CBRE GIP, Madison International Purchase Spanish Portfolio

A joint venture between CBRE Global Investment Partners and Madison International Realty has acquired a 6,458-unit portfolio of Spanish residential properties located in Madrid and other key cities. The portfolio, valued at $1 billion (€870 million), is comprised of 65 primarily mid-market apartment block buildings with about 70 percent located in the Madrid area.

The portfolio was purchased as part of the recapitalization of a fund managed by Azora, a specialized investment and asset manager. Azora will continue to manage the assets and has a minority stake in the joint venture.

CBRE GIP and Madison, which plan to seek other opportunities for the joint venture, see the Spanish multifamily market as a compelling investment because of strong demand and lack of supply.

“The residential rental market in Spain is very fragmented making this portfolio and its critical size unique to act as a major consolidator in the sector. This investment is in line with our key strategy—to focus on urbanization and demographic trends in supply constrained markets—and increases the CBRE GIP residential sector exposure in Europe,” Alexander van Riel, head of Continental Europe at CBRE Global Investment Partners, said in a prepared statement.

Derek Jacobson, co-chief investment officer at Madison International Realty, said the investments represented a rare opportunity to acquire a large-scale, high-quality residential portfolio located largely in the Spanish capital.

“We have a track record of residential investment and management in the U.S. from which to draw on as we look to grow this joint venture,” Jacobson said in prepared remarks. “This is our first JV with both CBRE GIP and Azora and is typical of the strong focus we place on building strong relationships with specialist partner firms where we can combine their expertise and local market access with our own real estate discipline and approach.”

Longtime Portfolio Management

The fund managed by Azora owned the portfolio for 15 years, said Javier Rodriguez-Heredia, partner of Azora & head of residential. He said Azora was pleased to find a way through the strategic partnership to keep the units available for the tenants and invest in new rental product. Azora manages the biggest volume of rental apartments in Spain with more than 13,000 dwellings. The firm, which also manages hotels, student housing and offices, has the biggest hotel portfolio under management in Spain with more than 14,500 hotel rooms.

“We have created a unique investment platform to lead the future of the Spanish residential rental market by combining CBRE GIP and Madison’s robust investment capabilities with Azora’s leading skills in investing, managing and operating residential portfolios,” he said in a prepared statement. “It is key to encourage the creation of this type of platform which devotes long-term resources to longstanding rental product supply. This is the only real way to alleviate the rental market tensions that have recently appeared in the Spanish market due to the imbalance between a highly growing demand and a shrinking supply.”

CBRE GIP and Madison were advised by Jones Day, Perez Llorca, PwC, Howden, Arcadis, CBRE and Newmark Knight Frank while Azora was advised by Kempen, Freshfields and Deloitte. 

Image courtesy of CBRE Global Investment Partners and Madison International Realty