the office handbook › content › dam › deloitte › es › ... · 2020-05-12 · @ 2017...
Post on 03-Jul-2020
0 Views
Preview:
TRANSCRIPT
@ 2017 Deloite Financial Advisory1 of 15
The Office HandbookInvestment & Financing Keys
Spain 2017
Financial Advisory I Real Estate
February 2017
@ 2017 Deloite Financial Advisory2 of 15
The Office HandbookSpain 2017
Javier García-Mateo, MRICS
PartnerFinancial Advisory ‖ Real Estate
jgarciamateo@deloitte.esMob: +34 659 90 02 15
@ 2017 Deloite Financial Advisory3 of 15
► Vacancy Rate in Madrid (11%) and Barcelona (10%) slightly decreasing.
► New Supply continues to increase. 155,000 sqm recently refurbished delivered in 2016 in Madrid and Barcelona
► Take-Up in Madrid and Barcelona decreased by 13% and 25%, due to the lack of large letting deals. Nowadays, most offices buildings aim to become a Grade A to compete at a higher rent.
i. Impressive building design.
ii. Connection to the user and deep
understanding of the millennial way of work.
iii. Becoming a green and technological building.
► Prime Rent are experiencing a positive trend due to the favourable macro-economic conditions.
► GDP growth: +3.3% 2016 (+2.5% 2017 F)
► Unemployment rate (2016) decreasing by 9.7% (CAGR) since 2013.
► Exports growth: +4.5%
► Increase in Business Confidence Index: +6.6% (Q4 14 –Q4 16), but was stable in Q4 15/Q4 16 var.
► Creation of Companies Index: +1.5% in YoY Var.
► MAD & BCN are the most competitive cities in Europe as an alternative to London due to Brexit.
2Supply &
Demand
4Key Investment and Financing Drivers
3OfficeInvestment Market 5 Key
Factors
The Office HandbookSpain 2017
EXECUTIVE SUMMARY
Market Overview
1Consolidation of the recovery
► High Liquidity for both Equity and Lending due to the progressive entry of new players.
► Increasing lender appetite for technical Grade A buildings (LEED/BREAM
► Low yields sets a barrier for higher LTVs for senior loan facilities structures.
Full Due Diligence required to perform the optimal deal analysis:
► Financial Factors: Understanding of NOI vs GRI ► Business Performance: Analysis of income
sustainability analysis► Legal Factors: All intervenient contracts
analysis. Urban and legal risks analysis.► Tax Factors: Analysis of tax impact on results
analysis► Technical Factors: Identification of structural or
technical defects and compliance with regulations.(*) IMPORTANCE OF LEED/BREEAM CERTIFICATION.
2015 vs 2016
► EMEA region accounts for 35% of the total Office Investment volume. Spain accounts for 2% of this amount.
► In Spain, Office Investment volume in 2016 decreased by 8% (€4,895 M) and accounted for 40% of total non-residential investment.
► SOCIMIs (Spanish REITs) took part in 55% of total Office transactions in Spain during 2016
► Madrid leads Europe in Capital Value growth (20%). Barcelona grows by 13%.
@ 2017 Deloite Financial Advisory4 of 15
Yie
ld T
rend(%
) 2015-2
016
4
Oferta y
demanda
Lecciones
aprendidas y
perspectivas
3 %8 %
4 %13 %
1%9 %
- %
2 %
20 %
6 %
12 %18 %
8 % 14 %
1.200
1.700
2.200
2.700
3.200
3.700
0
Lo
nd
on
Paris
Mu
nic
h
Barcelo
na
Fran
kfu
rt
Berli
n
Du
bli
n
Am
ste
rd
am
Mad
rid
Bru
sels
Vie
na
Mil
an
Lu
xem
bu
rg
o
Lis
bo
n
Min. 2007 Max. 2009 2015 2016
10 Year Bond
2015-2016(18th January
2016)1.39%▼36 bps
0.43%▼23bps
0.93%▼6 bps
0.32%▼15 bps
0.32%▼15 bps
0.32%▼15 bps
0.80%▼7 bps
1.32%▼38 bps
0.52%▼27 bps
1.91%▲35 bps
3.84%▲106 bps
0.66%▼18 bps
Source: Deloitte RE, Bloomberg
Lecciones aprendidas y perspectivas
12€
17€
22€
27€
n.a.
