CBRE: Spain Is Europe’s Sixth Largest RE Investment Market

29 November 2016 – La Vanguardia

According to data published yesterday by the real estate consultancy CBRE, Spain was the sixth largest country in the European Union for real estate investment in the tertiary sector during the nine months to September, with investment amounting to €6,438 million.

In fact, Spain accounted for 4% of the total amount invested in real estate across Europe during the 9 months to September, which amounted to €163,095 million in total, down by 16% compared to the same period last year.

The hotel sector accounted for most of the investment in Spain during the first nine months of the year; the country was third in the ranking for hotel investment in Europe.

The retail or commercial sector also performed well. It grew in Spain with respect to last year allowing the country to position itself as the fourth largest destination for retail investment in Europe.

Although the volume of investment in the tertiary sector in Spain during the first nine months of this year was lower than the figure recorded last year, the Head of Research at CBRE Spain, Lola Martínez-Brioso, thinks that it is likely that the final figure for the year will be in line with the previous two years.

All of this, she adds, does not include the operations that Merlin has completed this year, with its purchase of Testa and its merger with Metrovacesa.

As a result, the Director of the firm maintains that this data is indicative of sustainable activity, which “distances us from another potential bubble”.

Of the 28 countries in the European Union, the United Kingdom leads the ranking in terms of real estate investment, with a total investment volume of €45,915 million during the first nine months of the year.

The UK is followed by Germany (€32,700 million) and France (15,793 million). Sweden and The Netherlands are ranked in fourth and fifth places, respectively.

Nevertheless, Sweden recorded the highest increase in investment volumes (31%) compared with the same period last year, followed by Denmark, up by 21%.

Original story: La Vanguardia

Translation: Carmel Drake

Drago Finalises Purchase Of Gas Natural’s RE Jewels

7 November 2016 – Expansión

The investment firm Drago Capital, together with the Canadian pension fund manager PSP Investments, has emerged as the clear candidate to acquire the real estate jewels of Gas Natural Fenosa in Madrid. The firm is now holding exclusive negotiations with the energy company to put the finishing touches to a deal that is likely to close within the next few weeks.

According to market sources, the offer from the Spanish real estate vehicle manager, which was presented as part of a consortium with the Canadian fund, has supplanted those submitted by the other suitors also interested in the assets.

The operation values the energy company’s assets in Spain’s capital at just over €300 million, which means that this will be the largest sale and leaseback transaction (sale to a third party and subsequent rental of the property) since 2010.

The firm chaired by Isidro Fainé engaged the real estate consultancy firms CBRE and Cushman & Wakefield in the summer to sell its main real estate assets in Madrid. This process sparked interest amongst private equity funds and investors alike, both at home and overseas.

Other candidates

Specifically, in addition to Drago, the investors Iba Capital, Henderson Park and a family office participated in the bidding until the latest round. Has Capital, which had also expressed its interest in Gas Natural’s properties, withdrew at the last minute as it was unable to raise financing.

The assets up for sale are: the group’s headquarters in Madrid, located on Avenida de San Luis 77; a property on Avenida de América 38; the Acanto complex, at number 11 on the same street; and the Antonio López complex on Calle Antonio López 193.

Altogether, the global surface area of the four complexes amounts to 57,000 m2. In addition, the portfolio of assets includes 1,695 parking spaces. (…) .

Gas Natural’s move comes at a time when its competitors are also divesting their real estate assets.

Specifically, Torre Cepsa – one of the Cuatro Torres in Madrid – was acquired just two months ago by Pontegadea. That purchase – the largest ever undertaken by Amancio Ortega’s investment vehicle – was completed in September and saw the founder and largest shareholder of Inditex spend €490 million.

Meanwhile, Endesa’s headquarters in the capital is owned by Merlin; and Iberdrola’s headquarters in Bilbao is partially owned by Kutxabank.

Repsol still owns its headquarters in Madrid, in Méndez Álvaro, however, there has been speculation that the oil company may sell the asset. (…).

