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residential Market News: Spanish Real Estate Intelligence

Notaries: House Sales Rose by 7.6% in Q1 2018

16 July 2018 - Eje Prime

There has been a slight cooling off in terms of residential transactions. House sales rose by just 7.6% during the first quarter of 2018, representing a “small deceleration” in YoY growth with respect to previous quarters, which have been exceeding 10%, according to the General Council of Notaries.

House transactions rose in the majority of the autonomous regions, led by La Rioja, with an increase of 22.6%. It was followed by Murcia (+20.9%) and the Community of Valencia (+18.5%). At the opposite end of the spectrum were the Balearic Islands (-8.1%), the Canary Islands (-2.4%) and Extremadura (-1.2%).

As with the volume of operations, prices also showed signs of a decelerating trend, although they did rise by 1.4% on average. The national average price amounted to €1,377/m2, whilst in País Vasco, the Balearic Islands, Madrid, Cataluña and the Canary Islands, prices exceeded the average, at €2,208/m2, €2,157/m2, €2,146/m2, €1,646/m2 and €1,490/m2, respectively.

In addition, the sale of flats grew by 6.9% during the first quarter, somewhat lower than the increases of more than 10% seen in the previous eight quarters.

On the other hand, according to the General Council of Notaries, the “significant” increase in the number of mortgage loans to acquire homes, seen last year, continued at the national level (+10.9%) during the first quarter.

Original story: Eje Prime

Translation: Carmel Drake

 
Excem Debuts on the MAB with a Market Value of €16.8M

9 July 2018 - Expansión

The Socimi dedicated to the rental of rooms for young people is going to make its stock market debut at a price of €1.40 per share. The Socimi is going to debut with a portfolio of 28 homes, which contain 181 rooms for rent, all located in the centre of Madrid.

The real estate firm Excem, which was constituted in 2015, has the aim of investing in urban properties located in central areas of Madrid, Barcelona and other main cities in Spain. It targets properties that are suitable for renovation and redecoration and subsequently leases out rooms to students and young professionals.

Currently, the Socimi is looking to extend its activity in the capital to other cities with “high demand and limited supply of these types of assets for rent”, including Barcelona, Sevilla, Valencia, Málaga, Bilbao and Santiago de Compostela, according to information provided in the explanatory prospectus that accompanies its debut on the MAB.

Around 40% of the company is controlled by Excem, a group owned by the Hatchwell family. In fact, the Socimi is chaired by David Hatchwell, who started his professional career in Goldman Sachs and HSBC before joining the group.

With the aim of undertaking its investment and growth strategy, Excem’s Socimi has conducted a number of capital increases since 2016 and has mortgaged all 28 of the homes that it holds in its portfolio.

At the moment, it has an indebtedness level equivalent to 38.5% of the value of its assets, well below the leverage limit of 70% that the company has imposed on itself.

"HOMIII.COM".

The Socimi markets the rental of its homes through its own online platform (www.homiii.com) and by subleasing through other specialist companies. Since September last year, it has had an agreement with Uniplaces, a company from the United Kingdom specialising in reserving accommodation for students in a number of European cities. According to the prospectus, at the end of March, the firm had 175 lease contracts for its rooms (96.7% of its portfolio) with different tenants.

By virtue of the contracts, the tenants pay a monthly rent and make a contribution towards shared utilities (water, electricity, gas, internet and central heating) after handing over a deposit equivalent to one month’s worth of both concepts by way of guarantee.

Excem has the aim of achieving a gross return on each asset of between 4% and 6%, a percentage calculated as gross income from rental over the investment made. The Socimi has been created with the option of setting itself an expiry date, given that it does not rule out selling its properties once the minimum period of three years established for Socimis has come to an end, or dissolving the company after the seventh year, “depending on what the shareholders agree on the basis of the performance of the company, as well as the current and future properties in the portfolio”.

Original story: Expansión 

Translation: Carmel Drake

 
Testa's Shareholders Approves its Debut on the MAB

16 July 2018 - Expansión

The General Shareholders’ Meeting of Testa Residencial has approved its debut on the Alternative Investment Market (MAB), which will likely happen before the end of this month (July) through the listing system, according to reports from sources at the company speaking to Europa Press.

The rental home Socimi in which Santander and BBVA hold stakes, had initially planned to make its debut on the main stock market in June, but delayed that move until the end of September due to the political and stock market uncertainty. It has now decided to make its debut on the MAB at the end of this month to comply with Socimi regulations. In this way, in order to not lose its status as a Socimi, which establishes a period of two years from constitution to debut on the stock market, Testa Residencial will list on the MAB before the end of this month, although it does not rule out making the leap onto the main stock market in a second phase.

Through the listing system, the company can request access to trading without the need to launch a public sale offer (OPV). This formula gives its shareholders the opportunity of having their shares trade on an organised market without having to place the shares with new investors. Also, there will be no reference price, but rather the price will be determined based on the purchase and sales orders received during the adjustment period.

Testa Residencial became the second company after Azora to decide to delay its planned debut on the stock market, although in the case of the real estate asset management company, the delay was motivated by the takeover bid that Blackstone formulated for Hispania, one of its main clients.

In the case of Testa, the firm had initially planned to start trading on the stock market during the second half of June, and one of its possible IPO dates was 22 June. At the end of May, and due to the political and stock market uncertainties, the firm decided to delay that debut until the end of September (…)

Other firms in the sector that had also planned to make stock market debuts before the summer, such as Vía Célere and Haya Real Estate, the servicer owned by the US fund Cerberus, may now wait until a window of opportunity opens in October, depending on the conditions of the market. In the case of Haya, the firm’s debut is currently conditional upon the signing of asset management contracts that it is negotiating with BBVA and Sareb.

In terms of Testa Residencial, by virtue of the OPV, the Socimi Merlin Properties had also planned to exit its share capital, with the placement of the entire 17% stake that it held in the firm.

The market also expected Santander and BBVA to sell some of their stakes in the rental home company, which amount to 37% and 26%, respectively. Acciona, for its part, had still not taken a decision about its 20% stake in the company.

Testa Residencial is one of the largest rental home companies in the country, given that its portfolio contains 10,700 homes and is worth €2.275 billion.

With its debut on the MAB and its likely subsequent debut on the main stock market, the firm seeks to consolidate its position as a new, unprecedented real estate giant in the country, given its specialisation in primary residences for rent, at a time when that sector is experiencing a real boom.

Original story: Expansión 

Translation: Carmel Drake