News

Prima takes its place in the sun

News

Rachel Frampton

02 December 1999

The deal marks the start of an international expansion planned by the fast-growing Spanish company

Quoted Spanish property company Prima has acquired an option to purchase a 48,600m2 office development in Miami, Florida.

The Barclays Financial Services Center on the prime Brickell Avenue is due for completion next year; 20% of the space has already been let to Barclays Bank. It also includes 1,400m2 of retail.

Prima is paying three annual instalments of $5m each for the option to purchase the building in 2002 at $130m.

The vendor, MDM Brickell Office Group, is providing a rental guarantee that will show a net yield of around 8% on the investment.

The scheme is the first major office development to be built in Miami for 10 years, according to Prima director Luis López de Herrera-Oria. He said that the market was over built in the 1980s as investors were offered tax incentives, then the market dived. “There is nothing available if you want large floorplates and lots of letting contracts end this year and next,” he said.

The US deal is likely to be a one-off; Prima does not anticipate building up a substantial trans-Atlantic holdings but was an opportunity spotted by managing director John G¢mez Hall who knows the market well. Prima is considering selling a 50% stake in the development during the term of the buying option.

But the purchase is nevertheless part of a new strategy of international expansion at Prima which will focus on Europe. Last year, the company agreed a 5% equity swap with German counterpart RSE.

The Spanish company has grown at a phenomenal rate, making two rights issues totalling €195m (Pts32.5bn) since 1997. It spent about €367m (Pts60bn) building up its portfolio in 1997 and 1998; this year it plans to invest a further €183m (Pts30bn).

At the end of last year, its total portfolio was valued at €388m (Pts64.6bn), of which 56% was offices, 30% retail and 12% industrial.

Turnover, primarily from rental income, tripled last year to €15m (Pts2.5bn), while net profits were up 161% to €9.97m (Pts1.66bn).

Prima expects rental income to more than double this year as new schemes are absorbed into the portfolio.

The deal marks the start of an international expansion planned by the fast-growing Spanish company Quoted Spanish property company Prima has acquired an option to purchase a 48,600m2 office development in Miami, Florida. The Barclays Financial Services Center on the prime Brickell Avenue is due for completion next year; 20% of the space has already been let to Barclays Bank. It also includes 1,400m2 of retail. Prima is paying three annual instalments of $5m each for the option to purchase the building in 2002 at $130m. The vendor, MDM Brickell Office Group, is providing a rental guarantee that will show a net yield of around 8% on the investment. The scheme is the first major office development to be built in Miami for 10 years, according to Prima director Luis López de Herrera-Oria. He said that the market was over built in the 1980s as investors were offered tax incentives, then the market dived. “There is nothing available if you want large floorplates and lots of letting contracts end this year and next,” he said. The US deal is likely to be a one-off; Prima does not anticipate building up a substantial trans-Atlantic holdings but was an opportunity spotted by managing director John G¢mez Hall who knows the market well. Prima is considering selling a 50% stake in the development during the term of the buying option. But the purchase is nevertheless part of a new strategy of international expansion at Prima which will focus on Europe. Last year, the company agreed a 5% equity swap with German counterpart RSE. The Spanish company has grown at a phenomenal rate, making two rights issues totalling €195m (Pts32.5bn) since 1997. It spent about €367m (Pts60bn) building up its portfolio in 1997 and 1998; this year it plans to invest a further €183m (Pts30bn). At the end of last year, its total portfolio was valued at €388m (Pts64.6bn), of which 56% was offices, 30% retail and 12% industrial. Turnover, primarily from rental income, tripled last year to €15m (Pts2.5bn), while net profits were up 161% to €9.97m (Pts1.66bn). Prima expects rental income to more than double this year as new schemes are absorbed into the portfolio.