BBVA Continues to Obtain Juicy Profits from the RE Market

17 April 2018 – Merca2

Bilbao. Gran Vía, 1. One of the most iconic buildings in the Vizcayan capital has been located at that address since 1969. Comprising 21 storeys and measuring 86 m tall, it was the giant of the city until the arrival of Torre Iberdrola. Headquarters, at the time, of Banco de Vizcaya, the entity known nowadays as BBVA has just put the property up for sale. The price? Around €100 million.

This is a new milestone in the process to divest iconic buildings that the entity chaired by Francisco González has been carrying out for several years and which has been generating some juicy profits. This money for the coffers is a godsend for the balance sheet.

Another example, the most recent on the long list, saw the sale of Torre Puig in 2017 to the Catalan perfume group of the same name. That building, which ended up in BBVA’s hands after its acquisition of Catalunya Caixa, was sold for €60 million, at a gain of €30 million.

Also prior to this latest operation on Bilbao’s Gran Vía, which is expected to be closed before the summer, in 2015, BBVA sold the office block known as Torre Ederra in Madrid, located at number 77 Paseo de la Castellana, to Gmp (owned by the Montoro Alemán family and the sovereign fund of Singapore GIC). Spanning 21,000 m2 and spread over 18 floors, BBVA acquired that property in 2003 for €87.5 million from the French group Saint Gobain. The sales price paid by Gmp exceeded €90 million.

BBVA and its €300 million gain

There are several reasons behind BBVA’s decision to divest a series of buildings; some of them have significant value, not only financial but also in terms of their history and architectural beauty.

One of the reasons is to finance the cost of the creation of BBVA City (Ciudad BBVA). The new headquarters, popularly known as La Vela due to its most iconic tower, also comprises another seven horizontal buildings. It cost around €700 million to build and was constructed to reduce by one third the operating cost of having around 6,500 employees spread across a dozen properties, amongst other reasons.

Another building that was sold, for example, was the work of the architect Francisco Javier Saénz de Oiza. Constructed at number 81 Paseo de la Castellana, measuring 100 m tall, and spanning more than 49,000 m2 over 30 storeys, that property was sold in 2007, also to the real estate group Gmp.

That same year, BBVA reduced its portfolio further by placing other buildings in Madrid on the market, such as those located on Calle Goya 14, Calle Alcalá 16 and on Gran Vía de Hortaleza. In total, more than 108,000 m2 of space was sold, which saw these last four buildings generate gains of €300 million for the entity chaired by González (…).

Another operation that was different was BBVA’s sale, at the end of 2017, of its real estate division to the fund Cerberus Capital for around €4 billion. That deal was carried out at a discount of 61%: the gross book value of the 78,000 real estate assets that form part of the deal is €13 billion.

In this case, the operation involved divesting the bank’s exposure to property, in part “imposed” or “recommended” by the Single Supervisory Mechanism (SSM) of the European Central Bank (…).

Which assets are being spared? So far, the former headquarters of Argentaria, located on Paseo de Recoletos in Madrid, which currently houses the headquarters of Fundación BBVA. For the time being, no “for sale” sign has been put up there. But it could only be a matter of time.

Original story: Merca2 (by Valentín Bustos)

Translation: Carmel Drake

Rental Prices Will Rise On La Castellana After The Summer

6 July 2016 – Expansión

Madrid’s financial district is refreshing its image and prices are set to rise in the area after the summer. The Spanish capital’s La Castellana thoroughfare is aiming to attract tenants who are willing to prioritise the quality of space over rental costs.

Whilst investors remain attentive to the course of events unfolding in the City (London), following Brexit’s victory in the EU referendum held on 23 June, and the formation of a new Government in Spain after the election on 26 June, business is continuing as usual and the capital’s financial district is getting ready to open its doors to some new tenants. Some of the countries in the Eurozone may, over time, attract some of the activity that has been performed in the United Kingdom until now, and if this becomes a reality, Madrid’s financial district could represent a good option for companies currently headquartered in London.

Torre Europa is preparing itself to this end. Grupo Infinorsa has launched a process to renovate the property following KPMG’s departure and will allocate €20 million to the modernisation of its facilities. In the same way, GMP is in the middle of renovating the Castellana 77 skyscraper, known as Torre Ederra – the former headquarters of Saint Gobain – as well as Castellana 81 – Torre BBVA – to adapt them both to the new demands of the market. Another building that is looking for new tenants is Torre Picasso following EY’s move to Torre Titania. (…).

