Sonae Sierra is understood to have cancelled the sale of two shopping centres in Portugal, prompting suggestions that the market for high ticket retail property in the country may have peaked.
Sonae Sierra had put GaiaShopping (pictured) and ArrabidaShopping, both in Porto, on the market through broker JLL for a price in the region of €250 mln last year and it is believed that the properties have actually been on the market for about nine months.
GaiaShopping provides nearly 60,000 m2 of space with 150 shops, while ArrabidaShopping has more than 60,000 m2 in 189 shops and was refurbished in 2008. The centres are owned on a 50-50 basis by the Sierra fund and the Sierra Portugal fund.
Neither Sonae Sierra nor JLL would comment.
Local experts say the centres have been withdrawn from the market because of insufficient demand at the price being asked.
One expert, who requested anonymity, said Sonae’s asking price represented a sub-6% yield for what have been described as tier-2 malls, which investors are valuing at around 7%.
However, Peter Papadakos, managing director of real estate research firm Green Street Advisors, commented that the sale may be linked to a cash requirement by Sonae which could have an impact on the yields at which a transaction could have occurred.
‘In terms of what would be an appropriate price in the current market context, we would guess in the region of a 5.6-5.9% NIY. Perhaps the vendor was asking a low-5% type yield, hence why they did not trade.’
Papadakos also said the assets should qualify, according to Green Street’s quality ranking, at A- to A, even if there would be a certain amount of room for improvement. ‘They are qualitative assets with an asset-management angle for each one of them,’ Papadakas added.
Portugal’s recent run of success began with Blackstone’s €850 mln sale of four shopping centre assets in January 2018. One expert commented that the first two months of 2019 have been busy: ‘This should translate into considerable activity so the market is not yet turning,’ but he added that it may have reached its peak.
This article first appeared in EuroProperty, PropertyEU's sister publication
