Henderson Park, the European real estate investment platform, has acquired Gran Via 43, a prime high street retail/office property located in the centre of Madrid, Spain, from Mutualidad General de la Abogacia, the Spanish pension fund for lawyers.
Henderson Park secured €39 million of senior acquisition financing from La Caixa for the transaction.
The 7,347 sq m high street asset is spread across 11 levels, with the lower two floors comprising retail units and the remainder made up of office space. The asset is multi-let to seven tenants and provides attractive asset management opportunities, capitalising on its strong location.
Gran Via is the single most visited street in Madrid and records the city’s highest footfall levels. The street includes international brands and flagship retail stores and is a dominant area for hotels, restaurants, cinemas and theatres. The ongoing regeneration of the historical city centre of Madrid, including plans to pedestrianise Gran Via, is expected to reinforce its attractiveness.
This transaction represents Henderson Park’s third investment in the Spanish market, and second in Madrid, following the acquisitions of Los Cubos office asset in 2017 and a site to develop a 750-bed student housing scheme in Barcelona earlier this year.
Nick Weber, Founding Partner of Henderson Park, said: “This acquisition presents a rare opportunity to invest in a prime central Madrid location that offers considerable asset management potential. Leveraging both the asset’s prominent positioning and the wider regeneration of the Gran Via area we are reviewing options for both the refurbishment and re-leasing of the existing space, as well as repositioning for alternative uses to fully unlock the property’s potential.
“As illustrated by our investment activity to date, we are confident in the prospects for the Spanish market which has enjoyed a strong economic recovery and continues to draw high tourist numbers, underscoring our confidence in this latest addition to our portfolio.”
Ashurst acted as Henderson Park's legal advisor for the acquisition.
RPA Perspective The main retail activities driving the market continue to be fashion related (shoes stores, jewellery) and F&B, according to the latest date from Cushman & Wakefield. The latter include mostly concepts of fine dining from international organised chains and some local brands in expansion phase. Some technology operators are also looking for flagship positions in the main cities. Prime rental values remained stable at the prime cohort in the main capitals but they stand at peak levels of the last 5 years.
The capital markets wave is still strong in Spain, with both institutional and private capital tackling high street locations. The former is looking for tickets in excess of €20 million whilst the latter may enter below this mark. Spanish Reits (Socimis) are new actors in the high street capital market in Spain. These have higher capital costs than private investors so they are willing to make acquisitions in prime locations of secondary cities across the country. Prime yields remained stable in Q2-2018.
Both retailers and investors are eager to find the correct location, fulfilling their performance expectations. This implies they will make their location and investment decisions based on strong evidence of sustained profitability. The backdrop of this scenario will be steady growth in private consumption, retail sales and economic expansion.
