Project Paris R - IM PDF

PROJECT PARIS
Project Paris R
Since it was opened in 1988, Torre Picasso has held
a unique place amongst Spains most emblematic
buildings. Located on the Paseo de la Castellana
boulevard, Madrids financial and commercial
thoroughfare, stands the exclusive Azca complex,
widely acknowledged to be Spains most prestigious
business address.
BBVA and Aguirre Newman are acting as advisors
of FCC in relation to the sales process of TORRE
PICASSO (Project Paris).
The proposed transaction consists of the purchase
of one of the best and most prestigious office
building in Madrid, fully occupied by different tenants
worldwide renowned.
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PROJECT PARIS
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Private & Confidential
Project Paris R
CHAPTER 1. EXECUTIVE SUMMARY ....................................................................................
Torre Picasso, a landmark asset in Europe
1.1. Introduction
1.2. Transaction summary
1.3. Overview of the opportunity
1.4. Torre Picassos Key Investments Highlights
CHAPTER 2: LOCATION OF TORRE PICASSO ...........................................................................
In the citys financial heart
2.1. Madrid, principal business centre in Spain
2.2. Azca: a current reality with an outstanding future
2.2.1. Communications and access
2.2.2. Services and businesses in the area
CHAPTER 3: DESCRIPTION AND CHARACTERISTICS OF TORRE PICASSO .................
Torre Picasso, a unique asset
3.1. Torre Picasso as a unique asset in Europe
3.1.1. Premium services to tenants
3.1.2. Renewed worldwide tenants
3.1.3. Resilient rents
3.1.4. Best-in-class occupancy level
3.2. The building and the architect
CHAPTER 4: TECHNICAL CONSIDERATIONS IN RELATION TO TORRE PICASSO.........
Construction excellence
4.1. Architectural aspects
4.2. Installations
4.3. Floor plans, flexibility of space
4.4. Torre Picasso and the environment
4.5. Improvements and continuous adaptations
CHAPTER 5: TENANCY SCHEDULE ......................................................................................
Best-in-class tenants
5.1. Torre Picasso financial overview
5.2. Detailed revenue analysis
5.2.1. Structure of contracts
5.2.2. Contract length: Tenancy period
5.2.3. Contract rent vs. market prime rents
CHAPTER 6: OFFICE MARKET ...............................................................................................
A market with high growth potential
6.1. Description of the office market: a market undergoing growth
6.2. The market in CBD
6.2.1. Trends in stock within the Central Business District
6.2.2. Demand and rents
6.2.3. Price evolution in CBD
6.2.4. Vacancy and future supply
6.3. The market in the area of Influence: Azca
6.3.3. Azca and surrounding buildings
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PROJECT PARIS
1.1. Introduction
EXECUTIVE SUMMARY
Torre Picasso, a landmark asset in Europe
CHAPTER 1
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Private & Confidential 05
1.1. Introduction
This Information Memorandum has been prepared by the Management of Fomento de Construcciones y Contratas
S.A. (FCC) with the assistance of BBVA and Aguirre Newman for the purpose of providing information to a selected
number of parties who have expressed an interest in the Potential Transaction.
BBVA and Aguirre Newman have been retained as advisors to represent FCC, the sole Shareholder of Torre Picasso,
in the Potential Transaction. Accordingly, all communications, enquiries and requests relating to this Information
Memorandum and the Potential Transaction should be addressed to the BBVA and Aguirre Newman representatives
listed below. Under no circumstances should the Management, employees or consultants of FCC and its subsidiaries
or parent company be contacted directly.
BBVA Aguirre Newman
Va de los Poblados s/n C/ General Lacy 23
28033 Madrid 28045 Madrid
Spain Spain
Javier Gonzlez Jimnez de la Espada Jaime Pascual-Sanchiz de la Serna
Executive Director CEO
Corporate Finance Investment Banking Aguirre Newman
+34 91 374 73 02 +34 91 319 13 14
+34 639 504 585 +34 677 784 545
javier.gonzalezj@grupobbva.com luisjaime.pascual@aguirrenewman.es
Jorge Arrastia de la Sierra Alejandro Campoy Zuasti
Vice President Director
Corporate Finance Investment Banking Investment Division
+34 91 374 40 28 +34 91 468 95 94
+34 638 836 611 +34 667 473 948
jorge.arrastia@grupobbva.com alejandro.campoy@aguirrenewman.es
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Transaction Process
- Following a broad strategic review of its business operations, FCC has decided to divest some of its non core assets.
- To this end, FCC is considering the disposal of 100% of Torre Picasso and PER Gestora Inmobiliaria S.L. (the Assets).
Torre Picasso is one of the most emblematic office buildings in Europe with high end market rents and record occupancy
levels; making it a recurrent source of income resilient to economic downturns.
- PER Gestora manages the building and provides general, commercial and administrative services such as security,
cleaning, reception and manteinance. PER Gestora is neutral in terms of results; its main income comes from the fees
charged for its management services and its expenses approximately match its revenue (in 2010 it posted a loss of
22,000). In 2010 it reported a book value of 88,000.
- The Potential Transaction will be structured in two phases:
Phase I, in which a selected number of candidates, having received and reviewed this Information Memorandum,
will be invited to submit a Non-Binding Offer for the Assets.
Phase II, in which a reduced number of selected candidates will be allowed to conduct due diligence on the
Assets and will be provided with access to additional information (site visit, data room, management presentation
and draft SPA).
Following the completion of the due diligence process, the candidates will be invited to submit a Binding Offer.
Envisaged Perimeter of the Transaction
- The Potential Transaction consists of the sale of Torre Picasso and PER Gestora Inmobiliaria S.L., owned by FCC (100%)
Fedemes S.L.
Torre Picasso
PER Gestora
Inmobiliaria S.L.
Transaction Perimeter
100%
1% 99%
Note: Torre Picasso is legally structured as a Comunidad de Bienes
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In the heart of the financial district in Madrid stands Torre Picasso, a majestic tower known as one of the reference
points in the city. Its sobriety and elegance represent a symbol for the people working in Madrid and those who come
for business.
Its unique location, second to none facilities and elegant architectural design make it one of the most representative
office buildings in Europe.
Built in 1988, it has been part of the Madrid citizens lives for more than two decades. Torre Picasso enjoys an enviable
location within the main business district of the city, the Azca complex. Close to the main train, metro and
bus stations, it is only 15 minutes away (either by metro or by taxi) from Madrids international airport.
Originally designed to replicate New Yorks Rockefeller Centre functionality and efficiency in terms of communications,
Azca is the Spanish head office for some of the most well-known international companies, such as FCC, Accenture,
Generali, Saint Gobain, HSBC, Google etc. In addition, Azca provides a variety of services ranging from shopping
centres, fashion and accessories shops, restaurants and hotels, making it a fully integrated business area in the city
centre.
Designed by Minoru Yamasaki, the architect of New Yorks Twin Towers, Torre Picasso is a symbol of elegance,
sobriety and distinction within the business community of the capital of Spain, Madrid.
The floors are divisible in four different modules, providing ample flexibility for the tenants to design its offices and
accommodate its personnel in the way that suits them best. With one of the highest ratios of operating surface over
rentable surface, 75.6%, Torre Picasso enjoys an efficient distribution of spaces.
Additionally, Torre Picasso is equipped with the latest technologies and state-of-the-art facilities to provide its tenants
with a premium service. Despite having been built in the late 80s, the continuous investment carried out by its owner
over the last five years with an average annual capital expenditure of 1.7MM have put Torre Picasso in the vanguard
of technology.
Property:
Address:
Tower total height:
Total built surface:
Lettable surface:
Parking spaces:
Number of Tenants as of June 2011:
Annual Rental Income 2010:
Torre Picasso
Pz. Ruiz Picasso (P de la Castellana, Madrid)
157 m
108,983.48 sqm
78,131 sqm
833
32
25.8MM
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1.- Unique asset and investment opportunity: Torre Picasso can only be compared to those buildings that represent
a brand by themselves and that provide recognition to a business area or a city
Landmark building in Spain. With a height of 157 metres, Torre Picasso is one of the tallest buildings in Spain
and one of the most emblematic buildings in Europe
Designed by Minoru Yamasaki, the architect of New Yorks Twin Towers. Torre Picasso was built using the
best available technology and materials
2.- Located in the financial district of Madrid (the Central Business District) providing a privileged office space
4
th
financial complex globally with annual GDP of 2.8bn: its 4.5 sqm house 1,932 companies and c. 39,200
workers
Madrid: The most dynamic city in Spain and a natural hub between Europe and LatAm
3.- Renowned international and loyal tenants with long term contracts
Torre Picassos tenants are prestigious international companies: FCC, Google, Ernst & Young, Societe
Generale, HSBC, Intel and Accenture among others
c. 50% of the rent has a maturity period of 5 years, providing recurring and predictable income
Long terms contract with average of 6.5 years in Torre Picasso
4.- Stable and predicable rents, resilient to economic cycles
Historic superior prices, in the upper band of Madrids premium business area
Weighted average rent of 28/sqm/month; in the upper band of the office market
Moderate but steady rental growth strategy, resulting in a stable source of income
5.- best-in-class occupancy levels
Outstanding occupancy track record of close to 100% for extended periods o time
Last 5 years average of 99.4%
6.- Exclusive and premium service to tenants
Second to none security standards
24-hour maintenance service
World-class concierge service
State-of-the-art technology
Excellent rate of parking spaces (1 per every 80 sqm)
7.- Superior centralised management system which incorporates the latest technology
Efficient management of the building resulting in the highest maintenance standards
Exceptional control system which allows to have a centralised and quick response to any emergency
High quality information gathering permits the analysis of processes potentially resulting in further efficiency
gains
8.- High degree of adaptability of spaces to the tenants needs
Orthogonal floors, with completely open-plan offices, that may be divided in 4 modules
Allows Torre Picasso to attract higher amounts of potential tenants
9.- Well invested asset with no significant capex requirements for the coming years
Future regulatory capital requirements have been performed well in advance
The building is fully modernized and employs cutting edge technology
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2.2. Azca: a current reality with an outstanding future
LOCATION OF THE TOWER
In the citys financial heart
CHAPTER 2
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Madrid is the capital and largest city of Spain. The population of the city is roughly 3.4 million and the entire population
of the Madrid metropolitan area is calculated to be nearly 5.8 million. It is the third largest city in the European Union,
after London and Berlin, and its metropolitan area is the third largest after London and Paris. The city spans a total
of 604.3 km.
The city of Madrid has the forth largest Gross Domestic Product (GDP) in the European Union ( 230 MM) (12.2%
of GDP). Due to its economic output, high standard of living and market size, Madrid is considered the major financial
centre of Southern Europe; it hosts the Spanish head offices of the vast majority of the largest Spanish companies
as well as some of the most prestigious companies worldwide.
Madrid has world-class infrastructure facilities including, but not limited to high-speed national network gateway, a
modern metro network, first-class airport (15 min. away from the city centre) and 3 main ring roads (M-30, M-40 and
M-50):
Together with Tokyo and Paris, Madrid is one of the largest high-speed gateways in the World
