10 June 2016 – El Economista
Spain’s Socimis have come face to face with a new competitor. The appeal of the real estate sector has brought their foreign counterparts to Spain; they are interested in the same type of assets and some are even willing to assume more risk.
Although their arrival will generate more competition between the Spanish vehicles, the truth is that this news is being welcomed by all players in the sector, as they consider it to be yet another sign that the market is entering a new phase of its recovery.
The first to arrive in Spain following the crisis were the French, operating through SCPI (Société Civile de Placements Immobiliers); they are now ready to close transactions with more risk. Nevertheless, the experts in the sector indicate that it won’t be long before other more core profiles arrive, such as the British, Dutch and Americans.
The Socimi Actipierre Europe has already taken its first steps in Spain with two operations amounting to around €25 million. The firm, which focuses solely on commercial assets and is able to make 40% of its investments outside of France (but within the European Union) acquired the Tres Caminos Retail Park in Puerto Real (Cádiz).
According to sources in the sector, the transaction value amounted to approximately €14.5 million. The retail park has a constructed surface area of 20,270 sqm and 820 parking spaces.
The French Socimi, which has a market capitalisation of €430 million and was created in September 2007, has also purchased a retail outlet leased to MediaMarkt in the Les Gavarres de Tarragone Retail Park.
The vendor of that asset was Corum Asset Management, which had owned the property since 2013. In just three years, it generated gains of almost 50% on its capital investment. The Socimi, advised by Invesco, has paid €9.7 million, whilst Corum paid €7.4 million at the time with a return of 8.1%. In addition, Corum received two years worth of rental income.
These kinds of transactions are attracting a lot of attention from other international investors, which see significant opportunities to generate gains from Spanish assets in just a few years. As a result, experts predict that there will be quite a few operations in Spain over the coming months, financed by capital from France.
The experts also say that with interest rates at 0% “and the volatility of the Asian and European stock markets, investor interest in real estate assets has increased even further”. As such, “the combination of surplus liquidity and the return of possible operations involving prime assets, which are now appearing in the market, could accelerate the arrival of these vehicles”.
The experts highlight another statistic that is very interesting for investors – the fact that the yield on non prime assets in secondary cities has decreased from 8.12% to 6.50% in about two years, a compression that is already very similar to that seen in the case of prime products in the major cities, such as Barcelona and Madrid.
This situation favours the arrival of investment in Spain and softens the impact being generated by the political uncertainty in the country.
Original story: El Economista (by Alba Brualla)
Translation: Carmel Drake