Wereldhave sells entire Spanish portfolio, shuts down Madrid office

Listed retail property firm Wereldhave said on Thursday that it has reached an agreement to sell its entire property portfolio in Spain to local REIT Axia Real Estate for €99.5 mln.

The transaction price reflects a yield of 6.8% and an 8.5% premium to the book value of the assets of €91.8 mln at 30 June 2014.

The 78,000 m2 portfolio includes four assets which were marketed through a close bidding process; the Planetocio retail and leisure centre in Collado Villalba near Madrid, two modern office schemes at Avenida de la Vega 15 and Calle Fernando el Santo 15 whose tenants include US Group Cisco and a logistics centre located at Calle Mariano Benlliure 1-2 near Madrid. The occupancy rate in the portfolio is around 80% and the rental income is €6.7 mln.

The agreement includes an additional earn out/profit share mechanism based on the performance of the portfolio, that could provide a further upside between €0-€2.5 mln in 2014/2015, Wereldhave said in a statement.

The transaction, which will be completed in September 2014, will result in the closing of the Madrid office by the end of the year. The closing costs will amount to around €1 mln.

Following the deal, Wereldhave will focus on mid-sized shopping centres in Finland, Belgium and the Netherlands and sustainable offices in Paris. Earlier in 2014, Wereldhave sold three assets in the UK while last year it divested its entire portfolio in the US as part of plans to retreat to Continental Europe.

'The selling of the Wereldhave portfolio in a very flexible time frame confirms the large liquidity of the Spanish market,' commented Adolfo Ramirez-Escudero, president of CBRE Spain which advised Wereldhave on the deal.

Ramirez-Escudero said that he expects 2014 to be 'a record year of activity' in the Spanish investment sector, which should be second in terms of volumes only to the peak year of 2007, when the market saw some €11 bn of assets change hands. 'Buyers cover various groups, from the well-known SOCIMIs (Spanish REITs) to investment funds and private investors from the Middle East and Asia,' he added.

This is the second purchase for Axia Real Estate in a month. In August, the newly launched Spanish REIT spent close to €53 mln on an office property and two logistics platforms in Spain.

In Madrid, the company, which raised €360 mln in an initial public offering in July, purchased an office building in Madrid for almost €29 mln from Germany’s IVG. Located in the city’s Alcobendas district, the property comprises 17,270 m2 of GLA and 396 parking spaces.

Axia also bought two logistics platforms located in Cabanillas del Campo (Guadalajara) and Dos Hermanas (Seville) from CBRE Global Investors for just under €24 mln.

The Spanish REIT, in which US banks JP Morgan and Citigroup are major shareholders, said at its IPO in July that it planned to invest the proceeds from the offering in the next 12 to 18 months, largely in offices (70%) and logistics assets (20%).