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Canada Pension Plan Investment Board (CPPIB) has joined forces with Intu Properties to acquire Parque Principado shopping centre in Oviedo, Northern Spain.

The transaction announced on the first day of Expo Real represents CPPIB’s first foray in Spain and is in line with the pension fund’s strategy to grow in Continental Europe and widen its view to the southern regions.

PropertyEU reported back in May that landlords Sonae's Sierra fund and CBRE Global Investors were looking for a buyer for their jointly held prime regional Parque Principado mall in Asturias. The 75,000 m2 retail complex with 156 stores was expected to trade for some €150 mln. It was owned by the Sierra Fund, a pan-European retail fund in which Sonae Sierra has a stake of 50.1%, and CBRE Iberian Value Added Fund.

Opened in 2001, the centre is 97% let with an average unexpired lease term of six years. The purchase price of €141.5 mln reflects a net initial yield of 7.2% based on net income of €11.7 mln.

Intu, formerly known as Capital Shopping Centre, will undertake the asset management of the property. The co-investors said they also intend to secure bank financing at around 50% of the property value after acquisition.

‘The opportunity to acquire Parque Principado, a top ten centre in Spain, on attractive and earnings accretive terms firmly establishes our presence on the ground in a country where we see considerable growth opportunities in the regional shopping centre industry. A further positive feature of the acquisition is entering into partnership with a major and highly regarded global investor, CPPIB, and we look forward to extending this relationship,' said David Fischel, Chief Executive of Intu.

‘We believe this is an attractive entry point to the Spanish retail market,’ added Graeme Eadie, senior vice-president and head of Real Estate Investments, CPPIB.

In a recent interview with PropertyEU, CPPIB’s European head of real estate investments Wenzel Hoberg plan said he planned to expand into the markets of Southern Europe in the near future. ‘Southern Europe has been challenged so much by the financial crisis that in the past it did not allow us to meet our required hurdle rates. But we hope this will change in the future.'

Cushman & Wakefield acted on behalf of the co-investors in the purchase of Parque Principado and has been appointed property manager and letting agent.