Barajas airport is Europes 4th busiest airport and the recently built terminal 4 is one of the worlds largest
airport terminals
Madrid metro network is the second largest network in Europe, only surpassed by London. However,
the Madrid metro is newer, more user-friendly and better maintained than its London counterpart
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2.2. Azca, a current reality with an outstanding future
Torre Picasso is located in Madrids Central Business District. This business and retail hub is located to the north of
the centre, in the financial and business heart of the city, within what is known as the Azca Complex. This stretches
between the boulevard of Paseo de la Castellana and the streets Orense, Raimundo Fernndez Villaverde and General
Pern.
In 1957, the architect Antonio Perpi formulated a scheme to develop this area of Madrid, taking inspiration from
the Rockefeller Center in New York. The scheme was approved in 1964. The work encompassed the layout of railway
tracks and links and the parking as well as movement of vehicles and public transport within the interior, in addition
to the provision of pedestrian walkways.
Azca is the financial centre of the capital of Spain and houses some of the most important buildings and skyscrapers
in Madrid, offering high levels of business and retail activity on a daily basis. The restaurants and cafs, fashion and
accessory retailers and shopping centres, including El Corte Ingls and Moda Shopping, make up the everyday life of
this complex.
The complex is noteworthy
for some of the principal
skyscrapers of the city, such
as Torre Picasso, Torre Europa
and the current head office of
BBVA.
Besides skyscrapers, it also
offers numerous lower levels,
underground areas and
walkways used by thousands
of pe o pl e , i nc l udi ng
professionals, office workers,
visitors and shoppers. The car
parks are situated on the
lowest underground levels.
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Although the Azca complex is a pedestrian area, taxis and private vehicles may reach the very base of Torre Picasso
by means of an area envisaged for this purpose. The same is true of the loading and unloading dock.
Azca offers a lively retail experience, including top tier retailers such as El Corte Ingls, FNAC, Habitat, Mango and
Decathlon whose daily rhythm (particularly from Monday to Friday) is the hustle and bustle of the city shopping.
Office workers, business visitors and tourists enjoy a wide range of establishments offering fashion, accessories, shoes,
jewellery, household furnishings, etc. Particularly noteworthy are the shops specialising in technology and mobile
communications, taking advantage of the synergies arising from an area fundamentally based on business.
Additionally, Azca is surrounded by one of the most expensive residential areas in Madrid, in where approximately
4,500 people live.
M-30
M-30 M-30 M-40
M-30 M-30 M-40
M-30 M-30 A-1
M-30 M-30 A-2
M-30 M-30 A-3
A-6
M-30 M-30 M-30
M-30 M-30 A-5
A-42
M-30 M-30 R-2
M-30 M-30 M-11
M-30 M-30 R-3
R-5
R-4
Casa de Campo
Retiro
Plaza Castilla
Atocha
Plaza Coln
AZCA
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Santiago Bernabeu
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Furthermore, Azcas lower levels and walkways are crossed by c. 120,000 persons per
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The superb location of Torre Picasso at the financial heart of the city makes it a privileged office space with first class
infrastructures available and easy access. The Azca complex is bordered by the boulevard of the Paseo de la Castellana
and another three main roads, providing excellent access to the rest of the city and the principal communications
arteries of the capital.
Paseo de la Castellana forms the main corridor connecting the area of Nuevos Ministerios to the city ring roads (M-
30, M-40 and M-50) and the principal dual carriageways and motorways giving access to Madrid. This fact enables
the International Airport of Madrid-Barajas and the Juan Carlos I Business Park to be reached within 15 minutes.
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In addition, and located only a few minutes away from Torre Picasso, the large rail transport interchange of Nuevos
Ministerios, makes the public transport provision of the area of Azca one of the best in the city.
The station of Nuevos Ministerios currently provides an interchange between 3 Metro lines and another 8 commuter
rail lines in addition to a number of medium-range national rail lines. Direct access to the international airport of
Madrid-Barajas is achieved by means of line 8 of the Metro (c.15 minutes).
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TORRE
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Taxi stop
Bus stop
Parking
Train station
Metro station
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In terms of access points, Azca has various entrances and exits at the first or second floor levels of the complex.
Access to the first floor of the complex is achieved by means of:
- Calle de Agustn de Betancourt, underneath the street Calle Raimundo Fernndez Villaverde, for both
entrance and exit
- Plaza de la Baslica, under the street Calle Orense, for both entrance and exit
- Calle Orense and Calle General Pern, for entrance only
Access to the second floor of the complex is achieved by means of:
- Calle Capitn Haya, under the street Calle General Pern, for exit only
- Calle de los Hermanos Pinzn, giving entrance below the Paseo de la Castellana
- Paseo de la Castellana, for exit only
- The railway interchange square, for exit only
A total of 7.5 km of underground streets on two levels, with almost 15,000 underground parking spaces offering
entrance points and exits over and above the four streets which border the limits of the complex.
General Pern
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NUEVOS MINISTERIOS
TORRE
PICASSO
SANTIAGO BERNABEU
STADIUM
MINISTRY OF
PUBLIC WORKS
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The area of influence boasts an unparalleled range of services which offer companies locating within the complex a
privileged, fully consolidated area. Among others, the following services may be highlighted:
Shopping Centres: El Corte Ingls at Nuevos Ministerios, the largest
of the shopping centres belonging to the retail group, is located only a
few metres away from Torre Picasso. This mall would be expanded by
some additional 22,000 sqm GLA (Gross Lettable Area) resulting from
the demolition of the old Torre Windsor.
At the opposite end of the Azca complex, adjacent to Torre Picasso, the
Moda Shopping Centre offers 7,000 sqm GLA, combining retail and
leisure activities and offering the best fashion shops in Madrid. It
additionally provides business facilities such as the convention centre
and cultural installations in the form of an exhibition hall. Counting both
fashion retailers and restaurants, the centre has more than 65 operators.
Hotels: Numerous hotels are located within the area of influence.
Particularly noteworthy are operators such as NH, AC among others.
The Intercontinental and Villa Magna luxury hotels are close by as well
(within 10 min car ride).
Restaurants: The area possesses numerous pretigious restaurants
as well as chains resulting in an outstanding food offering (Acrpolis, La
Vaca Argentina, Xanacuc, among others).
Fashion and accessories: In addition to El Corte Ingls and Moda
Shopping Centre, many retail operators have chosen to establish their
flagship store in the area of Azca. (FNAC, Habitat, Decathlon and so on).
Santiago Bernabeu Stadium: An emblem of the city, the football stadium
of Real Madrid is one of the most visited sites in the capital.
Ministerio de Fomento (Ministry of Public Works): The emblematic
building of the Mininistry is located right next to Azca.
In addition, there are a number of health club and sports facilities located
within the Azca area, including the prestigious Real Canoe swimming
and health club.
This range of services together with Torre Picasso and the other office buildings such as the Torre Mahou, the Torre
Ederra, the Torre Europa, the Sollube Building, El Corte Ingls headquarters and the Torre BBVA, have enabled the
area to become the most important business centre in Spain. Numerous multinational companies have chosen this
location to set up their Spanish head office: FCC, Accenture, Ernst & Young, BBVA, Deloitte, Saint Gobain, KPMG,
Barclays, Havas Media, Google
Azca is ranked fourth placed financial market at an international level. It generates an annual GDP of 2,820 million,
representing 1.41% of the regional GDP in the Autonomous region of Madrid. Its 4.5 million sqm house 1,932 companies
and approximately 39,200 workers.
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PROJECT PARIS
CHAPTER 3
3.1.2. Renewned worldwide tenants
DESCRIPTION AND CHARACTERISTICS OF TORRE PICASSO
Torre Picasso, a unique asset
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Torre Picasso is one of the most emblematic buildings in Spain and among the most representative of the Madrid
financial market. Its height of 157 metres makes it one of the architectural peaks of the country and its concept, based
on the most advanced technology, continues to make it one of the most sophisticated, efficient and safest buildings
in Europe.
Its presence has transformed not
only the urban landscape of Madrid,
but also the concept of what a
workplace should be: a first-class
office building offering the best
services, conceived to offer the
most sophisticated installations
and maximum use of space in the
finest area of Madrid.
Since opening in 1988, Torre Picasso
has enjoyed the most prestigious
tenants in the marketplace; highly
reputable national and international
companies who have used the
building as a symbol of their brand.
Torre Picasso boasts one of the best
occupancy ratios within the multi-
tenant office market, with an
annual average of 98.03% since
year 2000 - far above the average
occupancy rate for buildings in the
business centre of Madrid.
The type of building, the versatility
of its floors and its strategic
l ocati on have enabl ed Torre
Picasso, among other different
factors, to be resilient to the
economic and real estate cycles.
Moreover, the desi gn by the
prestigious Japanese architect
Minoru Yamasaki, noteworthy for
efficient buildings with elegant
lines, gives Torre Picasso one of the
highest efficiency ratios of the
PRIME zone of Madrid, with more
than 75% of the area being usable.
Well above that of other buildings
in the area.
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Since Torre Picasso started its commercialization in 1989, tenants have enjoyed a great variety of services that make
Torre Picasso a unique to set their offices.
Special mention should be made to the Control Centre, the buildings nerve centre equipped with a state-of-the-art
technology, monitoring the whole building to the utmost detail and analyzing the received information in real time.
For this purpose there is a video wall with 32 17 monitors and two 40 monitors. The Operator and Second Response
Chief positions are occupied by PER Gestora Inmobiliaria personnel 24 hours a day, 365 days a year.
Any emergency is dealt with by means of a single telephone call to the Control Centre, where it is redirected to the
appropriate department, assuring a rapid solution to any issue that may happen.
Other services provided by Torre Picasso:
Auditorium: With a capacity of 45 people, enables tenants of
the complex to have use of a space designed for communications
with the highest level of infrastructure, comfort and installations.
English Courtyard: This open 430 sqm space courtyard is located
on the top basement level directly below the foyer. Available
to tenants for informal events and gatherings, it includes
lavatories and a small kitchen.
Archives/storage rooms: There is a secure underground space
for storing tenants files and other valuables, which is protected
by access controls, video surveillance cameras, and an automatic
fire detection, alarm and extinguishing system.
Loading and unloading zone: The loading and unloading dock
and service lifts of the building are monitored to control the
entrance and exit of catering services, stationery, mail, courier
services, removals, etc. following monitoring by scanner.
24-hour reception and security service: During office hours
the reception area in the main foyer is attended by a staff of
hostesses who greet and guide visitors. All the public areas of
Torre Picasso and its accesses are under constant watch by
security personnel and electronic surveillance systems.
Sub post office: An official sub post office exists, with a postbox
for each tenant.
