Spain Industrial Market Report 2015

Transcription

1 OPTIMUS Insights KRIS VAN LANCKER Managing Director This publication should not be viewed as a personal recommendation within the meaning of the Financial Conduct Authority rules. Spain Industrial Market Report 2015 T: (+34) E: kvanlancker@optimusinvestors.com DAVID DIEZ Investment Consultant 1 June 2015 T: (+34) E: ddiez@optimusinvestors.com Optimus Global Investors, a trademark of Optimus Capital, S.L. Industrial Real Estate Market The positive economic momentum that Spain has witnessed since mid-2013 continued throughout 2014 and has fed into the industrial real estate market. Pertinent to the recent success of the industriallogistics markets has been the improvement in private consumption; GDP growth up 1.4% in 2014 and increased exports as a result of the drop in oil prices and the Euro as well as improved access to financing. Putting this into numbers, investment volume in the area was north of 600m ($670m) last year (the highest level seen in the last 10 years), yields in excess of 7% and take-ups levels greater than 30% in. 70% of the investor activity over the last year took place in the area while the rest was in, Seville, Zaragoza and Valencia. 60% of demand came from institutional investors, 30% from SOCIMIs (Spanish REITs) and 10% from family offices. Naturally, the amount of interest in this market has lead to a fall in supply (despite there still being high levels of supply), a fall in vacancy levels over the last 2 years and rental price increases for the best quality assets. Less prime assets have seen a stabilization of rental levels as most appetite is focused on prime at the moment. 1

2 1. MADRID INDUSTRIAL PROPERTIES 20% of industrial spaces taken in 2014 were for sale whilst 80% were to let. Yields for prime Industrial assets: 7% After many years of corrections, industrial rents in, depending on the area, are either stabilizing or are close to stabilizing as rental corrections are ever smaller - prices fell around 4% over 2014 to 3.15sq.m/$38sq.ft per month. This observation is also true in terms of prices of properties for sale with a 7.5% fall to 590sq.m/$7,100sq.ft over the same period. However, as we already mentioned, these price falls are less subdued than in the recent past and are actually stabilising. Approximately 20% of the space taken in industrial properties over the last year was for sale, whilst the remaining 80% was to let. Historically, particularly in the last 6 years, sales did not reach the 10% take-up barrier so existing levels demonstrate the gradual economic recovery. Despite the industrial sector as a whole lagging slightly behind other real estate segments, yields across prime assets have actually started to fall due to the ongoing shortage of large, high-quality assets prime yields currently stand at 7% having hardened 50bps in Q alone and an additional 75bps in Industrial rents in prime areas have been stable over the last year and are currently seen at 5sq.m/$60sq.ft per month this is a tendency we will continue to see in 2015 due to the limited development in the pipeline. Moreover, this lack of pipeline in prime areas has led to take-up of vacant space in more decentralized areas however this phase is still very much in its infancy in that only a handful of projects are under development tenants seeking larger, more modern premises will continue to struggle to find what they want in the most popular areas. Yields for prime Logistics assets: 7.5% 2. MADRID LOGISTICS The story in the logistics sector is similar to the industrial space in that rental prices of the best quality and located properties have begun to rise and remain stable in other markets. Prime units with solvent tenants and compulsory fixed term contracts in the best communicated areas have seen a 100bps hardening over the last 6 months to the existing 7.5% yield levels. Nevertheless, yields in secondary markets are seen at 8.5% and have been stable. Fourth consecutive year of take-up growth in the logistics sector, with 90% of transactions for lettings purposes and the remainder outright purchases. During 2014, and continuing on from the falls seen in 2013, vacancy rates fell from 16% to 14.5%. Furthermore, take-up registered its fourth consecutive year of growth increasing by 35% compared to 2013, 90% of which was for lettings and the remainder for outright purchase transactions. After 6 years of consecutive price falls, logistics rents on average 2

3 followed different lines to those in the industrial sector and rose by 4% in and currently stand at just over 3sq.m/$36sq.ft per month. There is a quantifiable relationship in the logistics space between rents and distance from the most urban areas of rents fall from 4.75sq.m/57sq.ft per month from within the most central and urban areas of the city to 2.5sq.m/$30sq.ft per month in the outer regions: There is a quantifiable relationship in the logistics space between rents and distance from the most urban areas of rents fall from 4.75sq.m per month from within the most central and urban areas of the city to 2.5sq.m per month in the outer regions Urban + Zone 1 (20km radius) 27% of total available logistics space Zone 2 (20-40km radius) 28% of total available logistics space Outer regions (40-90km radius) 45% of total available logistics space (which is the result of the large amount of developments constructed in the run-up to the financial crisis) Speculative development continues to be low compared to pre-crisis levels although we are seeing that this is gaining momentum in the markets where there is a great deal of demand. This is not just because of the increased demand but also due to the significant drop in land prices over the last few years. Turn-key projects will continue to be carried out throughout 2015 as occupiers struggle to find adequate logistics space in the market. KEY TAKEAWAYS Attractive yields, limited supply of quality stock, falling vacancy rates, improved access to financing, stable prices at record lows and rising for the best properties are making the industrial sector highly demanded by investors. To this end, an upswing in demand will cause rents to increase and initial yields to fall and will inevitably cause capital values to increase considerably over the next 5 years. Contact us If you would like to discuss this report or the investment opportunities for your institution in further detail, please the team or call us directly. Global phone numbers: research@optimusinvestors.com Spain: (+34) info@optimusinvestors.com UK: +44 (0) US: +1 (646) Address: Calle General Oraa 29, 28006, Spain 3

