The Portuguese Real Estate Market in July

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July was a month of significant investment, mainly in the hotel sector, and in line with the previous month in which there had already been major acquisitions and openings.

Although the beginning of the month was somewhat listless on the corporate transactional side, business picked up markedly from the second week onwards, with deals in the office, retail and mainly hotel sectors.

The NPL market was also in the news, with Novo Banco, BCP, CGD and Santander placing four portfolios of non-performing loans from large debtors on the market. The banks named these sets of assets “Project Harvey”, “Green”, “Mercury”, and “Pool 54 & 55.”

At the end of the month, reports surfaced that JP Morgan AM and MCH Investment Strategies had finalised a €370 million fund for Portugal and Spain. JP Morgan Asset Management, one of the world’s largest management companies, and MCH Investment Strategies, with around €4 billion in assets under management or representation, announced the closing of the first fund resulting from their alliance strategy for the development, management and distribution of real asset programmes in Portugal and Spain. The fund will seek a diversified investment base, separated by country, sector and type of asset, including infrastructure, real estate and means of transport.

Offices

It was still during the beginning of the month when Jamestown acquired Entreposto de Lisboa for 98 million euros. Jamestown made its debut in the Portuguese real estate market with its acquisition of the JQOne office building. The design-focused real estate investment and management company announced, on behalf of a group of investors, its entry into the Portuguese market with the acquisition of JQOne. The property, located in the eastern area of Lisbon, has 48,000 square metres of surface area.

The British firm Sixth Street bought 15 buildings in Quinta da Fonte for 150 million euros. Signal Capital sold the properties to Sixth Street in partnership with Acacia Point Capital. Located at Quinta da Fonte in Oeiras, the 15 buildings could be one of this year’s biggest real estate deals. With 80,000 square metres of construction, Quinta da Fonte comprises 22 buildings. This deal was for 15 of them.

Retail

Another two major deals were announced in July, this time in the retail sector. Firstly, Avenue sold the  266 Liberdade shop in Lisbon for 13.9 million euros. The property, which has 1,300 m2, is located in the former Diário de Notícias building. The sale of the shop was concluded to the open-ended real estate investment fund IMOFID managed by Fidelidade Sociedade Gestora de Organismos de Investimento Coletivo (Fidelidade SGOIC).

Meanwhile, the Makro store in Alfragide was sold for more than 40 million euros. The sale & leaseback operation comprises the land and buildings of the company in Alfragide, including an office building and the store. Together with METRO PROPERTIES, METRO AG’s real estate management arm, Makro Portugal sold the asset to Fundo de Investimento Imobiliário Aberto IMOFOMENTO, managed and represented by BPI Gestão de Ativos The site has 25,400 m2, of which 21,000 m2 are dedicated to the shop, and the remaining 4,400 m² are offices.

At the end of the month, two supermarkets leased to Pingo Doce in Quinta do Lago and Vale do Lobo were sold for around €6 million. The properties were acquired from BPI Gestão de Ativos by a Portuguese fund, with the food retailer remaining as the tenant. In Vale do Lobo, the Pingo Doce store is located in the entrance area of the resort and includes around 900 m2 of gross construction area. The Quinta do Lago resort shop is in the Praça Buganvília area, and totals around 630 m2.

Hotels

Without a doubt, the hotel segment was the most successful during the month, accounting for most of the deals in July.

At the very beginning of July, a Mercan Group hotel was inaugurated after an €11.2-million investment. The Casa da Companhia Hotel is the Mercan Group’s new luxury hotel. The new unit is located in Porto’s historic centre, close to the city’s main monuments. Casa da Companhia resulted from the restoration and rehabilitation of a historic 18th-century building. The new five-star boutique hotel combines history, comfort and quality in each of its 40 rooms, ten of which are suites.

Soon after, Minor announced that it would take over two hotels in Vilamoura valued at 29 million euros. The Anantara Vilamoura and Tivoli Residences will now be owned directly by the Minor group.  The management of the hotels is now in the hands of Minor, after Marinoteis, which had been managing the hotels, went through a demerger. After the split, the two units were transferred to a new company: Minor Luxury Hotels Vilamoura, which was set up with a share capital of 29.4 million euros, the same value as the assets.

Meanwhile, Azora acquired two five-star hotels in the Algarve for €148 million. The manager thereby increased its investment in its hotel fund, acquiring the units, which the NH Hotel Group will operate. Azora European Hotel & Lodging has also closed a management contract for these units with Minor International (MINT). The main assets included in the transaction are the Tivoli Marina Vilamoura resort and the Tivoli Carvoeiro resort.

Further north, Sonae Capital sold the Porto Palácio Hotel for €62.5 million to Crédito Agrícola’s CA Património Crescente fund. Managed by Square AM, the Crédito Agrícola fund acquired the complex of buildings, including the five-star hotel unit, which has a total area of 48,000 square metres.

The end of the month was just around the corner when it became known that the Regency Salgados Hotel & Spa had opened after a 15-million-euro investment, where the existing building was converted into a hotel unit. The most recent four-star unit in Albufeira, the Algarve, is located in the Salgados area and is 400 metres from the sea. It has 88 rooms on five floors.

NPL’s

The Non-Performing Loans market in Portugal was in the spotlight this month with the placement of several NPL portfolios on the market.

First came the news that Novo Banco would sell a portfolio of non-performing loans of large debtors worth 640 million euros, called Project Harvey. The debts include 20 single names, with eight corporate loans and another 12 loans linked to the real estate sector.

Meanwhile, BCP, CGD and Santander have put bad debt portfolios totalling €368 million on the market. They consist of the “Green” portfolio belonging to BCP, for 150 million euros, the “Mercury” portfolio of Caixa Geral de Depósitos, for 128 million euros, and the “Pool 54 & 55” portfolio of Santander Totta, for 90 million euros.

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