“Corio has acquired 95% of the shares of Príncipe Pío Gestion S.A. (hereafter: ‘PPG’) from Grupo Riofisa S.A. (owned by Inmobiliaria Colonial S.A.) (hereafter: ‘Riofisa’). PPG is the long term leaseholder of the Príncipe Pío shopping centre. The shopping centre has a GLA of 28,680 m² and is connected to the Príncipe Pío railway station and has 900 underground parking places. The centre is located to the west and close to the city centre of Madrid and has 12.5 million visitors per annum.
Acquisition
The total investment amounts to € 126.5 m (including all acquisition costs), and produces a Net Initial Yield of 7.8%. Corio will take over the favourable loans in PPG leaving € 56.5 m to be financed by Corio, resulting in a net return on equity of around 13%. Corio will own 95% of the shares in PPG.
The other 5% are held by Administrador de Infraestructuras Ferroviarias (hereafter: ‘ADIF’). ADIF is the Spanish state owned company that manages the railway infrastructure. The freehold to the land and buildings is owned by ADIF, PPG operates the shopping centre on the basis of a lease agreement with ADIF ending in 2050.
Shopping centre
Príncipe Pío is a dominant first class shopping centre in Madrid at a very good location to the west and close to the city centre. It is located on top of a very busy train/metro station and a bus interchange which enhances footfall. In addition, it is located close to and with direct access to the ring road as well as important connection roads from the ring to the city centre. Its location and its retail and entertainment mix results in being one of the favourite meeting places for the inhabitants of Madrid (especially the Western part). This is also supported by the fact that it is one of the only shopping centres in Madrid that is open on every Sunday. Around 4.5 million people reside within a 20 minute drive from the shopping centre and around 1 million people reside within a 10 minutes drive. Consequently, Príncipe Pío has a very high footfall of around 12.5 million people per year.
The shopping centre was opened late 2004. It is linked to the 125 year old Príncipe Pío railway station which has been renovated to suit retail. The shopping centre has been developed by Riofisa. The two parts are joined together by a glass and steel covered entrance hall which gives the shopping centre a modern and light look and feel.
The shopping centre operates on three floors (basement, ground floor and first floor) and three underground parking levels. The basement is fully dedicated to fashion and accessories, the ground floor has a mix of tenants (leisure, restaurants, fashion and a supermarket) and the first floor has a food court and a cinema. The anchor tenants are: Opencor supermarket, H&M, Zara, Bershka, Massimo Dutti, Pull & Bear and Mango. Corio will take over the management of the shopping centre in the first half of 2010.
Rational
Corio is positive on the long term outlook of the Spanish retail property market. It has therefore been one of Corio’s objectives to strengthen its position and the quality of the portfolio in Spain. The acquisition also strengthens Corio’s position towards tenants because Príncipe Pío is a preferred shopping centre for tenants. With this acquisition, the value of Corio’s portfolio in Spain (based on the 31 March 2009 valuation) is around € 588 m (excluding the minority share of ADIF) and it increases Corio’s share in Spain from 8 to 10%”. (CS della Società)
