Sonae Imobiliária

Sonae Imobiliária, the private Portuguese shopping centre developer and manager, is busy exporting the expertise it created in its domestic market over the past ten years. The company is working on 15 projects in Portugal, Spain, Austria, Italy, Greece and Brazil, amounting to more than 447,000m2 of development. It already owns or co-owns 23 shopping centres, three shopping galleries and a retail park, with a total area of 1.51m m2 – assets independently valued at €2.3bn as of June 2002. Sonae has a net asset value (NAV) of €958m, a figure it aims to more than double over the next five years.

The company aims to consolidate in the markets where it has a presence, but is also interested in gaining a foothold in France. It takes a prudent approach when tackling less developed markets such as Brazil, where it will not invest more than 20% of its NAV. Regions such as eastern Europe are also unlikely to feature on Sonae’s agenda, as it prefers to focus on southern Europe, where consumer tastes are similar to those of its domestic market.

Sonae modernised the shopping centre format in Portugal and introduced shorter leases than were traditional in the market. It developed the country’s first regional shopping centre, CascaiShopping in Lisbon, which opened in 1991, and in 2000 developed Portugal’s first retail park, Sintra Retail Park in Lisbon, in a joint venture with UK property company Miller Developments.

The company has a track record of working with international partners on its schemes. “We were also the first company to create shopping centres where the design and architecture are developed around a theme,” says chief executive Alvaro Portela. Sonae’s international partners include US pension fund Teachers’ Insurance and Annuity Association and UK fund manager Pricoa.

Last July, Sonae and ING Real Estate struck a deal to jointly own and operate five shopping and leisure complexes in Spain: Gran Casa in Zaragoza; Kareaga and its leisure extension Baliak in Barakaldo (Vizcaya); Zubiarte in Bilbao; Valle Real in Camargo (Cantabria); and La Farga in Hospitalet (Barcelona). The deal for the centres, which have a total area of 226,700m2, represents a €137m investment for Sonae. The two companies have co-owned shopping centres since 1993, when they developed the Viacatarina centre, Porto. They also co-own Lisbon’s Centro Colombo.

Sonae hopes to bring in more international investors through a fund, the details of which have yet to be finalised. “It would probably be a global fund, visible on an international level,” says Portela.

The company delisted from the Portuguese stock market in 2001, removing the country’s only significant property player. Sonae had been listed on the Lisbon and Porto stock markets since December 1997, but in December 2001 its key shareholders, Sonae SGPS and UK property company Grosvenor, launched a tender offer to take the company private. They argued that Sonae did not use the stock market as “a fundamental source of funding for future plans”. The price to minority shareholders was €16 per share, representing a premium of 9% over the highest share price in the year prior to the bid. Sonae’s holding company, Sonae SGPS, now has a 67.04% stake, with Grosvenor holding the balance.

In the first half of 2002, Sonae’s earnings before interest, tax, depreciation and amortisation were €47.2m, up 26% on the previous year’s €37.5m. Sonae’s gearing, as of 30 September 2002, is 46.75%. “This is a low level of debt and the company has no intention of reducing it,” says Portela.

Selected projects under development
Sonae’s Bilbao scheme is one of five being developed in Spain under a deal struck last July with ING Real Estate
Country	Location	Project	Size m2	Partner	Opening
Spain	Madrid	Avenida M40	45,000	Group Eroski	Autumn 2003
Spain	Toledo	Luz del Tajo	35,000	Grupo Eroski	Spring 2004
Spain	Madrid	Plaza Éboli Localização	28,800	Grupo Eroski	2004
Spain	Bilbao	Zubiarte Localização	21,600	ING Real Estate	Spring 2004
Austria	Vienna	Vienna Mitte Localização	24,600	–	Spring 2005
Greece	Athens	Aegean Park	60,000	Grupo Charagionis	Spring 2004
Greece	Sal¢nica	Pylea Centre	50,000	Charagionis/Lamba Development	Spring 2004
Italy	Brescia	Brescia Centre	29,000	–	Spring 2005
Portugal	Ponta Delgada	Parque Atlântico	20,000	Grupo Nicolau Sousa Lima	Autunm 2003
Portugal	Set£bal	Setúbal Retail Park	20,000	Miller Developments	Spring 2004
Portugal	Coimbra	Coimbra Retail Park	13,000	Miller Developments	Spring 2003
Germany	Dortmund	3do	55,000	WestDeutsche Immobilien Bank	Spring 2006
Source: Sonae Imobiliária