French listed retail giant Klépierre confirmed on Monday that it has signed an agreement to acquire 100% of the Plenilunio shopping centre in Madrid from Orion Capital Managers' European Real Estate Fund III, as tipped by PropertyEU last month.

French listed retail giant Klépierre confirmed on Monday that it has signed an agreement to acquire 100% of the Plenilunio shopping centre in Madrid from Orion Capital Managers' European Real Estate Fund III, as tipped by PropertyEU last month.

The transaction price comes to €375 mln, or a yield of less than 5%.

With a liquidity position of €2.7 bn at year-end 2014, Klépierre said it plans to finance the deal via its own funds but may also consider limited mortgage financing.

'This investment is consistent with the strategy to focus investments on leading retail assets in the most growing regions of Continental Europe,' the French buyer said.

Orion Capital Managers put the 70,000 m2 mall on the market for €400 mln in November last year to benefit from the recovery in the Spanish commercial property sector.

Plenilunio
Located to the northeast of the Spanish capital, Plenilunio offers over 230 shops with tenants including Mango, Sfera, Okeysi and Primark. Cushman & Wakefield advised Orion on the sale.

Opened in 2006, the scheme attracts around 10.5 million visitors each year and saw retailer sales surge 15% year-on-year in 2014. Plenilunio has a financial occupancy rate of 99.3% and generates €21 mln of annual gross income.

Orion bought Plenilunio in 2009 from Santander’s Banif fund for €235 mln - a 26% discount to the value of the asset at the end of the fourth quarter of 2009 (€320 mln). The 2009 deal reflected a yield of 7.5%, compared to slightly less than 5% for the current indicative price.

Plenilunio is the second major Spanish disposal by Orion in the past two months following the sale of Puerto Venecia in Zaragoza to listed UK investor Intu Properties. Puerto Venecia traded in December last year for €451 mln, or a net initial yield of 5%.

Comment
Cushman & Wakefield advised Orion in the Plenilunio sale. Rupert Lea, head of capital markets retail at C&W, said: 'Plenilunio is the major shopping centre for all retailers looking to locate and benefit from the east of Madrid. Despite the crisis it has always had strong demand. I believe that this is the last major shopping centre to sell in Madrid for the next 10 years. The price achieved is yet another indication of the new market trend: strong demand and lack of prime product.'

The International Council of Shopping Centers (ICSC) voted Plenilunio as the 'best shopping centre in the world' in 2007.

Klépierre already owns Principe Pio and La Gavia shopping centres in Madrid, which turned in a strong performance over 2014. The deal nearly doubles its Spanish portfolio which is now valued at €1.4 bn, or around 7-8% of Klépierre's total portfolio. Spanish assets of Klépierre also include the flagship Mare Magnum in Barcelona and Mediriano in Tenerife. At 7.6%, the Spanish operations reported the highest increase in year-on-year retail sales last year.