MERLIN Properties acquires TREE Inversiones Inmobiliarias for 739.5 million euros

• The largest real estate transaction in Spain in 2014
• Tree Inversiones Inmobiliarias S.A., owned by Ares Management, Europa Capital, Deutsche Bank and Banca March, comprises a portfolio of commercial properties in Spain which are fully leased to BBVA
• The transaction is MERLIN Properties’ first acquisition since its listing earlier this month

MERLIN Properties Socimi S.A., (“MERLIN”) (MC:MRL), one of the main real estate companies listed on the Spanish stock exchange and specialising in the acquisition and management of commercial real estate assets in the Iberian region, today announces the acquisition of Tree Inversiones Inmobiliarias for 739.5 million euros, after adjustments, reflecting 2014 sales.

This acquisition forms part of the irrevocable undertakings which MERLIN signed with the shareholders of Tree Inversiones Inmobiliarias S.A., subject to the completion of MERLIN’s recent €1.25 billion IPO. Through the acquisition, MERLIN will acquire 100% of the share capital of Tree Inversiones Inmobiliarias S.A.

Tree Inversiones Inmobiliarias S.A., owned by Ares Management, Europa Capital, Deutsche Bank and Banca March, comprises 880 bank branches and 5 buildings located throughout Spain. All of the assets are leased to BBVA, with the bank branch leases expiring in 2039 and the building leases expiring in 2029.

Ismael Clemente, Executive Chairman and CEO of MERLIN Properties stated: “we have successfully executed the largest stock market listing in Spain since July 2011. The success of our IPO is firmly tied to various strategic core themes, one of which was undoubtedly having high-quality assets in the portfolio from the outset, as is the case of Tree Inversiones Inmobiliarias”.

“Thanks to our previous position at MAGIC Real Estate as portfolio manager, we are extremely familiar with the assets and we are acutely aware of the potential that having them leased out in full to a blue chip tenant like BBVA can generate for MERLIN investors”, added Clemente.

Following the signing and execution of the transaction, the four vendors of Tree Inversiones expressed their satisfaction. “This transaction marks a significant exit for Ares, which had the vision to invest in Tree at a time when very few investors were interested in Spain. We are very encouraged by this transaction, and we remain active in our search for new opportunities in the Spanish market,” said Rafael Aviles, Head of Real Estate Iberia at Ares Management. “We appreciate the opportunity we have had to work with the skilled professionals at RREEF (currently ARA), MAGIC and then MERLIN and with our investment partners over these years in the Tree portfolio.”

Jason Oram, Partner at Europa Capital said: “Europa is delighted to have invested on behalf of Europa Fund III in the establishment of Tree and to have worked with its partners to transform the value of the Tree portfolio since the assets were acquired in 2009. We consider this next phase of Tree’s ownership to be testament to the quality of the portfolio and the strengthening appetite of institutional investors for prime real estate in Spain”.

Antonio Losada, Head of Wealth Management Spain & Portugal at Deutsche Bank, said: “The sale of Tree Inversiones Inmobiliarias to MERLIN Properties Socimi is the ultimate great success of an investment project launched by Deutsche Bank and its investors in Spain. In 2009 and 2010 during the Real Estate market and financial crisis, DB decided to structure the acquisition of the BBVA’s branches offering our clients an interesting inflation hedge. This deal is the result of joint effort between the Alternative and Real Assets (ARA), the Real Estate division from Deutsche Asset & Wealth Management, and the investment potential of DB Wealth Management clients in Spain, which through its 35% share on the deal along with our partners have made possible this transaction.’

Banca March, said: “The sale of Tree Inversiones enables us to share the success of this transaction with our clients. We will keep searching for good investment opportunities to coinvest with them and continue growing together”.

The portfolio of Tree Inversiones Inmobiliarias represents the starting block for a series of investments that MERLIN Properties will carry out in coming months. As established in the prospectus, the Company will focus investments on Spain’s main cities and, to a lesser extent, on Portugal. As regards the type of assets, MERLIN Properties will mainly invest in offices, shopping centres, industrial and logistics facilities and urban hotels, within the Core and Core
Plus segments.