CPPIB buys half share in Intu's Puerto Venecia for €225m

Canada Pension Plan Investment Board (CPPIB) has further expanded its ever growing European shopping centre portfolio with the acquisition of a 50% share in the massive Puerto Venecia shopping centre in Zaragoza, northern Spain.

CPPIB, which last month agreed to acquire a 46.1% stake in German retail developer mfi as part of a partnership with mfi's owner Unibail Rodamco, is buying the interest from UK shopping centre specialist Intu Properties for €225.4 mln.

This is the second partnership for Intu and CPPIB which together own the Parque Principado shopping centre in Oviedo, Spain.

Intu acquired Puerto Venecia in January of this year for €451 mln hinting at the time that it would look for an investment partner. It obtained a €225 mln bridging loan from HSBC to finance the deal.

Based on a net rental income of €22.4 mln, the deal represents a net initial yield of 5.0%.

CPPIB, which manages Canada's public pension fund, said the joint venture is an opportunity to increase its presence in the Spanish retail market, and is in-line with its global strategy to build relationships with aligned, well-respected partners.

'Puerto Venecia is a high quality asset and is the pre-eminent centre in its catchment. It provides a great complement to our existing portfolio of retail assets across Europe, and we look forward to further building our relationship with Intu through this transaction,' commented Andrea Orlandi, managing director & head of Real Estate Investments Europe, CPPIB.

The 206,000 m2 shopping centre and retail park offers over 200 shops and has been performing strongly since opening in 2008 (retail park) and in October 2012 (the shopping centre).

Intu has options on four development sites in Spain (Malaga, Valencia, Palma and Vigo) and plans to use the proceeds to finance the projects, according to CEO David Fischel. 'The funds generated from this transaction will be available to further Intu’s Spanish activities, where we have recently exercised our option to acquire a site in Malaga for a major shopping resort development.'

Intu is considering introducing an investment partner into the development site at Malaga.