According to the consultancy JLL, real estate investment in the office segment is expected to exceed €2,400 million in 2016. That figure falls below the record €3,170 million achieved last year due to the limited supply of high quality products. During the first nine months of 2016, investment in offices amounted to €1,572 million, with Madrid accounting for the vast majority of that figure (€1,150 million).

Original story: Expansión (by R. Arroyo & M. A. Patiño)

Translation: Carmel Drake

JLL: Inv’t In Retail Sector Falls By 27% In H1 To €1,278M

20 September 2016 – La Vanguardia

Real estate investment in the retail sector – which includes shopping centres, retail parks and other premises – decreased by 27% during the first half of the year to €1,279 million, as a result of the shortage of products in the market, according to data published yesterday by the real estate consultancy JLL.

Despite the decrease in investment during the first half of the year, the firm expects the full year to close roughly in line with 2015, when investment exceeded €3,000 million. Moreover, it does not detect any negative impact as a result of the political instability in Spain at the moment.

Spain accounted for 7% of all retail investment in Europe during the first half of 2016, to stand in fourth place in the overall ranking.

High street stores and shopping centres accounted for 25% and 23% of total investment in H1 2016, respectively, well below the 48% that each one of those segments represented a year ago.

Despite the decrease in investment, JLL is convinced that the fall is not indicative of a deceleration in the market. The number of operations completed during the first half of the year amounted to 38, exceeding the 23 signed a year earlier.

Nevertheless, the average size of those transactions decreased by half to €40 million. Most, 18, corresponded to high street stores, amounting to €310 million in total, compared with 14 operations amounting to €860 million in 2015.

Socimis accounted for 16% of the total investment with €106 million.

In terms of rents, Paseo de Gracia recorded an increase of 11.6% to €240/sqm/month, although Portal del Ángel in Barcelona was crowned the most expensive street in Spain after rents there increased by 8.3% to €260/sqm/month.

In Madrid, Preciados is the most expensive street, with rents of €255/sqm/month, following an increase of 6.25%. It is followed by Serrano (€240/sqm/month and an increase of 6.7%) and Gran Vía (€230/sqm/month, up by 4.5%).

The forecasts indicate that rents in Madrid will increase by 2.4% p.a. during the period 2016-2018 and by 1.7% p.a. in Barcelona.

In the case of shopping centres, rental prices reached €88/sqm/month and forecasts show that they will increase at an average annual rate of 2.2% between 2016 and 2018.

During this period, new shopping centre openings are expected to double after hitting a minimum of 343,000 sqm between 2013 and 2015.

Project highlights this year include: Parque Nevada (Granada), Sambil Outlet Madrid and Fan Mallorca Shopping. Between now and 2018, the following centres are also expected to open: Plaza Río; Open Sky Center; Viladecans The Style Outlets; Torre Village; Palmas Altas and Torrecárdenas.

According to the Director of the Retail Department at JLL, Sergio Fernandes, there are increasingly more players interested in developing new centres from scratch, as well as significant interest in both the sale and purchase of new centres.

JLL also highlighted the growing trend in terms of the opening of flagship stores, as well as the shortage of quality space, which is forcing retailers to convert other spaces from residential, office and leisure use into commercial properties.

One of the most noteworthy operations of this kind is the opening of a 5,000 sqm Zara store on Castellana 79 (in the building that previously housed Fnac), which is due to open at the end of 2016 or the beginning of 2017.

JLL expects returns to continue to be compressed over the next few months and that the average value of the shopping centre market will grow by 5.6% p.a.

Original story: La Vanguardia

Translation: Carmel Drake

Socimis Have Raised €1,700M In Funding In YTD16

11 August 2016 – Expansión

Merlin, Hispania, Grupo Lar and Axiare are increasing their capital and attending the bond market in order to finance new acquisitions, increase their asset portfolios and grow in size.

The large listed real estate investment companies (Socimis) – Merlin, Hispania, Lar España and Axiare – are preparing themselves to gain financial muscle and resume their property purchases. Specifically, so far this year, those Socimis have raised almost €1,700 million between capital increases, financing agreements and bond issues and they are expected to continue to pull on the real estate sector this year.