4 Appendix (i) Economic Indicators Macroeconomic backdrop, Spain: SPAIN f 2016f 2017f GDP (YoY%) 1,1-3,6 0,0-0,6-2,1-1,2 1,4 2,8 2,5 2,0 Industrial Production (YoY) ,5 2,5 2,6 - - Household Consumption (YoY%) - 0,7-3,6 0,3-2,0-2,9-2,3 2,4 3,3 2,4 1,8 CPI (YoY%) 4,1-0,2 2,1 3,0 2,4 1,5-0,2-0,4 1,1 1,2 Unemployment (%) 11,3 17,9 19,9 21,4 24,8 26,1 24,5 22,5 20,8 19,3 Central Bank Rate (%) 2,50 1,00 1,00 1,00 0,75 0,25 0,05 0, Month Interest Rate (%) 2,89 0,70 1,01 1,36 0,19 0,29 0,08 0, Year Note (%) 2,29 1,85 3,44 3,16 2,78 1,41 0,38 0, Year Note (%) 3,81 3,97 5,44 5,04 5,23 4,13 1,60 1, EURUSD 1,40 1,43 1,34 1,30 1,32 1,37 1,21 1,05 1,10 1,13 GDP (% YoY change) Spain Eurozone Germany France UK Italy 2,7 1,0 1,0 0,8 2,4 0,1 Source: Bloomberg, Optimus Capital Key Economic Indicators, Spain: f 2016f 2017f GDP (YoY%) CPI (YoY%) Household ConsumpXon (YoY%) Unemployment (%) Source: Bloomberg, Optimus Capital Spanish Yield Premiums: Spanish Government 10yr Absolute Yield (%) 8.00% Spanish 10YR Yields Spread Levels 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% Risk Premium bps (Spanish 10yr Gov. vs Bund) Yield % Yield by Asset Class: % 7.50% 7.00% 7.00% 5.75% 5.25% 4.75% 4.75% 4.00% 3.25% 0.00% 0 5/1/08 5/1/09 5/1/10 5/1/11 5/1/12 5/1/13 5/1/14 5/1/15 Source: Bloomberg, Optimus Capital 4

5 Appendix (ii) Market Transactions 2014 (> 100m) & 2015 YTD 2014 Asset Class Asset Location 2014 Offices 70 Andalucian government buildings Several locations Transaction Value ( m) 300 Vendor Junta de Andalucía (Gov. entity) Purchaser W.P. Carey (US REIT) 2014 Retail & Hotel Marineda City Complex La Coruña 260 Invest Cos (Fund) Merlin Properties (SOCIMI) 2014 Retail Islazul 232 Grupo Lar & Ivanhoé Cambridge TIAA Henderson Reat Estate (Fund) (Fund) 2014 Hotel Resort Sotogrande Cadiz 220 NH (Hotel Cerberus (Fund) 2014 Offices 2014 Offices & Retail 2014 Vastned Portfolio (8 centers) 13 Generalitat buildings Four office buildings & one retail warehouse Several locations 2014 Retail El Boulevard 2014 Office, Retail & Hotel Paseo de la Castellana, 200, & Tarragona Several locations San Sebastian Generalitat de Catalunya (Gov. entity) Credit Suisse (Bank) 160 Vastned (RE Offices Santa Hortensia Industrial Six logistics assets & Guadalajara 133 CBRE Global Investors (RE Reyal Urbis (RE Morgan Stanley (Bank) Gran Europa (RE Zurich (Insurance) Axia Real Estate (SOCIMI) Baupost Group (Fund) / Green Oak Real Estate (Fund) / Grupo Lar (RE REI Investment IBV (Fund) Drago (RE + PSP Investments (Canadian Pension Fund) Finacess (Fund) Logicor (RE 2014 Offices Levitt Portfolio 130 Levitt (RE Merlin Properties (SOCIMI) 2014 Offices Eight buildings & Malaga 120 Oncisa (RE Hispania Activos Inmobiliarios (SOCIMI) 2014 Offices Avenida de America Solvia (RE London Regional (Fund) 2014 Retail Gran Vía de Vigo Vigo 115 ING Real Estate developments Oaktree (Fund) 2014 Industrial Portfolio SABA & 100 SABA (Interparking) Prologis (Logistics) 2015 Asset Class Asset Location Transaction Value ( m) Vendor Purchaser Retail Building on Gran Vía N/A Talus Real Estate (RE Fund) Retail Building on Gran Vía 32 N/A Drago Capital (RE Pontegadea, Amancio Ortega (Retail) Offices Torre Ederra N/A BBVA (Bank) GMP (RE Offices BMW Offices 41 Gecina (RE SOCIMI managed by IBA Capital Gecina Residential & Commercial 11 plots in 64 Office buildings on Office 27 N/A Realia (Fund) Goya 29 Residential & RE complex 'Golf Hills N/A N/A CTH Capital (Fund) Commercial Village' Offices Building in 37 UBS (Bank) Merlin Properties (SOCIMI) Retail Residential, offices & nursing homes Offices Ten Consum Supermarkets Valencia & Castilla- La Mancha N/A 18 buildings 90 Office building in NPL portfolio NPL Portfolio "Aneto" 250 Offices Residential & Commercial Tripark Business Park (Las Rozas) 10 A group of investors La Llave de Oro (Developer) N/A Meridia (Fund) Goldman Sachs (Bank) Colonial (Fund) Blackstone (Fund) N/A N/A IBA Capital Partners (Fund) Real Estate complex 35 Cevasa (RE AKM Arganzuela (RE February Residential Plots in 13 Castlelake (Fund) 5

