Intu Properties plc and Canada Pension Plan Investment Board Acquires Parque Principado Shopping Centre
Intu Properties plc ("Intu") and Canada Pension Plan Investment Board ("CPPIB") have today announced a joint partnership agreement to acquire Parque Principado Shopping Centre, Oviedo, a 75,000m2 (approximately 800,000 sq ft) prime regional retail destination in Asturias, Northern Spain. The full text of the announcement is set out in Further Information below.
The opportunity to acquire Parque Principado, a top ten centre in Spain, on attractive and earnings accretive terms firmly establishes Intu's presence on the ground in a country where we see considerable growth opportunities in the regional shopping centre industry. A further positive feature of the acquisition is entering into partnership with a major and highly regarded global investor, CPPIB, and we look forward to extending this relationship.
Intu has a site under option in Andalucia, for 80,000m2 of retail space with additional leisure and, as previously announced, has entered into arrangements with Eurofund, a local partner with a track record of successful retail development, for pre-development activity on this site and at two major sites under option, in Valencia and Vigo.
We are aiming to attract additional third party capital to assist with funding Intu's Spanish activities without diverting significant financial resources from Intu's organic development pipeline in the UK. In this context, we are actively investigating the creation of a special purpose investment vehicle for our Spanish activities, such as a Spanish REIT, following a number of recent regulatory improvements to this product.
After a difficult period, the Spanish economy appears to be stabilising. Expectations are for a return to growth in GDP from 2014. Unemployment growth has slowed and structural reforms are expected to have improved labour competitiveness with longer term benefit. Private consumption is expected to return to growth in 2015.
The shopping centre market in Spain offers opportunities to create a quality business of scale and has the potential to generate superior total returns over the long term. The Spanish prime shopping centre market is quite fragmented in terms of ownership. Considerable scope exists for improvement, along the lines of regionally pre-eminent destinations in the UK and elsewhere, in the shopping centre provision for many major catchments in Spain. Spain is one of the few major European countries without a committed pipeline of prime shopping centre developments and limited investor competition currently provides a contra-cyclical opportunity to acquire large, high quality centres at historically low pricing.