These four companies, which debuted on the Madrilenian stock exchange between March and July 2014 with €2,560 million to invest, have been the stars of the reactivation of the real estate sector and intend to continue to grow this year. Last year, the Socimis accounted for more than 40% of all real estate investment, with an investment volume of around €5,300 million. To that end, Merlin, Axiare, Hispania and Lar España managed to raise almost €3,000 million on the main market through several capital increases.

Bond issue

So far in 2016, the Socimis have again been very active in terms of raising funds for investment. Specifically, Merlin, which is preparing for its merger with Metrovacesa in a deal that will see it become the largest real estate company in Spain, has opted to go to the bond markets. The company chaired by Ismael Clemente completed a bond issue in April amounting to €850 million, with a maturity of seven years and an annual coupon of 2.225%, payable annual in arrears.

Similarly, in June, the Socimi announced that it had signed a revolving loan (a flexible arrangement) for a maximum amount of €320 million over five years, which will be used for the current investment program that it is undertaking, as well as to finance new acquisitions. (…).

Meanwhile, Hispania, which focuses on the hotel sector above all, completed a capital increase in June amounting to €231 million, through the issue and placing into circulation of 25.8 million new shares, at €8.95 per share (the sum of the nominal value and the issue premium). The company in which George Soros owns a stake, which had used up almost all of its investment capacity, has identified new opportunities worth €1,500 million. (…).

Another of the Socimis listed on the stock market that wants to gain financial muscle to make purchases is Lar España. That company has completed a €147 million capital increase this year, through the issue of 30 million shares at a price of €4.92, in order to be able to undertake new transactions.

In addition, in February, the company signed a loan with a banking syndicate comprising Natixis, Credit Agricole and Santander, amounting to €97 million over a seven year term. This financing was associated with the acquisition of Megapark Barakaldo. (…).

Financing agreements

In March, also with the aim of raising funds for investment, Axiare Patrimonio signed a new financing contract with Banco Santander for €14.9 million over two premises in Edificio Velázquez, in Madrid.

In addition, in June, Axiaire reached a financing agreement with Bankinter amounting to €31.2 million, with a five-year term. (…).

Similarly, the company has also signed an agreement with BBVA amounting to €7 million, also with a five-year term. In this case, the financed property is an office building on Calle Josefa Valcárcel (Madrid).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Testa & International Funds Have Driven RE Inv’t In 2015

3 December 2015 – Expansión

According to the consultancy firm CBRE, investment in offices, commercial assets, hotels and logistics warehouses will amount to €13,000 million by the end of this year.

Real estate investment will close 2015 at record breaking levels. The arrival of international funds and the launch of the Socimis have driven the purchase of assets to levels exceeding even those seen at the height of the boom in 2007, and are expected to close the year with a total volume of €13,000 million. “2015 has not only seen a strengthening of the recovery that started in 2014, it has also seen growth of 25%, resulting in record levels (of investment)”, explains Mikel Marco-Gardoqui, Head of Investment at the real estate consultancy firm CBRE.

By type of asset, offices continue to be the preferred asset, but all of the sectors have experienced growth in 2015, according to the experts at CBRE. “All of the sectors, including offices and shopping centres, as well as hotels, have grown significantly this year and are now at record levels”, says Lola Martínez, Director of Market Analysis at CBRE.

By type of investor, 70% of the investment volumes have come from overseas investors, including those who have entered Spain by acquiring shares in Socimis.

Some the operations that have most boosted volumes include: the purchase of Testa by the Socimi Merlin Properties for €1,800 million, the acquisition of Torre Espacio by the Philippine businessman Andrew Tan for €558 million and the purchase of Gran Vía 32 by Amancio Ortega for €400 million.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Madrid Leads Global Growth In RE Investment

15 October 2015 – Expansión

The volume of real estate operations in the Spanish capital shot up by 164% during the 12 months to May 2015, to reach €6,347 million. As such, Madrid recorded the highest rate of growth in the world.