6 February Hotel Hotel Solvasa N/A N/A Eurohotel Group (Hotel February Industrial Gescobro (Collection company) N/A Miura (Fund) Cerberus (Fund) February Offices Building at Gran Vía N/A Private Mexican Investor February Residential Building at Calle Juan Bravo 120 N/A Lar España (RE & PIMCO (Fund) March Residential & Principe de Vergara & Offices Sanchinarro 86 N/A Hispania (SOCIMI) March Offices 11 office buildings (7) & (4) 100 GE Capital RE (Fund) Meridia (Fund) March Retail Airesur Shopping Centre Sevilla 77 N/A CBRE GI (RE March Retail Plenilunio mall 375 Orion Cap Managers (Fund) Klepierre Acquires (RE March Self storage & Baraka Global Self- storage 8 Offices Invest (RE Bluespace (Self- storage March Retail Zielo Shopping Centre 73 Hines (RE UBS (Bank) April Offices Revlon's HQ 30 Morgan Stanley (Bank) Standard Life (Fund) April Retail As Termas' shopping mall Lugo 67 N/A Lar España (SOCIMI) April Offices The 'Torre Norte' building 15 CaixaBank (Bank) SegurCaixa (Insurance) April Logistics Logistics Plot Guadelajara N/A N/A Montepino (RE April Student Accomodation Two Halls of Residence N/A N/A The Student Hotel May Land Private plot of land Mallorca 6 Ministry of Defence (Gov. La Llave de Oro subsidiary (RE entity) May Logistics 3 Logistics Platforms & Valencia 19 UBS (Bank) Lar Group (SOCIMI) May Retail 68 Gran Vía 45 Carlyle (Fund) FMS Wertmanagement (German 'Bad Bank') May Retail Puerta del Sol 9 30 Auction Kennedy Wilson & Renta (Fund) May Retail 3 land plots in Arroyo City Council 50 del Fresno (Gov. entity) CP Grupo Inmobiliario (RE May Offices Paseo de la Castellana N/A Corporacion Financiera Alba (March Family) May Logistics Logistics Platform Meco 22 Kefren Capital (RE Merlin (SOCIMI) May Retail Shopping centre Leon N/A CG Malls Europe (RE Blackstone (Fund) May Hotel Ritz hotel 130 Belmond Spanish Holdings & Landis JV - Olayan (Fund) & Mandarin Group (Fund) June Hotel Villa Magna Hotel 190 Sodim (HoldCo of Queiroz Pereira Jaime Gilinski (Colombian individual) family) FMS June Loans NPL Portfolio - 'Project Wertmanagement 260 Gaudi' (German 'Bad Oaktree (Fund) Bank') June Offices 2 office buildings (Las Rozas & Cristalia BP) 55 Deka (Fund) Hispania (SOCIMI) June Logistics 5 Logistics Platforms 75 N/A GreenOak (Fund) June Retail Plaza Éboli Shopping Doughty Hanson 30 Center (Fund) HIG Capital (Fund) June Hotel (Trophy assets) 2 Hotels In Canary Islands Canary Islands 105 N/A Hispania (SOCIMI) June Offices Offices in 51 Axiare (SOCIMI) June Offices Office Building 20 N/A Lar Group (SOCIMI) June Supermarkets Eroski Hypermarket Alicante 7 Altadena (Fund) Lar España (SOCIMI) June Residential- Hotel Condeminas Building N/A N/A Manel Adell (Private investor) June Trophy asset Building In Puerta de Alcalá 80 Auction Mapfre (Insurance) June Company Subsidiary Testa 1800 Sacyr (Construction) Merlin (SOCIMI) June Loans Hotel Loan Portfolio (Project Castle) N/A Bankia (Bank) UBS (Bank) June Retail Zielo Shopping Centre 70 Hines (RE UBS (Bank) June Port 50% Of Puerto Venecia Zaragoza 225 Intu CPPIB (Canadian Pension Fund) 6

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