Union Investment Sells Pórtico Building in Madrid to a French Fund

19 July 2018 – Eje Prime

International operation in the office market in Madrid. The German fund Union Investment has sold the Pórtico building to a leading French investment company. The price of the operation has not been revealed, but it exceeded the valuation.

The building, located at number 2 Calle Mahonia, in the Campo de las Naciones area, spans a surface area of 21,000 m2 spread over seven storeys. Moreover, the asset has 413 parking spaces. The operation has been advised by CBRE.

The tenants of the property, which used to be the headquarters of Marsans for several years, include the cruise company Pullmantur and the liquor company Beam Suntory. The building is almost completely occupied, according to details provided by the last owners, who were asking €130 million for the asset when they put it on the market in January.

Pórtico, designed by the architects SOM and Rafael de La-Hoz, was constructed in 2005 and has formed part of Union Investment’s real estate portfolio since 2008. The asset was included in the group’s Unilmo: Deutschland portfolio.

The operation represents the end of Unilmo: Deutschland’s investments in Spain. Nevertheless, Union Investment is continuing to analyse the commercial property market in Madrid for possible new purchases.

Not in vain, at the beginning of the year, the German fund acquired a commercial asset on central Calle Fuencarral in the Spanish capital. Union Investment also owns two offices buildings in Spain and a hotel in Barcelona, which together have a combined value of approximately €190 million.

Original story: Eje Prime

Translation: Carmel Drake

CBRE: Investment in High Street Premises Will Exceed €1.1bn in 2018

5 July 2018 – Eje Prime

Commercial premises, especially those located on the most prime streets of Spain, are proving highly sought-after. According to CBRE, the high street investment market is going to achieve record figures in 2018, up to a total of €1.1 billion. The culprits? The German fund Deka and Inditex, in addition to the strength of secondary cities in the country.

During the course of the last two years, investment in high street assets remained stable at around €800 million per year, after peaking at €1.01 billion in 2015. In 2018, according to calculations from the real estate consultancy CBRE, the investment volume will exceed the €1 billion threshold again, primarily due to the impact of the sale to Deka of a batch of 16 Zara stores for €400 million and the boost from activity beyond Madrid and Barcelona.

Deka has whereby become a catalyst for the retail investment market in Spain, together with Generali and Union Investment, which also starred in major investment operations during the first few months of 2018.

Deka’s €400 million operation was the largest in the last year and a half, followed by the purchase by Hines of number 17 Paseo de Gracia for €113 million and the acquisition by Generali of number 9 Preciados for €107 million.

Institutional investors are the main drivers of the investment market in this segment, according to the Retail keys in Spain report in CBRE. “In recent years, several overseas institutional investors have entered the Spanish market and many have been active in 2017 and 2018”, according to the document, which points out that Socimis such as Tander, Ores and Silicius have also been interested in the sector.

Madrid and Barcelona are continuing to be the main magnets for high street investment in Spain and, together, they account for 79% of the total expenditure. “Nevertheless, other cities in Spain are booming and demand is rising for investment products in cities such as Bilbao, Valencia, Sevilla and Málaga”, says the document.

The displacement of demand to other cities is a consequence of product shortages and low returns. On the one hand, according to CBRE, operators have accentuated their preferences for prime streets, which has strengthened the shortage of products. “Premises with recently signed contracts are sparking a lot of interest, given that if they reflect market rents, they become a very stable long-term investment”, says the document.

On the other hand, the pressure on returns remains strong and in 2017, they were compressed further still, reaching levels of 3.25% in Madrid and 3.50% in Barcelona for the most prime products. The “historically low” values are repeated in other European cities, with 3.25% in Berlin, 3% in Milan, 2.75% in Paris and 2.25% in Munich.

As a result of those two elements, investor interest is extending to other cities in Spain, although the operations closed tend to be of greater importance, “given that the premises and the rents are lower and the returns are higher”.

With investment of €170 million outside of Barcelona and Madrid in 2017, several purchases stand out such as M&G’s acquisition of the H&M store on Reyes Católicos in Granada as well as of the El Corte Inglés building in Plaza la Magdalena in Sevilla.

Valencia and Bilbao are the markets that, typically, generate the most interest from investors due to the size of the two cities, the importance of their high streets and the role of tourism. The tradition of investment in the segment by local family offices means that returns there are compressed to 4%.

Retail and shopping centres

High street premises accounted for 25% of the total investment in retail in 2017, well behind shopping centres, which accounted for 51% of the total, but ahead of retail parks (15%) and portfolios of supermarkets and hypermarkets (9%) (…).

In Spain in 2017, investment in the Spanish retail market amounted to €3.3 billion. CBRE forecasts that the figure will amount to €2.9 billion in 2018, boosted by high street investment (…).

Original story: Eje Prime (by P. Riaño)

Translation: Carmel Drake

CBRE: Investor Interest in High Street Stores Skyrockets

5 July 2018 – Cinco Días

Stores on the most commercial streets of Spain have become an object of desire for investors in the real estate market. Large funds and insurance companies alike are investing in these types of assets and experts predict that a new record is going to be set in the segment this year.

Investors are expected to spend around €1.1 billion on these types of commercial premises in 2018, according to forecasts from the consultancy CBRE. That figure would exceed the amount invested in high street stores in 2017 by €300 million, equivalent to a growth rate of 36.9%. Of interest are shops on commercial thoroughfares such as c/Preciados and c/Serrano in Madrid and Paseo de Gracia and Portal de l’Àngel in Barcelona. In fact, those two cities accounted for 79% of total investment last year. “Nevertheless, other cities in Spain are on the rise and there is growing demand for investment products in cities such as Bilbao, Valencia, Sevilla and Málaga”, according to the report “The Keys to Retail in Spain”, published by CBRE yesterday.

