Rodamco Europe announces it has realized a number of changes in its Spanish portfolio and pipeline in order to align the portfolio with its strategic focus on top quality retail properties.
This week, Rodamco Europe discontinued its EUR 159 million commitment of Puerto Triana in Seville, recuperating its current book value of EUR 1.8 million. In addition, Rodamco Europe has agreed to sell the Castellana Hall office building for an amount of EUR 35.2 million.
This follows the discontinuation of the retail warehouse and leisure pipeline project San Vicente in Alicante and the partial acquisition of the second phase of the Bonaire shopping centre in Valencia for EUR 21 million, as reported earlier. The (partially) cancelled development projects no longer comply with Rodamco Europe´s strategic and investment criteria and represent a substantial reduction in the company´s development exposure in Spain.
As a consequence of the discontinuation of the Puerto Triana project, Rodamco Europe´s pipeline portfolio has reduced from EUR 1,427 million to EUR 1,268 of which 93% (was 82%) is committed.
CEO Maarten Hulshoff: 'The shift in the Rodamco Europe´s Spanish portfolio reflects Rodamco Europe strategy to focus on top quality retail and reduce the office, logistic as well as development exposure. The latest move was the discontinuation of the Puerto Triana pipeline project in Seville. This was an ambitious project. However, the planning difficulties started to jeopardize the viability of the investment, and in line with our strategy to limit development risks, we have agreed with our co-shareholders to sell back the shares. Through the sale of Castellana Hall, we have further decreased our exposure in the Spanish office market, while on the other hand we have increased our share in the retail sector with the acquisition of a part of Bonaire II.'
The shares in Puerto Triana S.A., a special purpose vehicle for the development of a 68,000 m2 regional shopping centre on the Expo´92 site in Seville were acquired in July 2000. Once completed, this development would have represented a total commitment of EUR 159 million for Rodamco Europe with an expected return on investment of over 7.5%. Rodamco Europe has decided not to proceed due to persistent difficulties in obtaining the necessary planning consent for the project. The shares have been sold back to the other shareholders at book value as per 30 June of EUR 1.8 million.
The San Vicente project in Alicante is primarily a leisure project which no longer fits Rodamco Europe´s strategy of high quality and retail focus. The project comprises 51,000 m2 and represented an investment amount of EUR 57 million. The initial yield was estimated at 7.1%
In July 2001, at the time of the purchase of Bonaire I, Rodamco Europe obtained an option on the purchase of the further extension of the shopping centre, 'Bonaire II', of 32,400 m2 at a price of EUR 55.5 million. Rodamco Europe has decided to acquire only part of Bonaire II for an amount of EUR 21 million with a net initial yield of 7.3%. This concerns 13,250 m2 relating to the second floor of the main shopping centre. The adjacent retail park units will not be acquired as it no longer complies with the strategic and investment criteria.
Castellana Hall office building in Madrid was acquired in October 1998 for EUR 22.1 million and comprises 8,000 m2 with a yield of 6.3% and has now been sold for EUR 35.2 million. Rodamco Europe owned 57% of the building. The transfer of ownership is planned for the beginning of January 2004, until which time Rodamco Europe enjoys the rental income.
Source: Rodamco Europe