In the hands of a single investor, the creator of Zara and the Inditex empire, they add up to €15,000 million under management. Pontegadea is the investment vehicle of Amancio Ortega. Family office that diversifies assets on half the planet. Ortega designed the investment vehicle after the textile giant went public on May 23, 2001.
In 2002, it began reinvesting dividends distributed by Inditex, predominantly in the acquisition of real estate assets, until it became one of the largest players in the industry worldwide. However, the current identity of the portfolio was not reflected until 2007. Pontegadea’s investment strategy can basically be described as fundamental. This includes the safest assets on the market with very stable cash flows with annual returns between 2% and 5%. While Ortega has the safest assets in its portfolio, there is another part that can be described as core+.
These are high-end properties, but with less predictable rents. This category includes assets acquired prior to the completion of their construction. They still didn’t have a revenue history to take in, which makes them riskier than core. The return that the founder of Inditex can get for this class of building ranges from 4% to 7% at best.
Since its inception, the tool has been involved in some of the most important Real Estate operations in Spain as well as internationally. Chicago, Seattle, Paris, London, New York, Washington and Seoul have all seen how Amancio Ortega uses Inditex’s dividends to buy the best buildings. In 2022 alone, the businessman invested more than 1,700 million euros in various operations, almost all of the dividends he will receive from Inditex. In addition, in recent years, it has opened the gap to enter infrastructures and renewable energies outside the real estate sector.
It doesn’t try to make big returns with Pontegadea. According to real estate market experts who prefer not to be identified, their strategy is too low-risk to protect their assets over the long term and not maximize their profits. They also point out that its participation in Inditex, which has not changed since its IPO, demonstrates this. These experts point out that if Ortega had only tried to maximize short-term profits, it might have sold a large number of shares of the textile giant while having a sweet moment in the stock market.
Your first investment
On February 9, 2002, the company approved Ortega’s first investment. These were four hotels operated by the NH chain, for which he paid 15,200 million pesetas, representing 91.4 million euros. The founder of Inditex bought NH Abascal Serie Oro in Madrid, NH Iruña Park in Pamplona, NH Villa in Bilbao and NH Pirineos in Lleida.
These hotels had a twenty-year operating contract, expiring in 2022. In the real estate industry, such transactions are called sales and leaseback. The owner earns money from the sale of some assets, but keeps them in a long-term contract.
In fact, the Galician businessman owns some of the best real estate assets in Spain, especially Madrid and Barcelona. The tallest is Torre Cepsa, one of Madrid’s skyscrapers crowning Paseo de la Castellana. Pontegadea bought it for 490 million euros in 2016 after an ingenious move. The skyscraper was designed by Norman Foster as the headquarters for Repsol, but was sold for 815 million in 2007 to Caja Madrid, headed by Miguel Blesa. Until 2013, it was leased to the investment holding company of the Government of the Emirate of Abu Dhabi, which is being investigated for money laundering. When the contract expired, it fell into the hands of the fund and simultaneously handed over half of what Caja Madrid had paid in the last throes of the real estate bubble to the Spanish businessman. When Ortega took over, it leased seven factories from Amazon in 2019.
Amancio Ortega took advantage of his prominent position during the previous crisis. Five years before Torre Cepsa, it took over Torre Picasso, one of the capital’s landmarks. This skyscraper in the center of Azca’s financial district has 45 floors, for which the Koplowitz family paid 400 million to the construction company.
The founder of Inditex owns not only the best buildings in Madrid, but also some buildings in Barcelona. Paseo de Gracia is one of the arteries where the businessman invests the most. Between 2007 and 2014 it acquired several giants in the area. Number 1 was bought in 2014 from the bad bank Sareb for 130 million. It previously took number 43 to 45 million in 2007, and number 30 and 16 in 2008 and 2009. In 2004, it bought 50% of the commercial space. Paseo de Gracia 16 for 55 million euros; but it wasn’t until 2009 that he bought the other half of the property from Catalan real estate companies Metropolis and Restaura. It has impressive facilities such as Primark on Gran Via, which costs 400 million in the capital.
Santander features
One of its biggest acquisitions in Spain was the acquisition of 10 buildings in 2007 in Madrid (Castellana 24), Barcelona (Paseo de Gracia 5), Bilbao, Valencia, Valladolid, Oviedo, Seville, Malaga and Palma de Mallorca. . Banco Santander for 458 million euros. The buildings are leased to the business itself until 2047. This sale was a big deal for the business headed by Emilio Botín, which sold 10% of its assets due to the end of the Spanish real estate cycle. Despite being Occidental’s hotel portfolio, its biggest acquisition to date in Spain. Joining hands with BBVA, Cartera paid 706 million including debt to the group to Hotelera and La Caixa.
In the final stages of the Spanish and world real estate bubble, Amancio Ortega has leaped abroad. Since 2006, it has focused most of its investments outside of Spain. It premiered in Miami, where a luxury hotel and residential complex were purchased. Over the years, he has accelerated his acquisitions: the 413 W 14th St building in New York, the Southeast Financial Center, for which he paid 470 million, or the Amazon headquarters in Seattle cost him 656 million.
As of 2006, it has landed in Italy, France, Portugal and Mexico. In the first, he bought Palazzo Bocconi in Rome, which he rented from Zara, for 130 million; While in Paris, he bought 2 Rue Halévy for the same purpose. Six years later, he bought the building that housed the Apple store in the French capital. It wasn’t until 2012 that he built a building on Lisbon’s golden road. It entered Latin America in 2006 with the purchase of an office building in Mexico City.