Orion Capital Managers has teamed up with blue chip UK REIT British Land for what is destined to become Europe’s ‘largest retail and leisure scheme’.
The opportunity fund manager, which is currently investing capital from its Orion European Real Estate Fund III opportunity fund, has agreed to buy 50 percent of Puerto Venecia in Zaragoza in the north east of the country for an undisclosed price from Spanish property company Copcisa Corp and unnamed private investors. It will now progress the unfinished component with British Land, which became involved in Puerto Venecia in 2006 when it formed a 50:50 joint venture with Spain’s Copcisa Corp for the 2 million-plus square foot scheme at Spain’s fifth largest city.
Puerto Venecia has two components, one being a completed 900,000 square foot retail park that opened in 2008 and includes an Ikea home furnishings store. The other component is a 1.3 million square foot shopping centre expected to open in the autumn of 2012. Orion has bought into the property at a point when it is 70 percent let or sold and is entering the final stage of its development.
Aref Lahham, managing director of Orion, said: “We believe that retail in Spain still offers an attractive opportunity to our investors and the scale and quality of a centre like Puerto Venecia, which includes a development component, is clearly one of those rare outstanding opportunities”.
The property was British Land’s debut in Spain, and UK property press dubbed Puerto Venecia “Zaragoza’s Bluewater” in reference to the large Bluewater shopping centre in Kent, England – one of the largest centres in the UK.
According to British Land’s website, since the start of 2009, progress in respect of letting the shopping centre element has slowed considerably against the weaker economic conditions in Spain and the adverse effect on consumer spending, particularly in fashion, which is the primary focus of the shopping centre. That led the company to agree to allowing its 420,000 square foot anchor department store partner, El Corte Inglés, to push back its opening to 2011 or 2012.
The deal for Orion marks the biggest investment its fund III has made in Spain since buying Plenilunio shopping centre in Madrid for €235 million in 2009 from Banif Immobiliare, the Santander-managed real estate fund.