Foreign Capital Causes Investment in Madrid’s Offices to Soar

29 November 2018 – Expansión

Foreign capital is raising its game in the office market in Madrid and has caused investment during the third quarter to soar to a record level: almost €800 million. That figure, which is the largest since 2007, is explained by three mega-operations, which had a combined total of €511 million and accounted for almost 65% of the total transaction volume, according to a report compiled by the real estate consultancy Savills Aguirre Newman.

By volume, the largest transaction closed in the period was the purchase by the British firm Tristan Capital of a portfolio of offices spanning 78,000 m2 in Madrid from Colonial for around €280 million; it was followed by the purchase by the French firm Amundi Immobilier of the Pórtico building in Campo de las Naciones; and the acquisition of FCC’s headquarters in Las Tablas by Safra Sarasin.

In Spain, during the first three quarters of the year, the cumulative investment in offices amounted to €2.1 billion, which almost equals the total amount transacted in the whole of 2017. Specifically, Madrid accounted for 70% of the total invested during the first nine months of the year, with €1.4 billion worth of transactions signed.

Forecasts

In terms of forecasts, the consultancy firm has identified that almost €1 billion of operations are under negotiation and could be closed within the coming months. “The dynamism in terms of demand and the increase in products for sale in open processes could mean that the annual volume closes at 2016 levels, exceeding the figure recorded in 2017 by more than 50%.

In terms of absorption, the total volume during the third quarter increased the cumulative figure to 440,000 m2, which represents a YoY increase of 4%. “The good behaviour of the market during the third quarter allows us to forecast an annual volume of more than 600,000 m2”, explain sources at the consultancy firm.

Original story: Expansión (by R. Arroyo)

Translation: Carmel Drake

KF: Inv’t in Offices Amounted to €1.3bn & €0.8bn in Madrid & Barcelona, Respectively, in 2017

13 June 2018 – ABC

The performance of the office sector in Madrid at the end of 2017 bodes well for a “historical” 2018. That is according to all of the investment indicators managed by the real estate experts. Some very positive data for the region, which consolidates the Spanish capital’s position as the most attractive place for companies to locate their headquarters. In fact, it continues to be the greatest magnet for securing capital in the office market with a business volume of €1,324 million – 61% of the aggregated total – compared with €835 million in the Catalan capital. In terms of rented office space, 570,000 m2 was leased in Madrid, compared with 300,000 m2 in Barcelona.

Those are the findings of a recent report about the sector compiled by the consultancy firm Knight Frank, which forecasts greater activity in the sector in Madrid this year due to the rotation of assets by the Socimis and funds to fulfil their business plans. In Madrid, more than 40% of the total investment in 2017 involved funds, which, together with the Socimis outperformed other real estate players during the second half of last year.

The notable differences between the two regional capitals have increased as a result of the effects of the political instability caused by the independence drive and the decrease in tourism that has hit Cataluña. The experts consulted highlight that the rate of company creation has decreased in Cataluña since last summer, whilst in the Community of Madrid, the numbers have increased, with more than 185,000 companies registered with the Social Security at the beginning of 2018.

“The Spanish capital continues to be the key location due to its wide range of opportunities. Net absorption has been increasing for several years and rental prices are still very competitive in comparison with the main European centres”, explains Raúl Vicente, Director of Offices at Knight Frank. Nevertheless, the experts indicate the path that the city should take to become a “super city”. “In terms of the major challenges that it will have to overcome, they include mobility, adaptation to the technological revolution that we are living applied to the service of the city, efficiency, access to housing and an office supply that is commensurate with international demand, amongst others”, highlights the report.

The average price of offices in Madrid’s CBD has been rising in recent years. Prices in the capital now exceed €8,000/m2 on average, whilst in Barcelona, they amount to €6,900/m2. The highest price paid last year was for the former Barclays headquarters in Plaza de Colón, which was purchased from Barclays by CBRE Global Investors for €14,000/m2.

Other notable operations stand out including the purchase of Torre Serrano by Infinorsa and the sale of the Isla Chamartín Business Park to Tristan Capital and Zaphir Asset Management for €103 million. Also, the acquisition of the Palacio de Miraflores on the Carrera de San Jerónimo for €60 million by Remer Investment and of the Los Cubos building by Henderson Park and Therus Invest for €52 million (…).

Original story: ABC (by Adrián Delgado)

Translation: Carmel Drake

Blackstone Wants to Create a Hotel Leader with Hispania

5 April 2018 – Expansión

The investment fund Blackstone is considering a corporate operation involving the real estate group Hispania, as revealed by the online edition of Expansión yesterday. Financial market sources indicate that the fund is interested in the group’s real estate assets, rather than in Hispania’s company structure, and may make an offer shortly. Half an hour before the close of trading yesterday, Spain’s National Securities and Exchange Commission (CNMV) decided to suspend trading of the company’s shares when they had risen by 1.65% to €18.50 per share.

In the statement, the regulator indicated that trading would remain suspended “whilst the relevant information is communicated”. The Socimi’s asset portfolio amounted to €2.5 billion at the end of last year, of which €600 million corresponds to the 25 office buildings that it is looking to sell as part of its strategy to focus on the hotel management business. The transfer of that real estate portfolio is already on track and could materialise soon with its sale to the fund Tristan Capital. That portfolio would have to be excluded from the bid that Blackstone is considering, which would amount to around €1.7 billion, according to sources in the real estate sector.

Blackstone’s objective is to acquire Hispania’s hotel portfolio, the largest in Spain, taking advantage of the interest from its existing shareholders, including George Soros, to close their investments in Spain, which were initiated in 2014 and which are expected to be liquidated in 2020. To this end, the price set in the negotiations would have to come close to the valuation of the hotel portfolio, estimated at €1.638 billion as at December 2017, compared to its current market capitalisation of around €2.0 billion. The valuation of the portfolio reflects an important appreciation with respect to the purchase cost of the assets contained therein, in which Hispania invested just over €1.069 billion, and 42% more than the total allocated, including spending on renovations and updates to the properties.