Between June 2014 and May 2015, real estate investment in Madrid reached the record figure of €6,347 million, up by 164% compared with the same period a year before. That places the Spanish capital at the top of the global ranking of real estate investment growth, according to a study conducted by the consulting firm Cushman & Wakefield.

“This report clearly shows that the Spanish property market is continuing (to grow) at a very good pace and that both Madrid and Barcelona continue to be in the spotlight of global real estate investors”, says Oriol Barrachina, CEO of Cushman & Wakefield España.

In total, more than €13,000 million was invested in the Spanish market in one year, thanks to purchases by large international funds, as well as by listed real estate investment companies (Socimis). In Madrid, highlights included the purchase of the building at Gran Vía, 32 for €400 million by Pontegadea, the investment vehicle owned by Amancio Ortega, and the Plenilunio shopping centre, for which the French company Klépierre paid €375 million.

Total investment

Despite the significant increase, Madrid still falls well below the major cities in the world that account for the most real estate investment in absolute terms. That ranking is led by New York, with a total investment volume of more than $74,799 million (36% more than in 2014); London, with $55,207 million (up by 13%); and Tokyo, with $37,971 million (up by 0.7%).

In fact, in terms of total investment volumes, Madrid is ranked number 27 in the world, above European cities such as Milan, Dublin, Hamburg and Oslo. “Europe continues to be a very attractive market for cash flows, but North America is the region that has grown the most, demonstrated by the strong presence of US cities in the report”, says David Hutchings, Director of Investment Strategy for EMEA at Cushman & Wakefield. In fact, 14 of the top 25 cities in the ranking are American, compared with, for example, three that are German. In terms of the origin of investments, the USA also occupies the top places in the ranking.

Barcelona, whose investment volumes grew by 46% last year, still does not feature in the top fifty cities by investment volumes. However, the authors of the report are certain that the two Spanish cities will continue to capture the attention of investors over the coming year.

Yields

The furore over real estate assets in Spain has dampened the yields of these purchases somewhat, which now amount to 4.5% in the case of offices, 4% for commercial assets and 7% for logistics properties.

By types of asset, over the last twelve months, investors have chosen to buy commercial, residential and hotel assets in New York, offices in London and industrial assets in Los Angeles. In terms of property development, cities in Asia accounted for the majority of investment. Thus, between September 2014 and June 2015, $29,390 million was spent on these kinds of projects in Shanghai, followed by $23,392 million in Beijing, and in third place, $14,244 million in Chongqing. All three cities are located in China.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake

Socimis Invest €420M+ In Asset Purchases In Q1 2015

6 April 2015 – El Economista

The main listed real estate investment companies (‘sociedades cotizadas de inversión inmobiliaria’ or Socimis) have continued to make purchases in 2015. During the (first three) months (of the year), they have spent more than €420 million on the acquisition of office buildings, residential complexes, logistics warehouses and hotels.

Merlin Properties, which debuted on the stock exchange in June last year, with a valuation of €1,250 million, has invested the largest amount during the first three months of the year (€146.3 million).

Since the start of the year, the company has acquired the office building located at number 8 World Trade Center Almeda Park (WTCAP) in Cornella de Llobregat (Barcelona) for €36.5 million and has spent €38.1 million on another office building located on Calle Alcalá 38-40 (Madrid), which is entirely leased to the Ministry of the Interior.

Similarly, it has acquired a logistics warehouse measuring 16,242 m2 in Getafe (Madrid) for €12.75 million, which is leased to Transportes Souto; another measuring 72,717 m2 in Vitoria for €28.58 million, leased to Norbert Dentressangle; and has spent a further €19.8 million on another warehouse located in Coslada (Madrid), measuring 28,490 square metres, which is leased to Azkar.

Following these acquisitions, Merlin’s property portfolio exceeds 717,000 m2 and generates gross annual rental income of €132.2 million.