Sources at Cushman & Wakefield explain that demand is not growing in Madrid at the moment. “GDP levels are similar to during the years before the crisis, and so around 200,000 sqm of space is being leased out per year. The main explanation is uncertainty”. Moreover, it seems like the slowdown is more acute in the financial district, due to the quality of available stock and the cost. (…).

José Miguel Setién, Director of the Office Business at JLL, explains that renting in Madrid has been cheap until now and the price ratio is still very attractive when compared with other major European cities; this means that there is still a lot of potential in the Spanish capital. “Provided there are no political or structural macroeconomic problems, the figure trend is that the market will continue to rise”, he added.

The CEO of Aguirre Newman, Jaime Pascual-Sanchiz de la Serna, explained that offices in prime areas, as well as in the market in general, have been very static in terms of renovations and new projects. Pascual-Sanchiz says that several projects launched within the last 12 months will come onto the market within the next year. In his opinion, they will be a good indicator for measuring the evolution of offices. “The owners of those properties, including Pontegadea, Mutua Madrileña and the Consorcio de Compensación de Seguros do not have financial problems, and are not desperate to lease their properties at any price”. For the expert, although we are seeing small and medium-sized operations in the area, the large moves, which are more dependent on the domestic and international political situation, will have to be unblocked after the summer.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

GMP, Infinorsa, GreenOak Make It to the Final Bidding For Saint Gobain Skyscraper

9/12/2014 – El Confidencial

Next great battle is taking place in the Azca complex. One of its real estate jewels, known as Torre Saint Gobain and situated at 77 Castellana street (pictured second from the left), will soon get to know the name of its new owner.

Few days back, an alluring plot in this area was acquired by El Corte Inglés for 136 million euros.

The property up for grabs belongs to BBVA. Of the juicy bids it had received, the bank has picked three finalists: GMP, Infinorsa and GreenOak. Their offers are said to oscillate around €90 million, an upper-level in the 70-to-100 million euro range established by the property’s underwriters, the entity and CBRE Spain.

In the meantime, such industry tycoons as Colonial or Pontegadea were left out of the tender process.

GMP is the owner of the Torre BBVA black tower (first on the left), located just in front of the building for sale. In turn, Infinorsa holds Torre Europa, next eye-catching skyscraper of the office area. However, the most prominent building belongs to aforementioned PontegadeaTorre Picasso.

Sources from the market assure that submitted prices indicate rents of some 35 euros a square meter, in order to obtain good return rates. To compare, today’s prices in the complex vary from 20 to 25 euros per square meter.

The building is nearly 70 meters tall, has 18 stories above the ground level and a 16.000 square meter area. Apart from that, it disposes of six underground stories destined for parking lots, storage rooms, facilities and services.

In 2003, the property was bought by a real estate fund of BBVA for 87.5 million euros. However, more than ten years later, the unit is in need of a comprehensive refurbishment, a cost to be borne by the buyer.

The Ederra building, as it is called inside Azca, once housed the Saint Gobain Cristalería glassware group‘s Spanish headquarters. Last year, the firm’s rental agreement expired and the French tenant moved to its new premises at 132 Principe de Vergara street.


Original story: El Confidencial (by R. Ugalde & E. Sanz)

Translation: AURA REE

Pontegadea, GMP & Insurers Vie For Old Saint Gobain Premises

30/10/2014 – Expansion

The sale of the old headquarters of Saint Gobain (pictured in the center), situated at 77 Paseo de la Castellana street in Madrid, has become a special focus of international funds and Spanish companies.

BBVA’s 16-storey property is located in the downtown and within the Azca zone has 16.000 square meter area. It stands just next to the Torre Picasso tower, owned by Pontegadea, and the Torre BBVA, unit of Gmp. In fact, the two neighbors expressed their interest in buying the property, said sources close to the process.

When it comes to Gmp, the real estate firm and its partner Singapore Sovereign Fund (GIC) has recently presented its new strategic plan.

In turn, Pontegadea, owner of the abovementioned Torre Picasso and the 79 Castellana building, has been doing shopping in markets of London and New York. If the firm of Amancio Ortega purchases the property, it will be able to create synergies as ‘the current tenants of its units want to grow and have no available space for that’, the sources assure.

Other potential bidders for the Saint Gobain tower are insurers like Mapfre or Generali, unable to resist an office building on the Castellana street.

The Price

In 2003, BBVA acquired the unit for €87.5 million from Saint-Gobain that have been renting it until last year, when it moved to 4.300 square meter office space at 132 Principe de Vergara street.

It is expected the entity will ask for a similar amount, in spite of the need of an overall renovation of the property, estimated to require an up to €10 million expense. In any way, until now BBVA has preferred to see the bids before setting any price.


Original article: Expansión (by R. Ruiz)

Translation: AURA REE