Kennedy Wilson Europe Real Estate Plc has completed the acquisition of La Moraleja Green shopping centre, Madrid, from ING Real Estate & Other. KWE has acquired a 95.2% stake in the centre with an underlying real estate value of €71m (£52.2m), reflecting a yield on cost of 6.2%. The corporate acquisition was funded from the company’s cash resources.
La Moraleja Green is located in La Moraleja Business Park in the north of Madrid. The centre’s strong catchment area attracts 3.5 million visitors a year and benefits from its close proximity to a large work population from the adjacent business park and from its direct links to the affluent La Moraleja residential district.
The centre totals 29,600m² (318,700ft²) of space. KWE’s interest is 28,200m² (303,500ft²), with the remaining 1,400m² (15,200ft²) owned and occupied by Sanchez Romero, the luxury Spanish supermarket chain. La Moraleja Green is organised over three levels providing 1,296 parking spaces and over 80 retailers, cafes, bars and restaurants as well as an eight-screen CINESA cinema. The centre is occupied by strong international chains including Zara, Zara Home, Massimo Dutti, Oysho, Cos, H&M, Michael Kors and Carolina Herrera.
Existing occupancy is 80% with a WAULT of 1.8 years (6.8 years to expiry), generating NOI of €4.5m per annum.
KWE already has retail experience in the UK, Ireland and Spain. This acquisition represents the company’s first shopping centre purchase in Spain, and brings its total Spanish portfolio to £155.4m across 20 assets, representing 5.8% of the £2,682.6m portfolio.
Mary Ricks, president and CEO of Kennedy Wilson Europe, commented: “La Moraleja Green is one of Madrid’s most established shopping destinations and provides KWE with significant value enhancing asset management opportunities. There are large reversions to be captured, both by letting up the vacant space and improving existing rents, which sit c. 20% below its competition.
“We believe Madrid’s growing economy and improving property fundamentals coupled with stronger consumer confidence will translate to strong levels of rental growth.
“We look forward to driving future sales performance at the centre by enhancing the overall shopping experience including upgrades across both interior and exterior areas and improving the retail offering, including food and beverage. On completion of our capex programme and leasing initiatives we anticipate growing our yield on cost to c. 7%.”
Erik Vester, global portfolio manager investments of ING Real Estate, commented: “The divestment of La Moraleja fully resonates with our strategic objective to reduce our real estate equity exposure globally and implies another important milestone to accomplish the aforementioned. The institutional quality of La Moraleja in addition to the improved investor momentum in the Spanish marketplace contributed to a successful divestment process. The remaining Spanish real estate investment portfolio predominantly consists out of a mixed use land bank portfolio (c. 450,000m²).”
