M7 Real Estate sold a stand alone commercial property in Funchal, on behalf of the Portuguese Industrial Fund, to the Portuguese private equity firm Iberis Capital. The value of the deal was not disclosed.
Located in the capital of Madeira, this building has a total of 2,500 square meters and is fully leased to Hôma, a brand specializing in decoration and homeware. David Pinheiro, Partner at Iberis Capital, states that “this asset fits into the investment strategy of the yielding funds managed by Iberis, which privilege assets with long-term contracts and solid counterparties, with a focus on the retail and services areas”.
M7 purchased this property in 2020, when it was part of a multi-asset portfolio. At the time, he renegotiated the contract with Hôma for 15 years, in exchange for a temporary discount on the amount of rent during 2021, due to the pandemic. In its sale, now announced, M7 was advised by CBRE.
Eduardo Lopes, Senior Asset Manager at M7 Real Estate Portugal, comments in a statement that “in a short space of time, M7 demonstrated the ability to effectively manage assets, actively working with the tenant during the pandemic in order to find solutions that would allow them support in this period of uncertainty and forced confinement, adding value to the fund. Support was provided to Hôma through a temporary lease discount, in exchange for the extension of the existing lease, which was approaching its expiry. This allowed to create a long and stabilized income stream that naturally increased the asset's attractiveness to potential buyers. The result exceeded our initial expectations for this project and generated attractive returns for the joint venture.”
Leonardo Peres, Managing Director of M7 Real Estate Portugal, highlights that «the changes to the Golden Visa rules, which as of January 1, 2022 exclude direct investment in real estate in most urban areas of Portugal, such as Greater Lisbon and Greater Porto, mean that real estate funds, which allow foreign investors to apply for the Golden Visa regime, through indirect investment, are being established and increasingly active. We are, therefore, witnessing strong dynamics in areas that have so far been less crowded, which offer higher premium yields, and medium to long-term lease contracts».
It should be remembered that the Portuguese Industrial Fund focuses on the acquisition of logistics assets and offices in Portugal, where M7 acts as an asset and investment manager. It is the second M7 fund in Portugal, with a total of 153 million euros under management, together with the M7 Portuguese Active Fund “M7 PORAF”, with a fully invested portfolio of value-add properties.