183 bpsYield 2016 - Dif. 10
years bond 245 bps 333 bps 261 bps 388 bps 358 bps 332 bps 457 bps 236 bps 484 bps 348 bps 234 bps n.a. 141 bps
Capital Valu
es G
row
th (
%)
2015-2
016
Cap
ital V
alu
e
per e
ach
€1
of
ren
t
Commercial
Investment Europe and Spain
Supply
and
DemandCRE Market
Spain 2015
EXECUTIVE SUMMARY
Europe has experienced a global yield compression from
2015 and now, which has resulted in significant increases in Capital Values, apart from the effect that
other market factors could have had such as the trend in rent.
Drivers of the increase in cross-border
investment:
Accessibility to credit and more attractive financing conditions
2
3
1
4
Yielding Assets are more attractive than Investment Grade
Dollar strength (For American investors) and Euro weakness
Political and financial uncertainly in certain regions of Europe
The Office HandbookSpain 2017
Office Market: Capital Values and Trend Yield Analysis
1.39%▼36 bps
2%
3%
4%
5%
6%
7%
8%
Madrid & Barcelona outperform Europe
@ 2017 Deloite Financial Advisory5 of 15
Brexit OpportunityFrom a cost perspective, Madrid and Barcelona are the most competitive cities despite the limited office space available.
Total Office Inventory vs Vacant Space at January 2017 (Mill. Sqm)
*Total costs calculated for a company occupying 3,000 sqm in CBD with the Minimum contract per city and considering 1 employee/10 sqm working 8
hours/day. Fit out Costs: Medium specification
MAD/BCN42 €m
FRANKFURT103 €m
PARIS207 €m
EXECUTIVE SUMMARY
Strong competence between cities in Europe to attract companies after the BrexitImpact. Madrid and
Barcelona, potential options.
The Office HandbookSpain 2017
Key Drivers for the alternative cities to London
after the potential impact of Brexit:
Office Inventory and the current vacant space available for companies
2
3
1
4
Rental Level and the affordability of spaces for potential companies
Total Costs for a company, including fit out costs and labor / wages costs
Quality of life and leisure opportunities for the employees
Source: Deloitte, Eurostat
13
6
12
53
48
1.4 0.6 1.0 3.7 2.2
0
10
20
30
40
50
60
Madrid Barcelona Frankfurt Paris London
Inventory (Mill. sqm) Vacant Space (Mill. Sqm)
Rent CBD
(€/sqm/month)
Labour & Wages
costs
(€/person/h)
Av. Fit out
Costs
(€/sqm)
Min. Contract
Duration
(years)
Total costs for a
company* (€m)
Madrid 29 21 693 3 42
Barcelona 21 21 693 3 41
Frankfurt 37 32 1,334 5 103
Paris 65 35 1,422 9 207 London 124 26 1,028 7 138
@ 2017 Deloite Financial Advisory6 of 15
Poland1%Belgium
1%
Russia1%
Spain2%
Switzerland2%
Ireland3%
Netherlands3%
Sweden4%
Italy5%
Norway6%
France13%
Germany19%
United Kingdom38%
Poland
Belgium
Russia
Spain
Switzerland
Ireland
Netherlands
Sweden
Italy
Norway
France
Germany
United Kingdom
EXECUTIVE SUMMARY
2% of the Total Office Investmentof the analysed countries
Source: Deloitte
The Office HandbookSpain 2017
Cepsa Tower. 4 Towers area.
Cepsa Tower (Spain) with €490m of Investment
Volume, was the fourth largest transaction of 2016 in Europe.
European Investment Market
€1,000m
€730m €650m €490m
€220m
FranceGermanyUnited KingdomSpainItaly
VENDORNord Ovest
29,128 sqm
BUYERTrophy Assets
9 PLACE VENDÔME
Office
BUYERNorges Bank IM
VENDORSloane Cap. Part.
26,800 sqm
COMMERZBANK TOWER
Office
BUYERSamsung SRA
VENDORCommerzbank
52,700 sqm
CEPSA TOWER
Office
BUYERPontegadea
VENDORIPIC
56,250 sqm
PIAZZA EDISON
Office
CITYPOINT ROPEMAKER
ST
Office
BUYERBrookfield Office Pr.
VENDORReceiver - KPMG
65,587 sqm
Source: Deloitte
@ 2017 Deloite Financial Advisory7 of 15
EXECUTIVE SUMMARY
Top 5 deals per country (UK, Germany, France, Italy and Spain)
amount to €3,360m (2016).
Top 5 Spanish Deals accounts for 15% of this investment volume.
European Yields (2016):
For more information see CHAPTER 4 (Key Investment and Financing Drivers)
in the full report.
CountryPrime Yield
2016
Minimumlast
10 years
France 3.25% 3.80%
Germany 3.65% 4.00%
UK 3.15% 3.75%
Belgium 5.50% 4.80%
Spain 3.75% 3.80%
Sweden 3.70% 4.25%
Italy 4.25% 4.50%
Source: Deloitte
The Office HandbookSpain 2017
Spain with €4,895m of office investment volume in 2016, is one of the most significant players in the European Market.
