Intu Properties has acquired the Xanadú shopping centre in Madrid from Ivanhoé Cambridge for €530m, financed with a €263m five-year four-bank club senior loan, in the largest shopping centre transaction ever to close in Spain and cementing the REIT’s footprint in the Continental sector.
TH Real Estate was the underbidder, according to Spanish publication, Expansión. The Xanadú shopping centre, which opened in 2003 and comprises around 220 units with a trading area of 153,000 square metres, was acquired fractionally above its €526m external valuation on 1 February, which reflects a 4.3% net initial yield based on an annual net rental income of €23m. The valuation, however, excluded the associated management company and the SnowZone, Spain’s only indoor ski slope, which is part of the transaction. Occupancy is more than 97%.
Intu Properties’ purchase price exceeds the €495m paid by Deutsche Bank when it purchased Diagonal Mar in Barcelona last year. Intu confirmed plans to sell down an equity stake in the asset to an investment partner, in line with its overseas retail strategy. Discussions with potential partners are already underway.
Santander, BBVA, Credit Agricole and Caixabank have jointly extended a €263m five-year senior loan, reflecting a 49.6% LTV, with the all-in cost of debt estimated to be around 2.0%, Intu confirmed. The balance of the consideration will be met from Intu’s existing cash resources.
The acquisition increases Intu’s footprint in Spain to owning three of the top 10 largest shopping centres, David Fischel, chief executive at Intu, said in a statement, which also includes Intu Asturias, Oviedo and Puerto Venecia, Zaragoza. “We see a number of compelling opportunities to further enhance Xanadú’s status, such as improving the leisure and catering offering, with a Nickelodeon theme park and an aquarium due to open in 2017, and ensuring an enticing retail mix, which we believe will drive increased footfall and dwell time and ultimately improve rental levels and capital values.”
Xanadú has an annual footfall of 13m customer visits, with a core catchment of 1.2m people and further potential from over 4m people living within a 30-minute drive time. The centre comprises a retail mall over two levels, including all the key retailers such as El Corte Ingles, all of the Inditex fascias, Primark, H&M, Apple and Mango. In addition, the leisure centre is home to Spain’s only indoor ski slope, SnowZone, a 15-screen Cinesa cinema and Ilusiona bowling.
Ownership of the largest Spanish shopping centres is still fragmented and many regions do not have a prime retail and leisure destination. Intu said its pipeline of prime shopping centre developments across Spain – which the REIT believes to be “low” –aims to capitalize on the market gap. “We believe the opportunity exists to develop and build new schemes in a number of key regions of Spain,” Intu said in its statement. In addition to the three top ten centres that Intu now owns, the REIT also has a development site near Malaga and options on sites in Valencia, Vigo and Palma. Intu expects to start the construction of intu Costa del Sol, near Malaga, in the next 12 months.
This afternoon’s closed purchase takes Intu’s property portfolio to beyond £10bn. Last month, Intu reported £172m in annual profits in 2016, a substantial 66% fall on 2015’s £518m, driven by property revaluations of -£64m last year compared to +£351m in 2015.
Source: Expansión