Patrizia´s sale of Two logistics assets for €150m
PATRIZIA AG, a leading partner for global real assets, has sold two logistic assets for around EUR 150 million in the greater Madrid area to Real I.S., a real estate investment manager.
PATRIZIA originally bought the two assets in the Madrid districts of Getafe and Torrejón, in 2015/16 and since then has transformed the sites into prime logistics facilities, attracting tenants such as Amazon, Leche Pascual and GM Food.
Eduardo de Roda, PATRIZIA Country Manager for Iberia, said: “This landmark deal shows that thanks to our strong local expertise, we acquired these assets at just the right time, in the right place. We have once again demonstrated our ability to create sustainable value in our Iberian portfolio through our pro-active and expert asset management. We remain committed to our logistics assets which make up around a third of our entire real estate portfolio in Spain. Despite the challenging market conditions, we are fully on track to deliver on our local business growth objectives for Iberia.”
KPMG Abogados has advised Patrizia on the sale of the assets. Their team was led by Real Estate Partner Carlos Bardavío along with Pelayo Oraa Partner in charge of Real Estate taxation, and included Senior Manager María Llorens, Senior Associate Beatriz Ron, and Associate Elvira Puerta – all from the Real Estate team – as well as Senior Manager Felipe Martínez, and Associate Nicolás Pérez-Domper, from the Real Estate taxation team.
An Interview With The Real Estate Team at KPMG Abogados
How does this deal reflect the current real estate market in your jurisdiction?
This deal is the perfect example: high demand for core assets backed by top tenants, especially in the logistics sector. It is worth noting that the sales process was very competitive and many offers from both international and domestic investors were received, not a surprise considering the quality of the assets and of the tenants.
Did you face any particular challenges when working on this? If so, how did you overcome them?
The main challenge was to ensure the purchaser that it will receive 100% of the rents despite the existence of vacant areas in Torrejón and the COVID-19 situation. For this purpose, we implemented a series of temporary retentions from the purchase price and made notarial escrows with specific release conditions, taking into consideration different scenarios. We had to carefully think and draft these to cover our client’s risks appropriately and are much satisfied with the result.
How did you know your team was the right one for the job?
We know these assets like no-one else: we provided legal advice on their turnkey acquisition, financing, leasing, asset management and corporate issues. This allowed us to (i) provide accurate answers during the legal due diligence process (ii) to take initiative to solve in time all conditions precedent for Closing and, (iii) to implement balanced solutions for post-closing issues. It also allowed us to prepare the draft sale and purchase agreement and the ancillary documentation swiftly and to adapt to the purchaser’s specific requests, considering also the broad experience of the team in similar transactions, as we have been involved in several of the most important transactions (either for complexity or volume) in the recent years.
Finally, the confident relationship we have with PATRIZIA also helped in the transaction being closed in time and successfully.
How did you are your team ensure this was the right move for PATRIZIA?
Our work is always focused on ensuring that the client closes the transaction in balanced terms and conditions and not assuming any price discounts or risks which are not justified. In this particular case, the key issue was to implement legal solutions securing that, if the purchaser obtains 100% of the rent, the price retentions would be automatically released to the seller.
Has COVID-19 impacted the real estate market negatively? Were there any precautions you needed to take because of this?
The impact has been negative especially in the hotel, offices and retail markets, due to rent reductions, closing of businesses or evictions. This was also considered in the transaction due to the existence of rent reduction demands from some tenants in the assets and therefore, once the assets were up for sale in the market, we took the necessary time with PATRIZIA to analyse and implement temporary measures in agreement with some tenants to ensure that the purchase price would not be hampered while simultaneously considering that the logistics market has been less affected due to the COVID-19 pandemic. In this regard, the fact that we have advised a full variety of clients operating in all real estate markets during the COVID-19 situation gave us a privileged position to implement the correct solutions.
What do you expect the real estate market to look like in 2021?
We are very optimistic and expect a quick return to the levels of activity we had in March 2020 for the logistics, hotels and residential markets. In fact, in the last couple of months, we are seeing an increase in investments fuelled by the good news on vaccines. There is a lot of appetite for high-quality assets and, except probably in hotels and retail, there is still lots of room for the development and subsequent sale of these. We do also expect an increase in corporate transactions, especially joint-ventures and mergers, in which traditional players in the market will allow finance-driven players to enter their structures as partners either to reinforce capital structures or to develop new assets. Fortunately, the team has been very busy the whole year and we look forward to another busy and successful year for us and for our clients.