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Merlin Properties sells office portfolio for €225M
03 December 2019 | Vanessa Sousa

REIT Merlin Properties concluded the already announced sale of its office portfolio. Cain International and Freo Group joined together and paid the Spanish REIT 225 million euro for the portfolio.

Euronova within the Parque Empresarial Tres Cantos, Madrid - Photo Collected From Merlin Properties Website

The operation was concluded last Friday, the 29th of November. The portfolio consists of 8 office parks spread across Madrid and Barcelona with a total combined area of 133.000 sqm.

For Cain International, the privately held real estate investment firm operating in Europe and the United States, this portfolio represents a «significant opportunity to add value through securing additional tenants, refurbishment and redevelopment», revealed the company in a release on its official webpage.

Most of the assets (6) within this portfolio are located in the Spanish capital. According to newspaper Expansión, the Avenida de Aragón 334 (3.890 sqm); the Copenhague 4-8 (5.972 sqm); the Costa Brava 2-4 (16.000 sqm); the Euronova within the Parques Empresariales Tres Cantos (32.666 sqm), the Miniparc (Alcobendas) (9.195 sqm); and the El Plantío (7.068 sqm) are located in Madrid. In Barcelona, there are only 2 office parks: the Citypark Cornellá (12.916 sqm) and the Mas Blau. In total, these assets should provide a return of 5.2%.

Concerning this operation, Daniel Harris, Head of European Investments at Cain International, mentions in the same release that «we are pleased to be adding to our portfolio through this deal and are actively seeking out further investment opportunities.  With this acquisition, our development in 22@ in Barcelona and our current pipeline, we are aggregating a portfolio of close to €500m, which demonstrates our confidence in the current cyclical opportunity in Spain».

In truth, «the Spanish office market is experiencing significant growth, with rents increasing and vacancy reducing, and these well-located assets offer substantial scope for value creation through a granular approach», assumed Daniel Harris.

For Merlin this operation is part of its asset rotation strategy which has already earned it 280 million euro, according to the Spanish newspaper.

With this closing and the current pipeline of transactions, Cain International expects to double its European portfolio to 2 billion euro by the end of 2020.