Others: Fibre Optics Network, Internal Telephone Network,
Satellite Television, Reuters Service, Internal Messenger Service,
24-hour Continuous Caretaker Service, Comprehensive
Maintenance Service and so on.
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3.1.2. Renowned worldwide tenants
Torre Picasso is one of the most exclusive and representative buildings in the city of Madrid, both in terms of location
and technical characteristics. An important quality of an office building is the quality of the occupying tenants:
international companies in Picassos case.
32 tenants currently occupy Torre Picasso and the entire office space thereof. In spite of the heterogeneous high
quality nature of the existing tenants, this section highlights Torre Picassos top 10 tenants. These tenants are:
Deloitte, Ernst & Young, Societe Generale, Accenture, Corretaje e Informacin Monetaria y de Divisas, Bank of
America Merrill Lynch, E.ON, HSBC, CB Richard Ellis and Google.
21%
79%
Tenant Distribution by Area
Key 10 Tenants Rest of Tenants
This group of tenants occupy c. 80% of the lettable area of Torre Picasso. Also, it should be mentioned that 4 of the
10 main tenants (Deloitte, Ernst & Young, Societe Generale and Accenture) represent the 56% of the total
contract area of the tower, and have been in Torre Picasso for an average of 6.5 years.
First-class tenants tend to attract other tenants. Experience tells us that the increase in demand for office space in a
particular building is correlated with the relevance of such building's tenants. Torre Picasso has had to deal with
intensified demand from companies, usually having a waiting list.
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TENANT
SURFACE OCUPPIED
/SQM/MONTH (Office)
/SQM/MONTH (Retail U.)
MONTH RENT ()
YEARS IN TORRE PICASSO
CONTRACT END DATE
Deloitte
18,055 sqm
27.87 /sqm/month
17.40 /sqm month
512,661
6 years
31/03/2016
TOWER VARIABLES
Ernst & Young
15,383 sqm
27.49 /sqm/month
12.85 /sqm/month
381,805
6 years
30/04/2015
Societe Generale
5,367 sqm
28.0 /sqm/month
N.A.
157,018
8 years
14/01/2014 (Plus
annual renewal)
TENANT
SURFACE OCUPPIED
/SQM/MONTH (Office)
MONTH RENT ()
CONTRACT END DATE
Corretaje e inform.
3,813 sqm
27.40 /sqm/month
N.A.
104,473
17 years
6/11/2013 (Plus annual
renewal)
BofA Merril Lynch
3,490 sqm
28.25 /sqm/month
N.A.
107,330
4 years
31/12/2011 (Plus annual
renewal)
E.On
2,852 sqm
28.66 /sqm/month
18.34 /sqm/month
84,526
5 years
30/06/2012 (Plus
annual renewal)
TENANT
SURFACE OCUPPIED
/SQM/MONTH (Office)
MONTH RENT ()
CONTRACT END DATE
CBRE
2,551 sqm
28.00 /sqm/month
19.9 /sqm/month
72,639
4 years
31/05/2012(Plus
annual renewal)
Google
2,548 sqm
29.51 /sqm/month
N.A.
76,531
4 years
31/05/2016 (Plus
annual renewal)
Rest of Tenants
16,394 sqm
29.06 /sqm/month
20.32 /sqm month
478,719
N.A.
N.A.
Accenture
5,018 sqm
27,50 /sqm/month
N.A.
143,308
3 years
30/04/2013 (Plus
annual renewal)
HSBC
2,660 sqm
30.96 /sqm/month
24.36 /sqm/month
85,883
7 years
30/06/2012 (Plus
annual renewal)
Key Tenant profile is that of well-established, global corporation: 8 out of the 10 tenants analysed, achieved a turnover
greater than 20,000 per month, a fact confirming their status as large-scale, solvent companies.
Additionally it should be noted that the average number of years occupying the tower for the tenants stands at 6.5
years.
It should be highlighted that the two main tenants, Deloitte and Ernst & Young (occupying 43% of the area of the
Tower and representing 41% of the income thereof) terminate their contracts in 2016 and 2015 respectively. The
possibility of annual renewal is contemplated in both contracts.
Another important fact is that current tenants such as Deloitte have made important investments in order to fit out,
resulting in a key factor for the permanence of such tenants in Torre Picasso.
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The management of Torre Picasso has implemented an outstanding business strategy consisting of a combination of
high steady rents together with high occupancy rates.
It should be noted the good performance of Torre Picassos rental prices. As it is shown, rental prices in the tower
have always maintained a moderate but steady growth, demonstrating the quality and the consistency of the building
in relation to aggressive fluctuations that could suffer the market.
Given its adjusted rental prices, its premium location, unparalleled services to tenants and unique characteristics,
Torre Picasso has a strong upside potential in rental prices.
As detailed in the next section, rental prices should be seen in the context of occupancy levels. Whereas other buildings
in the area have suffered from high vacancy levels due to aggressive commercial practices, Torre Picasso' strategy is
focused in maintaining high occupancy levels together with a moderate but stable upward trend in rental prices.
Rental Price Evolution; Torre Picasso vs. Market (/sqm/month)
40.00
35.00
30.00
25.00
20.00
15.00
0.00
CBD Medium Prices Torre Picasso
1
9
9
9
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
Torre Picasso enjoys an unparalleled track record when it comes to managing office space demand leading to best-
in-class occupancy levels.
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
14.00%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
-2.00%
Torre Picasso CBD
Vacancy Rate; Torre Picasso vs. Market
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28 Project Paris
The analysis of the data in the period 2002-2004 shows that the tower had a higher level of vacancy than the market
(Central Business District). That increase in vacancy was produced by the departure of an important tenant that was
occupying more than a 5% of total lettable area.
The 2002 - 2004 period saw a high rotation in tenants that led to a technical vacancy rate on the region of 6 to 8%.
The rotation recorded within that period is explained due to a number of tenants repositioning their real estate
locations after the dot-com crisis. Since 2005 onwards, Torre Picasso has consistently had an occupancy level of
almost 100%.
These figures lead us to the conclusion that Torre Picasso is resilient against real estate cycles and stands as one of
the most competitive buildings in the Madrid Office Market.
During the last 10 years, Torre Picasso has enjoyed an occupancy rate of close to 100% with the exception of a limited
period of time in which the rate reached 92% at the bottom, partially compensated by increased rental prices.
Even, in the current financial crisis with severe economic conditions, Torre Picasso occupancy rate has remained
at 100% showing resilience to the crisis, while the market vacancy rate has skyrocketed to 12%.
As previously mentioned, the business strategy applied by management has resulted in:
i) steady growth of rental prices reaching and average of 28 sqm/month
ii) impressive occupancy rates averaging 98% for the last 10 years
It should be noted that Torre Picassos low vacancy rate has been maintained despite an increase in CBD stock of
approximately 37%.
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
100%
98%
96%
94%
92%
90%
88%
Occupancy Rate Rental Prices Level
Torre Picasso; Rental Prices vs. Occupancy Rate
30
25
20
15
10
5
0
/
s
q
m
/
m
o
n
t
h
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Planned in 1974, construction did not commence until the close of 1982 and the building was opened in December
1988. Torre Picasso has since become one of the most emblematic buildings in Madrid and its image is a symbol
for both the 6,000 people who work within its walls and the rest of the citys population.
At a height of 157 metres, it is one of the tallest buildings in the country and its conceptual design, based on the use
of advanced technologies, continues to make it one of the most sophisticated, efficient and safest intelligent buildings
in Europe.
Its presence has transformed not only the urban landscape of Madrid, but also the concept of what a place of work
should represent: a prime office building featuring the highest levels of service, offering the most sophisticated
facilities and enjoying an efficient use of space within the best area of Madrid.
Plot surface:
Buildibility
Total built surface:
Built surface above ground:
Built surface under ground:
Lettable surface:
Office
Commercial
Tower total height:
Office floor free height:
Above ground floors:
Parking floors:
Parking spaces:
9,468 sqm
84,257 sqm (c. 5,000 sqm remaining buildibility*)
108,983 sqm
75,268 sqm
33,714 sqm
78,131 sqm
70,165 sqm
7,967 sqm
157 m
2.60 m + 0.60 m false ceiling
Ground + Mezzanine + 43 office floors + 2 techncial floors + helipad
4
833 (74 public and 759 private)
Torre Picasso has 5 floors below ground and 45 floors above ground level. The ground floor combines retail and office
uses, taking advantage of independent accesses to the building. The first floor has tertiary uses in addition to an
auditorium of 270 sqm which is available to the tenants of the Tower.
Floors 2 to 43 are entirely assigned to office use whilst floors 44 and 45 are technical floors.
The building additionally has a mezzanine floor which houses an office area and a wide, open-plan space assigned to
holding events. This floor receives sufficient light thanks to the courtyard created alongside the main access to the
building.
Main Parameters
* Remaining surface given by property
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30 Project Paris
The structure of the building is mixed and combines reinforced concrete at the base with metal columns and beams
up to the crest, protected against fire by the use of fire retardant cement. The floor structures are composed of steel
deck and lightened concrete. The building roof has a helipad.
Due to the differences in height in pedestrian areas of Azca, entrances to Torre Picasso are at the level of the ground
floor and the mezzanine, from which a highly representative double vaulted lobby is accessed. This occupies the
majority of the area of the ground floor.
By means of security turnstiles, independent access is available from the entrance hall for each of the three groups
of lifts and stairways which interconnect the upper floors.
A particularly noteworthy characteristic of Torre Picasso is the wide entrance arch, which supports the entire facade
using an underground steel structure as reinforcing. The space below this arch is covered over using a special type of
safety glass known as STADIP.
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Torre Picasso was designed by the Japanese born American architect Minoru Yamasaki, in conjunction with a Spanish
team directed by Jordi Mir Valls and Rafael Coll Pujol.
Minoru Yamasaki (1912 1986): a unison of beauty and functionality
An American architect renowned for combining external beauty and the most efficient working spaces in his projects.
His travels around the world subjected him to an enormous range of influences.
During the great depression of the 1930s Yamasaki moved to New York, where he was employed by the firm of
architects Shreve, Lamb and Harmon, the designers of the Empire State Building. Years later he joined the firm of
Harrison and Abramovitz, responsible for the design of the Rockefeller Center.
His most famous work was the World Trade Center in New York,
comprising twin towers enclosed within a brilliant, metallic sheath
giving a markedly vertical impression.
The Twin Towers were completed in 1976 and perfectly embodied the
ideas of their creator in terms of clear lines, the absence of aggressive
elements and simple, understandable shapes.
The Torre Picasso was one of the last buildings he designed, leaving
behind an architectural legacy.
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32 Project Paris
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PROJECT PARIS
4.2. Installations
TECHNICAL CONSIDERATIONS IN RELATION TO TORRE PICASSO
Construction excellence
CHAPTER 4
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Structure
Mixed steel and concrete structure above ground, with 17cm-thick
steel deck and maximum mesh of 3 x 12m on floors above ground.
The central core supports the bulk of the weight, enabling space to
be maximised in the areas assigned to the activities of the occupants
through an open plan layout. The roof of the tower is designed in
order to house one of the largest heliports in the city of Madrid.
Faade
Mixed insulated facade consisting of off-white, continuous aluminium
plate columns, alternating with fixed windows of 1.4m in width,
subdivided into two parts by means of continuous vertical aluminium
pillars from floor to ceiling. The windows consist of insulated double
glazing with a reflective bronze coloured exterior over an aluminium
frame. The layout of the facade enables great flexibility when
