Month: August 2013

The Euribor closes August at 0,542% reducing the price of mortgages in nearly 270 Euros per year.

The main reference index for mortgages in Spain, the Euribor, has fallen 0,336 points in August in reference to the level shown during the same month in 2012, reaching 0,542%.

On the other hand, the reference rate has increased slightly in reference to the previous month, linking three consecutive months of increase.

In spite of this, those families revising their mortgage with the figure of August will pay 22,2 Euros less, taking into consideration an average mortgage of 150.000 Euros at 25 years. The Spanish mortgaged families will see their expenses reduced in 267 Euros per year. (…)

Banco Sabadell sells a portfolio of 953 properties valued at 88,9 million Euros.

Banco Sabadell has sold 100% of the bonds of a vehicle of securitization that included 953 properties valued at 88,9 million Euros to a consortium of international institutional investors, according to the information provided by the Catalan institution in an announcement.

This portfolio is made of second hand assets, 90% of which are homes and the remaining 10%, trade premises, parking spaces and storage rooms, with a higher concentration in Valencia and Madrid.

The institution has declared that this operation, carried out through the sale of bonds, has allowed the maximization of the value of the sale and has meant the “corresponding transfer of risk of this portfolio, which originated in the acquisition of the Banco CAM.

According to the managing director of Banco Sabadell, Miguel Montes, the closure of this sale is a sign of the “high interest” of international investors in this type of operations and constitutes a good base for future transactions.

The agreement will allow the group to maintain the management of the portfolio and the commercialization of the sold properties, through Solvia, the real estate company of the institution.

The “bubble” of housing prices ends up without air

The trail of the “bubble” of housing prices in Spain is lost after five years of a tough adjustment. According to the Organization for Cooperation and Economic Development (OCED), the current overvaluation of homes in Spain reaches only 11,5%, very far from the 44% reached in the year 2009.

This percentage of 11,5% leaves Spanish homes in the eleventh position in the ranking of the most “inflated” ones in the developed countries (…)

The current overvaluation of Spanish homes is far from the disproportionate percentages published by the OCED in its reports from 2007 and 2009. It talked then of 44% and 30%, respectively. There is no doubt that the sales of the last few years have reduced these numbers. In 2009, Spain was in the second position in this ranking, only behind Holland, with 54%.

(…) The OCED makes its calculations  based on a double ratio and its corresponding average: yield of the lease and salaries. In the case of Spain, selling prices over earnings from rentals are inflated in 8% and 15% over salaries. (…)

The international organization also divides the countries and published figures in five groups, placing Spain in the fourth, “where homes are overvalued, but prices are sinking. The OCED explains that “this category is the biggest one as it includes many European countries where the adjustment is still taking place”. And it stands out: “The most important one, Spain”. United Kingdom, Belgium, Denmark, Finland, Netherlands and Australia are also included in this group. And it warns: “While the corrections of prices are necessary in these countries, the financial health of the real estate market weakens and potentially its banking sector will be more fragile.” (…)

The signing of mortgages for homes sinks by 42,2% in June, reaching an historic minimum level

The real estate adjustment continues to show historic figures. The signing of mortgages for homes sank by 42,2% in June down to a total of 14053 signatures, as announced today by the National Institute of Statistics (NIS). This is the lowest level ever. The end of the access to credit, the increase of unemployment and the still existing recession continue affecting the Spanish housing sector.

