CBRE Global Investors (CBRE GI) has acquired an office and retail property in Barcelona as the first transaction in the market for one of it's Korean institutional separate account clients. The vendor, Avignon Capital, realised a 135% return on equity via the disposal.
CBRE GI purchased the property at 6-8 Carrer de Fontanella, in an off-market transaction, from European investment firm Avignon Capital for €64.7 mln.
The 8,126 m2 mixed-use building is located adjacent to Plaza Catalunya, a popular tourist destination. The property is 100% occupied with a weighted remaining lease term of over 12 years.
The building provides prime Barcelona high street retail on the basement, ground and mezzanine levels, which is leased to MediaMarkt, Europe's largest retailer of consumer electronics. The office floors are fully let to the Catalan Regional Government.
'This is the first acquisition in the Spanish market for this Korean client and we believe we have sourced a property that will perform very well for them,' said Antonio Roncero, transactions manager for Spain at CBRE Global Investors. 'The Spanish economy is well positioned and expected to deliver strong growth in the forthcoming years. We continue to see significant transactional activity as international capital flows into Spain.'
Stellar return
London-based Avignon Capital said that the property benefitted from a prime retail and commercial position in the city centre, with Passeig de Gracia and Les Rambles immediately to the north and south.
The sale produced a 135% return on equity.
Eric Mounier, CEO at Avignon Capital, said: 'The sale of 6-8 Fontanella is another prime example of Avignon Capital's ability to execute an innovative asset management strategy to significantly increase the value of an asset, as well as secure impressive returns for our investors.
'We continue to seek opportunities to generate fantastic returns for our investors and further our exposure in key European real estate markets.'
Arranged over basement, ground floor and six upper levels, the property was fully let to the Government of Catalunya and occupied by the Tax Administration of Catalunya upon acquisition in the first quarter of 2013.
The business plan on acquisition was to maintain the secure income from the Government of Catalunya, whilst simultaneously creating a new retail offering through reconfiguration works on the ground and first floors. In 2015, a new 10-year lease with annual CPI indexation was agreed with Media Markt, which began trading from Fontanella following the completion of upgrade works in December 2016.
Avignon Capital's asset management initiative to let the upgraded ground and first floor to an international retailer increased the passing rent and value of the building.
The Fontanella sale marks Avignon Capital's third significant property disposal of the year, all of which have resulted in strong returns on equity for investors. In January 2017, the firm sold its Copenhagen prime retail portfolio for €119 mln, producing a 154% return on equity; in February 2017, the firm sold Østensjøveien 27, a prime office building in Oslo, for €61 mln, producing an 87% return on equity.
Avignon Capital were advised by Garrigues for the deal.
