Schroder European Real Estate Investment Trust, the company investing in European growth cities, has completed the purchase of the Metromar shopping centre in Seville, Southern Spain, from UBS Asset Management. The total purchase price is approximately €52.5m, reflecting a net initial yield of 6.2%. SEREIT is acquiring a 50% stake in joint venture with the Schroder advised Immobilien Europa Direkt.
Seville is the capital of Andalucía and Spain’s fourth largest city and is an important tourist destination. The city is expected to outperform national averages in terms of both economic growth and consumer spending over the next five years.
The 23,500 m² shopping centre is let to 50 tenants, with a significant convenience retail offering, anchored by a 2,300 m² Mercadona grocery supermarket. The discretionary retail tenants include Zara, Mango, Sfera, H&M, Pull & Bear, Stradivarius, Bershka and Cortefiel. The centre has a significantly enhanced leisure offering compared with other similar centres in the region, anchored by a 12 screen cinema and a number of restaurants. This is reflected by the centre’s annual footfall of circa four million people, of which 50% are classified as ‘walk-in’.
Metromar’s sales growth over the past three years has been robust: 4% in 2014; 8% in 2015; and 4% in 2016. This reflects the quality of the tenant base and its dominant position within the growing residential suburb of Mairena del Aljarafe.
Located alongside the Ciudad Expo metro station, Metromar also benefits from good road access, with the A-8057 (33,000 cars a day) and SE-30 (Seville’s primary ring road) within close proximity. The centre is located in a densely populated area, with a catchment of 60,000 people in the immediate vicinity, and a further 250,000 within a 15 minute drive.
The asset is 90% let by area (98% by ERV) and generates an annual rent roll of €4m. The current weighted average lease term is nine years (and three years to first lease break) and the leases are subject to annual rent indexation.
The business plan for Metromar is to maximise investment returns through a combination of maintaining the current, high occupancy level and undertaking a number of asset management initiatives to improve the vibrancy and consumer experience.Several opportunities have already been identified to increase income returns through improving both the attractiveness of the centre and its dominant position in south-west Seville.