(…) It is far from the maximum number reached in September 2005, with the signature of 129.128 mortgages. With this set-back, the index accumulates 38 consecutive months of negative results. In the first half of 2013, the descent reached 23,5%. As for the monthly rate (June over May), the mortgages on homes dropped another 23,7%, its greatest descent in this month since 2009. The lent capital for mortgaged homes registered a monthly set-back of 22,8%, its greatest descent in the last five years. As for the average amount of mortgages registered in the Property Registries, it reached 119.307 in June, 2% lower than the same month in 2012. This also had a monthly decrease from May into June (-9%), closing the semester with a frop of 5%, reaching 97.495 Euros. The total lent capital reached in June 1370 million Euros, with an annual fall of 47,4%, while the average interest rate for the mortgages on homes was of 4,43%, 2% higher than the one registered in June 2012. The Euribor is the most common reference rate used when constituting a mortgage, in 82,7% of the cases. (…)

The fund Fibra acquires 278 Sabadell branches from Moor Park for 300 million Euros

The British fund Moor Park Capital Partners has decided to close up its first investment in Spain. The firm, with headquarters in London, has reached an agreement to transfer 278 branches leased to Banco Sabadell.

The properties belong to a package of 378 real estate assets acquired by Moor Park in April 2010 from Banco Sabadell through an operation of sale & leaseback, that is, the institution sold the branches and, at the same time, closed a leasing deal to stay as a tenant.

At that time, the British fund paid 403 million Euros for the nearly 400 branches with an initial yield of 6,65%. Now, after two previous sale operations, Moor Park will obtain between 300 and 330 million Euros for the 278 branches, according to sources close to the operation.

A figure that would need to be added to the earnings obtained for the sale of a hundred branches transferred at the end of 2010 and 2011. Moor Park decided to split up the package and place it among small and medium sized investors. However, it also closed an operation with a great investor, Amancio Ortega, who acquired through its real estate company Pontegadea a lot of offices for 55 million Euros in December 2010.

The objective of the British fund was to sell branches in order to obtain 200 million Euros, however, according to real estate sources, up to the sale of its last package of 278 branches, it had obtained 70 million Euros.

The nearly 300 properties generate an annual rent of 25 million Euros, according to these same sources, and are scattered all throughout Spain and mainly, in Madrid and Barcelona.

As it happened with Moor Park when it acquired these branches, the new owner enters the Spanish market with this operation. It is Fibra Uno, a Mexican institutional fund that works as a Reit. That is, it is a listed company devoted to the rental of properties, whose earnings have to be divided between the shareholders.

On the 30th June, the accounting value of these properties reached 51.100 million of Mexican pesos (2945 million Euros). Its portfolio includes 316 properties, located mainly in the south and center of Mexico. The assets have an industrial, commercial and office use.

This is the first great operation carried out by a South American fund which, after years focusing its acquisitions in the United States, has started to invest in Spain. At the end of June, a group of Venezuelan investors acquired a building located at the Recoletos Street in Madrid for more than 20 million Euros from the real estate company Renta Corporación. The agreement between Moor Park and Fibra Uno has been closed a few weeks ago, after finishing the negotiations which started on the last month of May. However the acquisition will not be closed officially until the 15th September.

The operation has also been approved by Banco Sabadell. The Catalan institution has confirmed its interest to maintain the branches as they are strategic ones. The properties have a lease agreement for 35 years, with a minimum 25 years, guaranteed by Sabadell.

In this first great operation of sale & leaseback in 2013, the consulting company CBRE ad the law firm Clifford Chance have acted as consultants for Moor Park; while the acquirer has been advised by Banco Santander on the financial side, the law firm Uría y Menéndez on the legal and tax side and Deloitte on the real estate aspects.

Sabadell´s share dropped yesterday by 4,59% down to 1,848 Euros.

Housing prices drop by 13,3% in June while the purchase of properties drops by 27%.

The average price of the properties sold during the month of June reached 1206 Euros per square meter, which means a drop of 13,3% in reference to the same month in 2012. The purchase of properties decreased by 26,9%.

As informed by the National Council of Notaries, “the real estate market registered in June an acceleration of the adjustment”. The accumulated drop in prices for all properties sold since the summer of 2007 reaches 34,9%. The sale of properties during the month of June dropped by 26,9%.

