Spanish REIT, Colonial, has begun the sale process for a portfolio with a GLA of c. 471,500m² which is comprised of 13 assets in Madrid, 2 in Catalonia and 1 in Seville. According to market sources, the portfolio is over 80% let at either market rent or under rented thus offering an attractive reversionary potential. The credit worthiness of the tenants will also be a boon to investors as it includes companies such as Alcampo (Auchan Group), Carrefour and Kellogg’s. As a result, it is expected to trade at a yield of 5.5% to 5% which would value the portfolio at up to €430 million.
Spain is enjoying a logistic property boom and attracted over €1.25 billion last year according to Knight Frank’s Q4 logistic snapshot. Some of the largest transactions of the last quarter of 2018 were Colony Capital & Neinver’s sale to Blackstone, GreenOak’s sale to Invesco and Logistik’s sale to Patrizia.
Spain’s prime net initial yield is expected to fall to 5% in the coming year on the back of strong take up, rapid growth of e-commerce business and occupier demand. Q1 of 2019 has already seen various transactions by funds like Gramercy, GreenOak and DWS with the latest being the sale of a €9.75 million warehouse by GORE Spain Holdings SOCIMI I. S.A., a Spanish REIT owned by GreenOak.
Over the next decade, Spain is expected to emerge as one of Europe’s most important logistic corridors, known in the sector as «logistic bananas» and this is aided by the availability of skilled and lower cost labour which has already attracted international manufacturers, including German automobile groups. Various Spanish cities are also located on the TEN-T Atlantic corridor and expected to benefit from traffic between Germany, Benelux and France over the next 5 years.
Plan of the European Ten-T Atlantic Corridor
The development of new high-quality logistics platforms is driving the arrival of new operators demanding built to suit solutions and, according to Knight Frank, Spain’s logistics offer is bound to reach approximately 1,500,000 m². In fact, during the end of February, ICC and DWS inaugurated a new 15,700m² logistics center in Madrid’s Torrejón de Ardoz following a €12 million investment. According to Daniel Galvez, Head of Real Estate at DWS in Spain, “the logistics sector continues to be a segment with a relevant investment focus for the funds [DWS] manages”.
Isaak Andic, owner of Mango, is taking advantage of the growing investor demand for logistics and has continued his strategy of selling logistics assets to focus on investing in retail flagships in urban locations. Since 2016, Isaak’s holding, Punta Na, has sold two logistic centres in the Barcelona province (Llisá de Munt & Parets del Vallès). The old logistic centre in Parets del Vallés was purchased by Galician logistics operator Jevaso for €25 million euros according to Expansión newspaper.
Photo of Pere Viñolas Serra, CEO of Colonial since July 2008 and member of its Executive Committee. (Source: Expansión.)