European Investment Market
# Country AssetGLA
(sqm)
Price
(€m)Buyer Vendor
1 France 9 place Vendôme 26.800 1.000 Norges Bank IM Sloane Capital Partners
2 Germany Commerzbank Tower 52.700 730 Samsung SRA Asset Management Commerzbank/CFB-Fonds 64/ 65
3 United Kingdom CityPoint, Ropemaker St 65.587 650 Brookfield Office Prop Receiver - KPMG
4 Spain Cepsa Tower 56.250 490 Pontegadea IPIC
5 France 65-67 avenue des Champs-Elysées 10.500 490 Middle-East investor Meyer Bergman & Thor Equities
6 United Kingdom Principal Place 55.740 443 ENPAM (Italy) Brookfield Property Part
7 United Kingdom The International Quarter 47.844 429 Deutsche Asset & Wealth Lend Lease
8 United Kingdom Aldgate Tower 30.193 402 China Life Insurance Co Aldgate Developments Ltd
9 Germany International Business Campus 84.000 400 GEG German Estate Group AG RFR Holding GmbH
10 Spain Adequa 100.000 380 Merlin Properties - SOCIMI Lone Star
11 Germany Zurich Zentrale Köln 60.000 350 Warburg HIH Invest Strabag Real Estate; ECE
12 United Kingdom Fore Street, 1 21.998 315 Kingboard (Hong Kong) Brookfield Office Prop
13 France CBX Tower 41.000 300 Tishman Speyer Properties France Dexia Crédit Local
14 Germany BayWa Hochhaus 54.000 280 WealthCap BayWa AG, Competo Capital
15 France 2-8 rue Ancelle 17.200 267 Amundi Uninail Rodamco
16 Germany Treptowers 3 90.000 230 Blackstone Real Estate Partners n.a.
17 Italy Piazza Edison 29.128 220 Fondo Italia Trophy Assets - Hines Fondo Core Nord Ovest - Ream SGR
18 Italy Via Monterosa 91 86.086 220 AXA Selectiv'Immo and AXA CoRE Partners Group
19 Italy Via Lorenteggio, Vodafone Village 61.857 200 Coima Res SIIQ Real Estate Center (Carminati Gr)
20 France 115-123 boulevard Montmartre 9.500 176 Korea Post Natixis
21 Spain Las Mercedes B.P. 80.000 140 GreenOak Standard Life Investments
22 Italy Piazza Cordusio 2 14.272 130 Bayerische Versorgungskammer Fondo Donatello - Comparto David
23 Spain Cuatrecasas HQ 15.094 124 Axiare Familia Reig
24 Spain Gas Natural HQ 32.000 120 IBA Capital Partners Gas Natural Fenosa
25 Italy Via della Chiusa 25.000 120 AXA Group Northstar
Source: Deloitte
@ 2017 Deloite Financial Advisory8 of 15
1,460 1,056 544 807
2,520
5,313 4,895
644 687
365 867
2,297
1,894 3,769
1,467
591
571
751
2,242
1,263
660
150
279
88
120
596
674
820
750
576
519
607
897
2,702
2,155
4,470
3,189
2,087
3,151
8,552
11,845 12,298
-
2,000
4,000
6,000
8,000
10,000
12,000
2010 2011 2012 2013 2014 2015 2016
# ASSET PRICE (€m) GLA (sqm) ZONES
1 Cepsa Tower 490 56,250 CBD
2 Adequa 380 100,000 DEC
3 Las Mercedes B.P. 140 80,000 DEC
4 Cuatrecasas HQ 124 15,094 RBD
5 Gas Natural HQ 120 32,000 DEC
6 Alcalá 45 104 18,655 RBD
7 Gas Natural Portfolio 86.5 25,100 n.a.
8 Meridia Portfolio 66 40,000 n.a.
9 Castellana 55 60 10,667 CBD
10 Roca Junyent HQ 55 9,960 CBD
Short Term Medium Term Long Term TOTAL
68%€1,417m
31%
1%
EXECUTIVE SUMMARY
Top 10 Spanish deals:
Source: Deloitte
Source: Deloitte
The Office HandbookSpain 2017
Offices
Retail Shopping Centre
Retail High Street
Logistics
Hotels
The total investment volume was 4% higher in 2016 than the investment volume in 2015. Office typology investment decreased by 8% despite the strong macro-economic conditions. However the retail segment continues to improve.