compartmentalising the floor according to the needs of the user.
Main Foyer
In the middle of the main entrance arch is a 5-metre wide revolving
door assembly that ensures a smooth flow of pedestrian traffic.
The imposing entrance arch leads to a spacious and airy foyer with
a fully equipped reception area for visitors and a control point for
people who work in the building.
Car parking
There is a provision of private car parking spaces associated with the
lease contracts for the offices, with more than one space for every
80 sqm of leaseable area. In turn there is a rotational car park which
enables the demand of visitors to the tenants of the tower to be
satisfied while maintaining the high levels of security of the complex
as a whole.
Finish Works
Premium quality specifications for floors, vertical walls and
installations. High-quality details in the signposting of the three
blocks into which the tower is divided for vertical communication,
interior signposting of the zones giving access to the private areas
of tenants using TFT screens, green spaces of great landscaping value.
The headroom on floors is 2.60m, with metallic, accessible, modular
false ceilings, above which there is 0.60m for the routing of the
principal installations, other than the electrical installation which
runs through the deck. Lighting and fire protection devices are
integrated into the false ceiling, as are the air conditioning diffusers
and return grilles.
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36 Project Paris
4.2. Installations
Air-conditioning
Designed in order to optimise working areas, the building has a thermostated water ring fed by 4 cooling towers (on
the roof) and 3 diesel boilers (on basement -3). The aforementioned ring cools the console type independent heat
pumps which are distributed around the perimeter of the facade and which are independently regulated with thermostat
controlled cycle changeover. Cold-only independent units exist for the core zones of the building and a hot water coil
is fed directly by the boiler circuit for the start-up of floors in winter. This equipment is located in a specific room
on each floor and contributes to the need for the renewal of the interior air thereof. They have variable flow with flow
regulators for the 11 interior zones per floor.
Counting solely the perimeter units, the flexibility ratios are fairly efficient (1 unit for every 33 sqm). Counting likewise
the adjustable interior zones, there are around 2,100 independent thermal regulation zones in the offices, each 26
sqm on average.
The installations are within the regulations and continuous monitoring is undertaken regarding water quality (legionella
prevention) and air quality, particularly with regard to microbiological parameters.
All information is integrated within the installation management and control systems (BMS) and enables operation
adapted to working conditions, operations and loads, permitting efficient use of resources whilst ensuring user comfort.
Electricity
For its common areas, Torre Picasso has a subscriber transformer substation comprising 5 transformers with a total
actual power of 3,890 kVA, fed by a double medium-voltage ring circuit in order to provide greater safety for the
building. In addition, and with a view to reducing off-circuit risks, there are two generating units of 1,500 kVAs each.
Independent of the foregoing, there is a low voltage transformer substation belonging to the electricity company
(Unin Fenosa) for supply to the privately leased areas. Main distribution to the common areas is carried out by means
of busbars and there are meters for the different uses and zones to control consumption and favour activities with a
view of improving the energy efficiency of the installations.
Lifts
Torre Picasso possesses a total of 24 lifts and 1 service lift, all manufactured by Otis. The distribution is as follows:
Floors above ground (vertical transport of persons)
Core of lifts for the lower block (from ground floor to the 18th floor), comprising 6 units with a speed of 2.5 m/s ,
maximum load of 1,600 kg (21 persons), and 62.60 metre track (18 stops); Core of lifts for the middle block (from
ground floor to between the 18th and the 32nd floor), comprising 6 units with a speed of 4 m/s, maximum load of
1,600 kg (21 persons), and 109.50 metre track (16 stops); and core of lifts for the upper block (from ground floor and
to between the 33rd to the 43rd floor), comprising 6 units with a speed of 6 m/s , maximum load of 1,350 kg (18
persons), and 146.35 metre track (13 stops).
Floors below ground (vertical transport of persons)
Core of lifts for the car park (from ground floor to B-4), comprising 3 units with a speed of 1.6 m/s, maximum load,
1350 kg (18 persons), and 11.90 metre track (5 stops); and core of emergency lifts for car parks in the emergency
stairway with direct exit to the exterior (from ground floor to B-4), comprising 2 units with a speed of 1.0 m/s,
maximum load of 630 kg (8 persons), and 11.42 metre track (5 stops).
The tower has an individual system management and centralized control for the following services: air conditioning
(Honeywell), fire detection and alarm system (Siemens), Access Control (Dorlet), control and measurement of the
electrical system (Schneider), lifts and hoists (Otis), CCTV (Bosch). All of them and depending on the criticality of
the services are integrated at different levels (software only or software and hardware) in a SCADA (Telvent) integrates
and interacts intelligently all these subsystems. It is currently being implemented a CMMS (GIM) that will integrate
into the SCADA and will complement all control data, specifications and Torre Picassos Management.
This system was implemented by Telvent, a leading IT solutions provider, back in 1989 and has been updated on a
regular basis. Additionally, an investment program for installing CCTV cameras for security purposes is currently
underway. This program, which is 50% completed, is expected to be finalized by 2012.
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Fire safety installations
Passive Fire Protection
Detection and Alarm System
Each floor has a fire detection panel, interconnected and integrated with engineered redundancy in management
and control software centralised at the Permanent Safety Post and Control Centre. The aforementioned panels
are connected to all of the detectors (smoke and temperature gradient), alarm buttons, bells, fire doors and
dampers. All of the plant rooms are considered to be at high risk and have additional detection and suppression
measures. Controlled evacuation of the building is facilitated by means of distributed megaphone originating
from the control centre and permanent safety post.
Fire suppression mechanisms
Fed by means of an exclusive water connection comprising numerous cisterns and pumps for the various cores
and blocks of the building. There are three pressure booster units for the tower (B-4 for the lower zone, 13th floor
for the middle zone and 19th floor for the upper zone). Each floor has a pressurised water hose, equipped fire
hydrants, manual extinguishers, control points and provision of sprinklers, water curtain confinement systems
in the car park and independent, automatic suppression systems in plant rooms.
Technical resources relating to fire safety
Lifts for priority use by fire services in all building cores
Secondary response teams with continuous training and advanced equipment to assist in intervention.
Security Installations
- Closed-circuit television with permanent recording in compliance with the Data Protection Act
- Security Megaphone with more than 1,250 broadcast points
- Interphone with more than 50 bidirectional communication points installed at all access points and lifts enabling
communication with the Control Centre
- Anti-intruder system with more than 2,000 sensors integrated into the central system enabling control of unauthorised
movement
- Emergency Lighting and signposting integrated within the control software and continuously checked
- Access Control at all entrances and exits to and from the complex for vehicles and persons in real-time and under
strict compliance with the Data Protection Act
- Shutdown plan for strategic areas and zones of the complex with the latest electronic locks and Keys and all users
and permits registered on a database
- Scanner for all packages entering the complex operated by specialist staff
- Patrol Control managed by a centralised system
- Sniffer Dogs for explosives
- Emergency Plan and Evacuation Plan continuously supervised and controlled by the Civil Protection police
- Exclusive communication between all applicable rooms and the Control Centre by means of internal telephone.
Service lifts
One service lift (from B-1 to B-4) with a speed of 0.5 m/s, maximum load of 1,800 kg (24 persons), 10.50 metre track
(4 stops).
Viewing lift
A viewing lift (from the 1st floor to B-1), with a speed of 0.4 m/s, maximum load 1,500 kg (21 persons).
Active Fire Protection
The response to fire of the materials used in the construction of Torre Picasso complies with the requirements for high
buildings and provides high levels of safety. In addition, safety measures exist for the evacuation of the building which
comfortably comply in terms of both number and sizing: fire escape stairways and corridors, pressurised, protected
interiors, exterior stairways, heliport, lifts for use by fire services.
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38 Project Paris
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The office floors above ground are very similar in themselves. The floors are orthogonal in shape and offer completely
open-plan offices set around a central core comprising three groups of six lifts, stairways and washrooms, the latter
having direct access from the common areas.
These office floors have an area of 1,700 sqm and a freestanding height of 2.60 m, and could be divided into 4 modules.
This provides the building with a great degree of flexibility in terms of commercialization. The possible division of the
floors into modules, allows to offer lettable areas from less than 250 sqm., a range of office space highly demanded
in today's market.
The floors are provided with an Ackerman network, a false ceiling, a smoke detection system and a sprinkler network.
Air conditioning is by means of diffusers in the central area with perimeter fancoils. Each floor has an independent
air conditioning system, and each office may programme on and off times as well as temperature and humidity from
a remote control device. The systems are monitored and supervised at all times from the Control Centre. Air conditioning
is supplied at the outer wall via heat pumps and air vents beneath the windows, and in the central area via an
autonomous unit. Air reaches the central area through linear vents built into the lighting panels.
The four floors underground house 833 car parking spaces, in addition to utility and machine rooms, storage rooms,
staff changing rooms, the Security Control Centre, etc. The parking spaces situated on basement floors 2 to 4 are for
private use of the tenants whilst those on the first floor are assigned to rotational parking for public use.
Floor 14 - Real division of different moduls
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HELIPAD
MEZZANINE
MACHINARY ON THE ROOF
FLOOR 43
FLOOR 42
FLOOR 41
FLOOR 40
FLOOR 39
FLOOR 38
FLOOR 37
FLOOR 36
FLOOR 35
FLOOR 34
FLOOR 33
FLOOR 32
FLOOR 31
FLOOR 30
FLOOR 29
FLOOR 28
FLOOR 27
FLOOR 26
FLOOR 25
FLOOR 24
FLOOR 23
FLOOR 22
FLOOR 21
FLOOR 20
FLOOR 19
FLOOR 18
FLOOR 17
FLOOR 16
FLOOR 15
FLOOR 14
FLOOR 13
FLOOR 12
FLOOR 11
FLOOR 10
FLOOR 09
FLOOR 08
FLOOR 07
FLOOR 06
FLOOR 05
FLOOR 04
FLOOR 03
FLOOR 02
FLOOR 01
GR. FLOOR
BASEMENT - 1
BASEMENT - 2
BASEMENT - 3
BASEMENT - 4
BASEMENT - 5
1,744.84
1,744.84
1,744.84
1,744.84
1,744.84
1,744.84
1,744.84
1,744.84
1,744.84
1,647.79
1,654.51
1,687.63
1,687.70
1,675.40
1,655.14
1,687.80
1,687.70
1,687.70
1,687.70
1,687.70
1,687.70
1,687.70
1,687.70
1,593.93
1,597.58
1,636.71
1,636.47
1,636.47
1,636.47
1,636.47
1,597.34
1,636.47
1,569.56
1,636.47
1,636.47
1,636.47
1,681.84
1,636.47
1,636.47
1,636.47
1,636.47
1,636.47
1,198.38
2,645.11
3,142.45
532.55
-
-
-
OFFICES OFFICES
HELIPAD
OFFICES
RETAIL ZONE
RETAIL ZONE
PARKING
PARKING
PARKING
OFFICES
RETAIL
ZONE
PARKING
PARKING
PARKING
FIRST LEVEL
SECOND LEVEL
TECNICHAL FLOORS
OFFICES-UPPER FLOORS
OFFICES-MID-LEVEL FLOORS
OFFICES-LOWER FLOORS
40 Project Paris
Lettable area
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Ground Floor
Floors 2-20
Office
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Floors 21-34
Office
Floors 35-43
Office
42 Project Paris