Investors regard these types of well-located assets as a good option for placing their money, a solid alternative in the context of low-interest rates and because these high street stores perform better (than other commercial assets) in the face of competition from online retailers. Currently, according to CBRE; the returns on these properties amount to 3.5% in Barcelona and to 3.25% in Madrid; in other cities (with more risk), the returns are greater.

The stars of these acquisitions are mainly the large funds. Hines, M&G, AEW, Thor, Union Investment, CBRE GI and Deka. “In 2017, in addition, an insurance company entered the high street sector for the first time: Generali acquired the Pull & Bear store on Calle Preciados in Madrid”, according to the report. Other active players include the Socimis, such as Tander, Ores, and Silicius, which have started to express interest.

In terms of large operations so far this year, in January, the German fund Deka acquired 16 Inditex stores for €400 million. Another significant operation was the acquisition of Mercado de San Miguel by the Dutch fund Redevco, for €70 million.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Thor Equities Sells c/Fuencarral 16 to Union Investment

31 January 2018 – Eje Prime

The fund Thor Equities is closing its positions in Spain. The group has sold number 16 Calle Fuencarral to the institutional fund Union Investment. Just before the operation, Thor Equities signed a rental contract to lease the store to the Swedish giant H&M, the second largest fashion retailer in the world, which will open a branch of its Cos chain there.

The establishment has a surface area of 1,320 m2, according to explanations provided in a statement issued by Union Investment and Thor Equities. The five-storey property was constructed in 1900 and was completely renovated in 2017. The fund changed the use of the property in order to convert it into a mega-store, whereby following the trend in the market in the centre of Madrid, as well as the example set by other real estate investors.

The operation, whose amount has not been disclosed, represents the first purchase by Union Investment in the market for high-street stores in Spain, although assets in the retail sector already account for 30% of the portfolio that the fund manages in Europe.

Nevertheless, the group already owned assets in the Spanish market. What’s more, the fund has already started to cash in some of its properties in the country with the sale of the former headquarters of Marsans. The Pórtico Building, located in Campo de las Naciones in Madrid, is up for sale for €130 million, a higher amount than the €115 million that the German investment group paid in 2009 to the now extinct travel company.

Headquartered in Frankfurt, the German company currently has several high profile tenants leasing that property, including: Pepsico, Pullmantur, Nautalia and Beam España, amongst others. With a gross leasable area of 27,000 m2, the Pórtico Building was designed by the architecture studios SOM and Rafael de La-Hoz.

Union Investment’s decision to put this asset on the market comes at a time when there is a distinct shortage of space in the office segment, after the leasing of offices grew by 31% in Madrid in 2017, to 543,000 m2, according to the consultancy Cushman&Wakefield.

Original story: Eje Prime

Translation: Carmel Drake

Union Investment Puts Marsans’ Former HQ up for Sale

16 January 2018 – Expansión

The fund Union Investment, which is headquartered in Frankfurt, has decided to cash in one of its most high profile real estate assets in Spain.

The firm has put the Edificio Pórtico in Madrid up for sale. Designed by the architecture studios SOM and Rafael de La-Hoz, this office building is leased in its entirety to several companies including Pullmantur, Redexis Gas, Nautalia, Beam España and Pepsico, amongst others. Nevertheless, it is well-known because it housed the headquarters of the tourist group Marsans for several years. The company created by Gerardo Díaz and Gonzalo Pascual purchased the property in 2009 from Hines and Monthisa for an amount that was never disclosed. Years later, Marsans reached an agreement with Union Investment to sell the building for €115 million through a sale & leaseback contract, whereby the tourist group remained as the tenant paying a monthly rent of more than €700,000.

A year later, Marsans received an eviction notice due to the non-payment of the rent, and it abandoned the property in 2011 once it had filed for liquidation. The departure of its main tenant did not represent a problem for Union Investment, which soon found replacements.

Currently, the building, which has a gross leaseable area (GLA) of 27,000 m2 spread over eight floors, is leased in its entirety. That, together with the quality of the property and the stamp of two recognised architecture studios, raises its appeal in the market.

For the sale, the German fund has engaged the real estate consultancy CBRE, which has already started to reach out to the usual investors in the office market in Madrid. The sales price amounts to around €130 million, say sources in the know, and the operation is expected to be closed during the first half of this year.

Investment in offices in Spain amounted to €2.21 billion in 2017, according to JLL, down by 20% compared to the previous year.

Lack of supply

That decrease was much more marked in Madrid, which although continued to lead the investment market in Spain, with investment of €1.374 billion, suffered a decrease of 38% in 2017 with respect to the previous year.

“Nevertheless, that reduction was not due to a decrease in investor interest, but rather a lack of supply, given that the two previous years saw record figures”, explains Borja Ortega, Director of Capital Markets at JLL (…).

Meanwhile, Union Investment is one of the largest investment fund managers in Germany. In Spain, its recent operations include the sale of the Área Sur shopping centre, located in the Cadiz town of Jerez, which it sold last year to a joint venture controlled by Axa IM-Real Assets and the Portuguese real estate company Sonae Sierra for €110 million. At the global level, the German firm manages assets worth more than €250 billion.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake