Avignon Capital, the European property investment firm, has sold Fontanella 6-8, a prime office and retail asset in Barcelona, for EUR65 million, producing a 135 per cent return on equity.
The buyer is a Korean institutional separate account client represented by CBRE Global Investors.
The asset is an 8,126 sq m property situated on the corner of Plaça de Catalunya, one of the busiest tourist locations in Barcelona. The property benefits from a prime retail and commercial position in the city centre, with Passeig de Gracia and Les Rambles immediately to the North and South.
Arranged over basement, ground floor and six upper levels, Fontanella 6-8 was fully let to the Government of Catalunya and occupied by the Tax Administration of Catalunya upon acquisition in Q1 2013.
The business plan on acquisition was to maintain the secure income from the Government of Catalunya, whilst simultaneously creating a new retail offering through reconfiguration works on the ground and first floors. In 2015, a new 10-year lease with annual CPI indexation was agreed with Media Markt, the leading European consumer electronics retailer, who began trading from Fontanella following the completion of upgrade works in December 2016.
Avignon Capital’s asset management initiative to let the upgraded ground and first floor to an international retailer increased the passing rent and value of the building.
The Fontanella sale marks Avignon Capital’s third significant property disposal of the year, all of which have resulted in strong returns on equity for investors. In January 2017, the firm sold its Copenhagen prime retail portfolio for EUR119m, producing a 154 per cent return on equity; in February 2017, the firm sold Østensjøveien 27, a prime office building in Oslo, for EUR61m, producing an 87 per cent return on equity.
Eric Mounier, CEO at Avignon Capital, says: “The sale of Fontanella 6-8 is another prime example of Avignon Capital’s ability to execute an innovative asset management strategy to significantly increase the value of an asset, as well as secure impressive returns for our investors.
“Not only does our team have the expertise and knowledge to enter key markets at the right time, but Avignon can extract further value by creating an exceptional retail space in the building and securing long income to an excellent tenant.
“We continue to seek opportunities to generate fantastic returns for our investors and further our exposure in key European real estate markets.”
Myles Sanger, Portfolio Manager, CBRE Global Investors says: “This is another solid asset to add to the portfolio of one of our key global separate account clients. The property possesses strong investment fundamentals, lease covenants providing long term high quality stable cash-flow and we expect steady rental growth due to the prime location and the positive outlook for the Spanish economy.
Source: PropertyFundsWorld