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Basement -1
Basement -2
Parking
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44 Project Paris
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The commitment of Torre Picasso towards environmental protection may clearly be seen from the faultless condition
of preventative maintenance, the control of all installations and significant investment assigned in recent years to
Environmental Protection and Energy Efficiency.
With clear and determined foresight, Torre Picasso is ahead of future environmental regulations in terms of equipment
and activities and, as further proof of this commitment, its own undertakings in this context go beyond those of
current legal requirements.
Quality Certification
Torre Picasso possesses an Environmental Management System based on ISO 14001, without prejudice to future
environmental quality certification in general, and Energy Efficiency in particular. External service providers are also
subject to this System.
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46 Project Paris
Renovation of the transformer substation, consisting of the
installation of two transformers with the latest generation
of dry insulation
Renovation of the pulling units and installation of unit control
and handling, improving energy efficiency and smoothness
Replacement of the floor/ceiling console R22 units, improving
energy efficiency and the efficient use of space in the tower
due to an increase in the usable area (net floor area) of the
private space used by tenants
Changeover of the ceiling R22 units for the use of a different
gas, improving energy efficiency and complying with
regulations
Renewal of the air-conditioning units on floors to improve
energy efficiency
Change of pneumatic air conditioning regulation system
managed by BMS
Replacement of fibreglass false ceilings with high quality
microperforated metal
Refurbishment of PPS and BMS Control Room, including
video wall
Replacement of analogue cameras by IP (1)
Modernisation and migration of BMS Software, leading to
the integration of other installations (network analysers,
enthalpy meters, etc)
Refurbishment of courtyard rooms
100%
100%
71%
48%
33%
42%
95%
100%
50%
0%
0%
0%
0%
29%
52%
67%
58%
5%
0%
50%
100%
100%
Improvement Implemented (%) To be Implemented (%)
The management of Torre Picasso carries out a policy of anticipation in relation to investments and improvements,
in order to spread out along few years the financial impact of such spending.
Additionally, such carefully planned investment strategy has kept Torre Picasso at the vanguard of the most technological
advanced buildings in Europe and the best maintained office space in Spain.
Below are shown the main improvements that are taking place in Torre Picasso as well as those intended to be
undertaken in the future.
(1) 50% implemented in 2011 and 50% in 2012
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PROJECT PARIS
TENANCY SCHEDULE
Best-in-class tenants
CHAPTER 5
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Historic P&L
Torre Picasso's service charge income in 2011 amounts to 6.68/sqm/month for offices, 4.22/sqm/month for retail
spaces and 24.64/lot/month for parking lots. Considering total expenses of 10.6/sqm/month, c.60% of Torre
Picasso's cost base is passed on to its tenants.
Torre Pi casso' s busi ness model i s proven, deli veri ng a soli d performance throughout the years.
In the following pages, a detailed analysis of Torre Picasso's financial performance is included.
In terms of gross rental income, office rental is the main source of revenue, consistently representing c. 88% of total
revenues.
The other 2 main drivers of gross rental income are the retail spaces and parking lots: contributing c.10% of total
revenues. Additional recurrent source of income are the auditorium and the public car park.
- The auditorium represents an annual revenue streamline of approximately c. 75,000.
- The outsourced public parking to a third party produces income of c. 145,000 annually.
Other income derives from services provided
to tenants in order to accommodate their
office space to their needs when moving in.
EBITDA remains fairly stable throughout
the period with a margin of above 65%.
-
-
Given Torre Picasso's positioning, its long term
contracts and historic rents and occupancy levels, P&L
is very stable with recurrent and predictable income
as well as stable margins.
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50 Project Paris
Historic capital expenditure
Average capital expenditure over the past 3 years was 1.5m and is explained by a combination of changes in regulation
(i.e. air conditioning and improvements done at Torre Picasso).
The management sets up a detailed calendar in relation to potential investments needed allowing to spread out the
capex in several years. It is expected that capex requirements would be lower as the works to fulfill new regulatory
requirements are finalized.
Data in '000 2008A 2009A 2010A
Total revenues
Gross rental income
- Office
- Retail
- Parking space
- Auditorium
- Public car park
Service charge income
- Office
- Retail
- Garaje
Other income
Service charge total expenses
Other expenses
EBITDA
EBITDA Margin
33,442
26,541
23,592
1,751
944
116
138
5,926
5,469
248
209
975
(11,397)
(2,570)
19,475
58.2%
33,605
26,506
23,703
1,635
947
75
146
5,971
5,512
254
205
1,128
(10,372)
(794)
22,439
66.8%
32,843
25,778
23,053
1,570
939
72
145
5,922
5,465
254
203
1,142
(9,939)
(968)
21,936
66.8%
The following tables show the breakdown of capital expenditure (investments) and those improvements booked as
expenses in P&L. Together represent the amount spent by Torre Picasso to keep the building according to the highest
quality standards.
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Investments at Torre Picasso amounted to a total of over 13 mm for the last five years (2006-2010).
2006 2007 2008 2009 2010
2,625
4,531
2,638
1,842
1,496
Torre Picasso investments and improvements (000)
2006 2007 2008 2009 2010 TOTAL
INVESTMENT (Capex)
532
0
30
876
0
323
0
1,762
438
2.9
17
145
0
56
48
709
1,361
29
337
2,162
42
393
107
4,435
Specifications
Accessibility
Efficiency
Fireplace
Exposure
Security
Services
TOTAL:
IMPROVEMENTS
417
33
582
252
9
0
99
1,395
Applications and software
Enginery
Facilities
Furniture
Electronic Equipment
Materials
Metal Ceilings
TOTAL:
477
321
1,284
534
5.4
0
144
2,768
121
105
838
688
11
47
114
1,929
1.4
4.4
1,209
96
0
0
51
1,365
11
0
1,094
86
47
0
0
1,241
1,029
465
5,009
1,658
74
47
410
8,697
3.5
0
168
1,048
0
8.5
0
1,230
254
26
78
71
42
4.1
0
477
132
0
42
20
0
0
59
255
Total Investments + Improvements 2,625 4,531 2,638 1,842 1,496 13,132
It should be noted, that the peak of the investments and improvements occurred in 2007, due to the upgrading of
new enginery such as the increase of power in the refrigeration towers, and the installation of new facilities including
the Siemens' fireplace units, Tetra's communications system, new warehouses, changing rooms, etc.
Data in 000
Project Paris R
52 Project Paris
Project Paris R
The table below provides a summary of lease contracts pertaining to offices, retail premises and parking spaces.
Although there are various contracts per tenant, the table shows a summary of areas and rental according to tenant.
5,018
3,490
-
485
2,491
249
387
3,813
562
17,917
588
2,828
11,424
1,921
493
2,476
2,548
2,516
731
313
305
488
305
305
246
534
378
5,367
-
280
797
249
659
-
70,164
-
-
854
-
60
-
-
-
-
138
-
24
3,959
-
-
-
-
144
-
-
-
-
-
-
-
-
-
-
2,496
-
-
-
-
292
7,967
5,018
3,490
854
485
2,551
249
387
3,813
562
18,055
588
2,852
15,383
1,921
493
2,476
2,548
2,660
731
313
305
488
305
305
246
534
378
5,367
2,496
280
797
249
659
292
78,131
46
71
-
6
15
3
4
12
19
96
6
26
158
40
16
14
11
37
19
2
1
4
5
5
2
15
2
70
-
3
22
2
8
19
759
138,002
98,566
-
13,956
69,739
8,474
12,053
104,473
17,114
499,330
17,663
81,061
314,002
60,029
14,662
65,588
75,197
77,876
19,680
8,928
8,847
14,668
8,695
8,847
7,241
15,954
10,970
150,286
-
8,118
22,428
7,324
19,394
-
1,979,165
5,307
8,764
-
692
1,706
342
236
-
2,135
10,925
661
3,032
16,943
6,382
1,450
1,576
1,335
4,500
1,432
-
-
482
527
341
238
1,793
201
6,732
-
316
2,610
220
-
-
93,335
30-4-2013
31-12-2011
31-12-2011
25-3-2014
31-5-2012
11-11-2013
31-5-2012
6-11-2013
31-1-2014
31-3-2016
28-2-2015
30-6-2012
30-4-2015
31-12-2013
30-4-2013
10-4-2015
31-5-2016
30-6-2014
14-2-2013
14-10-2013
31-5-2014
28-2-2013
28-2-2014
14-4-2014
18-11-2012
13-12-2012
14-7-2013
14-1-2014
15-7-2015
28-2-2013
31-12-2014
28-2-2013
28-2-2012
-
1-1-2012
1-2-2011
1-4-2013
1-8-2011
1-9-2011
12-11-2012
1-7-2011
7-11-2011
1-3-2011
1-5-2011
4-1-2011
1-5-2011
1-6-2011
1-2-2012
1-6-2011
1-11-2011
31-5-2012
1-7-2011
15-3-2011
15-11-2011
31-5-2012
1-4-2011
28-2-2012
14-4-2012
19-11-2011
14-1-2012
15-8-2011
1-4-2012
16-7-2012
1-4-2012
1-8-2011
1-4-2011
1-4-2011
-
Tenant
Office
Surface
(sqm)
End
Contract
Date
CPI
Revision
Date
Accenture
BofA - Merrill Lynch
Barclays Bank
Blackrock Investment Management
CBRE
Cenyt
Corporacin Andina de Fomento
Corretaje e informacin Monetaria y de Divisas
Daemon Quest
Deloitte
Diaz-Bastien & Truan Abogados
E.ON Servicios
Ernst & Young
Fomento de Construcciones y Contratas
Glencore
GMS Management Solutions
Google
HSBC
Intel Corporation Iberia
Irwin Mitchell
Lyonnais
Markel International Insurance Company
MBDA
Miramar
Pemex internacional
Polycom Solutions
Sartorius & Hart-Pallavicini
Societe Generale
Tower Gym
Trima Servicios Inmobiliarios
Visa
Wells Fargo Bank
P.E.R. Gestora Inmobiliaria
Available Space
TOTAL:
Data as of June 1, 2011
In addition to the contractual period, Torre Picasso's tenants can extend their tenancy automatically for a limited
number of years (mainly from 1 to 5).
These extensions provide an easy way of renewing the contracts, providing higher certainity to Torre Picasso's rent roll.
-
-
39,660
-
1,194
-
-
-
-
2,405
-
433
50,861
-
-
-
-
3,508
-
-
-
-
-
-
-
-
-
-
34,333
-
-
-
-
-
132,394
143,308
107,330
39,660
14,648
72,639
8,816
12,288
104,473
19,250
512,661
18,324
84,526
381,805
66,410
16,113
67,164
76,531
85,883
21,112
8,928
8,847
15,149
9,222
9,189
7,478
17,747
11,171
157,018
34,333
8,434
25,037
7,544
19,394
-
2,204,894
Retail
Surface
(sqm)
Total
Surface
(sqm)
Parking
Lots
Office
Monthly
rent ()
Retail
Monthly
rent ()
Parking
Monthly
rent ()
Total
Monthly
rent ()
Project Paris R
54 Project Paris
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
% CERTAIN OCCUPANCY
% FLOATING OCCUPANCY
% VACANCY
99.06%
0.94%
0.00%
86.05%
10.96%
3.00%
67.65%
23.08%
9.27%
54.14%
20.68%
25.18%
33.34%
37.52%
29.14%
5.96%
47.31%
46.73%
0.00%
38.78%
61.22%
0.00%
27.05%
72.95%
0.00%
27.05%
72.95%
0.00%
27.05%
72.95%
0.00%
11.15%
88.85%
0.00%
3.19%
96.81%
TOTAL SQM 78,131.5
Area SQM
Deloitte
18,055.20
2,495.74
Tower Gym
15,382.99
Ernst & Young
2,476.00
GMS Management Solutions
797,18
Visa
313,28
Irwin Mitchell
378,28
Sartorius & Hart-Pallavicini
5,018.24
Accenture
488,21
Markel International I.C.
248,75
Wells Fargo Bank
280,00
Trima Servicios Inmobiliarios
730,62
Intel Corporation Iberia
534,11
Polycom Solutions
246,28
Pemex internacional
305,08
Miramar
485,43
Blackrock Investment
2,851.61
E.ON Servicios
2,659.56
HSBC
2,550.67
CBRE
387,23
Corporacin Andina de F.
3,489.68
BofA - Merrill Lynch
854,03
Barclays Bank
248,75
Cenyt
2,548.45
Google
492,67
Glencore
562,04
Daemon Quest
305,08
MBDA
5,367.36
Societe Generale
1,920.92
FCC
Corretaje e informacin M.D.
3,813.00
Deloitte, the largest tenant at Torre Picasso, has the lengthiest floating period (Excluding Tower Gym and Barclays
Retail Unit) with the potential to extend its contract 5 more years.
The potential contract extension together with the compulsory occupancy could result in a secured occupancy rate
of approximately 70% until 2015.
2026
Binding contracts
Floating periods
305,08
Lyonnais
587,92
Diaz-Bastien & Truan
Project Paris R
The following chart shows an analysis of the schedule of contract termination by surface.
Torre Picasso's current rent profile reflects the nature of its long term contacts, with a limited number of contracts
expiring in the short term. Negotiations for the renewal of contracts expiring in 2011 and 2012 (namely BofA - Merrill
Lynch and CBRE) are currently underway and the management expects to succesfully close these negotiations.
It should be noted that an important amount of the square meters that would be available in the short term, are
principally modules of small areas which are easier to be commercialized. Nevertheless, it is expected that a good
portion of these contracts may be extended as recent experience has shown.
2011 2012 2013 2014 2015
4,836.4
Contract ending by surface (sqm)
2016
25,000
20,000
15,000
10,000
5,000
0
9,229.5
11,519.0
9,251.0
21,151.9 21,191.6
S
u
r
f
a
c
e

(
s
q
m
)
Project Paris R
56 Project Paris
Following the analysis of the contracts, it has been noted that the average stay of the current tenants in the Tower
stands at 6.5 years showing a high degree of loyalty from the tenants towards Torre Picasso. The chart below shows
the contractual distribution of the tower according to contract terms.
At May 2011, under the hypothesis of no renewal/extension for any contract existing at that date.
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
-
60%
50%
40%
30%
20%
10%
0%
1-5 years 5-10 years more than
10 years
Area % Tenants
Years of Permanency in the Torre Picaso
Number of Years
n the Tower
As may be seen from the chart, almost 50% of tenants stay more than 5 years at Torre Picasso. This fact largely
confirms that a significant proportion of the tenants decide to renew their contracts and to extend their commitments
remaining in the Tower.
It should be noted that of the group of tenants who have been at Torre Picasso for over 4 years (Deloitte, Bank of
America Merrill Lynch, EON, Visa, Barclays and CBRE) solely the contract of Bank of America Merrill Lynch and
Barclays terminate this year. It is anticipated that the option to extend the said contracts will be exercised.
Another important factor to be highlighted is the renewal of the contract of Deloitte, extended to 2016. This gives
a high degree of security due to the fact that Deloitte is the main tenant of the building, both in terms of occupancy
and rental income generated.
Project Paris R
The comparison between Torre picassos rent vs. market prime rents shows that 68% of Torre Picassos rental prices
are either below or at average market rents.
45% of rents are below market
23% of rents are at market
Only 32% of rents are above market
As a result, there is an upside potential to increase rents in the future.
Under Average Above Average Average
Lease Rent Structure
45%
23%
32%
At of June 2011
This analysis reinforces Torre Picasso's management strategy of high occupancy rates combined with competitive
rental prices which have resulted in a maximization of income for extended periods of time.
Project Paris R
58 Project Paris
Project Paris R
Project Paris R
PROJECT PARIS
CHAPTER 6
6.1. Description of the office market
6.2.4. Vacancy and future suply
6.3.3. Azca and surrounding buildings
OFFICE MARKET
A market with high growth potential
Project Paris R
6.1. Description of the office market
The Central Business District.
Including both sides of the Paseo de
la Castellana from the square of
Cibeles, in the city centre, up to Azca
in the north. The Cuatro Torres
Business Area is included in this prime
zone due to the characteristics thereof.
Rest of business District. Comprising
the remainder of the Central Business
District. Notable for the presence of
financial institutions, insurance and
service companies. This zone contains
a mix of Class A buildings located
outside of the Central Business District
and other, lower quality buildings.
Rest of the City. This zone covers the
historic centre of the city which is not
included in the above indicated zones,
such as Alcal and Princesa.
Decentralised. The decentralised zone
of Madrid, comprising the area of
influence between M-30 and M-40
such as the Campo de las Naciones.
Out of the City. Business zones
outside of the city with modern office
buildings.
The Central Business District.
Including both sides of the Paseo de
la Castellana from the square of
Cibeles, in the city centre, up to Azca
in the north. The Cuatro Torres
Business Area is included in this prime
zone due to the characteristics thereof.
Rest of business District. Comprising
the remainder of the Central Business
District. Notable for the presence of
financial institutions, insurance and
service companies. This zone contains
a mix of Class A buildings located
outside of the Central Business District
and other, lower quality buildings.
Rest of the City. This zone covers the
historic centre of the city which is not
included in the above indicated zones,
such as Alcal and Princesa.
Decentralised. The decentralised zone
of Madrid, comprising the area of
influence between M-30 and M-40
such as the Campo de las Naciones.
Out of the City. Business zones
outside of the city with modern office
buildings.
C B D C B D
R B D R B D
RC RC
O U T O U T
D E C D E C
In terms of the office market, 2010 has confirmed the change in trend identified during the second half of 2009. To
this effect, gross trading has grown year-on-year by 45%, standing at 454,000 sqm area contracted.
The office market in Madrid closed in 2010 with a stock of 12,221,342 sqm, 2.5% up compared to the previous year.
This figure includes the 301,727 sqm of new stock, incorporated over the last 12 months. With regard to the Central
Business District (CBD), the stock has grown by 11% due to Torre Cristal with a total area of 57,576 sqm.
Vacancy rates continue rising in practically all zones, other than the Central Business District (CBD). The overall
vacancy rate has reached 10.5%, representing more than 1,250,000 sqm available space. Analysing the behaviour of
the availability rate in the CBD over the last half year, a slight reduction in the available area is confirmed as transactions
representing significant volumes in this zone were concluded during the final months of the year.
Based on current vacancy rates, the envisaged trend in new supply and estimated demand behaviour, it is expected
that movements in rental prices during 2011 would be very similar to those registered throughout 2010. In this context,
the volatility in rental prices will depend to a great extent on the area, bearing in mind that there are zones in the
Madrid office market where rents would tend to stabilise.
New projects for construction and redevelopment of offices in the city of Madrid will decrease throughout 2011. This
fact will lead to a slowdown in the increase in the available area, enabling the currently vacant product to begin to
achieve consolidation in the marketplace.
Project Paris R
Aeropuerto de
Madrid-Barajas
M-30
M-30
A-6
A-2
A-3
M-11
A-6
A-5
M-40
R-2
A-1
M-40
M-45
M-21
M-607
A-2
A-5
Coslada
San Fernado
de Henares
Paracuellos
del Jaramas
La Moraleja
Alcobendas
El Pardo
Aravaca
Pozuelo de Alarcn
Somosaguas
Viclvaro
Chamartn
Hortaleza
Parque
del Retiro
A-42
A-4
M-50
R-3
R-2
M-13
Atocha
Cibeles
Coln
Nuevos Ministerios
Plaza Castilla
Calle Alcal
Cuzco
Avenida
de Amrica
Plaza
Espaa
Sol
P de Extremadura
Mndez lvaro
Avda. de la Albufera
M-23
Campo de las Naciones
CBD
RBD
RC
DEC
OUT
62 Project Paris
The amount of new stock made available to the market during 2010 was 77,963 sqm, of which 72% corresponded
to Torre Cristal. The incorporation of projects such as Torre Cristal has led to the CBD having the most notable
percentage variation in stock in 2010, with an increase of approximately 11% compared to 2011.
The stock in the CBD in Madrid remained constant up to 2008, the year in which new stock originating from the
Cuatro Torres Business Area (CTBA) began to enter the market. As a result, stock in the CBD has increased by 37%
over the last three years. However, current stock levels are expected to remain relatively constant going forward as
no new projects are envisaged.
A positive effect of the entry of new stock was that CTBA complex has renewed and modernised the character of the
Madrid prime office market, largely improving the image of the office stock of the city of Madrid.
Stock evolution CBD (sqm)
2003 2004 2005 2006 2007 2008 2009 2010
562,471 562,471 562,471 573,171 573,171
650,757
707,757
785,720
Project Paris R
During 2010, gross trading reached 454,396 sqm, representing an increase of 45% compared to 2009.
The following table details trends in trading over half-year periods in 2009 and 2010. During 2010 we may see a
general increase in trading in practically all zones, the increase in absorption registered by the CBD, being particularly
noteworthy by standing at 110% above the total absorption registered for this zone in 2009.
The table below shows the space contracted in 2009 for each of the zones comprising the office market in Madrid,
compared to the space contracted in 2010.
The absorption by sector of activity registered in 2010 is likewise shown below. The business services sector occupies
28% of the available office space in Madrid, well above the second largest occupier, the Government and official
organisations. However the business services average surface area is the lowest among the top 5.
1st Half
2009
2nd Half
2009
TOTAL
2009
1st Half
2010
2nd Half
2010
TOTAL
2010
Var
09/10
ZONE
Business Services
Goverrnment & Official org.
Chemicals/Energy
IT
Retail & Distritbution
Banking & Finance
Telecomunications
Industry
Construction / Real Estate
Insurance
Media
Others
126,139
52,398
49,250
45,023
39,223
34,103
25,646
23,762
22,319
16,533
14,407
5,419
27.8%
11.5%
10.8%
9.9%
8.6%
7.5%
5.6%
5.2%
4.9%
3.6%
3.2%
1.2%
943
1,661
1,106
1,709
978
845
775
362
720
484
1,083
437
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
N Sector Area % Average Surface Area
CBD
RBD
RC
DEC
OUT
TOTAL
10,128
19,346
21,918
53,835
32,546
137,773
10,506
59,869
9,738
44,214
50,553
174,880
20,634
79,215
31,656
98,049
83,099
312,653
12,380
36,457
25,577
131,136
75,115
280,665
30,886
36,261
17,247
52,394
36,944
173,732
43,266
72,718
42,824
183,530
112,059
454,397
110%
-8%
35%
87%
35%
45%
Madrid office market take-up by zone
Madrid office market take-up by sector
Project Paris R
64 Project Paris
The evolution of rental prices during 2010 has followed a downward trend, with prices in the CBD and RBD decreasing
by approximately 10% vs. 2009. Looking into detail, the first half of 2010 has suffered the bulk of the fall, i.e. c. 6.3%.
Nevertheless, rental prices have moderated its fall to a 4.3% during the second half of 2010, signalling a change of
trend that could show the path towards an expected price recovery in 2011.
Looking at the historic evolution of nominal and real rental prices in the CBD, it can be noted that current price levels
in real terms are close to minimums of the last decade, reached in 2003-2004. This situation together with the recent
slow down in the fall of prices, leads us to expect a price recovery throughout 2011, to be sustained over the near
future.
CBD
RBD
RC
DEC
OUT
36.00
30.00
22.00
20.50
17.50
30.67
23.70
16.67
14.42
12.51
32.00
27.00
22.00
19.75
17.00
28.75
21.65
16.57
14.72
12.20
32.00
26.50
21.00
18.75
16.00
27.50
21.12
16.35
14.36
11.27
0%
-1.9%
-4.5%
-5.1%
-5.9%
-4.3%
-2.4%
-1.3%
-2.4%
-7.6%
ZONE
Max.
Prices
Medium
Prices
Max.
Prices
Medium
Prices
Max.
Prices
Medium
Prices
% %
2nd Half
2009
1st Half
2010
2nd Half
2010
Var Max.
2H 10/1H 10
Var Medium
2H 10/1H 10
1
9
8
5
1
9
8
6
1
9
8
7
1
9
8
8
1
9
8
9
1
9
9
0
1
9
9
1
1
9
9
2
1
9
9
3
1
9
9
4
1
9
9
5
1
9
9
6
1
9
9
7
1
9
9
8
1
9
9
9
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
45
40
35
30
25
20
15
10
5
0
Real Nominal
Historical evolution of nominal and real rental prices in CBD
Madrid office market price evolution by zone
Project Paris R
2005 2006 2007 2008 2009 2010
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
6
,
5
8
3

9
,
9
8
9

1
0
,
7
3
0

7
,
1
2
3

6
,
5
9
8

6
,
3
7
6

8,908
Selling Price Evolution CBD (/sqm)
Average Selling Price per year Maximum Selling Price per year
Average Maximum Selling Price
Total built area. Prices have been calculated taking into account the office area excluding parking and retail areas.
Office spaces in the CBD were sold, in 2010, at 6,376 per/sqm built.
Selling prices have followed a similar trend than that of rental prices, experiencing significant decreases in the period
2008 and 2009, and a slowing down the fall in 2010. Maximum selling prices, which historically anticipate the trend
for average selling prices, have already recovered, making us think that average prices will follow suit.
Project Paris R
It may be appreciated from the chart that, despite the estimate that approximately 500,701 sqm of new space will
enter the market during 2011 and 2012, practically 50% thereof already has a committed user. As a result, availability
will not be significantly affected, especially in the CBD.
The chart below outlines the trend in new supply in Madrid since 1990, including GDP forecasts for the next two years.
It may be seen that new supply is ever more closely adapted to market needs and the entrance of new office projects
is gradually slowing down.
66 Project Paris
It is also important to highlight that, of the volume of new projects incorporated into stock throughout 2010,
approximately 41% was already let or sold to users by the end of the year. As a result, of all of the volume of new
stock incorporated during the year, only 177,436 sqm was genuinely available.
The forecast for new supply for the year 2011 estimates incorporation into the market of 216,378 sqm of new projects,
of which some 20% already have users committed.
Of these 216,378 sqm, around 90% will be incorporated into zones located between the M-30 and the areas furthest
away from the city.
The chart below shows the inclusion of new stock in 2010 and forecasts for 2011 and 2012. The proportion of the area
representing stock which is actually available and already incorporated or to be incorporated into the market is also
indicated.
vacant Ocuppied
2012 2011 2010
41.2%
17.4%
71.1%
58.8%
82.6%
28.9%
New offer forecast
Project Paris R
The vacancy rate relating to the total stock in Madrid stands at around 10.5% in January, 2011. In absolute terms, this
represents total available space for immediate occupation of 1,284,058 sqm. On analysing trends in vacancies over
recent half year periods, a gradual increase in vacancy rates may be seen for all zones, despite the fact that trading
has increased and the volume of new projects entering the market over the last 12 months has dropped significantly.
It should be pointed out in this context that availability in recent months has behaved differently depending on the
various zones of which the market is composed. CBD's vacancy ratio has recovered since the 1 H 2010 highest levels
of 15%.
1
9
9
0
1
9
9
1
1
9
9
2
1
9
9
3
1
9
9
4
1
9
9
5
1
9
9
6
1
9
9
7
1
9
9
8
1
9
9
9
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
*
2
0
1
2
*
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
-1%
-2%
-3%
-4%
New Offer Volume GDP Evolution (Madrid)
(*) Aguirre Newman forecast
New offer evolution vs. GDP evolution
1
H

