Rockspring TransEuropean Property Limited Partnership VI (“TEP VI” or the “Fund”) and Stage Entertainment announce the acquisition, in a joint venture, of two iconic theatres, Teatro Coliseum and Teatro Lope de Vega, on Madrid’s Gran Via, Spain’s Broadway equivalent and a prime shopping destination. The transaction, which also includes retail and residential elements, has been secured in an off market transaction for €58 million, reflecting a 7.5% yield.
The joint venture between Rockspring’s TEP VI and Stage Entertainment will see Rockspring Iberia manage the real estate while Stage Entertainment takes responsibility for the operation of the theatre entertainment businesses. Rockspring Iberia have primary responsibility for all transactions undertaken by Rockspring in the Iberian peninsula and also provide full asset management services for all Rockspring owned assets in the region. This combination of the strength of both companies complements their individual strategic plans: TEP VI’s focus on Europe’s leading cities, especially those exhibiting positive urbanisation trends; and Stage Entertainment’s commitment to the Spanish live entertainment market and its wish to further increase its presence in the cultural heart of the city.
The acquisition comprises the two theatres, Teatro Coliseum and Teatro Lope de Vega, which house 1,440 and 1,456 seats respectively, as well as two prime retail units totaling 1,419 sqm and three buildings adjacent to the theatres, which house a total of 43 short-term let apartments. New 10 year leases have been secured with Stage Entertainment on each of the theatres, providing long term income, while the wider opportunity includes the potential to realise value through a building reorganisation, refurbishment and, possibly, some redevelopment.
Paul Hampton, Rockspring Partner and Fund Director of the TransEuropean series said:
“This is a strong and exciting addition to the Fund’s portfolio, which already includes investments in the leading European cities of Paris, Geneva, and Lisbon. We are especially pleased to have the opportunity of partnering with a dynamic company like Stage Entertainment and we look forward to creating value from the real estate whilst its entertainment business continues to flourish.”
John Thompson, Director at Rockspring Iberia commented:
“This investment provides a compelling mix of excellent real estate fundamentals, secure long-term income secured on a first-class covenant and appealing upside potential which we intend to exploit to the full with our in-house asset management expertise. Opportunities of this quality are rare, so it is particularly pleasing to have sourced it off-market, all the more so given the weight of capital currently scouring Spain for precisely this type of high-calibre opportunity”.
Just Spee, CEO of Stage Entertainment commented:
“I am extremely pleased that Rockspring and Stage Entertainment have teamed up to give these two early 20th Century theatres a new and promising future. The buildings will be managed by Rockspring Iberia and Stage Entertainment España will secure the continuity of El Rey León and revitalize the programming of the Teatro Coliseum across the Gran Via. For the past 13 years we have been fully committed to the city of Madrid and its cultural life, so we are thrilled that we will also have long-term responsibility for the programming of the Teatro Coliseum after refurbishment.”
TEP VI held a final close in in July 2016 with €430 million and together with leverage of up to 55% has a total expected firepower of €1.0 billion. To date, the Fund has committed €539 million across seven projects in Geneva, London, Birmingham, Lisbon, across France and now Madrid. The Fund is a diversified pan-European investment programme with a focus on office, retail, residential and industrial properties in large metropolitan areas of core Western Europe (including the UK). Launched in 2016, the strategy is to assemble a cash-flow generative portfolio that can be aggressively ‘managed to core’, utilising the firm’s Europe-wide platform and, more specifically, its hands-on asset management or operator-style approach. The programme can be classified as ‘value-add’ in terms of risk, albeit income is expected to be a key driver of the 15% pa target return.
ProEquity represented Rockspring in the transaction and Hogan Lovells provided legal and tax advice.
Returns quoted are gross of fees, costs and taxes
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