At the end of last year, the Socimi reached an agreement with its until then partner in Bay, the hotel group Barceló, to acquire 100% of that subsidiary. According to the most recent accounts, Hispania’s hotels generated revenues of €129.67 million in 2017, up from €117.8 million recorded the previous year. Of that amount, €77.9 million was generated by properties in the Canary Islands, followed by €22.1 million contributed by hotels in the Balearic Islands and €8.7 million by hotels located in Madrid.

Blackstone is the international fund with the greatest exposure to the Spanish real estate sector, following several record-breaking operations. It owns assets worth €15 billion, including 51% of Popular’s real estate business, with a gross value of €30 billion, but acquired for €5 billion. Last year, it also purchased HI Partners, the hotel subsidiary of Sabadell.

Original story: Expansión (by R.Ruiz/R.Arroyo/M.Á.Patiño)

Translation: Carmel Drake

Catella: RE Inv’t Rose By 60% During First 8 Months To €7,061M

25 September 2017 – Expansión

The Spanish real estate market is still a magnet for investment at the global level. In this way, during the 8 months to August, investment in tertiary real estate assets (in other words, non-residential properties) rose to €7,061 million. That volume is 62% higher than the figure registered during the same period in 2016, according to data from the consultancy firm Catella (…).

By type of properties, commercial assets accounted for 45% of the total investment, with a volume of more than €3,200 million, up by 52% compared to the first eight months of 2016. In fact, that figure already exceeds the amount recorded for last year as a whole and is very close to the record investment made in 2007, when commercial assets worth more than €3,590 million were sold, according to sources at the consultancy firm.

Of that amount, investment in shopping centres accounted for 60% of total retail investment, amounting to €1,929 million. The figure is explained by the completion of major operations, such as the purchase of Xanadú, in Arroyomolinos (Madrid), on which Intu Properties spent €530 million; and the operation involving Nueva Condomina, in Murcia, which Klépierre purchased for €233 million.

Interest

Large assets were not the only retail assets to spark interest: high-street premises were also on investors’ radars. As such, €711 million was spent on that type of property between January and August, with highlights including operations such as the purchase of Preciados 9, the future flagship Pull & Bear store in the centre of Madrid, by Generali for €98 million. Meanwhile, investors spent another €516 million on retail parks and supermarkets, with the operation involving a portfolio of nine retail parks leading the way – the South African investor Vukile spent €193 million on that purchase.

In the case of offices, investment increased by 46% to reach €1,512 million. “The Boston portfolio – comprising 14 office buildings located in Barcelona, Madrid and Valencia – owned by BBVA and acquired by Oaktree for €180 million has been the most important transaction so far this year. In Madrid, the most significant transaction saw the acquisition of the Manoteras business park by Tristan Capital (€103 million), whilst, in Barcelona, the most high-profile deal has been the purchase of Torre Agbar by Merlin Properties (€142 million”, say sources at Catella.

During the first 8 months of 2017, hotel purchases rose by 25% to reach €1,760 million, thanks to operations such as the one involving Edificio España, for €272 million, as well as the purchase starring the international fund London & Regional (which acquired four hotels located on the coast and islands for €240 million), as well as others involving Starwood and KKR.

Moreover, the logistics sector has not been left behind in terms of the increase in investment. Between January and August, that segment saw investment grow by 31% to reach €575 million. (…). In this area, the most significant operation has been the sale of GreenOak’s portfolio to P3 Logistics Park for €243 million.

Whilst retail assets were the star product by type of property, international funds continued to be the undisputed stars in terms of buyer profile.

Between January and August, funds accounted for 42% of the total volume invested; whilst real estate companies represented 28% of the total (…). Meanwhile, the Socimis, who were the most active investors in 2014 and 2015, have seen their share of the cake decrease to 11% so far this year.

“On the other hand, core investors have returned to the market, with the acquisition of prime properties located in Madrid and Barcelona. Insurance companies, family offices and other institutional investors have purchased assets such as offices and retail premises in Madrid, with yields of around 3%”, said Carlos López, Partner at Catella.

Year-end

“…We expect 2017 to be a record-breaking year, with an investment volume of around €10,000 million, compared to the figures of more than €8,500 million in tertiary investment in 2016”, says López (…).

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

MDSR Buys A Portfolio Of Hypermarkets For €150M

21 September 2017 – Expansión

The fund MDSR Investments has completed another purchase in Spain. The firm has acquired a portfolio of hypermarkets leased to Carrefour and Eroski, which were owned until now by Tristan Capital. The operation, which has been closed for a value of approximately €150 million, represents the largest transaction in Spain involving hypermarkets and shopping arcades so far this year.

The portfolio has a gross leasable area of 86,836 m2. Located in Segovia, Jaca, Fuengirola, San Javier, Tomelloso, San Sebastián and Ribadeo, the first four operate buildings under the Carrefour brand. Moreover, the operation also includes shopping arcades in Segovia, Jaca and Tomelloso.

This is the seventh operation to be undertaken by the firm, which is managed by an Israeli group and financed by US investors, since it arrived in Spain a year and a half ago. Moreover, it is the firm’s second transaction in recent months, given that, in March, it acquired a portfolio of five Eroski hypermarkets, owned until then by Joparny, for around €30 million.

In October 2016, MDSR Investments acquired the Travesía de Vigo shopping centre for €49 million.

In this operation, MDSR has been advised by Savills on the real estate side and Dentons for legal aspects; whilst Linklaters has advised the seller on the legal side.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake