Spain’s Bankinter Investment has won the race to acquire the Montepino logistics asset platform from CBRE Global Investors, through a SOCIMI or Spanish REIT structure in which Montepino’s founding partner, Valfondo, retains a stake.

The deal ensures that Montepino will become the largest logistics real estate SOCIMI in Spain, forecast to reach a gross asset value of around €1.2 bn in the coming years. Its portfolio currently comprises a gross area of 865,000 m2 across 22 logistics assets, plus 13 projects under development, with which it is set to exceed 1.2 million m² of developed land and 500,000 m² of new gross lettable area (GLA) in the near future.

Bankinter will add €40 mln to the SOCIMI’s share capital, which will be split between the bank and Valfondo, Montepino’s founding partner, and its private banking and institutional customers.

Valfondo will reinvest the sale of its stake in the new vehicle, maintaining a 5% stake, and will remain as manager of the platform.

The SOCIMI, Bankinter Investment’s newest investment vehicle, will have only Bankinter’s private banking and institutional customers as shareholders. As with the 14 alternative investment vehicles launched by Bankinter Investment in the last five years, Bankinter will co-invest in the SOCIMI with its customers, becoming the company’s main shareholder (6.4%), together with Valfondo, which will exceed 5.1% of the SOCIMI.

Growth story
The deal marks the latest milestone in Montepino’s incredible growth story. The boutique Spanish developer, which was founded in 2002 by Valfondo, hit the international headlines in 2017 when it signed a landmark joint venture with CBRE Global Investors for a slate of both standing assets and development projects totalling 245,000 m².

‘What people may not know is that Montepino was a small development business with around eight employees when it reached the joint venture agreement with CBRE Global Investors,’ says Julián Labarra Pérez, senior advisor corporate finance at Montepino. ‘Montepino was very active and had a good track record, but it was still an incredibly important achievement at the time.’

The joint venture went on to create a stabilised prime portfolio exceeding 865,000 m² of space, aligned with the European Value Partners (EVP2) fund goals of creating core assets in supply-constrained markets. Montepino went on to set historic records within Spain, doubling its business portfolio in just three years. In 2020, when CBRE Global Investors flagged its intentions to sell its 95% stake in the platform, Montepino determined that the best way forward would be to find a buyer that would welcome the developer’s ongoing participation.

‘We felt there was much more value in the platform if we remained on board as a partner,’ adds Labarra Pérez. ‘So we launched the process to look for a buyer on the basis that they would continue the partnership with Montepino, but under new conditions.’

International interest
‘We embarked on three bidding rounds, the first of which was open to all and attracted 12 offers,’ Labarra Pérez says. ‘That was a surprise. Initially, CBRE Global Investors was planning to just sell the operating platform as they believed that it was unlikely that bids would exceed half a billion euros.

‘But we believed we could do more, as we have seen what an incredible growth story the logistics market in general represents. Investors are really focused on value creation and on the runaway potential of e-commerce. In the end, the first round of bids brought 12 offers in the €700- €900 mln range and we knew we were on to something because all the big names were interested.’

For the second round, bids were whittled down to around five interested parties, including potential club deals. Adds Labarra Pérez: ‘All the big names were in the hat at this stage, including the likes of AXA, Allianz and Brookfield. We made management presentations and clarified not just the pricing but also management conditions. When we went to the final bidding round, where only Brookfield and Bankinter remained, it was clear that Brookfield wanted to use Montepino to replicate what they had done with Gazeley, and create another pan-European player; they presented a plan which was very aggressive, also in terms of leverage and growth. The Bankinter offer was more conservative, but impressed us with the corporate governance aspect and their willingness to invest in the management. That proved the best scenario for us.’

The future with Bankinter
While rewarding Montepino’s business model, the new deal also marks the continuation of Bankinter’s successful alternative investment strategy, which has to date launched 15 investment vehicles in the last five years. Meanwhile, SOCIMI Montepino is likely to be listed on the BME Growth market in the future, and if all goes well, may be destined at some point for the continuous market of the Spanish Stock Exchange.

‘Listing on BME Growth is highly feasible at this stage,’ notes Labarra Pérez. ‘The maximum company size for the sub-market is €1 bn and we would be listing at around €640 mln. That works for us, also as it’s a simple and straightforward process. But we will eventually exceed €1 bn, and that could accelerate us towards participation in the continuous market. We are going to be hiring specialist advisors to consider the matter from all sides –either way, we are destined for growth.’

The Bankinter deal for Montepino comes on the back of the logistics industry’s runaway success story across Europe, and its tantalising fundamentals in Spain. ‘What makes the Spanish market so exciting is its e-commerce potential,’ Labarra Pérez says. ‘E-commerce penetration in the Iberian Peninsula is still very low. Pre-Covid, we were at around 5% and although the pandemic has seen that grow to around 7-8%, we’re still lagging significantly behind the rest of Europe, which has mostly been in double digits for some time. That means there is an incredible amount of growth potential in the Spanish market. According to recent studies, a 1% increase in Spain’s e-commerce penetration will require an extra 1 million m² of logistics assets. And it is this area which has really driven Montepino’s business in recent times, as we are not only able to attract these kinds of customers, but also keep them. We work a lot with huge names including Spanish retailer Inditex who are committed to partnering with us on further schemes.

‘Added to this, there are some interesting dynamics surrounding land availability. Although you can clearly see that there is land around cities such as Madrid, zoning processes have slowed greatly in recent times. After the global financial crisis, many plans to develop greenfield land were put on hold, and even today, the urbanisation process takes a lot of time and has become a political issue. So buildable plots today are hard to come by, and that makes it all an ultra-competitive market.’

Development skills 
International logistics developers have taken note of these fundamentals and are looking at expanding into Spain, but Montepino still dominates proceedings in the Iberian Peninsula. ‘We have absorbed around 50% of real estate demand in the logistics sector within the central zone of the peninsula and dominate its largest markets,’ affirms Labarra Pérez.

Another aspect with which Montepino has become synonymous is its approach to environmental, social and governance (ESG) matters. From its commitment to corporate ethics and integrity, to its proactive approach to communities, Montepino also has 100% of its developments on track to becoming LEED certified. ‘It’s a record that we are incredibly proud of but we think we can also do more,’ says Labarra Pérez. ‘So, we are always looking with our partners to take this to the next level, and that means paying attention to innovation.’

Montepino furthermore has the rare distinction of being a majority female company in what is frequently a male-dominated world. ‘Over 60% of our staff are women,’ says Labarra Pérez. ‘It’s not a policy, but a consequence of building the best possible team. We have been fortunate to have extremely talented women working for us, and we have sought to retain the best people and build on that. Other firms in the sector have had to deliberately target more female participation. For us, it came naturally.’

In terms of strategy, Montepino has set out its stall as the best big box developer in Spain, but its last mile credentials are also impressive. ‘We believe strongly in this dual approach,’ says Labarra Pérez. ‘We think that these are the most compelling areas for the logistics market today.

E-commerce players require large sites to host their considerable labour forces and for vehicle access, but last mile is also a crucial piece in the puzzle. Right now, we are working on last mile schemes in cities from Alicante to Cordoba and Malaga.’

Concludes Labarra Pérez: ‘At the end of the day, our success lies in understanding our customers. There is a saying that the best way to deliver for investors is to create a company that is focused on clients. We have always designed the company around that thesis. Our team members know the development business inside out and that is really reassuring for our clients, it’s what makes them keep coming back. And that will always remain our unique selling point.’