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. The ‘family office’ that diversifies its assets on half the planet. ortega The textile giant designed the investment vehicle after going public on May 23, 2001.
It began reinvesting dividends distributed by Inditex in 2002 in acquisitions, primarily in 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%. On the contrary ortega Although it has the safest assets in its portfolio, there is another part that can be defined 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 ‘yield’ that Inditex’s founder can achieve 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 Amancio Ortega He set aside 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 state that: ortega Just to maximize short-term profits, he could sell a bunch of shares of the textile giant while having a sweet time on the stock market.
Your first investment
On February 9, 2002, the company approved its first investment. ortega. 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, this type of operation is known as ‘sell and lease back’. 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. Designed by Skyscraper Norman Foster Will be Repsol’s headquarters, but sold to Caja Madrid, then president Miguel Blesa815 million in 2007. 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. once in hand ortegaIn 2019, it leased seven factories to Amazon.
Amancio ortega benefited from its 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 family paid 400 million to the construction company. koplowitz.
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. In 2014, it bought number 1 from ‘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 he got 50% of it. Commercial area of Paseo de Gracia 16 for 55 million Euros; however, 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 is of great importance for the business he heads. Emilio Botinwhich disposed of 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 jumped 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.
Despite its large presence in the United States, Pontegadea has prioritized investments in the United Kingdom. He went through the whole ‘Brexit’ crisis in this country, that didn’t make him change his mind about his bet. Various investments in London exceed €500m: Devonshire House, which paid 477m in 2013; 100 Wood St, which he bought for 480 million; Oxford St Primark, which includes a payment of 551 million; The Adelphi Building with a cost of 680 million; or the Post Building, in which he invested 703 in 2012.
The founder of Inditex does not limit his purchases to Europe or North America. It has been available in Asia since 2016, especially in Korea. ortega In 2016, he paid 328 million euros for a 22-story building in downtown Seoul.
Recent investments
On the other side of the pond, Pontegadea in Toronto has closed the Royal Bank Plaza office complex, the largest acquisition in its history. This 40-story skyscraper is the headquarters of the largest financial institution in Canada. The businessman paid €812 million, or CAD1,150 million, to two local pension funds of Ontario municipal employees and the Canada Pension Plan Investment Board.
in April, ortega He invested £200m in an office building in Glasgow for the HFD Group, at around 237m euros at exchange rates. It is a project currently under construction located at 177 Bothwell Street. Upon completion, Virgin Money, BNP Paribas, Aecom, CBRE, Transport Scotland and existing vendor will be considered tenants; estimated annual return of 4.5%.
In the middle of 2022, it closed several acquisitions, such as that of a luxury apartment complex in New York. Pontegadea paid 500m euros for 64 flats in 19 Dutch buildings formerly owned by the investment fund Carmel Partners. This was his first major investment in the residential sector, as he traditionally preferred large office buildings and commercial buildings on main arteries.
In addition to residences ortega He became interested in logistics and closed the purchase of a large logistics portfolio for which he paid 900 million euros. These are the ships in Pennsylvania, Tennessee, South Carolina Virginia, Pennsylvania, Texas and Wisconsin; Rented from Amazon, Home Depot, Nestlé, Fedex or TJX.
Undoubtedly, great investment ortega It is his participation in the Inditex company that he is the founder of. The businessman owns 59.29% of the shares, which have remained unchanged since the company’s IPO in 2002. During the lowest price in recent years, with the stock market crash caused by covid, its participation was valued at 34,224 million euros; however, at the historical maximums of 2017, the value rose to 68,209 million.
It also has two equity investments in strategic sectors of the Spanish economy, such as gas and electricity. The businessman owns 5% of Enegás and Redeia (formerly Red Eléctrica Group). The first is the manager and responsible of gas transportation in our country, and the second is the operator of the entire Spanish electricity system. Its participation in the gas company is valued at more than 254 million euros, while its stake in the electric company is more than 520 million euros.
In Portugal, Pontegadea acquired 12% of Redes Energéticas Nacionais, operator of the Portuguese electricity grid. The vehicle bought its stake from Oman Oil in an operation worth 190 million euros. The value of its shares in listed companies related to electricity and gas infrastructure is close to 1,000 million.
In infrastructures, too, Pontegadea has a large investment in a large-capacity international submarine fiber optic cable network, one of the largest in the world, reaching an extension of 94,000 kilometers. ‘Family office’ signed an agreement to buy up to 30% stake in Telxius Telecom, authorization pending and remaining 70% stake in Telefónica. Both partners increased their participation in 2022 and received 40% of their holdings from the KKR fund for an amount of 215.7 million euros.
In July of the same year, it acquired Repsol’s 49% stake in the Kappa photovoltaic complex in Ciudad Real for €27 million. The photovoltaic installation has a total installed capacity of 126.7 megawatts and can supply electricity to 71,000 homes. In November last year, it completed a similar acquisition for 245 million for 40% of Delta, a 335 MW wind farm in the state of Zaragoza. Additionally, the group has an investment in Enagás Renovaable (5%) and paid 3.5 million for it.
In 2021 Pontegadea recorded revenues of 1,970 million euros, 53.7% more than in 2021: 1.294 million from dividends from Inditex, 847 million from real estate income and 29 million from shares in other companies. The net profit announced was 1.606 million, which is 240% higher than in 2021. The valuation of its portfolio is 15,264 million euros as of 31 December last year.