EXCLUSIVE: UKI strikes deal with Spain’s Amancio Ortega

The London-based firm has acquired a development site in Madrid from the world’s second richest man as it eyes further investments in Spain, France and Germany.

UK & European Investments (UKI), the London-based private real estate firm, has entered into the Spanish residential property sector for the first time amid a €200 million European acquisition drive, it is expected to reveal tomorrow.

The company has acquired a development site in Madrid in the city’s central Chamberi district from Ponte Gadea, the family investment firm of Amancio Ortega, the billionaire founder of Spain’s Inditex, the fashion group behind the Zara clothing empire. He is said to be the world’s second richest man, with an estimated worth of $71.5 billion.

UKI is teaming up in the deal with Spanish developer and operating partner, Uniq, and together they will demolish two derelict buildings and replace them with a 60,278-square-foot development comprising approximately 40 apartments. Planning consent already exists and construction is due to begin in 2016 and end in 2018.

Fraser Denton, director of European acquisitions, called the investment a “rare” opportunity to acquire a new residential development in the center of Madrid. “Following the financial crisis, there have been several years of pent up demand for residential properties in Spain. We are seeing increasing opportunities in the key metropolitan areas of Spain, with Madrid offering attractive opportunities for local and national buyers,” he explained.

As well as entering Spain’s residential market, the company is also expected to announce tomorrow that it has made €200 million of investments in the first half of 2015. It has also exchanged contracts to buy a hotel asset in Hamburg and in January this year revealed a joint venture with Red Tree Capital in the Paris market. Red Tree Capital is the private equity real estate firm of former leaders of The Carlyle Group’s European real estate group, Eric Sasson and Robert Hodges. The first deal was to acquire a freehold office building, Le Bleriot, in Surenes, near Paris.

UK & European is a hybrid of a family office and a private equity real estate company that acquires income-producing properties as well as makes opportunistic investments. Its financial backing comes from the Lewis Trust Group, on behalf of the family that owns UK fashion retailer, River Island. Occasionally, UKI invests in other real estate specialists. For example, in 2013 it provided €100 million of funding to Albulus Advisors, to buy nonperforming and sub-performing loans in Germany.

The 30-strong firm is currently targeting value add opportunities in the UK, Germany, Spain, the US, France and Poland.

Barney Kelham, chief executive officer, said for the Madrid, Hamburg and Paris deals that the group had managed to source “rarely available” properties in outstanding locations, adding that he expected additional deals to materialize in Germany, France and Spain.