Tag: Quinlan

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

Deutsche Finalises Purchase Of Diagonal Mar For €505M

11 July 2016 – Expansión

Largest operation in the retail sector for 10 years / The German group has outbid the other candidates, including CBRE, ECE and Henderson.

The process to purchase Diagonal Mar is entering the final stretch. With nothing but the final details left to finalise on what will be the largest real estate operation in the shopping centre segment for ten years, Deutsche Bank has taken the lead by outbidding CBRE Global Investors, ECE and Henderson Real Estate, the other three candidates left in the contest.

Market sources have informed Expansión that Deutsche Bank’s offer, for €505 million, could be signed at the end of this month.

If this operation goes ahead, Northwood Investors will get rid of this property, which it acquired from the Irish bad bank Nama (National Asset Management Agency) in 2013 for €150 million.

Changes of ownership

It is not the first time that this property has changed hands. The real estate company Hines was awarded a mixed use project at the end of the 1990s, which included a residential area, offices, hotels and a large shopping centre with a constructed surface area of 100,500 sqm and a GLA of 87,000 sqm, plus 5,000 parking spaces.

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

On 7 June, a process was opened whereby investors were invited to submit non-binding offers for the property. 18 offers were submitted in total, including one from the Socimi Merlin (the only Spanish firm to participate in the auction). In the end, only four candidates were selected to go through to the final bid: CBRE Global Investment, ECE, Henderson TH and Deutsche Bank.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake