Amancio Ortega has directed real estate investments in the last year and a half To logistics centers in the United States and Europe. Is it a temporary fad? Is it a strategy to include in your investment portfolio? Only time will tell. Figures say almost two-thirds of the company’s $2.8 billion investment since July 2022 has been in distribution centres. In other words, 13 of its 22 most recent acquisitions are logistics warehouses with solvent tenants and long-term leases that they all have in common: five from Amazon, two from Home Depot and one from Fedex or Nestlé. In total, it has invested 1.773 million in these assets and now owns more than a million square feet in this sector, when only a year and a half ago it had none.
Why has it now entered this market, which it has not touched in any of the more than 150 operations it has carried out in the last twenty years? According to various sources consulted, there are several answers. The first is that real estate prices are high. It is unattainable in Spain, so more than three years passed without a major investment in national territory. For this reason, building purchases are primarily made in countries such as the United States and England.
The second is that their competitors cannot provide financing due to the high costs they have to pay to finance themselves due to the increase in interest rates. A situation that has reduced transaction volume by more than 50% in the United States and Europe in the past year.
Pontegadea, Amancio Ortega’s investment arm, also has no debt like Inditex and does not need to go into debt to make acquisitions, so it has not been affected by high interest rates. In 2022, he pocketed $1,718 million from dividends from an almost 60% stake in Inditex. A year later there were 2,217 people. The forecast for this year is that it will exceed 2,500. Pontegadea’s task is to invest all this money as quickly as possible so that it continues to create value. In 2022, a record amount of 2 billion 783 million was spent in 13 operations. A year later there were 1,335 people at 11.
Pontegadea CEO Roberto Cibeira explained in a recent interview in the “Financial Times” that they have observed “price adjustment across all asset classes in Europe” in recent months. “We believe this is a good time for investors with low debt as credit conditions are tightening, which reduces competition for possible acquisitions of reasonable size,” said the company chairman, who also acknowledged that they were offered assets. in bilateral processes and in most cases outside the market [antes de que se anuncien públicamente]especially in the areas of logistics, retail, offices and infrastructure.”
The third reason experts give for this change of strategy is that Amancio Ortega prefers to diversify his investments. The vast majority of its more than 100 assets are leased office properties. Now 10% are already logistics platforms.
Source: Informacion
James Sean is a writer for “Social Bites”. He covers a wide range of topics, bringing the latest news and developments to his readers. With a keen sense of what’s important and a passion for writing, James delivers unique and insightful articles that keep his readers informed and engaged.