About the asset
Preciados 9, Madrid
Exclusive building constructed in 1940 and located on Preciados Street, considered one of the main commercial avenues in Spain, which connects Puerta del Sol to Gran Vía.
The property is subject to urban protection, “zoning standard 1 (Historic Heritage Protection) grade 2”, due to its location within the historic centre. It previously had tertiary use solely on the first floor, second floor and basement.
THE INTERVENTION: VALUE ADD
The transaction obtained significant recognition and repercussion in the market, both because of the exceptional location of the asset and because it was a completely off-market transaction, in which IBA managed to buy from El Corte Inglés one of the first buildings to be sold in its history (a month earlier, IBA had closed the sale and purchase of another large property sold by the chain, in Plaza de Cataluña, the commercial heart of Barcelona).
Following the purchase of the property, IBA began a process of total transformation of the asset, to turn it into the best commercial property on Preciados Street and, at the same time, began the search for a prestigious tenant, in line with the quality and exceptional location of the property. In this process, the asset transformation and the search for a tenant overlapped in order to optimize the time frame and obtain the best results from the investment.
The main actions carried out on the property were as follows:
▪ Office use was changed to 100% commercial use.
▪ The gross letable area was reduced in exchange for maximizing the buildable area on the lower levels, a key aspect in commercial premises, where the value and commercial utility of the higher floors is usually lower than on the second floors.
▪ Two floors were demolished to obtain 5 meters of free height on the ground and second floors and to homogenize the first floor level, resulting in one of the keys to the subsequent success of the commercialization of the leting of asset, thanks to the great visual and commercial attraction that these higher floors represent for the end consumer and, therefore, for the tenant.
▪ The façade was modified, obtaining an impressive 10-meter-high shop window, which gave the building unbeatable external aesthetics and an excellent commercial category.
▪ After a competitive process in which the asset was the object of great interest from some of the most prestigious international brands, an agreement was reached with the well-known brand Pull & Bear, one of the main fashion brands of the Inditex Group.
After approximately one year of renovation work, the building received LEED Core & Sell Gold certification and was handed over to the tenant, Pull & Bear.
Continuing with the strategy of optimizing deadlines by concentrating and overlapping tasks, with the refurbishment works underway and the lease already signed, a sale contract was closed with an institutional investor, which was subject to the opening of the store.
A few months later, coinciding with the opening of the store, the deed of sale was executed and all the established conditions were fulfilled.
Leveraged IRR: 37% (post-tax).