New York-based private equity real estate firm Northwood Investors has closed its debut deal in Spain with the acquisition of a majority stake in the Diagonal Mar shopping center in the heart of Barcelona.
Northwood has bought approximately 70 percent of the trophy asset’s floor area from Dublin-based property manager Avestus Capital Partners.
The sale price has not been disclosed although it has been reported as being €150 million.
The remainder of the property is still owned by anchor tenant Alcampo, the domestic supermarket. However, Northwood is still retaining Avestus as the property manager, a role the firm has held since 2006.
With a total floor area of 942,000 square feet, Diagonal Mar is 99 percent leased to 190 domestic and international tenants. The property overlooks the Mediterranean Sea and is just three miles from the Barcelona city center. Footfall in 2013 at the center was in excess of 16 million.
Avestus paid approximately €300 million for the stake in 2006 when the company was known as Quinlan Private. The capital for that original investment, however, did not come from Avestus’ €400 million blind-pool fund, which was raised in 2008.
“The center is an exceptional asset that has evolved considerably under our stewardship, maintaining a strong performance during the downturn,” Fergus Farrell, principal at Avestus, said in the statement. “Northwood’s long-term focus and commitment to ongoing investment will allow us to realize the full potential of the center.”
Local groups and even Barcelona mayors have criticized the development for its rigid design in the past. Thus, Northwood and Avestus are also planning several projects to enhance the attractiveness of the asset to both shoppers and retailers, including a renovation of the external terrace area.
“We believe that Northwood’s long-term perspective as owners, together with Avestus’ knowledge and experience with the property is the right combination to ensure that Diagonal Mar remains a premier retail destination in the Barcelona market,” said Khaled Kudsi, senior managing director at Northwood.
With $3.9 billion assets under management globally, Northwood claimed the 22nd spot in this year’s PERE 50 ranking, thanks largely to the $824 million fourth fundraising round it closed in December. Founded in 2006 by John Kukral, the former president and chief executive of Blackstone Real Estate Advisors, Northwood specializes in buying and repositioning distressed properties.