Sonae Sierra, APG, Allianz and Elo form JV for €1.8bn Iberian retail portfolio

Sonae Sierra, APG, Allianz and Elo form JV for €1.8bn Iberian retail portfolio

Sonae Sierra, APG, Allianz and Elo have entered into an agreement to form a new strategic joint venture for Sierra Prime, a EUR 1.8 billion retail portfolio of prime shopping centres across Portugal and Spain.

The Sierra Prime portfolio is composed of six prime retail shopping centres, with three located in Greater Lisbon (Centro Colombo, Centro Vasco da Gama and CascaisShopping), two in Málaga (Plaza Mayor and Designer Outlet Málaga), and one in Greater Porto (NorteShopping).

The properties – together representing c. 380,000sqm GLA – consist of leading shopping centres in prime locations, attracting in total approximately 90 MM visitors each year.

”The portfolio has experienced a remarkably resilient operating performance through economic cycles, underpinned by full occupancy, high sales density and best-in-class tenant mix, and also features attractive NOI growth opportunities through asset management and value creation initiatives,” said Sonae Sierra in a statement.

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Following a 50/50 partnership in the Sierra Fund, Sonae Sierra and APG on behalf of its pension fund clients have decided to form a new long-term joint venture – Sierra Prime – solely focused on these 6 properties and to bring two new leading institutional investors – Allianz and Elo – to further support the development and growth of the portfolio.

Each investor will retain a 25% economic interest in the joint-venture, which has a 15-year horizon. Allianz Real Estate, representing several Allianz group insurance companies, and Elo, a Finnish pension insurance company, have each acquired a 25% stake in the venture from Sonae Sierra and APG.

The transaction will generate estimated cash proceeds of approximately €525MM to Sonae Sierra and APG, while allowing both to maintain a sizeable exposure to these prime properties.

Sonae Sierra has been managing these properties since inception and will continue to provide investment and property management services to the portfolio, leveraging its unrivalled know-how and expertise which is proven by the current €7.2Bn of assets under management and over 100 managed assets.

“This is a landmark transaction for the Iberian retail real estate market and for Sonae Sierra. We are pleased to continue our successful and long-lasting partnership with APG and we are excited to welcome Allianz and Elo to join Sierra Prime” said Fernando Guedes de Oliveira, Sonae Sierra CEO. “Following the transaction, Sonae Sierra will maintain the management of the portfolio properties and we are committed to developing and growing the unique Sierra Prime portfolio in the future.”

“APG has been an investor in this portfolio of prime shopping centres since 2003. Over the last 17 years the assets have shown their strength and resilience. We are now pleased to be part of the creation of Sierra Prime, allowing us to retain exposure to these assets going forward, whilst bringing in Allianz and Elo, two respected institutional investors, as new partners to the venture. Together with Sonae Sierra, all four parties look forward to further support the development and growth of these prime assets.” said Robert-Jan Foortse, Head of APG European Property Investments.

 “The Sierra prime portfolio underscores our commitment to working with prime partners, investors and stakeholders. We are delighted to build on our relationships with APG, Sonae Sierra and Elo who share our long-term, strategic approach and focus on prime assets,” said Jerome Berenz, Head of Indirect Investments, Allianz Real Estate.

“Shopping centres are a part of Elo’s diversified real estate portfolio and our focus is on the best, locally dominant shopping centres that meet the present and future expectations of customers. The well-managed Sierra Prime JV is a good fit for Elo’s investment strategy and the real estate portfolio. We are pleased to make our first Iberian real estate investment alongside leading institutional investors” said Director Timo Stenius from Elo.

The transaction has been completed today and it is not subject to any further authorizations.

Sonae Sierra and APG were advised in this transaction by Morgan Stanley & Co. International plc (“Morgan Stanley”) and co-advised by Santander Corporate & Investment Banking (“Santander”), and the law firm Freshfields Bruckhaus Deringer LLP.

Allianz and Elo were advised by the law firm Uría Menéndez and, in respect of Dutch law matters, by De Brauw.