Amancio Ortega, landlord of the big tech companies

Pontegadea is unstoppable. The news, revealed by specialized media, that Amancio Ortega’s real estate company is negotiating the purchase of Facebook’s future headquarters in Dublin, Ireland, has almost reached the category of paradigm. It is a monumental operation ($550 million, according to published figures) in a year of great investment activity for the richest man in Spain. And the new object of desire, a high-end office complex, is not an extravagance at all for a man who has known for years what it is like to be the landlord of the largest technology companies.

If the operation is completed, Facebook would not be a new tenant for Pontegadea. The real estate company with which Ortega, founder of the Inditex fashion group (Zara, Bershka, Massimo Dutti and more) manages his investments, and from which he obtains the bulk of his wealth, already rents offices to Facebook in Madrid and Seattle. The Seattle offices were acquired in 2019 for $415 million. In Madrid, the capital of Spain, Pontegadea welcomed the social network in its building at 35 Castellana Boulevard, a shared block of seven floors (plus three more underground, for parking) that until last spring was also the headquarters of the law firm DLA Piper.

But the Dublin operation is of a different scale: the 100,000 square meter complex is intended to be the largest headquarters of Meta (the parent company of Facebook, which also owns Instagram and WhatsApp) outside the US. The six buildings in the complex can house up to 6,000 employees, and the rent would be around €22 million a year, with a commitment to stay for the next 25 years, according to the data that has been published and on which Pontegadea has not commented.

Facebook is not Ortega’s only technological tenant. His vast real estate empire, which is valued at more than $15 billion, can boast of having almost all the American big tech companies among its extensive list of tenants. Just in Spain, it rents offices to Google in Madrid’s iconic Picasso Tower, as well as to Apple stores in Barcelona and Valencia. Apple also rents commercial spaces in Paris, Miami and San Francisco.

Even more symbolic is the presence of Spotify, which rents offices from Pontegadea in London. And particularly significant is the real estate company’s relationship with Amazon, which leases several different types of properties, from offices to distribution platforms. In fact, two of the latter were acquired this year as part of a $905 million mega-operation through which Ortega acquired seven logistics assets in the US.

A good match

Sources from Pontegadea point out – without specifying any numbers – that the large technology companies do not represent a high percentage of their real estate portfolio as a whole. In its annual results report for 2021, the group reported $647 million from rentals. But the fact that the big tech does not account for the bulk of the company’s profile, does not mean they are not sought-after clients. In fact, in the logic of Ortega’s company, working with tech companies supposes an almost perfect symbiosis. According to the aforementioned sources, these firms tick many boxes: seriousness, financial stability and an extended rental time. Also, they are usually companies that look for what in real estate jargon is known as prime assets – well-located buildings with good features, ecological certifications and value-added services. In short, properties that are more expensive to purchase, but which can also be rented for higher prices.

The Pontegadea group is actually a network of partnerships with which Ortega manages his enormous fortune (currently estimated at almost $52 billion, according to Forbes). It stands on two pillars: industrial investment (the most important, the nearly 60% stake it has in Inditex, which brings juicy dividends) and real estate. The latter includes, according to the results of 2021, buildings valued at $15.26 billion, distributed in nine countries, with the United States, the United Kingdom and Spain as the main markets. And after a weaker season due to the pandemic, business has picked up steam again this year. Since last spring, the company has purchased a major office building in Glasgow, Scotland, a luxury housing skyscraper in New York and the seven logistics assets mentioned above. If the group finally buys the future headquarters of Facebook in Dublin, the investments made since last April will be close to $2.2 billion. What’s more, Pontegadea will have a profitable rental agreement with a tenant who is already an old acquaintance.