15 Feb 2022
M7 sells retail warehouse on behalf of Portuguese industrial fund
M7 Real Estate (“M7”), the pan-European investor and asset manager specialising in multi-tenanted properties, announces the sale of a retail warehouse in Madeira, on behalf of the Portuguese Industrial Fund (“PIF”), a joint venture with a major global private equity firm. The asset has been sold to an affiliate of Portugal Yield Fund, FCR, managed by Portuguese private equity firm Iberis Capital.
Situated in Funchal, the property comprises 2,500 sq m and is fully occupied by Hôma, the home decor and supplies store.
Having acquired the asset in 2020 from a wider portfolio, M7 engaged in discussions with the occupier agreeing a re-gear of the lease for a longer period of 15 years, with a break at year 10, as well as a temporary discount to the rent in 2021 in response to the Covid-19 pandemic.
Eduardo Lopes, Senior Asset Manager of M7 Real Estate Portugal, commented: “In a short timeframe M7 has demonstrated effective asset management, actively working with the tenant during the pandemic to establish solutions that helped them navigate poor trading conditions and forced closures, thereby adding value to the Fund. Support was provided to Hôma through a temporary rental discount, in exchange for them extending their existing lease, which was approaching expiry. This created a long and stabilised income stream which increased the attractiveness of the asset to potential buyers. The sale exceeded our underwritten business plan for the asset and generated attractive returns for the joint venture.
Leonardo Peres, Managing Director of M7 Real Estate Portugal, added: “The changes to the Golden Visa rules, which as from 1st of January 2022 exclude direct investment in real estate in the majority of urban areas of Portugal such as Greater Lisbon and Greater Porto, mean that real estate funds, which allow foreign investors to apply for the scheme through indirect investment, are being established. We are therefore witnessing a strong demand for assets in areas with less competition, higher yields and mid to long term lease contracts.”
David Pinheiro, Partner at Iberis Capital, commented: “This asset fits into the investment strategy of the income funds managed by Iberis, which focus on assets with long-term contracts and solid counterparties, with a focus on retail and services.”
PIF targets primarily logistics and office assets in Portugal with M7 acting as both investment and asset manager. The vehicle is M7’s second in Portugal where it manages a total of €153 million of assets, including on behalf of the M7 Portuguese Active Fund (“M7 PORAF”), which owns a portfolio of value add real estate opportunities in regional Portuguese markets and is fully invested.
M7 was advised by CBRE.