Regarding the cost of properties, when it comes to apartments, the fall of prices reached an 15,6%, down to 1305 Euros per square meter. Also the prices of free properties presented a descent of 15,6% in June, down to 1318 Euros per square meter. Among them, the cost of free new properties sold in June experienced a decrease of 28,9% (down to 1407 Euros per square meter) while the second hand ones experienced a drop of 8,7% (down to 1298 Euros per square meter).

Finally, the price of single family homes transferred in June reached 972 Euros per square meter, which means a descent of of 4,4%. On the other hand, the percentage of acquisition of homes with some kind of mortgage financing reached in June 31,4%. In these cases, the percentage on the price of the financed property reached 76,9%.

The number of new mortgages for the acquisition of a property decreased in June 39,8% and the average amount of them by 10,1% in reference to the same month of last year. On the other side, the purchase of properties dropped by 26,9% in June in reference to the same month of the previous year, down to 25252 transactions, after a spring where the adjustment of the sector had softened, according to this report.

As for types of properties, the transactions of apartments registered an annual descent of 27,7% in June, with a stronger descent in the first hand properties (46%) than in the second hand ones (14,1%). The sale of single family homes decreased in June by 23%.

Andalusia leads the purchases in Spain.

Andalusia is the Spanish region with the highest number of purchase operations of properties in the sixth month of 2013, according to the figures published by the National Institute of Statistics (NIS). In June, the region has reached 4412 operation, followed by the Valencian Community (3811), Catalonia (3545) and Madrid (2907). The regions with the lowest number of operations in May were La Rioja (188) and Navarra (290).

The regions with the highest increase in operations were the Canary Islands (+ 24,9%) and Navarra (+21,3%), while the biggest descents correspond to Extremadura (-47,9%) and Asturias (-30,5%).

As for the national scenario, the purchase of properties deepened its fall in June after descending 5,5% in reference to the same month in 2012, down to a total of 23966 operations, according to the information provided by the INS. The purchase of properties accumulates therefore two consecutive months of descent, after returning in May to negative figures, when it moved back 3,7%. The descent in May took place after an increase of nearly 11% in April, after a very negative month of March, where these operations decreased more than 12%. (…)

The annual descent in the purchase of properties is due to the set-back in the purchase of new properties, as the transactions of second hand homes increased in 1,8%, reaching 13.665 operations. Meanwhile, the purchase of new homes dropped 13,7% down to 10.301 operations.

Most of the properties transferred during the sixth month of the year (89,5%) were free ones. The purchase of this type of properties decreased 3,3% down to 21443 operations, while the operations on subsidized properties reached 2523, with a descent of 20,7% in reference to June 2012.

Taking into account urban and rural properties, 137062 ones were transferred in June, with an increase of 4,6% over June 2012. (…)

The cost of housing rentals experiences its biggest fall in history.

Rental prices dropped by 0,2% in July this year, which means its biggest fall in the history of the National Institute of Statistics (NIS), which started in 2002. Rentals accumulate a descent of four consecutive months and present a set-back of 0,3% this year. The price index for rentals also stays one and a half points below the consumer prices index, which reach 1,8% last month.

By regions, the main descents took place in Navarra (-2,1%), Madrid (-1,5%), La Rioja (-1,1%), Aragón (-0,7%), Extremadura (-0,6%), the Canary Islands (-0,5%), Castilla-La Mancha (-0,5%), Valencian Community (-0,4%) and Andalusia (-0,3%). On the other hand, there were increases in Melilla (+1,3%), Galicia (+1,1%), Ceuta (+ 0,9%), País Vasco (+0,8%), Catalonia (+ 0,7%), Castilla y León (+0,7%), Cantabria (+ 0,6%) and Asturias (+ 0,3%). The Balearic Islands have not seen any changes. Finally, regarding the maintenance costs of the property, prices increased by 2%, two tenths more than the general index, and were stable in reference to the previous month.