Spanish Investment Market (CRE)
40%
60%
Office Segment
Rest of CRE
- 8%
Top 10 Spanish deals:
Total office investment volume in Spain at 2016: €4,895m
A total office pipeline investment volume of €1,417m is expected to be transacted in Spain
Source: Deloitte
Source: Deloitte
@ 2017 Deloite Financial Advisory9 of 15
110
127
108
109
112
104
107
98
103
108
113
118
123
128
2014 2015 2016
108
109
103
105
100
104
105
100
98
100
102
104
106
108
110
112
2014 2015 2016
EXECUTIVE SUMMARY
Recovery of Business Confidence indicators is having a progressive impact on average rental prices in both Markets and areas.
Lease Market
As take-up slightly
decreased, vacant space reduced and as a
consequence, Rent has
increased during recent
years.
Average Rent Growth Madrid
Avera
ge R
ent
trend
IN
DEX
BA
SIS
10
0 (
20
14
)
vs
Avera
ge R
ent
trend
IN
DEX
BA
SIS
10
0 (
20
14
)
Average Rent Growth Barcelona
For more information see CHAPTER 2 (Supply & Demand) with the full rental market analysis based on Deloitte Database.
The Office HandbookSpain 2017
CBD
RBD
DEC
RC
OUT
CBD
RBD
RC
OUT
DEC
CBD
Central Business District
RBD RC DEC OUT
Rest of Business District Rest of City Decentralized Out of the city
CONSUMER
CONFIDENCE
INDEX 94.9 points
(base 100)
UNEMPLOYMENT
RATEDecreasing ar CAGR of
9.7% since 2013
CREATION OF
COMPANIES
Q1 2017
aggregated
increase of 3,76%
compared
to Q12015
EXPORTSGrowth of 4.5% (2014 – 2015)
GDPGrowth of
3.3% in 2016
BUSINESS
CONFIDENCERecovery since
2013. Growth
of 31,4%
2013-2016
EXPENDITURERecovery of most
consumption groups
during 2013-2016
GROWTH
EFFORT RATESHousehold E.R. being reduced
Source: Deloitte
@ 2017 Deloite Financial Advisory10 of 15
EXECUTIVE SUMMARY
The lease contracts have
responded positively to the market momentum, particularly in
CBD, where the vacant space in quality
buildings strongly decreased during the
recent years.
THE KEY FOR SUCCESS
Source: Deloitte
The Office HandbookSpain 2017
Source: Deloitte
Standard lease terms generally accepted
Average Rent Free Period (months)
2014 2015 2016Contract Duration (years)
Space leased by companies per employee(sqm/employee)
5(Break option 3rd Year)
(1)
5(Break option 3rd Year)
(1)
5(Break option 3rd Year)
(1)
Transfer of Property Tax and Community Charges to the tenant
80%
13-14(sqm/employee)
12(sqm/employee)
10(sqm/employee)
Average space leased by companies(sqm)
912 / 638 (sqm)(2)
919 / 748(sqm) (2)
853 /561 (sqm) (2)
4(months)
4(months)
2-3(months)
100% 100%
(1) Break option Year depending on the size of the company. For Companies >1,000 – 1,500 sqm, the regular mandatory period is 5 years.(2) Average Space leased by companies in MADRID / BARCELONA
Source: Deloitte
CONNECTION
TO THE END
USER
DESIGN
SUSTAINABILITY
CONNECTION
TO THE ASSET
MANAGEMENT
Main
Term
s
@ 2017 Deloite Financial Advisory11 of 15
EXECUTIVE SUMMARY
Main
Conditio
ns
P&L reconstruction Restructuring of the Financial Sector
Fundamentals improvement
Alternative to the fixed income / bond yields
Development loans: Regular lenders are returning to
the market
Senior DebtYielding assets: 2016 more and
more competitive
MAIN DRIVERS FOR THE INCREASING LENDER APPETITE
Monetary Policy: QE, low funding costs, etc.
Excess of Liquidity: Increase in transactions
Entry of new sponsors
FINANCIAL SECTOR
REAL ESTATE INVESTMENT MARKET
MACROECONOMIC ENVIRONMENT
Yield assets: Improvement of the financing terms
Financing MarketThe Office HandbookSpain 2017
Source: Deloitte
(1) Balloon need to cover the high funding costs during the loan´s duration. (a smaller balloon will result in a larger annual debt service)(2) Sustainable LTV to face the debt service with high funding costs (A higher LTV will result in a larger debt service)
LTV
Upfront Fee
Spread
2014
<40%(1) 30%-40% 30%-50%
2015 2016
200-250pbs 150-200pbs 75-150pbs
250-300pbs 200-250pbs 150-200pbs
Framework
Main Players
Balloon 70%(2) 60% 80%-100%
Credit Access Constraints
Financing Upturn
Institutional Investors / Debt Funds
Banking / Assurance Companies
2013
30%-55%
50-100pbs
100-175pbs
80%-100%
@ 2017 Deloite Financial Advisory12 of 15
EXECUTIVE SUMMARY
Most active players expected to stay active in
2016:
Main Players:
Equity
Debt
2015 2016
(€m) (€m)
CORE PROFILE STILL DOMINATES:
Source: Deloitte
The Office HandbookSpain 2017
Core 4.102
Core+ 149
Value Added 419
n.a. 225
Core 3.889
Core+ 355
Value Added 247
n.a. 822
Core
73%
Core+
7%
Value Added
5%
n.a.
15%
Core84%
Core+3%
ValueAdded
9%
n.a.5%
Source: Deloitte
@ 2017 Deloite Financial Advisory13 of 15
The Office HandbookSpain 2017
@ 2017 Deloite Financial Advisory14 of 15
Source: Deloitte
EXECUTIVE SUMMARY
Source: Deloitte
The Office HandbookSpain 2017
Key for lease asset management: Data, Analytics and Planning
What is next? Innosys by Deloitte
innosys
Data
Analytics
Planning
Keys for asset management:
Solution developed by Deloitte for management real estate companies.
2
3
1
4
Goals: Planning, Analytics & Lease Management.
Lease Management: Landlord & IFRS16
More than 185 implementations at European level.
Innosys for lease asset management
Technology Microsoft, Arcplan, Esri, Leverton & Excel
Reporting / Analytics
Scenaries / Simulations
@ 2017 Deloite Financial Advisory15 of 15
EXECUTIVE SUMMARY
Recovery of rental key indicators since 2013. It is expected to remain stable during
the next years given the slow
down of the macro-economic
conditions.
Key Office Market Indicators
The Office HandbookSpain 2017
10 of 134Source: Deloitte
Key Market Indicators: Historical Analysis – 10 year basis
Source: Deloitte
vs
MADRID
Key Indicator 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Inventory (mill. Sqm) 9.94 11.22 11.55 11.92 12.21 12.38 12.63 12.69 12.73 12.83 12.93
Vacant Space (mill. Sqm) 0.50 0.58 0.81 1.11 1.29 1.41 1.58 1.80 1.70 1.51 1.39
Vacancy Rate (%) 5% 5% 7% 9% 11% 11% 13% 14% 13% 12% 11%
New Supply (sqm) 568,000 1,281,000 337,000 366,000 295,000 168,000 251,000 56,000 40,000 100,000 96,704
Rent in CBD (€/sqm/month) 29 36 39 31 27.5 26 23 23.5 24.5 26.5 29
Take-Up (sqm) 681,500 844,700 491,300 312,700 454,400 356,600 297,300 395,100 420,000 573,000 496,000
Yield CBD (%) 4.25% 5.00% 5.90% 5.80% 5.60% 5.65% 6.00% 5.75% 5.50% 4.25% 3.75%
Capital Value CBD (€/sqm) 8,188 8,640 7,932 6,414 5,893 5,522 4,600 4,904 5,345 7,482 9,280
BARCELONA
Key Indicator 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Inventory (mill. Sqm) 4.85 4.97 5.34 5.58 5.76 5.83 5.86 5.92 5.88 5.89 5.94
Vacant Space (mill. Sqm) 0.27 0.29 0.41 0.63 0.81 0.81 0.83 0.89 0.83 0.67 0.59
Vacancy Rate (%) 6% 6% 8% 11% 14% 14% 14% 15% 14% 11% 10%
New Supply (sqm) 138,000 115,000 372,000 241,000 181,000 69,000 30,000 55,000 -35,000 5,000 58,000
Rent in CBD (€/sqm/month) 20 22 22 18 17.0 16 15 14.5 15.0 16.5 21
Take-Up (sqm) 386,800 358,200 349,800 202,200 237,500 267,500 204,600 197,600 217,000 420,600 315,000
Yield CBD (%) 4.50% 5.25% 6.00% 6.00% 5.80% 5.95% 6.25% 6.00% 5.75% 4.75% 4.00%
Capital Value CBD (€/sqm) 5,267 4,914 4,400 3,600 3,517 3,176 2,832 2,900 3,130 4,168 6,300
SPAIN
Key Indicator 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Offices Investment Volume (mill. €) 3,818 5,879 4,289 1,013 1,460 1,056 544 807 2,520 5,313 4,895
@ 2017 Deloite Financial Advisory16 of 15
top related