In the last year and a half, Amancio Ortega pivoted his real estate investments in logistics centers in the United States and Europe. A passing fad? A strategy that will sit in your investment portfolio? Only time will tell. What the numbers say is that almost two-thirds of the 2.8 billion it has invested since July 2022 will be in distribution centers. Or to put it another way, of its 22 most recent acquisitions, 13 are logistics warehouses in common in that they all have solvent tenants and long-term lease contracts: five from Amazon, two from Home Depot, and one from Fedex or Nestlé In total, it has invested 1,773 million in these properties and now has more than one million square meters in this sector when one and a half just a few years ago it didn’t exist.
Why has it entered the market without being touched by any of the more than 150 operations it has done in the last two decades? According to the many sources consulted, there are many answers. The first is high real estate prices. In Spain, not achieved, so it is more than three years without making a large investment in the national land. For this reason, building purchases are made, above all, in countries such as the United States and the United Kingdom.
The second is the lack of financing from its competitors due to the high cost they have to pay to finance themselves due to the increase in rates. A situation that reduced the number of transactions by more than 50% in the United States and Europe last year.
Like Inditex, Pontegadea, Amancio Ortega’s investment arm, has no debt and does not need to borrow to buy, so it is not affected by high interest rates. In 2022 he pocketed 1,718 million for the dividends he received for the almost 60% he had in Inditex. A year later there were 2,217. The forecast for this year is that it will exceed 2,500. Pontegadea’s mandate is to invest all the money as quickly as possible so that it continues to create value. In 2022, a record 2,783 million was spent on 13 operations. A year later there were 1,335 in 11.
In a recent interview published by the “Financial Times”, Roberto Cibeira, CEO of Pontegadea, explained that they observed “an adjustment in prices in Europe of all types of assets” in the new oh months. “We believe that this is a good time for investors with low debt given the tightening of credit conditions, which reduces the competition for possible acquisitions to a reasonable extent,” said the head of the company, who also acknowledged that they are offered assets ” in bilateral processes and, in many cases, outside the market (before it is made public), especially in logistics, retail, office and infrastructure.
The third reason given by experts for this change in strategy is that Amancio Ortega chose to diversify his investments. The majority of its more than 100 properties are office properties for rent. Today, 10% are logistics platforms.