Meanwhile, the Socimi owned by the Lar Group purchased a plot of land jointly with Pimco measuring 26,203 m2, located on Calle Juan Bravo, 3 (Madrid), where the Juan Bravo Plaza project was being carried out, led by the property developer Eurosazor, owned by Rafael Ortiz, in which Fernando Fernández-Tapias and Paloma Mateo also hold shares.

Lar España will now take over the management of this new real estate project with the objective of constructing a first class residential building in one of the “prime” (real estate) areas of the city, close to the Golden Mile. This transaction takes the Socimi’s total investment to €458.7 million in 15 deals since its IPO.

Meanwhile, Hispania, – the listed investment company controlled by Azora and in which the multimillionaires George Soros and John Paulson hold shares – has acquired a residential complex measuring 39,000 m2 in Sanchinarro (Madrid), comprising 284 homes and 311 garages, for €61.15 million.

It has also purchased an office building located on C/Príncipe de Vergara, 108 (Madrid) measuring 7,324 m2 for €25 million, as well as the three-star Hesperia Ramblas Hotel (Barcelona) for €17.5 million and the four-star Vincci Málaga Hotel for €10.4 million.

Finally, AxiaRE has acquired two office buildings in Madrid, one located in Campo de las Naciones and the other on Calle Juan Ignacio Luca de Tena, for €40.5 million in total.

Since its IPO, the company has closed 9 investment transactions valued at €464 million, through which it has acquired 18 properties, which have a combined rentable surface area of more than 402,000 m2.

Original story: El Economista

Translation: Carmel Drake

Real Estate Invesment In Madrid Tripled In 2014 To €3,600M

16 March 2015 – Yahoo Finance

Real estate investment in Madrid tripled in 2014, to reach €3,600 million, compared with €976 million in the previous year, according to a study conducted by BNP Paribas Real Estate.

In addition, office rentals in the capital have risen for the first time since 2008, with an increase of 10% with respect to the previous year, due (mainly) to “prime” income, which reached €312/m2 per year at the end of the year.

In the meantime, investment in Barcelona also increased, although to a lesser extent (by +9%), to amount to €1,300 million in 2014. Similarly, the city registered record office rental figures, exceeding the levels achieved in 2007 by 18 basis points.

In this line, the study highlights the recovery in the markets that were hit the hardest by the crisis: in Dublin and Madrid, for example, investment increased by 120% and 278%, respectively (last year). London, which recorded a slight decrease with respect to 2013, attracted the highest volume of investment in Europe, with almost €30,000 million, followed by Paris, where investment amounted to €17,000 million.

(Across Europe), investment in non-residential real estate increased to €108,000 million, of which €74,000 million related to offices, a volume that made last year the best year since 2007.

Office leases increased by 10% in Europe

Office leases in Europe increased to reach 11.7 million square metres in 2014, i.e. 10% higher than in the previous year, driven by growth in Paris, Berlin and Brussels.

The study reflects that the improvement in economic conditions and the labour market in 2014 had a positive affect on the office market in Europe. In this way, the return of large transactions has contributed to good results in most markets.

As in previous contexts, the main drivers of demand were reductions in costs and rationalisation; similary, users maintained their preference for new buildings in good locations.

Despite the significant increase in office leases, the average vacancy rate in the 35 cities analysed decreased by 10 basis points only and is still above the threshold of 10%. These levels are possible because the reduction in available space was in partly offset by a higher volume of new developments and the freeing up of second hand space as users relocated, according to the real estate consultant.

However, the lack of supply in central areas has kept rents under pressure in the case of ‘prime’ category buildings. As a result, average ‘prime’ (rental) income increased by 3%, driven by increased activity in rising markets, such as London and Dublin.

By contrast, rentals in peripheral districts evolved in the opposite direction, as they continued to suffer from high vacancy rates, which forced owners to offer incentives to prevent price decreases.

Original story: Yahoo Finance

Translation: Carmel Drake

Savills: Spain’s Commercial Property Market Outlook Is Improving

11 March 2015 – Property Wire

There are already signs that Spain’s residential property market is recovering and now a new report shows that its commercial markets are also growing.

