PSP, Drago team up on €140m Spain deal

The Canadian pension plan and Spain’s Drago Capital have agreed to buy Complejo Inmobiliario Castellana 200, a mixed-use scheme in Madrid.

The Public Sector Pension Investment Board (PSP Investments) and its Spanish real estate investment partner, Drago Capital, have secured another deal for their partnership.

The pair, which struck up an alliance in 2011 aimed at investing €400 million in the country, have agreed to terms to buy a Madrid mixed-use scheme, Complejo Inmobiliario Castellana 200, for around €140 million.

The latest deal follows a partnership that kicked off three years ago with three properties – Gran Vía, 32 and Miguel Yuste, 40 in Madrid and Caspe, 6-20 in Barcelona – and adds an office complex comprised of two buildings to the portfolio. The deal also includes the prospect of developing a third building at the same site.

Spanish press reported in January that the asset had been put up for sale by Santander, BBVA, Sabadell, Bankia, Banco de Valencia and Reyel – Banco de Valencia and Bankia's loans being now included in Spain's bad bank, Sareb.

Other than Spain, PSP Investments – one of Canada’s largest pension plans, with some $76.1 billion of assets – has struck up agreements in other European markets and sectors as well. A notable example is a €1 billion logistics joint venture created with UK REIT SEGRO in July 2013.

PSP invests funds for the pension plans of the Public Service, the Canadian Forces, the Royal Canadian Mounted Police and the Reserve Force and began its real estate program in October 2003. Core investments dominate the portfolio, which primarily comprises stable income-producing investments in traditional sectors

Neil Cunningham, senior vice president of real estate investments, heads up the property program. He joined in June 2004, having spent four years at Merrill Lynch Real Estate Finance Group.