PropertyEU Editor's Choice: Bargain hunters flock to Spain

Welcome to Editor's Choice - a weekly snapshot and roundup of the top stories and deals published in our daily PropertyEU newsletter for the week of 10-14 February.

Bargain hunters flock to Spain
A family office linked to Hong Kong-based businessman Harry Mohinani has joined a string of foreign investors from Northern and Southern America who have flocked to Spain in the past few months searching for bargains. The Hong Kong-based investor has snapped up the former headquarters of Spanish telecommunications firm Telefonica in Barcelona for just over €56 mln. The transaction value represents just 25% of the price paid for the asset six years ago by Cerep Investment, a unit of The Carlyle Group which is currently in liquidation. It is believed that Telefonica sold the building, which is currently vacant, to Cerep in June 2007 for as much as €235 mln.

In another bargain-basement deal in Spain this week, listed European retail property fund Vastned sold €160 mln of Spanish malls for 29% below their last appraisal value as of 31 December 2013.The buying consortium includes US hedge fund The Baupost Group, GreenOak Real Estate and Spain’s GrupoLar. The all-cash price reflects Vastned’s plans to shed its exposure to struggling Spanish shopping centres.

Opportunistic US investors also continue to circle legacy loans portfolios in Spain. This week it emerged that Apollo Global Management has teamed up with its local partner Banco Santander to prepare an offer for Commerzbank’s €5 bn real estate loan portfolio on the market. Other likely bidders for the Spanish loans include a range of international private equity firms seeking to re-enter the market at a time when prices have hit rock bottom. A partnership of Blackstone and Deutsche Bank, VärdeParners and Kennedy Willson, as well as Lone Star, Fortress, HiG, Cerberus, Orion and Oaktree have been named as potential bidders. AXA and Bank of America Merrill Lynch are likewise said to be eyeing the assets. According to Spanish paper El Confidencial, Commerzbank is looking for two buyers respectively for the performing and non-performing section of the portfolio, known as Project Octopus.

The bevy of foreign investors converging on Spain follows a year in which investment volumes doubled in the final six months, with cross-border investors boosting their share to 65% of total transactions, according to figures from CBRE. Speaking at PropertyEU’s Spain & Portugal Investment Briefing in London earlier this week, Patricio Palomar, head of research & investment strategy for CBRE in Spain, said that the country's two major cities - Madrid and Barcelona - will be among the top four markets in Europe in terms of total return offered to investors in the coming years. ‘In the case of Barcelona, we expect rental growth of 17.5% which, when adding the forecast yield compression, means the city will provide one of the best return perspectives over the next few years,' he noted. Public authorities and banks looking to dispose of real estate assets are expected to provide new interesting investment opportunities in the near future, he added.

Elsewhere in Europe, logistics and residential continue to steal the show. Earlier this week, UK REIT Segro announced it has acquired €472 mln of logistics assets for a 7% yield from Tristan Capital and AEW Europe. The assets will be parked in the recently created Segro European Logistics Partnership (SELP), a joint venture between Segro and Canada’s PSP Investments. And in Germany, Vienna-listed Immofinanz has realized its goal to beef up its presence in the residential sector through the acquisition of the DGAG residential portfolio from Solaia RE, a joint venture between Italian listed group Prelios and an investment fund managed by Deutsche Asset & Wealth Management. The €917 mln takeover sum reflects a gross yield of 7.6% and encompasses a package of 18,000 apartments providing a total of 1.09 million m2 lettable space in Northern Germany.

The world's leading real estate advisers also continue to jockey for a key position in Europe’s biggest markets. This week Colliers International announced it has acquired UK retail property specialist Briant Champion Long (BCL) in a move aimed at strengthening its retail resources in London and mainland Europe. And on the Continent an outsider emerged as a candidate for acquiring UK independent commercial property agent GVA. Contacted by PropertyEU, German listed engineering and services firm Bilfinger confirmed that it is in discussions with GVA, but declined to provide further details. GVA announced in October last year that it had appointed corporate finance firm Cannacord Genuity to review its strategic options in order to pay back its minority private equity owner and grow on the international stage. It would not be the first time that a long-established advisory firm opts for an unconventional model in a move to consolidate its operations. Earlier Drivers Jonas, the UK’s oldest property advisory firm, teamed up with accountancy and business advisory firm Deloitte. Eighteen months later, at end-2011, Australian property services company UGL bought DTZ. But that unlikely combination is now coming unstuck. Last year, UGL announced that DTZ is to be demerged into a stand-alone company listed on the Australian Securities Exchange. Does Bilfinger see synergy where others do not?

Judi Seebus
Editor in chief PropertyEU

OTHER DEALS & HEADLINES

Plaza Centers in asset sale push to repay creditors

Germany's Adler to acquire peer Estavis

German institutional investor bags retail property in The Hague

Montea invests €42m in Dutch and Belgian property

Tristan fund buys green office in London

Rockspring√ acquires logistics park in Lyon

Zanzibar retail portfolio in Cologne goes on the market

Polish investment hits seven-year high in 2013: JLL

FINANCE
Canada Life finances Dev Secs project in London's Cross Quarter

Insurer VPV finances ECE shopping centre in Berlin

FUND WATCH
Hamburg Trust launches fund under new German legislation

DEVELOPMENT
Industry heavyweights launch new Russian development firm

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