Merlin sells 166 BBVA branches for €252m

Merlin Properties has agreed to sell a chunk of the long-leased BBVA ‘Tree’ portfolio which formed the key seed assets at its flotation in June 2014.

BBVA is to repurchase 166 bank branches for €252 mln, Merlin revealed in its third quarter results, published last week. The price reflects a 3.6% premium to the June 2018 valuation.

The branches are mainly in mid-sized Spanish towns and cities and some of them have been closed by BBVA, which is still paying rent on them. They were let on 30-year leases. Local experts believe BBVA hopes to cut its rent bill and relet the branches into a rising rental market.

Separately, the bank is working with private equity firm Cerberus which took a majority stake in a joint venture with the bank to manage almost €13 bn of distressed real estate assets. Merlin still owns close to 700 of the original 880 branches in the BBVA portfolio, which also included five other buildings.

The portfolio had a total of 375,000 m2 located in 49 provinces and the property company agreed to buy them for €739.5 mln. The Tree sale takes its sales proceeds for the year to €588 mln, following the sale of Testa Residencial for €321.2 mln, a 1.5% premium to NAV and a price which implied a value for Testa of €1.895 bn.

Merlin’s acquisitions included Lisbon’s Almada shopping centre and Zen Tower, for a combined €562.4 mln. The Socimi’s third quarter figures showed office rents in
its €12.25 bn portfolio rising faster than retail and accelerating. Office rental growth was 6.8% versus 4.7% in the first half of 2018 and 3.4% in the whole of 2017.

Among the company’s significant office lettings in Q3 were: 6,000 m2 to Deloitte in Torre Chamartin in Madrid; 3,385 m2 to Oracle in Torre Glories and 6,000 m2 to Sitel in 22@ Llull, both in Barcelona; and 2,140 m2 to Servdebt in Lisbon.

This article first appeared in EuroProperty, the weekly publication of PropertyEU


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