Inmobiliaria Colonial REIT (“Colonial”) and Stoneshield Capital have partnered in a new joint venture management company to create the leading pan-European Science & Innovation platform. As part of this Colonial is investing €200m into Deeplabs, the market leader in Spain, with 138,000 sqm of workspace and purpose built facilities across three Science and Innovation campuses in Barcelona and Madrid, a large, high quality, diversified tenant base, and an ambition to accelerate pan-European growth.
Pere Viñolas Serra, Chief Executive Officer of Inmobiliaria Colonial, said:
“We have for some time been developing our urban transformation assets, with a view to accelerating growth and returns. Our announcement today is an extension of this strategy, as we continue to position our core office portfolio alongside our faster-growing mixed-use portfolio. There is a significant undersupply of suitable assets in the Science and Innovation sector in Europe, at a time when demand is growing sustainably and rapidly. With existing stock unable to meet demand, and a lack of real estate expertise to develop high quality lab space, there is a significant opportunity to build a pan-European platform to meet high quality, long-term tenant demand. We look forward to working closely with our exceptional partners, Stoneshield Capital and Deeplabs, to fulfill our vision, delivering attractive yields and returns for our shareholders in the process.”
Juan Pepa, Managing Partner and co-Founder of Stoneshield Capital said:
“The European security budget is growing from €400bn to €1.2tn by 2026. This unprecedented growth will trigger massive demand from companies for space to innovate, test, manufacture and operate.”
Felipe Morenés Botín, Managing Partner and co-Founder of Stoneshield Capital said:
“The need for critical real estate is paramount to deliver Europe’s ambition to innovate in key sectors such as security, health and technology. We want to support governments and companies by providing highly specialized real estate, which will be critical for the companies to innovate and operate successfully.”
Deeplabs targeting rapid pan-European growth to meet sustainable Science & Innovation demand
Deeplabs, founded in 2020, has progressed a successful strategy to date, with a consolidated €400m portfolio of Science and Innovation hubs in Barcelona and Madrid and a leading position in Spanish Life Science Segment. The ambition of this Science & Innovation Platform is to build a portfolio across key strategic Science & Innovation locations across Europe, including Paris, Cambridge, Amsterdam, Berlin, Munich and Lisbon reaching in the mid-term over €2.4bn of Assets under Management, accelerating the growth on the back of third-party capital. A short-term pipeline of €700m in assets has been identified.
Strategic infrastructure for European Sovereignty in Science & Innovation
Science and Innovation real estate demand is surging, driven by structural shifts in demographics, AI-driven technology and geopolitics. Europe is committing record-breaking R&D budgets to fuel the innovation economy amid a structural under-supply of locations, due to a lack of the necessary real estate expertise to create appropriate research and innovation facilities. Barcelona and Madrid are already established and rapidly growing Science & Innovation hubs with excellent characteristics for sustained success.
Joint Venture brings together Colonial, Stoneshield Capital and Deeplabs’ combined expertise
This project brings together two complementary market leaders with a shared vision and commitment to delivering high quality research space for long-term tenants, and to creating value and superior returns for investors. Colonial is an international leader in urban transformation with a significant mixed use real estate portfolio, including healthcare facilities, in Paris, Madrid and Barcelona, and a strong track record of delivering exceptional properties that meet customer needs.
Stoneshield Capital has a long-term investment focus with extensive track record on transforming assets in supply-constrained thematic sectors, including Science & Innovation ecosystems. They have strong credentials of sourcing opportunities and pursuing disciplined investment to create value, generating support from institutional investors. Stoneshield Capital has consistently attracted institutional backing and demonstrated strong capacity to raise capital for platform growth.
Deeplabs has grown significantly in the last four years to become the market leader in the development and management of Science and Innovation ecosystems in Madrid and Barcelona. It has proven sectoral expertise, operational know-how and a tenant-focused approach to delivering value-added services that build long-term tenant retention.
This investment accelerates Colonial’s mixed use Urban Transformation portfolio
The creation of the new joint venture and investment into Deeplabs is consistent with Colonial’s desire to accelerate its Urban Transformation strategy. Colonial will continue serving clients through its existing core prime office portfolio, a sector where it has an exceptional market position and which remains highly attractive.
This investment accelerates expansion into high growth industries with increasing demand, but which are consistent with Colonial’s experience and track record in delivering attractive returns. Colonial has close to 200,000 sqm in Urban Transformation initiatives underway with €100m of rental income. These include Scope Business campus in Paris, Condorcet, an urban mixed-use scheme in Paris, Sancho de Ávila, life sciences and healthcare assets in Barcelona and Santa Hortensia, an urban mixed-use scheme in Madrid.
The expansion into high growth, dedicated Science & Innovation ecosystems is a logical step in that continued development. It sets the opportunity to create high quality, thriving ecosystems that champion experience and amenity, providing urban campus solutions and leading science innovation centres across a range of industries and ecosystems, including wet labs, dry labs, and research and technical workspace, all of which is being demanded by potential tenants.
Colonial remains focused on driving shareholder value
This transaction and the new joint venture will help Colonial continue to drive shareholder value and attractive returns. The transaction is immediately accretive to EPS and these assets provide attractive yields at 7-8% on stabilized cost and high value add potential with a 15% net IRR. As the investment vehicle grows its AUM to over €2.4bn through the investment of third-party capital, Colonial will benefit from further EPS and NTA accretion. These are attractive returns which also offer diversification benefits from an asset class and geographic perspective for Colonial’s investors.
Conclusion: Strong Growth of Science & Innovation in Europe
Colonial and Stoneshield Capital’s joint venture will drive growth through Deeplabs, a leading platform, as part of Colonial’s Urban Transformation strategy. Colonial’s dominant market position in Spain with top-tier S&I campuses in Madrid and Barcelona position it well to lead the European market as the first fully integrated Science & Innovation platform across geographies with first-mover advantage. It will involve the development of prime science ecosystems built to attract world-class talent and high quality, long-term tenants, using third-party capital. Colonial’s investment is expected to generate returns of +15% net IRR, as well as being accretive on EPS and NTA in both the near term and longer term.
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