Backed by close to 2,000 shareholders and stellar sector fundamentals, the Spanish logistics socimi is eyeing expansion both at home and abroad.
Until around six years ago, few people outside of Spain had probably ever heard of Montepino.
But a combination of strong growth, a high-profile joint venture with a global player, change of ownership, and – most recently – a stock market listing, have put the Spanish logistics company firmly in the international spotlight.
The listing on Euronext Access Paris in early June comes two years after Montepino reverted to Spanish control following a prominent joint venture with CBRE Global Investors (now CBRE Investment Management), during which strong growth was achieved. In a closely watched and highly competitive bidding process involving several foreign players, Montepino was finally sold to Bankinter Investment, the investment banking division of Spain’s Bankinter, in 2021, with founding partner and asset manager Valfondo Investment Management retaining a minority stake.
With 48 assets totalling 1.9 million m2 and valued at €1.2 bn, Montepino Logistica is now one of the largest logistics developers and asset managers in Spain, with plans to expand further both at home and abroad.
‘The listing is the next step in the history of Montepino, which is constantly evolving, and will support progress towards achieving our targets for the coming years,’ says Juan José Vera, managing director of Valfondo IM which manages the platform.
Going public was a mandatory move after Montepino became a socimi, or Spanish REIT, through its takeover by Bankinter. ‘Under the regulations for socimis in Spain, you have two years to become a public company once you convert to a REIT; we were in our second year,’ explains Vera in an interview with PropertyEU.
Read also: Montepino builds with Bankinter for a brighter future
While acknowledging that the timing of the listing was ‘not the best’ given the uncertain market climate, he is at pains to point out that it was essentially a ‘technical procedure’, not an IPO accompanied by a capital increase or the introduction of new shareholders or investors. The main benefit of going public, says Vera, is to give the close to 2,000 existing shareholders in Montepino a ‘window to liquidity’.
Besides three main shareholders - Bankinter Investment (6.4%), Catalana Occidente (6.3%), and Valfondo Inmuebles (5.1%) - the rest of the socimi’s capital is held by over 1,800 minority shareholders, all of whom are Bankinter private wealth clients.
Notes Vera: ‘We have a lot of shareholders – nearly 2,000 – mostly families and small companies. That’s a lot of people with a lot of potential changes in their holdings, so if any of them wants to buy or sell it’s easier to do that in a public market.’
New chapter
The Euronext listing marks a new chapter in Montepino’s growth story as it seeks to consolidate its position not only in Spain, but also in the wider Iberian Peninsula and other markets across Europe.
In the last six years in particular, that growth has been turbo-charged. At the time it formed the landmark joint venture with CBRE GI in 2017, Montepino was a small development business with 10 employees and a portfolio of projects and standing assets totalling 245,000 m2. In the three-and-a-half years that followed, the portfolio more than tripled to 865,000 m2 across 22 assets.
Since becoming a socimi under Bankinter, the business has grown again, supported by a €250 mln capital hike. Over the next three years, Valfondo aims to boost the value of Montepino’s portfolio further to €2 bn, with rental income from managed assets set to nearly double to €90 mln.
Vera stresses that this growth will be measured, and focused initially on consolidating the company’s position in home market Spain as well as Portugal, which it entered last year. ‘We first have to finish our ongoing projects, totalling around 300,000 m2. Currently we have close to €40 mln of rental income per year, when the developments are completed that will rise to nearly €90 mln, assuming current market rents.’ Amongst those projects is a 147,000 m2 development in Lisbon, Montepino’s first in Portugal, where it plans to expand its footprint.
In Spain, the REIT is seeking to fan out from its Madrid stronghold in the centre of the country to the region of Catalonia in the northeast, the Mediterranean corridor running along the east coast and large urban centres such as Seville and Bilbao. Accessing suitable locations for development - particularly big box warehouses - is more challenging here given the often mountainous terrain and densely populated areas.
Further down the line, expansion to other markets in Europe is on the agenda. ‘We’re keeping a close eye on opportunities, looking at key logistics markets such as the UK, France, Germany and the Netherlands,’ says Vera, adding: ‘We have a feeling something could come up in the next 3-6 months.’
Follow the customer
The Valfondo boss is aware of the intense competition in these markets, including in Spain, where international players such as Prologis, Segro, Panattoni, GLP and TCC are all active and busy expanding their operations. But what sets Montepino apart from its rivals, according to Vera, is its customer-centric business model. ‘We put our tenants at the centre of everything we do, building long-term relationships with them based on trust and constantly adapting to their needs,’ he says.
Testifying to this approach, the socimi has become the biggest build-to-suit (BTS) logistics developer in Spain in terms of square metres, with the majority of its projects in this segment. And while the average WAULT to break within the sector is some two or three years, across Montepino's portfolio it is over 8.3 years.
Among its biggest clients are some of the leading third-party logistics providers (3PLs) for the fashion retailing industry in Spain. The top three – GXO, Logisfashion and Luis Simoes - account for 63% of rental income. To cater to the ever increasing requirements of such players for advanced automation and robotics systems, Vera says Montepino has an in-house technical team that is far bigger than the average for Spain. ‘We have a team of close to 60 overall, of which nearly half are technical staff, whereas our competitors have 6-7 people overall.’
E-commerce, long the main driver of the logistics market in Spain, saw a big growth spurt during the pandemic and continues to fuel demand for warehousing, says Vera. E-commerce penetration, which in southern Europe has traditionally lagged behind that of more mature northern markets, is currently nudging 10%, ahead of central Europe but still behind the UK’s 20%, for example. ‘E-commerce continues to grow and is still the main growth driver for logistics development,’ he affirms.
Another is increased corporate M&A activity, leading to a need among major cross-border occupiers to consolidate their operations in more modern and sustainable facilities. Says Vera: ‘International companies occupying warehouses that are, say, 20 years old want modern and energy-efficient buildings when they scale up, and they want to have the same standard across all their facilities in Europe.’
ESG focus
This focus on sustainability has boosted demand for a new generation of buildings that comply with increasingly stringent ESG regulations. Montepino is tapping into this demand with what it calls a ‘new construction paradigm’ centred on facilities that are green, worker-friendly and tech-advanced. Notes Vera: ‘Things are changing so fast, if you look at our portfolio now, we’re developing a completely different class of warehouses compared to five years ago.’
The socimi certifies all its developments according to the US LEED system, and has achieved two Platinum ratings – the highest level - to date. ‘We started with LEED 10 years ago, because we felt the US Green Building Council model was more in line with our understanding of sustainability than BREEAM,’ says Vera. However, the firm will also pursue BREEAM if clients demand it; a case in point is the 424,000 m2 industrial estate in Illescas (Toledo) which it is developing under the BREEAM Urbanism seal for large-scale projects.
For the next three years at least, Montepino has its work cut out, finishing a large swathe of ongoing developments and hunting for new opportunities. With construction costs up by nearly 45% in Spain in a tough macroeconomic environment, that in itself is a challenge. But what about the longer term? Says Vera: ‘Valfondo has a 10-year contract with Bankinter to promote and manage Montepino’s assets. We don’t have any plans beyond that. Montepino’s history has been one of continuous change and adaptation, so we’ll see where that leads us next.’
