New project! Achieve annual rental yields of 5.4%
We have a new rental project ready, the eighth one. This time, we have the same developer, tenant, and even the city. We’ll tell you all the details about this project, which will open for investment on Thursday, February 29, 2024, at 4:00 PM (UTC+1).
As we mentioned, the Pepco San José project follows the structure of the Pepco Delicias project. Both are located in Zaragoza, with the Pepco chain as the tenant and GPA as the manager.
Pepco is a European chain of Polish origin, listed on the stock exchange, specializing in fashion and low-cost products. It aims to make Spain its fourth market this year, with the opening of an additional 100 stores to the 200 it already has in our country. The developer, on the other hand, specializes in income-generating assets, with a track record of over 30 years.
The project at hand is located in the San José neighborhood of Zaragoza, specifically at Avenida del Tenor Fleta, 52. The property was previously a market and, with a gross leasable area of 995 square meters, it is a highly demanded asset in the city centers. It is the fifth location in Zaragoza.
5.40% annual yield for 5 years
As mentioned, the tenant for this space is Pepco, which entered the premises in June 2023 with a 15-year contract – six of which are mandatory. Since January 2024, it has been undergoing a comprehensive renovation that will conclude with the opening to the public in June 2024.
The operation will be structured via equity. Urbanitae investors will contribute a total of €1,180,000 to purchase the premises, and they will do so through a capital increase to the operation’s SPV. No bank financing will be necessary.
As is customary in our rental projects, the expected duration in this case is five years. According to the lease agreement signed by Pepco, it is estimated that the project will generate an average annual dividend of 5.40% for Urbanitae investors, distributed quarterly.
From the third year onwards, a divestment window will open if market conditions are optimal: the sale of the asset would generate an additional return on capital gains, which can be calculated using the project’s data sheet formula: (Projected Income – Estimated Costs) / Total Equity.
In this video, the developer and our CEO, Diego Bestard, explain the details of Pepco San José.
Very limited risk
The project is interesting for several reasons. It is worth noting that it protects against inflation, as from July 2026, the rent will be annually reviewed: the first review will be a 2.5% increase.
Another positive point is the tenant’s security. Pepco has signed a 15-year lease, six of which are mandatory. Additionally, the effort rate that the rent represents for Pepco is low.
Investor exit in 2029
In the investment calendar, the acquisition of the premises is scheduled for the first quarter of 2024. The payment of the first dividend to investors will be in the third quarter of 2024. From the first quarter of 2026, a divestment window opens subject to market conditions. If not by then, three years later, in the first quarter of 2029, Urbanitae investors would exit, and profits would be distributed.
If you have any doubts, you can address them in the webinar we will hold with GPA on Tuesday, February 27, at 12:00 PM (UTC+1). As always, you can contact us at contacto@urbanitae.com or by phone at 911 23 25 22. Get informed and don’t miss the opportunity to achieve annual rental yields of 5.4%.