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Zara’s billionaire founder Amancio Ortega is seizing on the commercial property downturn as a chance to buy assets on the cheap as high borrowing costs hand the advantage to debt-free investors.
Pontegadea, Ortega’s €90bn-plus personal investment group, is expanding its real estate holdings via a “buy the dip” strategy. The Spanish fund, which owns 59 per cent of Zara’s parent company Inditex, has in the past year announced 10 acquisitions worth €1.1bn spanning logistics, offices and residential property.
Its real estate portfolio is concentrated in western Europe and North America, where its prize assets include the Adelphi building and Devonshire House in London, and Amazon’s Seattle headquarters.
Because Pontegadea is awash with dividends from its Inditex stake and does not need to take on debt, it has been unaffected by the high interest rates that have pushed transaction volumes down by more than 50 per cent in the US and Europe in the past year.
Roberto Cibeira, Pontegadea’s chief executive, told the Financial Times the group had observed “a price adjustment in Europe across asset classes” in the past few months.
“We believe this is a good time for investors with low debt given the tightening of credit conditions, which is reducing competition for potential acquisitions of a reasonable size.
“In Pontegadea’s case, we are being offered assets in bilateral processes and in many cases off-market [before they are advertised publicly] — specifically in logistics, retail, offices and infrastructure.”
Pontegadea is eclipsed in size by just a handful of family offices, including those of Bill Gates, Jeff Bezos and Sergey Brin, as well as the owners of Chanel and the family of Walmart’s founder, according to the Sovereign Wealth Fund Institute, a research group.
In the past month alone, Pontegadea has spent $113mn on a cold storage warehouse in the Miami area and €100mn on a distribution centre in the Netherlands used by Primark. Those deals have boosted its property portfolio to about €20bn across 11 countries.
Although distressed sales are starting to crop up in commercial real estate, many lenders have offered indebted property owners some flexibility to avoid fire sales.
Savills, the global real estate group, said last week that lenders were starting to reach the limit of forbearance and that this could be a “catalyst” for more deals in 2024.
Pontegadea said it remained optimistic about the future of offices, which make up 40 per cent to 50 per cent of its real estate portfolio, and did not subscribe to the view that the rise of working from home had made them a poor investment. It added that some tenants had modified their office space but none have sought to make cuts.
The fund’s only properties outside Europe and North America are two retail buildings in South Korea. It does not invest in real estate development projects because they do not deliver cash flow from day one.
Ortega, who started out in 1963 in Galicia with a home workshop making dresses and dressing gowns, is the world’s 13th-richest person with a fortune of $98bn, according to Forbes.
This year Pontegadea is set to receive about €2.2bn in dividends from its shares in Inditex, which owns Zara as well as Massimo Dutti and Bershka. Annually, it earns a further €800mn-€900mn in income, including rent, from its investments, among them renewable energy plants.
Pontegadea reinvests most of that cash. Only a portion is channelled to Ortega and his immediate family, including Marta Ortega, Inditex’s non-executive chair since 2022 and Ortega’s only daughter from his second marriage. Her wealth was estimated at €80mn by Forbes last year.
Pontegadea vies with Fedesa, which belongs to the family behind the Ferrero chocolate business, for the title of Europe’s biggest family office.
