COMMERCIAL property firm Intu, owner of the Braehead shopping centre, has continued its march into Spain by buying the Puerto Venecia complex in Zaragoza for €451 million (£354m).
The firm said it had exchanged contracts with a subsidiary of the Orion European Real Estate Fund to acquire the shopping centre and retail park, and signalled that it will also look to develop a number of venues from scratch.
The deal gives Intu a net initial yield of 5 per cent, based on net rental income of €22.4m.
It follows the company’s acquisition last year of a shopping centre in Oviedo, and means it has two of the top ten centres in Spain. It also has options on four development sites, in Malaga, Valencia, Palma and Vigo.
David Fischel, chief executive of Intu, said: “The transaction substantially accelerates our activities in Spain, which is a country where we see major opportunities for the type of genuinely regional destination centre in which the group specialises.
“Puerto Venecia represents such an asset, with an attractive combination of retail, restaurants and leisure. The centre is seeing strong growth in footfall and retailer sales from key names, and provides an excellent template for the future development of sites we have under option, such as in Malaga where we expect to move the project forward significantly in 2015.”
Intu said it was positioning itself as an “increasingly significant regional shopping centre landlord in Spain”.
The company said that Spain has returned to economic growth following six difficult years of rising unemployment, salary deflation and depressed consumer spending.
“While the eurozone continues to have economic challenges, Spain benefits from high-quality infrastructure and outperformed the eurozone in 2014, with the third quarter being the fifth consecutive quarter of year-on-year growth in GDP in Spain,” Intu said.
It said that the Spanish shopping centre market offered opportunities to create a business of scale and quality which had the potential to generate superior total returns over the medium term.
The group said its approach to the country was similar to its strategy in the UK, where it has aimed to develop “regionally pre-eminent shopping centre destinations” in a significant number of locations. However, it now believed Spain offered greater opportunities.
“Ownership of the largest Spanish shopping centres is fragmented and many regions do not have a pre-eminent retail and leisure destination,” it said.
“The committed pipeline of prime shopping centre developments across Spain is at a low level and we believe the opportunity exists to develop and build new schemes in a number of key regions of Spain.
“We continue to work on bringing forward the developments on which it has options to the point where we can consider moving forward, with the Malaga site at the most advanced stage of the four.”
The Puerto Venecia centre has only opened recently and Intu said its rental levels were not regarded as demanding, indicating scope for increases as the market recovers and the centre becomes fully established in its region.