Foram and Lar Grosvenor buy shopping centre "Madrid Sur" for € 41.4 million

A newly incorporated joint-venture company created by both parties has acquired the Madrid Sur Mall. Furthermore, Foram has acquired for € 20.8 million Eroski’s hypermarket at Madrid Sur in a Sale and Lease Back transaction.

Foram Spain, a subsidiary of VastNed Retail, the Dutch based real estate investment fund specialised in retail properties, and Lar Grosvenor, a joint venture between Grupo Lar and Grosvenor, together have bought the mall Madrid Sur, with almost 80,000 square meters of total floor space.

The operation is a € 41.4 million investment, taken in equal shares. The president of the new joint venture company, Javier Hortelano, explains that 'this is a strategic alliance. While it is the first project that both companies realise together, one of our aims for the future is to explore new businesses and growth.”

In this way, Foram Management España (a 100% VastNed Retail subsidiary) and Lar Grosvenor will continue the asset management of Madrid Sur. Gestalia, a company formed by Lar Grosvenor and Eroski, will be in charge of property management and Foram will be responsible of the management of the new joint venture.

'Our intention is to enhance the image of the centre as well as its infrastructure. We want to attract new commercial formulas and to renew the image of the shops to reinforce the value of Madrid Sur as meeting point and a leisure and trade centre for the inhabitants of its zone of influence', affirms Miguel Pereda, vice-president of the new company.

The Mall presently produces about € 3 million on annual rents. Taking the purchase costs into account, the Mall has been acquired at a gross initial yield of 7.2 percent. The board of management expects to improve the yield shortly by renegotiating the expiring lease agreements. The yield is expected to increase to 7.8 percent in one year’s time.

€ 20.8 million Sale & Lease Back for Eroski hypermarket
Out of the frame of the previous operation, Foram has bought from Eroski the Mall’s hypermarket for an amount of € 20.8 million. The operation is under the format of a Sale and Lease Back. Presently a 25 year lease agreement is in place with half term break for the tenant.

The hypermarket is currently let at an annual rent amounting to € 1.6 million. Taking the purchase costs into account, the Mall has been acquired at a gross initial yield of 7.5 percent.

Almost 25,000 square meters of commercial floor space and more than 600 jobs
The Madrid Sur Mall has a total floor space of 79,330 square meters. About 1,600 parking spaces and a gross lettable floor space of 24,137 square meters. There are 84 units that employ near 600 people.

The main trade is the Eroski hypermarket, with 12,000 square meters (over and above the Mall’s lettable floorspace). Major brands operating in the centre are inter alia Mango, Abacus, Wai Pai, Amichi, Springfield, Imaginarium, Paco Martínez and Bershka. The Yelmo Cineplex operates 9 cinemas for up to 1,600 visitors. The Mall also offers food and beverage facilities such as McDonald´s, Bocata, Cantina Mariachi, Bierwinkel and others.

Source: VastNed

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