ECE and J&T Bid in RE Operation of the Year

12 June 2018 – Expansión

One of the real estate mega-operations of the year is entering the home stretch. The German manager specialising in retail ECE and the Slovakian real estate leader J&T Real Estate are positioning themselves as favourites to acquire the Valle Real (Santander), Max Center (Bilbao) and Gran Casa (Zaragoza) shopping centres, currently owned by Iberian Assets, a joint venture in which the fund managers CBRE Global Investors (CBRE GI) and the multi-national Sonae Sierra both hold 50% stakes.

In the case of the Slovakian firm, the operation would be carried out through an alliance with Sonae Sierra and would represent J&T Real Estate’s debut in Spain.

Market sources explain that, in both cases, the bids for these assets exceed €450 million and reveal that the transaction could be closed within the next few weeks.

The portfolio, baptised as Project Summit, includes almost 117,000 m2 of gross leasable space in total (owned by Iberian Assets) and together, the three centres received 24 million visitors last year. CBRE GI and Sonae Sierra engaged the real estate consultancy firms CBRE and JLL at the beginning of the year to sell the three shopping centres.

The assets

Valle Real, opened in November 1994, has a gross leasable area of 47,725 m2, spread over two floors and is fully occupied (100%).

The shopping centre, located in Santander, closed last year with 5.9 million visitors. Valle Real includes a Carrefour hypermarket, which occupies almost 16,000 m2. Its other main tenants include Primark, Inditex, H&M and Forum Sport.

Meanwhile, Max Center is located in Bilbao and it opened its doors for the first time in 1997. The asset was remodelled in 2000 and its tenants include Inditex, H&M, Cortefiel, La Tagliatella, Foster’s Hollywood and Cinesa.

The shopping centre also has an adjoining leisure space, Max Ocio, which opened in 2002.

In total, the centre has a surface area of almost 40,000 m2 and it also received 5.9 million visitors last year.

Gran Casa, inaugurated in 1997, has a gross leasable area spanning 80,000 m2, almost half of which is occupied by Hipercor, and with an overall occupancy rate of 93%. Last year, the shopping centre, located in Zaragoza, received 12.2 million visitors.

If the transaction goes ahead, it will be the largest (non-corporate) operation in the real estate sector so far this year by transaction volume.

Moreover, the sale of the Summit portfolio would clear the way for the sale of another major commercial portfolio by Unibail Rodamco.

The shopping centre giant has hung the “for sale” sign up over four of its shopping centres in Spain – Los Arcos (Sevilla), Bahía Sur (Cádiz), Vallsur (Valladolid) and El Faro (Badajoz) – an operation that may exceed the volume of Project Summit.

Investment

According to data from the Spanish Association of Shopping Centres and Retail Parks (AECC), last year 29 transactions, involving 36 assets, were closed for a total sum of €2.7 billion, which represented growth of 35% YoY.

So far this year, several significant operations have been closed such as the sale of a portfolio of 14 premises by Inditex to the German fund Deka for €370 million (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

ECE Finalises Purchase of 3 Shopping Centres from Sonae & CBRE GI for €450M

8 June 2018 – Eje Prime

The portfolio of shopping centres jointly owned by Sonae Sierra and CBRE Global Investors could be on the verge of having a new owner. The German company ECE is reportedly finalising the purchase of three shopping centres from the two groups for between €450 million and €500 million, according to sources close to the operation speaking to Eje Prime. Sonae Sierra and CBRE GI jointly own these three assets (50% each).

With the purchase of this portfolio, ECE would begin to acquire its first assets in Spain, given that since it carried out the acquisition of Auxideico Gestión in 2010, a company specialising in the management of retail complexes and which previously belonged to ING Real Estate Development, it has not closed any transaction of this kind.

The centres that may be added to the portfolio of the German firm ECE are: Gran Casa en Zaragoza, the largest of the three; Valle Real (Cantabria); and Max Center (Barakaldo, Bizkaia). The two current owners already announced when the sales process was launched that they expected to pocket around €500 million from the sale.

If the operation with ECE goes ahead, it will represent the real estate giant’s first purchase in Spain since its arrival. Eight years ago, the group headquartered in Hamburg and the leader of the European market in urban shopping centres, acquired the Spanish firm Auxideico Gestión, which was, at the time, responsible for the management of fourteen shopping centres.

Until last year and following its acquisition by ECE, the group controlled more than 25 retail complexes in Spain, including Albufera Plaza, Montecarmelo and Moraleja Green in Madrid, Alcalá Magna in Alcalá de Henares and Parc Central in Tarragona. In 2017, Auxideico finally stopped operating in Spain due to “its small business volume”, according to sources in the sector. Across Europe, ECE has more than 195 shopping centres under management.

