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KWE acquires Spanish Carrefour & Dia supermarket portfolio for €85.5m

17 August 2015

Kennedy Wilson Europe Real Estate Plc (LSE: KWE) an LSE listed property company that invests in direct real estate and real estate loans in Europe, has completed the acquisition of a Spanish portfolio of 16 supermarkets, including 11 Carrefour supermarkets and five Dia supermarkets from a joint venture between French institutional investors managed by AEW Europe. The purchase price of the portfolio was €85.5 million, reflecting a yield on cost of 6.9%. The acquisition was funded from the Company’s cash resources.

The 16 supermarkets comprise 593,600 sq ft of lettable space across seven high street stores and nine big box stores across Spain with a concentration around Madrid and Barcelona regions.

The stores are 100% occupied by Carrefour and Dia on triple net leases, generating a day one NOI of €6.0 million with 85% of the NOI from Carrefour and 15% from Dia. The portfolio has a WAULT of 5.4 years (23.4 years to expiry) with all the leases expiring on 31 December 2038 with six yearly rolling tenant break options and upward only rent review provisions at this time. The next break option is at 31 December 2020.

Summary of portfolio


Location


Province

Area
(sq ft)

Big box/
High street

Carrefour stores

 

 

 

Aluche

Madrid

53,900

Big box

Alcaiá de Henares

Madrid

66,300

Big box

Olerdola

Barcelona

50,200

Big box

Berga

Barcelona

36,000

Big box

Viladecans

Barcelona

32,200

Big box

Igualada

Barcelona

62,200

Big box

Pontevedra

Pontevedra

55,000

Big box

Bilbao

Vizcaya

49,000

High street/Convenience

Salamanca

Salamanca

39,200

High street/Convenience

Cádiz

Cádiz

33,400

High street/Convenience

Almería

Almería

26,900

High street/Convenience

Carrefour subtotal

 

504,300

 

Dia stores

 

 

 

Granollers

Barcelona

19,900

Big box

Esparragueras

Barcelona

19,400

Big box

Dr. Fleming

Madrid

18,500

High street/Convenience

Mora d’Ebre

Tarragona

18,300

High street/Convenience

Rocafort

Barcelona

13,200

High street/Convenience

Dia subtotal

 

89,300

 

Total

 

593,600

 

Carrefour is Europe’s largest retailer and Spain’s second largest supermarket. It operates 10,860 stores across 33 countries and has a market capitalisation of €18.6 billion. Spain is Carrefour’s second largest market by footprint with 582 stores. Carrefour is rated Baa2 with a positive outlook by Moody’s.

Dia is Spain’s fourth largest supermarket. It de-merged from Carrefour Group in 2011 and is listed on the Madrid Stock Exchange. It operates 7,306 stores globally of which 4,781 stores are in Spain where it enjoys the second largest market share with 7.9% of sales. It is rated Baa3 with a stable outlook by Moody’s.

Mary Ricks, President and CEO of Kennedy Wilson Europe, commented: “This exciting acquisition represents KWE’s largest purchase to date in Spain and brings our Spanish ownership to €136.8 million or 3.9% of the total portfolio.

“The portfolio benefits from a strong geographic concentration around the affluent areas of Madrid and Barcelona regions, where c. 70% of the income is generated along with the robust tenant covenants of Carrefour and Dia providing secure income streams. The attractive value of this portfolio is further cemented by the blended c. 570bps premium to the respective corporate bond yields of Carrefour and Dia of 1.2% and 1.1%, when compared to our going-in yield of 6.9%.

“The prime high street units are 29% under-rented at today’s ERV’s. This coupled with our ability to grow rents through the CPI index-linked leases as the economy recovers and Spanish consumer spending improves and the re-setting to market rents through upward only rent reviews every six years will deliver another lever to create value.”

Savills advised KWE and CBRE advised AEW Europe.

Leavesden Park, Watford, UK (1)

Investor enquiries
Juliana Weiss Dalton, CFA
Investor Relations Director,
Kennedy Wilson Europe
+44 (0) 20 7123 5577
ir@kennedywilson.eu

Press & media enquiries 
Dido Laurimore / Tom Gough
FTI Consulting
+44 (0) 20 3727 1000
kennedywilson@fticonsulting.com