Azaria Rental, the company managed by Drago Capital, keeps its investment appetite active despite the pandemic and is looking for opportunities to fatten its portfolio to make the leap to the continuous market.
The company’s objective is to reach a volume of assets of between $366 million and $610 million (€300 and €500 million) in the next two years, and to do so they are considering both “the acquisition of properties with long term rental contracts, and the purchase of assets that have to be repositioned in order to obtain long rental contracts”, explains Francisco Silvela, Managing Director of Drago Capital, who pointed out that they can also consider “corporate operations, such as asset contributions from investors interested in entering our society in order to diversify risks and delegate management to our team.”
Currently, Azaria Rental has about $183 million (€150 million) in assets under management, of which 70% are offices and 30% retail. “We believe that a multi-asset portfolio is better able to withstand the ups and downs of the market. The fundamental characteristic of our company is that the assets are leased to first-class companies with contracts of no less than 10 years of obligatory compliance,” pointed out Teodoro Diez, Head of Asset Management in Drago Capital.
“We believe that we can aspire to trade in the continuous market when we have an asset value of $610 – $730 million (€500-€600 million), which with reasonable leverage will allow us to have a market capitalization of more than $366 million (€300 million),” explained Silvela, who highlighted that “along with the larger size will also come a greater diversification in terms of tenants and assets that will make the capital structure more efficient and allow for a higher dividend payment.”
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Current operations of Azaria Rental
In order to advance towards this goal, the company currently has several operations on the table for more than $244 million (€200 million) at different levels of progress. “We are interested above all in the tertiary sector and we are looking at various options both in offices and in retail”, says Diez, who acknowledges that at this time of the market “it is difficult to specify when we are going to close a deal, but we are working to make it happen as soon as possible.” The key for Azaria is that the assets make sense by location and use or that they are strategic in the long term for the user.
“The segment in which we all have our sights set on is that of vacation hotels, which is suffering a lot, but in which a significant recovery is expected, especially in assets that can be repositioned,” explained Silvela.
In addition, the directors assured that they continue “to believe that quality office space, in good locations, will continue to be in demand by users, although with a different space configuration.”
Likewise, they show appetite for assets in which the macro environment is promoting its attractiveness as logistics or residential for rent. “We find it more difficult for the risk/return profile we are looking for, but we do not close the door to any typology,” they concluded.
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First published in elEconomista.es, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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