Blackstone, the greatest fund in the world, rubs its hands: “Spain is interesting”

“Buy it, fix it and sell it”. This is how the opportunistic of the global capitalism work, who have found in Spain a place to expand at ease, as shown by the last operations of the bad bank, the Forb and the Town Council of Madrid. “The awarded properties at the side of the ocean are promising”, Joan Solotar, managing director at Blackstone, declared in an interview to the television channel CNBC.

Blackstone is the biggest investment fund in the world, and only in the real estate market it manages 64.000 million dollars in assets. As stressed by one of its executives, “the real estate sector in Spain is, absolutely, one of the areas we are focusing on. You only need to see “which banks have the assets and what they need to sell” and that the market is “on a downward path”.

The fund has landed in Europe to buy all kind of assets: hotels, offices, portfolios of homes, blocks of apartments… “The prices are far lower and if we look at a scenario in four or five years and these assets can be improved – with the model buy, fix and sell – Spain is interesting, this executive in Manhattan points out, as “everything is based on the offer and the demand and the real estate assets “can be maintained” while the latter recovers.

Two months ago, Blackstone paid 128,5 million Euros to the Municipal Company of Housing and Land in Madrid  for 1860 apartments built with public funds and on a rental basis. An average 69.000 Euros per home. “Look at the prices of the assets – she adds- the great discounts and the price of building a similar property right now”.

In Spain there is the need to sell cheap what was built at very high prices and the vulture funds are ready to buy. Two days ago, CatalunyaCaixa sold its real estate company to a Swedish and a US investment fund. Twenty candidates had attended the auction.

But not only banks need to sell. The State and other public institutions are speeding up sale processes of public patrimony. This would be the case of the Postal Service (Correos), the train network (Renfe), the National Heritage, the regional governments – such as Madrid – and the town halls, which will lose weight in the next few months at very low prices.

Slowly, the foreign capital is taking hold of the presumed real estate bargains. These are presumed, because no one apart from its managers knows what is being sold, at what price and with what margin. The opacity is complete, in spite of the sellers being institutions such as Frob or the bad bank, owned by the State of with a high public participation, a formula which prevents any regular citizen from having access to them.

And a margin that depends on when the valuations were made, many of them already obsolete. The interesting point right now is to see that the investment funds are rubbing their hands with the Spanish market. “Banks are starting to sell and while the merger and acquisition markets are very slow, the real estate market is behaving differently”, Solotar declares.

The dates chosen to close these deals, the last weeks of July and the first ones in August, are also a proof of the semi-darkness they are moving in.

Blackstone is the biggest of all venture capital funds in the world and this year it has just reinforced its position in Spain. Iñaki Echave joined the firm in February as managing director with responsibilities over Spain and Portugal.

The executive joins a team presided over by the investment banker Claudio Boada, president of the Group of Businessmen between 2004 and 2012 and consultant of the bank HSBC. Previously, he had been president of Lehman Brothers in Spain, where he worked for 16 years,.

Blackstone has a strong real estate division in the States, a market where prices have awoken again.

The purchase of homes deepens its fall to 5,5% and accumulates two months in a row of descent.

The purchase of homes deepened its fall in June after descending 5,5% in reference to the same month in 2012, reaching a total of 23.966 operation, as informed this Monday by the National Institute of Statistics (NIS). The purchase of homes accumulates two consecutive months of descent, after returning in May to negative figures, with a descent of 3,7%. The descent in May took place after an increase of nearly 11% in April, after a very negative month of March, where these operations decreased more than 12%. Looking only at monthly figures (June compared to May), the purchase of homes dropped by 8,6%, 1,8 points less than in the previous year and the lowest in the last five years. The annual descent in June is due to the relapse in the purchase of new homes, as the transactions of second hand homes increased in 1,8% reaching 13.665.

Meanwhile, the purchase of new homes dropped by 13,7% down to 10.301 operations. Most of the transferred homes during the sixth month of the year, 89,5% were free properties. The purchase of this type of properties dropped by 3,3% down to 21443 operations, while the operations on subsidized properties reached 2523, with a descent of 20,7% in reference to June 2012.