02/18/14– Miami– Tim Gifford,Senior Vice President, with CBRE (J. Albert Diaz)
Dealmaker: Tim Gifford
The Deal: Gifford and a team at CBRE helped arrange last month’s $125 million sale of Centro Bancomer, one of the largest office buildings in Mexico.
Details: Balancing the interests of institutional stakeholders, the Miami-based dealmaker arranged the sale of one of Mexico’s largest office properties for $125 million. Gifford helped put together the sale of Mexico City’s Centro Bancomer, which was sold by the real estate arm of Prudential Financial Inc. The buyer of the 1.7-million-square-foot landmark building was Fibra UNO, a Mexican real estate investment trust linked to Deutsche Bank’s local unit.
Putting together the deal was complicated as the seller wished to maximize how much they could get from the disposition of its property while protecting itself from any problems the sale might cause to a development it’s undertaking next door. Prudential is in the process of building Torre Mitikah, a luxury mixed-use tower that will rise nearly 900 feet, next to the Centro Bancomer.
“It was an extremely complex sale,” Gifford said, noting the size of the property, its designation as architecturally protected and the fact the buyer inherited an obligation to build a parking garage with costs estimated at $40 million.
The deal also was complicated by the fact the building’s main tenant, Spanish bank BBVA, is expected not to renew a lease expiring in 2016. Extensive dealings with Mexican government agencies that needed to vet the transaction for antitrust compliance added to the transaction hoops, Gifford said.
Gifford explained CBRE won the bid to negotiate on behalf of Prudential after presenting a plan to split the sale of various assets owned by that client, including development rights previously tied to the Centro Bancomer building.
“What we recommended was segregating the components and taking them to market at different times,” Gifford said. “We could maximize the client’s value because the buyer profile of a large single-tenant office building is very different from the buyer of development rights.”
After winning the account, Gifford said CBRE arranged “a prelaunch to a short list of potential buyers.”
“We went and highlighted different aspects of the building to make it attractive to the local market, hoping that would generate an incentive for someone to be more aggressive prior to a competitive process,” Gifford said. “The key selling component for the property was the neighboring [Mitikah] project, which is one of the largest mixed-use development projects in Mexico.”
Notably, part of the sales pitch was the idea that the new owner might be able to draw rents from BBVA Bancomer well past its planned departure in 2016.
“What we highlighted with the buyer is that the tenant is building a new property in order to vacate, but as with any new construction, they could run into problems,” Gifford said.
Gifford noted it took about five months from the time the building was first shopped to the closing. But he noted, “We had to wait approximately 60 days for government approval, and one month was eaten by the [Christmas] holiday.”
Indeed, Gifford said “dealing with two institutions that are so highly regulated” was one of the things that made the deal something he could learn from.
Background:Gifford is a Miami senior vice president of CBRE’s global capital markets group, which specializes in complex cross-border deals.