A Rockspring fund has teamed up with Europe's largest stage production company to acquire two theatres on Madrid's Gran Via, Spain's equivalent to Broadway and a prime shopping district, PropertyEU has learned.
The investment volume for Teatro Coliseum and Teatro Lope de Vega comes to €58 mln, reflecting a 7.5% yield.
The properties were acquired in an off-market transaction by a joint venture of Rockspring's TransEuropean Property Limited Partnership VI (TEP VI) and Stage Entertainment, a theatre production company founded by Dutch theatrical producer Joop van den Ende in 1988. Stage Entertainment is now the largest theatre production company in Europe with offices and private theatres in eight countries.
The Coliseum has a capacity for 1,440 audience members and Lope de Vega seats 1,456. There are also two prime retail units totalling 1,419 m2 and three buildings adjacent to the theatres, which house a total of 43 short-term let apartments.
New 10-year leases have been secured with Stage Entertainment on each of the theatres, providing long-term income.
Rockspring Iberia will manage the real estate, while Stage Entertainment takes responsibility for the operation of the theatre entertainment businesses.
Compelling mix
'This investment provides a compelling mix of excellent real estate fundamentals, secure long-term income secured on a first-class covenant and appealing upside potential which we intend to exploit to the full with our in-house asset management expertise,' said John Thompson, director at Rockspring Iberia. 'Opportunities of this quality are rare, so it is particularly pleasing to have sourced it off-market, all the more so given the weight of capital currently scouring Spain for precisely this type of high-calibre opportunity.'
Paul Hampton, Rockspring partner and fund director of the TransEuropean series, added that the theatres were an 'exciting addition' to the fund's portfolio, which already includes investments in Paris, Geneva, and Lisbon. 'We are especially pleased to have the opportunity of partnering with a dynamic company like Stage Entertainment and we look forward to creating value from the real estate whilst its entertainment business continues to flourish.'
TEP VI held a final close in July 2016 with €430 mln and together with leverage of up to 55% has a total expected firepower of €1 bn. To date, the fund has committed €539 mln across seven projects in Geneva, London, Birmingham, Lisbon, across France and now in Madrid. The fund is a diversified pan-European investment programme with a focus on office, retail, residential and industrial properties in large metropolitan areas of core Western Europe, including the UK.
Cash-flow generative
Launched in 2016, the strategy is to assemble a cash-flow generative portfolio that can be aggressively ‘managed to core’, utilising the firm’s Europe-wide platform and, more specifically, its hands-on asset management or operator-style approach. The programme can be classified as ‘value-add’ in terms of risk, albeit income is expected to be a key driver of the 15% per annum target return.
Rockspring Iberia has primary responsibility for all transactions undertaken by Rockspring in the Iberian peninsula and also provides full asset management services for all the assets owned by Rockspring in the region.
Stage Entertainment produces many of the best known international musicals, collaborating with international production companies such as Disney Theatricals Worldwide and Andrew Lloyd Webber’s Really Useful Group.
ProEquity represented Rockspring in the transaction and Hogan Lovells provided legal and tax advice.
