Quinlan Private will make its first investment in Spain by buying a shopping centre in Barcelona for €300 million. The purchase of the Diagonal Mar centre, which will close this week, marks a new turn in Quinlan's strategy as the firm taps into one of Europe's fastest growing mature economies.
"The Spanish economy is one we have identified over the past while as one in which we would like to invest," said Thomas Dowd, the Quinlan partner who negotiated the deal.
Quinlan is buying Diagonal Mar from Deka, a German property fund. The asset was not openly for sale, but a deal was agreed after Quinlan approached Deka about a month ago.
The investment firm suspected the asset was on track to be sold later this year. Contracts were signed about three weeks after the initial approach, with the result that Quinlan did not have to compete with other buyers. "We believe we've bought it well," said Mr Dowd of the €300 million purchase price.
The 84,000sq m (900,000sq ft) shopping centre was built about five years ago and is passing through its first rental cycle. It is almost fully rented, with an electrical goods retailer soon expected to enter as an anchor.
The area surrounding the centre has attracted a high degree of investment, including residential development. It includes three hotels, three office buildings and one of Europe's largest convention centres. The development is located on an inner ring road of Barcelona, about 2km from the city centre. It has a direct catchment area of 1.5 million people. Quinlan projects a yield of about 5 per cent on the centre but is expecting this to rise. Yields on Dublin's Grafton Street are currently averaging below 3 per cent.
The Diagonal Mar investment, which is likely to have a timeframe of five to 10 years, also comes on the back of Quinlan's belief that substantial Spanish retail investment is hard to find.
The group has already arranged to syndicate the deal on to its clients, with Quinlan's principals also taking a position in the deal. Mr Dowd said the investors were "not a big number", with the deal to be split to accommodate larger and smaller clients.
The purchase was, he said, "properly leveraged", with borrowings thought to amount to about 80 per cent of the price.
Mr Dowd said Quinlan was not planning to develop the centre to any great extent. "We always explore these sorts of possibilities but this is not being bought with that in mind," he said. "We're buying this because we believe there is good growth in Spanish retail."
Quinlan also plans to examine other investment opportunities in Spain. The company is concentrating on an expansion into the US and the redevelopment of a £530 million (€777 million) block of properties in London's Knightsbridge.
