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REALIA expands its rental business by buying an office building in Madrid


REALIA expands its rental business by buying an office building in Madrid

  • This new asset, which is BP Oil's headquarters, is located in the Arroyo de la Vega business park and is worth 38.5 million euro.
  • REALIA has also sold an industrial plot for 40.5 million euro, with capital gains of 13.5 million euro.

REALIA has bought an office building in the Arroyo de la Vega business park, in Alcobendas (Madrid), for 38.5 million euro. The company, headed by Ignacio Bayón, also sold a plot of industrial land in Carabanchel (Madrid).

The newly-acquired building is currently under a long-term lease to a single tenant: BP Oil. The lettable floor area, comprised of offices and service areas, is 8,856 m2; there are 243 parking spaces. As a result of this deal, REALIA has expanded its rental portfolio in Spain to 241,000 m2. REALIA also has 135,753 m2 (gross lettable area) of office space in Paris through its listed subsidiary, SIIC de Paris.

The Arroyo de la Vega building was built on a turnkey basis for BP Oil to house its Spanish headquarters. The building is located in one of the most desirable business districts of northern Madrid, where prices are expected to appreciate considerably over the next few years as new buildings are completed. It generates annual revenues of 1.9 million euro, secured by a lease which expires in 2011; given its location, potential for revenue appreciation is estimated at over 18%.

This investment is part of REALIA's strategy to increase exposure to the rental business in prime office and shopping properties. In 2007, REALIA invested more than 210 million euro in the rental business, and made divestments worth 92 million euro (of which 33.3 million euro were capital gains). As a result of this strategy, 2007 was the first year in which REALIA's rental business surpassed the house building and land management divisions in terms of total asset value. REALIA, which is controlled by FCC and Caja Madrid, had assets (GAV) worth 6,341.8 million euro as of 31 December 2007 according to an appraisal by CB Richard Ellis. Rental property accounted for 53% of that figure, and property development and land for the other 47%.

REALIA has also sold an industrial plot in Calle Aguacate, Carabanchel (Madrid) which has permission for 48,627 m2 of building. The plot was sold because the company had designated it as non-strategic. The sale price was 40.5 million euro, 1.4% higher than CB Richard Ellis' valuation, and capital gains amounted to 13.5 million euro.

REALIA obtained 813 million euro in revenues in 2007; EBITDA was 366.2 million euro and net attributable income was 140.4 million euro. The company's leverage (LTV) is 31%, one of the lowest ratios in the sector. Net asset value (NAV) after taxes is 2.258 billion euro, and net net asset value (NNAV) per share is 8.31 euro.