Spanish Market Sees Major Retail Transaction, Positive Change for Struggling Real Estate Sector

By Alex Girda, Associate Editor

Asturias, Spain—As Southern Europe sees the economy of several countries continue to struggle with the effects of the economic downturn, Greece, Italy and Spain have been the ones hit hardest in the entire Eurozone. However, as investors reshuffle their priorities and search for new opportunities in Eastern Europe and the Nordic markets, it seems that some see potential even in the more downtrodden markets. To that effect, the recent announcement regarding the acquisition of a major retail property in northern Spain has energized analysts present at this year’s EXPO Real in Munich.

The deal was made by a partnership created between British company Intu Properties and the Canada Pension Plan Investment Board, who jointly acquired the Parque Principado Shopping Center in Asturias, in Northern Spain. The total value of the intriguing transaction stands at around 162 million euros, or the equivalent of $220 million.

The asset has a number of attractive features, apart from being an 807,000-square-foot retail spot, the property boasts a very high occupancy rate, currently at around 97 percent, and visitor numbers stood strong at 9 million for last year. The acquisition implies a net initial yield of 7.2 percent. Intu, a company that is currently looking to attract additional funding for a soon-to-be created Spanish REIT, acquired the shopping mall.

With the market pointing towards an upcoming stabilization, CPPIB is set to continue its ventures in the European market, and the large acquisition is finally showing some positive signs for Spain’s current real estate status. Intu is the current owner of some of the largest shopping malls in Britain, and has had previous experience with the local market, having purchased an option on a retail development plot, although that move has been criticized by industry specialists.