International real estate advisor Savills is predicting CBD office yields in Madrid will move from 5% to 4% and 4.5% for super prime properties, as a lack of good quality stock puts pressure on pricing.

This follows strong investment volumes in Spain’s office market during 2014 in which €2.8 billion was transacted, triple the €990 million total in 2013.

The firm states that in terms of location, 60% of investment was made in Madrid, 30% in Barcelona and the remaining 10% in other locations throughout the country.

Savills reports that the growing amount of demand and the lack of supply continues to push achievable yields down in the CBD and the main business areas. Prime yields at the end of the year moved by 100 basis points, secondary areas by 75 basis points and out of town locations saw a change of 50 basis points.

‘Investors preference for Spain’s more mature market of Madrid is undeniable, accounting for a total of €1.65 billion. But the lack of good quality stock is putting pressure on yields,’ said Luis Espadas, director of investment at Savills Spain.

‘The yield in the CBD stands at 5%, and for super prime properties could achieve between 4% and 4.5%,’ he added.

The firm finds that SOCIMIs, the Spanish equivalent of REIT’s, were very active in the office market, with 27% of their total capital being invested in commercial property and 76% of that total in offices.

‘Whilst the SOCIMI and domestic investors were very active in 2014 this year we predict we will see large Latin American investors capitalizing on opportunities in the Spanish office market,’ said Pablo Pavia, director of investment at Savills Spain.

The Savills report also states that take up in the office market at the end of 2014 was 382,000 square meters, some 2.5% less than the previous year. However, 2013 take up was heavily distorted by the Vodafone letting of 50,000 square meters, and discounting that letting take-up grew 12% on the previous year.

Additionally, it points out that there are a number of large space requirements currently in the market, several of which are seeking space exceeding 5,000 square meters.

‘Thanks to signs of a recovery in Spain some occupiers are more willing to sign pre-lease agreements on speculative space in the CBD which in term is prompting major market players to carry out speculative developments. The increase in take up activity will cause rents in the best properties to continue to rise through 2015,’ said Ana Zavala, director of office agency at Savills.

According to Savills rents in the CBD are currently in excess of €25.50 per square meter and could reach €28 per square meter in 2015 given continued strong take up. The firm also predicts landlord will continue to undertake refurbishment projects in 2015, with three quarters of new space in the pipeline for the upcoming year related to refurbishment projects.

Original story: Property Wire

Edited by: Carmel Drake

Shareholders Expected To Approve Intu’s Purchase Of Land In Malaga

6 March 2015 – Expansión

The British property developer has called a shareholders’ meeting to approve (its construction of) one of the largest shopping and leisure complexes in Spain.

The company that owns Puerto Venecia in Zaragoza (pictured above) and Parque Principado in Asturias is going to construct its third shopping centre in Spain, if its shareholders approve the plans at their meeting on 15 April.

In a statement issued yesterday (Thursday) to the London Stock Exchange, Intu Properties announced its decision to exercise a call option to purchase 30 hectares of land close to Torremolinos (Málaga) for €37.5 million. The company has already invested €4.2 million preparing for the project and it may also buy another adjacent site for €4.8 million.

The vendor of the land in Málaga is the Peel Group, a company that holds a stake in Intu, and so the other shareholders should authorise the transaction at their meeting. Moreover, Peel has committed to investing the money it receives from the sale of the site in Málaga into shares in the company, which is listed in London.

If the agreement is approved, Intu will invest €450 million in the development of a new shopping centre between 2015 and 2018. Its objective is to obtain an annual return of 7% on this investment from the rental of shops and restaurants in the complex. Intu plans to look for partners to buy shares in the development company that will build the centre.

In addition to its shopping centres in Zaragoza and Asturias, and its project in Málaga, the Intu group is planning other developments in Valencia, Vigo and Palma de Mallorca. Intu’s share price rose by 1.1% in trading on the London Stock Exchange on Thursday.

Original story: Expansión (by R. Casado)

Translation: Carmel Drake