices in prime locations offer a return of 5.5%, well-located industrial assets generate a return of 8.25% and logistics centres in secondary areas produce returns of up to 9.5%, explain sources at Deloitte Real Estate.

In the hotel segment, the experts predict that the volume of investment in 2015 will exceed that recorded last year (€1,081 million) thanks to deals involving distressed assets and the activity of debt portfolios, given the shortage of attractive assets.


Another possibility being considered by investors looking to enter the Spanish market and make a good return is the recovery of out-of-date properties or those without good lease contracts, through their renovation. “On the one hand, Socimis are looking to purchase offices, logistics assets and shopping centres that guarantee a return of between 6% and 7.5%. On the other hand, we have the real estate funds owned by private equity firms, which are looking for riskers assets that offer higher returns, such as properties that require renovation or land that needs developing. The expected returns in those cases can exceed 15%”, explain sources at Deloitte RE.

“Investors are becoming increasingly sophisticated and demanding. As has happened in other European countries, the most efficient buildings are going to be the key and, in the case of the financial district in Madrid, they have the lowest availability rates in Europe for that type of asset, which opens an important niche, both for investment as well as for the renovation of existing properties”, say source at Knight Frank.

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

Translation: Carmel Drake

Cerberus Purchases Gescobro From Spanish Fund Miura

18 February 2015 – Expansión

Transaction / The US firm acquires the company that specialises in debt recovery, which has been controlled by the private equity firm Miura for five years.

Following its acquisition of Sotogrande, the US fund Cerberus is continuing to dominant transactions in Spain. Its latest target has been Gescobro, the debt recovery company, owned by the private equity firm Miura since 2010, which held more than 90% of its share capital, according to market sources.

The management team, which held a minority stake in the company, continue at the helm. Through this transaction (for which the consideration paid has not been disclosed), Cerberus strengthens its debt management capability, in particular after investing in bank debt in the Spanish market in recent months.

The US fund already owned Haya Real Estate (formerly Bankia Habitat), which, in addition to its real estate management services, also operates in the field of mortgages.

With the acquisition of Gescobro, Cerberus enhances its position in the debt recovery market, specifically in the consumer credit segment. Last year, Gescobro managed files with a value of €4,000 million. Miura first acquired shares in the company in 2010; until then it was owned by the founding family, the García-Godalls.

Gescobro employs nearly 300 professionals between its headquarters in Barcelona and its offices in Madrid. Heading up the company is Iheb Nafaa, the CEO, who is supported by Gemma García Godall, Head of Business Development and the daughter of the firm’s founders. The two executives were also shareholders of the group when Miura controlled the company and, according to market sources, both continue to hold a minority share.

The transaction, which was closed on Monday, is the second divestment made by the Spanish fund since it was established in 2008. The advisors to the transaction included PwC, on the side of Miura, and the law firm Ashurst, who worked with Cerberus.

Original story: Expansión (by Sergio Saiz)

Translation: Carmel Drake