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CBRE GI acquires final investment for European Value Add fund

H2O Rivas Shopping Centre
CBRE Global Investors has agreed to acquire a 70% interest in H2O Rivas Shopping Centre in Madrid for an undisclosed amount. The acquisition is on behalf of the European Co-Investment Fund (ECF), the firm's European value-add program. The acquisition has conditions attached that are expected to be met by the end of June, immediately following which completion will occur. The investment is in the form of a joint venture with the current owner, Alpha Real Trust Limited, which has retained a 30% interest. The current manager, Alpha Real Capital LLP (the investment manager and largest shareholder of Alpha Real Trust Limited) will continue to act as operating partner.


This acquisition is the seventh investment for ECF and the fund is now fully committed. ECF held a final close in February 2016, raising approximately $840 million from a group of North American and European investors. The closed end fund invests in value add real estate across Europe with a focus on building or repositioning assets in the retail and logistics sectors to create core product in supply-constrained markets.

H2O shopping centre is located in Rivas Vaciamadrid, which is 17km southeast of Madrid CBD and is one of the city's fastest growing districts. Opened in 2007, the property is a 52,000 sq m shopping centre comprising 130 units across two floors and is arranged around a man-made lake and large landscaped gardens. The property has a strong leisure and restaurant focus. Anchor tenants include Nike, Mercadona, H&M, Mango and seven Inditex Group brands, including Zara, Bershka and Massimo Dutti, along with leading cinema operator Yelmo.

Under Alpha Real Trust's ownership, H2O experienced strong year-on-year sales growth since 2010, with footfall increasing from 5.7m to 7.7m visitors. To attract a high number of new and repeat visitors, Alpha Real Trust invested in physical upgrades, including the creation of a new lakeside restaurant and leisure plaza, and innovative marketing events such as launching the first Lego Fun Factory children's play area in Spain. Alpha Real Trust significantly enhanced the centre's commercial mix through an active leasing strategy that included adding new retail and leisure anchors and promoting a programme of store refurbishments and expansions, the latest of example of which being an enlarged H&M. The property is currently 92% leased. Under the new partner's ownership, H2O is set to undergo a renovation project which will further strengthen the leisure offer, continue to enhance the tenant mix and consolidate the centre. The recent acquisition of an additional land parcel will also provide potential expansion capacity.

Alpha Real Trust has also completed the refinance of the borrowings secured on the shopping centre with a new €65 million seven year loan with Aareal Bank. This loan has been used to partly repay the previous bank loan which had been provided by a syndicate of banks and which was due to be repaid in October 2017. The new margin of 1.80% (1.70% on swapped fixed rate borrowings) represents a significant saving on the previous financing which had incurred a weighted average margin of 2.50%.

Charles Baigler, Fund Manager of ECF said, „This is the seventh investment for ECF and the fund is now fully committed. The acquisition is in line with our strategy of acquiring dominant assets in supply constrained markets which have refurbishment or redevelopment opportunities. We are happy to retain the existing manager, Alpha Real Capital, to deliver the business plan which should allow us to capture the forecast rental growth in the Madrid retail market and create a core, stabilized shopping centre.“

Brad Bauman, Joint Fund Manager of Alpha Real Trust Limited said, „We are delighted to partner with CBRE Global Investors and continue our investment in the H2O shopping centre. We believe the centre will continue to deliver high returns for our shareholders.“