2
0
0
5
2
H

2
0
0
5
1
H

2
0
0
6
2
H

2
0
0
6
1
H

2
0
0
7
2
H

2
0
0
7
1
H

2
0
0
8
2
H

2
0
0
8
1
H

2
0
0
9
2
H

2
0
0
9
1
H

2
0
1
0
2
H

2
0
1
0
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
CBD RBD RC DEC OUT
Vacancy evolution
Project Paris R
As may be seen from the chart, the availability rate in the CBD increased significantly during 2008 from 4.88% to
8.84%, due to the entrance into the market of space available in the CTBA zone. In this context, it may be appreciated
that since the second half of 2010, the availability rate in the CBD began to fall from 15.10% at the beginning of 2010
to 11.9% recorded at the end of the same year.
The evolution of the vacancy rate is highly correlated to GDP variations. Therefore, the expected recovery of the
economy in the near future leads us to forecast lower vacancy rates going forward.
68 Project Paris
2003 2004 2005 2006 2007 2008 2009 2010 2001 2002
14%
12%
10%
8%
6%
4%
2%
0%
-2%
-4%
-6%
GDP CBD
Evolution Vacancy rate CBD vs GDP
Project Paris R
The office market in Azca is characterised as being one of the most historic financial centres in the city of Madrid. This
financial district comprises a wide variety of buildings dedicated solely to office use and is complemented by a wide
range of retail and restaurants.
The key elements relating to the office market in the Azca complex are commented below.
The office market in Azca is characterised as being one of the most historic financial centres in the city of Madrid. This
financial district comprises a wide variety of buildings dedicated solely to office use and is complemented by a wide
range of retail and restaurants.
The key elements relating to the office market in the Azca complex are commented below.
Torre Picasso
Europa Tower
Cadagua Building
GM 15 Building
BBVA Tower
Pontegadea Tower
Saint Gobain Tower
Black Tower
Titania (El Corte Ingls)
Alfredo Mahou Tower
Bronce Building
Trieste Building
Residential Building
78,131
45,655
9,620
19,820
19,687
9,258
15,781
19,687
14,000
21,287
12,926
22,881
-
Holiday Inn (Hotel)
Mastes II Building
Mastes I Building
Sollube Building
Serante Building
El Corte Ingls
Moda Shopping Centre
-
-
-
-
-
-
-
20,743
20,349
29,081
4,131
-
-
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
N Building Area
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
N Building Area
25
9
12
13
14
15
16
17
18
19
6
11
10
8
7
4
3
2
5
1
22
21
20
26
24
23
Office
Residential
Retail
Project Paris R
CTBA REST OF CBD AZCA
CBD Surface Distribution
36%
15%
49%
70 Project Paris
The office market in Azca currently possesses a stock of 384,037 sqm. This represents some 49% of the total stock
of the Central Business District (785,720 sqm). This figure illustrates the extent to which Azca represents the most
established business area within the entire CBD of the city of Madrid.
The available space in the area of Azca
cur rentl y s tands at 59, 192 sqm,
representing an availability rate of some
15.4% of the total stock of the zone. This
fact is mainly due to the dynamism
experienced by the city of Madrid in terms
of the entry into the market of new projects.
This has directly affected the Central
Business District with the entry of 230,000
sqm of new space from the Cuatro Torres
Business Area.
Despite the large volume of new space added to the stock of CBD over the last three years, the vacancy rates in Azca
have increased by just 7 percentage points. It must be highlighted that this increase in vacancies has occurred in less
emblematic buildings and that the most representatives in Azca, such as Torre Picasso, Torre Negra or the Bronce
building, have maintained vacancy levels below 5%.
Project Paris R
The explanatory table below brings together the main variables recorded during 2010 and 2011 in the Azca zone in
terms of demand and rents:
As may be noted, a total of 11 transactions were carried out in 2010 and 2011 in the Azca zone, amounting to a total
area of 4,901 sqm. The average price of the said transactions stood at 28.21 sqm/month, whilst the average asking
price stood at 29.05 /sqm/month. The negotiating margin therefore being 3.7%.
The average area of the transactions closed in 2011 in the Azca zone was 668 sqm, some 34% below the average area
recorded for transactions carried out in Madrid as a whole. This fact is a consequence of the exclusivity and the prices
of the zone, limiting transactions involving large spaces, and mostly directed to business services companies which
on average use smaller office spaces.
As may be appreciated, 39% of the transactions recorded in 2010 to date were undertaken with regard to Torre Picasso.
If an analysis is undertaken from the point of view of the area traded, it may be seen that 62% of the total absorption
of the zone has been focused on Torre Picasso.
Date Building Area
Asking Price
(/sqm/month)
Negotiation
Margin
2011
2011
03/01/2010
15/01/2010
04/02/2010
18/03/2010
26/01/2010
01/06/2010
18/06/2010
25/10/2010
19/07/2010
Europa Tower
Torre Picasso
Torre Picasso
Torre Picasso
Torre Picasso
Torre Picasso
Cadagua Building
Europa Tower
Europa Tower
Torre Picasso
Torre Picasso
350
305
534
488
248
280
335
1,400
270
313
378
27.00
28.50
30.00
30.00
30.00
30.00
28.00
28.00
28.00
30.00
30.00
n.a
28.50
29.50
29.00
28.42
28.00
28.00
27.00
27.00
28.50
29.00
-
0%
1.69%
3.45%
5.56%
7.14%
0.00%
3.70%
3.70%
5.26%
3.45%
Closed Price
(/sqm/month)
AZCA ZONE
Gross Take Up (2011. 1st Q)
Gross Take Up (2010. 2nd H)
Gross Take Up (2010. 1st H)
Gross Take Up (2010-2011)
Average Asking Price
Letting Deals Average Price
Letting Deals Average Area
N Buildings with Vacancy
655 sqm
691 sqm
3,555 sqm
4,901 sqm
29.05 sqm/month
28.21 sqm/month
668 sqm
13
Project Paris R
72 Project Paris
In terms of the levels of rents, it must be pointed out that the rents shown on the previous page correspond solely
to transactions closed during 2010 and 2011, producing therefore a fairly unrepresentative sample of the price levels
which may currently be found in the Azca zone. In order to extend the sample range and provide insight into the real
situation, current asking prices for the buildings located in the Azca zone are indicated below:
In terms of the levels of rents, it must be pointed out that the rents shown on the previous page correspond solely
to transactions closed during 2010 and 2011, producing therefore a fairly unrepresentative sample of the price levels
which may currently be found in the Azca zone. In order to extend the sample range and provide insight into the real
situation, current asking prices for the buildings located in the Azca zone are indicated below:
As may be seen from the chart, the asking price in the Azca zone stands at around 25.67 /sqm/month, some 15%
below the asking price for the buildings in which transactions have been closed in 2010 and 2011. This is due to the
fact that the majority of the buildings located in Azca suffer from some technical shortcomings. The result is aggressive
rental pricing in order to compete with technically better, more representative buildings such as Torre Picasso.
Current Asking Prices (/sqm/month)
S
o
l
l
u
b
e

B
u
i
l
d
i
n
g
30.0
28.0 28.0
27.0
26.0
25.0 25.0 25.0 25.0 25.0
24.0
M
a
s
t
e
s

I

B
u
i
l
d
i
n
g
M
a
s
t
e
s

I
I

B
u
i
l
d
i
n
g
B
r
o
n
c
e

B
u
i
l
d
i
n
g
T
r
i
e
s
t
e

B
u
i
l
d
i
n
g
A
l
f
r
e
d
o

M
a
h
o
u

T
o
w
e
r
S
a
i
n
t

G
o
b
a
i
n

T
o
w
e
r
G
M

1
5

B
u
i
l
d
i
n
g
C
a
d
a
g
u
a

B
u
i
l
d
i
n
g
E
u
r
o
p
a

T
o
w
e
r
T
o
r
r
e

P
i
c
a
s
s
o
C
r
i
s
t
a
l

T
o
w
e
r
36.0
34.0
E
s
p
a
c
i
o

T
o
w
e
r
Project Paris R
Below it is shown the vacant space in each office building currently located in Azca zone:
Excluding the Titania building as it is not officially opened yet, the vacancy rate in Azca would be 10.47%, in line with
the CBD. In spite of being by far the largest tower, Torre Picasso enjoys the lowest vacancy rate close to 0%.
The finalisation and commercialisation of Titanias office spaces should not affect a premium building such as Torre
Picasso; instead it should represent a threat for the less competitive buildings.
Torre Picasso
Titania*
Sollube Building
Europa Tower
Trieste Building
Alfredo Mahou Building
MasterS II Building
Masters I Building
GM 15
BBVA Tower
Saint Gobain Tower
Bronce Building
Black Tower
Cadagua Building
Ponte Gadea Building
Serante Building
TOTAL
City Center (AZCA)
City Center (AZCA)
City Center (AZCA)
North Of City Cenrter
City Center (AZCA)
City Center (AZCA)
City Center (AZCA)
City Center (AZCA)
City Center (AZCA)
City Center (AZCA)
City Center (AZCA)
City Center (AZCA)
City Center (AZCA)
City Center (AZCA)
City Center (AZCA)
City Center (AZCA)
78,131
35,563*
29,081
28,499
22,881
21,287
20,743
20,349
19,820
19,687
15,781
12,926
9,687
9,620
9,258
4,131
357,444
292
19,000
12,057
8,464
640
2,630
3,600
0
3,388
0
2,669
773
0
1,342
4,629
0
40,503
0%
100%
0%
3%
3%
12%
17%
0%
17%
0%
17%
6%
0%
14%
50%
0%
16.61%
Building Location Area Vacant Area Vacancy
*Titania building area: 21,133 sqm commercial, 14,430 sqm office
Project Paris R
With regard to new projects in the zone of Azca, it must be pointed out that the possibilities for the entry of new
projects are limited due to the lack of space in the area. The disappearance in 2008 of the office building known as
the Torre Windsor 1 has enabled the creation of new office space by means of the Titania project, acquired by El Corte
Ingls. Apart from this project, mention should also be given to the entrance into the market of new refurbished space
in the building Castellana 79. Both projects are detailed below.
With regard to new projects in the zone of Azca, it must be pointed out that the possibilities for the entry of new
projects are limited due to the lack of space in the area. The disappearance in 2008 of the office building known as
the Torre Windsor 1 has enabled the creation of new office space by means of the Titania project, acquired by El Corte
Ingls. Apart from this project, mention should also be given to the entrance into the market of new refurbished space
in the building Castellana 79. Both projects are detailed below.
New projects in the zone of Azca
The new Titania building has a total leaseable area of 35,563 sqm.
The building is classified for tertiary use, both retail and offices. At
the present time. The first seven floors will be annexed to the
Castellana shopping centre, adding 21,133 sqm of shop space.
Nevertheless, the sales area will be reduced due to the establishment
of viewing lifts, mechanical escalators and washrooms.
Offices will be located between the ninth and eleventh floors,
amounting to a total of 14,430 sqm. The layout of this zone is
noteworthy for its curved shape. Access to the offices will be
independent from that of the shopping centre and will be provided
with a lobby area.
It is expected that the building will be let as soon as a single tenant
is found who is willing to carry out the fitting-out and start-up works.
The Castellana 79 building is owned by Ponte Gadea and has
undergone the comprehensive refurbishment of all of its installations.
With its 9,258 sqm, the building offers some of the highest technical
specifications.
It is important to point out that, despite the fact that it entered the
market at the beginning of 2011, 50% of the area of the building is
occupied, thus demonstrating the existing demand for quality office
space in this zone.
The entry of these projects into the market has added 23,688 sqm to the office stock of the zone, representing 6%
of the total stock of the area of Azca. The entry of these projects has likewise mitigated the lack of office space in the
Azca zone in that, to date, solely the Torre Picasso or the Cadagua building possessed office space having a certain
degree of consolidation in terms of technical specifications.
74 Project Paris
Project Paris R
Torre Picasso is located within the business district known as Azca. This represents one of the most traditional, well
established business districts in the city of Madrid. The Azca zone currently has a stock of office space amounting to
384,037 sqm, representing some 49% of the total stock of the Central Business District of the city of Madrid (785,720
sqm).
Somewhat more than 20% of the current total stock of office space in Azca is provided by the Torre Picaso. This figure
reflects the significance of the building, not only in terms of area, but also with regard to the technical characteristics
thereof. Together these make the tower the most symbolic and representative building in the Azca zone.
6.3.2. Azca and sourranding buildings
In order to analyse the efficiency of Torre Picasso, it has been calculated a efficiency ratio of leasable area. To calculate
this ratio, a standard floor was chosen for each one of the buildings and the ratio of leaseable area to sqm leased was
obtained. The efficiency ratio for the leaseable area of each of the existing comparable buildings in Madrid has likewise
been extracted. This ratio measures the efficiency of the net floor area per sqm leased.
By using this ratio we may see that Torre Picasso lies in second place in terms of the efficiency of the leaseable area.
C
o
m
p

7
C
o
m
p

6
C
o
m
p

5
C
o
m
p

4
C
o
m
p

3
C
o
m
p

2
T
o
r
r
e

P
i
c
a
s
s
o
C
o
m
p

1
Eficiency Ratio of Leaseble Area
80.0%
75.0%
70.0%
65.0%
60.0%
55.0%
50.0%
% Leaseble Area Average of Leaseble Area
76.6%
75.6% 75.5% 75.4%
74.3% 74.0%
68.0%
61.5%
Consequently tenants at Torre Picasso enjoy a higher real space in their offices.
Project Paris R
76 Project Paris
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