MADRID-Hines has bought 11 Calle Salustiano Olozaga from Madrid-based developer Monteverde for an undisclosed sum. The six-story, 3,780-sm (40,675-sf) vacant apartment building is located in Salamanca, Madrid's most affluent residential area, adjacent to the French Embassy and near the famous Puerta de Alcala monument.

The building is the first asset purchased by the Hines European Value Added Fund. "Salamanca is a prestigious area comparable to Mayfair in London, and the demand for high-end residential properties there remains very strong," says John Gomez-Hall, head of Hines' Spain operations.

Plans for renovation include the construction of approximately 16 luxury apartment units, two offices on the ground-floor level and 18 private parking spaces. Construction and sales will begin in June 2006 with completion expected in August 2007.

"With this vehicle," says Lars Huber, a director with Hines in London who is also the fund manager, "we plan on acquiring investments with potential and applying Hines' expertise to add value." He says that more such investment will "follow soon."

The fund has euro 287 million ($370 million) of equity commitments provided by German and Swiss institutions. The prime plan is to invest mainly in offices, but there is an allocation for other asset classes. Hines will focus on acquiring buildings in Western European countries, targeting France, Germany, Italy, Spain and the UK, and will seek to add value to acquisitions through tactics such as renovation, strategic leasing or re-leasing, improving operational efficiencies and refinancing.

"The Hines European Value Added Fund is the continuation of our strategy to widen our European activities," says EVP Michael Topham. "In 2002, the firm formed the Hines European Development Fund, and we are in the process of forming our European Core Fund."

With offices in 13 countries and assets of euro 8.5 billion ($11 billion), Hines boasts a European portfolio consisting of 40 projects totaling more than 12.1 million sf.