ECE, a giant with a healthy investor appetite

Founded in 1965 by Werner Otto, ECE now has more than half a century of experience in the sector under its belt. The family-owned company develops, plans, builds, leases and manages shopping centres and invests in real estate projects.

With a retail surface area of 7.2 million m2 and around 21,000 retail operators, the shopping centres managed by ECE generate annual sales of more than €23 billion and have a market value of €30 billion. Moreover, ECE has a stock of shopping centres under construction and being planned, with an investment volume of €3.2 billion.

ECE, in addition to specialising in the management of shopping centres, also operates in the real estate sector with other types of assets. The company owns a portfolio of logistics assets spanning 913,000 m2 and office buildings measuring 1 million m2.

Shopping centres, a good business in Spain

The fact that a group such as ECE is showing interest again in this business in Spain is due to the good outlook that the studies predict for the sector. Spanish people both visited and spent more in shopping centres in 2017, and the turnover in this types of assets increased by 1.5% last year with respect to the previous year, whilst visitor footfall grew by 1.1% YoY.

The sectors that performed the best last year with respect to 2016 in terms of sales were the household, leisure and restaurant segments, with increases of 5%, 3,7% and 2,7%, respectively, according to a report from Cushman&Wakefield (…).

Shopping centres will continue to be the most sought-after assets by investors, primarily international funds. The Spanish retail market closed 2017 with 555 active shopping centres and a stock spanning 15.8 million m2, according to the Spanish Association of Shopping Centres (AECC).

Original story: Eje Prime (by C. Pareja)

Translation: Carmel Drake

CBRE GI to Invest €800M in Spain in 2018

18 May 2018 – Expansión

The real estate asset manager CBRE Global Investor (CBRE GI) is redoubling its commitment to Spain. After ending last year with a record investment of €800 million and starring in several mega-operations, the firm wants to establish a new record this year, exceeding the milestone set in 2017. From its offices in Madrid, CBRE GI manages assets worth €3.2 billion in the retail, office, logistics and student hall sectors, located in Spain and Portugal, and is getting ready to enter the residential sector.

“Last year was very important given the significant transaction activity undertaken, of which €800 million corresponded to purchases. This year, we hope to match that figure and even exceed it”, explained Antonio Simontalero, Head of Operations for Spain and Portugal at CBRE GI, speaking to Expansión.

The firm works with eight funds and owns a portfolio comprising 19 shopping centres, 37 logistics platforms, three office buildings and 33 halls of residence for students.

Although retail is still the main market for the manager, accounting for 70% of its portfolio, CBRE GI has decided to attack new businesses. Thus, last year, it entered the market for student halls with the purchase, together with AXA IM Real Assets and Greystar, of Resa, the market leader in Spain, for €400 million. “We are continuing to analyse opportunities in the student hall market. We want to grow the portfolio and increase our exposure”, says Antonio Roncero, Head of Transactions for Spain and Portugal at CBRE GI.

Another milestone in 2017 was the consolidation of the manager in the logistics sector following the joint venture signed with Montepino for the development and promotion of logistics assets. “The initial objective of the investment in the joint venture with Montepino was €300 million, but we hope to exceed that figure soon. With the developments underway, we have 80% of the investments committed”.

Simontalero points out that CBRE already had 700,000 m2 of logistics assets under management and the agreement with Montepino will allow the firm to exceed the 1 million m2 threshold. The logistics sector is thereby becoming the manager’s second segment by volume, accounting for almost 15% of its total assets. “The differentiating feature of this joint venture is that all of the assets are going to be latest generation, which is what the main operators require”, adds Roncero.

Rental homes

In terms of next steps, CBRE GI is preparing to attack a new market, specifically, the residential rental market. “We are analysing various options with different partners, either through the development of new-build properties or by investing in a business through the purchase of portfolios”, say the directors.

For Simontalero, the size of the rental market vs. the purchase market in Spain is going to grow and will move into line with the rest of Europe. “There is latent demand that is not being fully satisfied with the current supply in the market”, he said.

For Roncero, the key is in the service. “We see an opportunity for offering a professionalised service in the rental home segment, providing security to the tenant and placing emphasis on the maintenance of properties”.

Roncero says that the objective of CBRE GI involves gaining “critical mass” in the sectors to which it is least exposed in order “to diversify and be more versatile”.

Sales

In addition to growing its portfolio with new properties, the company is continuing to rotate its assets. Specifically, last year, it sold four shopping centres (two in Spain and two in Portugal), and it is now preparing to sell three more – Gran Casa (Zaragoza), Valle Real (Cantabria) and Max Center (Barakaldo) – whose ownership it shares with Sonae.

“Our business involves identifying investment opportunities, managing them and selling them to generate returns for our investors”, he said.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake