PRECIADOS 9

DESCRIPTION

This exclusive building was constructed in 1940 on Calle Preciados, which is considered one of the main commercial avenues in Spain, connecting Puerta del Sol and Gran Vía.

The property was subject to strict urban planning protection, Zoning Regulation 1 ‐Historic Heritage Protection ‐ Grade 2, due to its location within the historic centre and was permitted tertiary use only on the ground floor, first floor and basement.

THE INTERVENTION: GENERATING VALUE

This transaction received considerable recognition and attention from the market, partly because of the exceptional location of the asset, and partly because the operation was completely off‐market and one of the first buildings to be sold by El Corte Inglés (a month earlier, IBA had closed the purchase of another significant asset sold by the chain, in Plaza de Cataluña, the commercial heart of Barcelona).

 

Following the purchase of the property, IBA undertook the complete refurbishment of the asset in order to convert it into one of the best commercial properties on Calle Preciados and, at the same time, began the search for a reputable tenant, appropriate to the quality and exceptional location of the property. To optimise the timeframe and obtain the best return on investment, the transformation of the asset and the search for a tenant coincided in this process.

 

The main actions undertaken were as follows:

  • Change of use of the office floors to reach 100% commercial use for the building.
  • The gross rentable area was reduced in exchange for maximising the buildable area on the lower levels ‐ an essential aspect in commercial buildings, given that the market value and utility of the higher floors is usually lower than that of the lower floors.
  • Two floors were demolished to obtain 5 metres of free height on the ground and first floor and to homogenise the level of the ground floor. Thanks to the great visual and commercial attraction that these higher floors create for the end consumer and, therefore, for the tenant, this action was one of the keys to the subsequent success of the marketing of the asset.
  • The façade was modified, resulting in an impressive 10‐metre high shop front, which gave the building an unbeatable external aesthetic and an excellent commercial standing.

After approximately one year of refurbishment work, the building received the LEED Gold certification and was handed over to the tenant, Pull & Bear, one of the Inditex Group’s leading fashion brands.

DISINVESTMENT

Following the same philosophy of overlapping tasks to optimise deadlines, with the refurbishment works underway and the rental contract already signed with the Pull &Bear, a sales contract was signed with an institutional investor, which was subject to the opening of the shop.
A few months later, coinciding with the opening of the store and once the established conditions had been fulfilled, the deed of sale was executed.
Net IRR (post tax) of the Investment: 37%.