Intu Properties has closed a transaction worth £101 million on the Parque Principado Shopping Centre in Asturias in northern Spain. It is one of the country’s top 10 shopping centres, and brings in nine million visitors each year. Prime tenants include Primark, Ikea, Zara and H&M.
The company, which owns 16 shopping centres in the UK, has joined the Canadian pension fund CPPIB, in the deal. Intu also has options on sites to build retail centres in Vigo, Valencia, and Malaga. It is looking for partners to help duplicate its business model of UK regional shopping centres in Spain without overextending its balance sheet and sacrificing its domestic investments.
Spain’s banks were bailed out last year, and its economy has only recently emerged from a two-year recession. It is expected to return to growth in 2014, but unemployment is still sitting above 26 per cent and private consumption is not expected to shift into growth until 2015.
Intu, which bought Parque Pincipado on a yield of 7.2 per cent, highlighted the country’s lack of shopping centre developments in the pipeline as well as its limited competition for existing centres.
Chief executive David Fishcel stated recently that the deal establishes the company’s presence “in a country where we see considerable growth opportunities in the regional shopping centre industry.”
CPPIB’s head of real estate investment was equally optimistic, and commented that the purchase was “an attractive entry point to the Spanish retail market.”
