Ways to Invest in Property

31/03/2014 – Expansion

 Real estate sector raises after knock-off of the recession and property opportunities flourish again. This is proved by two recent listings (Lar España and Hispania Activos) and a possible entrance to the stock market of Solvia. Last year, two other Socimis (Spanish REIT companies) debiuted on the MAB (the Alternative Stock Market): Promorent and Entrecampos.

First Steps

An expert from Profim, José María Luna, claims that investing in a Socimi is not the best idea for a retail investor due to the fact that present listed trusts spend great majority of their revenues on creating their property portfolios. (…).

 Size

(…) Lar and Hispania are said to be worlds apart. The first manages €418 million and has appreciated by 4.5% since its flotation on 5th March.  Pimco bought 12.5% of its stake. The Socimi targets mostly at premises and shopping centers, while Hispania vies for residential assets and hotels.

Hispania has got €527 million capital and has advanced by 5.4% since becoming listed on 14th March. The company is administered by Azora, (…) and held by illustrous George Soros and Paul Paulson.

On the other hand, Lar is legally obliged to pay dividends, while Hispania is free from this charge. (…).

The last funds

Except for the Socimis, there are two funds that survived the recession (before, there existed 12): Ahorro Corporación Patrimonio Inmobiliario and Santander Banif Inmobiliario. (…).

Equity funds

Another option is to invest in companies listed on the stock market, such as Colonial or Realia. However, Ignacio Romero from Banco Sabadell warns about the two firms. “Their balance restructuring has not concluded yet, deleveraging rate remains high, although they head in the right direction.”

The high indebtness underlines security volatility. For example, Colonial has got a 70% rate of debt juxtaposed with net asset value. An ideal rate should balance between 40%-50%. (…).

 

 

Original article: Expansión (C. Sekulits)

Translation: AURA REE

Spring REO Sales in Banks

31/03/2014 – Expansión

CaixaBank, Bankia, Sabadell, BBVA, Santander, Popular, España Duero, Bankinter, Unicaja, Grupo BMN, Ibercaja and Kutxabank speed their sales up by applying unique discounts reaching 70%. (…).

The latest data shows that in several regions, such as the Community of Madrid, the Balearic Islands and Galicia, housing prices began to rebound.

(…) Great majority of the banks apply discounts on holiday property in areas whith stock in excess and on used houses in zones of smaller interest. On the contrary, in Madrid, Barcelona, Valencia or Seville some entities have raised prices with view to emerging economic recovery.

REO Property Showcase

CaixaBank, together with Servihabitat, has got over 14.400 houses for sale located mainly in Catalonia, Valencia, Andalusia and the Canary Islands. Last year it sold 29.132 properties for €5.3 billion. Among the campaigns targeting at stock reduction, noteworthy is “Tú propones el precio” (“You suggest the price”) (…). One of houses embraced by the offer is situated in Carcaixent (Valencia), has got a 250 square meter area and is available from €161.000.

Presently, Bankiahabitat.es sells more than 24.500 properties out of which more than a half are houses. The bank offers a 45% discount on value before the bubble burst. (…) Few weeks ago, Bankia launched a campaign for 300 dwellings situated in the Community of Madrid at bargain prices 40% off. Also, in Alicante, Valencia and Toledo the entity offers real deals. In 2013, it sold 7.300 units.

Sabadell´s Solvia hanged the “For Sale” board on 17.269 propeties, out of which 8.154 are houses sold at almost half of their original price in Madrid and Barcelona. (…) In 2013, the group sold 18.501 units, by 34% more than a year before, for €3.1 billion. Few weeks ago, the bank ran “Personal Advisor” initiative and a new auction scheme applied to 9% of its total sales that brought an increase in prices by 16%. At present, Sabadell is developing 1.296 houses and plans to promote various projects on land. (…).

With help of Anida, BBVA sells houses with 70% discounts. Last year they sold 14.390 units, by 43.2% more than in 2012. This year the bank targets at 1.000 properties per month supported by “Tu precio” (“Your Price”) campaign. (…).

Altamira, the former Santander´s real estate firm that is held by Apollo (85% of stake), sells via its website 14.000 properties, including 6.000 dwellings. On the portal one finds a slogan that in Altamira “we would like you to look beyond a house”. One of the campaigns involved selling at prices from the 90s. There are houses from €31.000 in Alicante for up to €70.000 in Las Palmas.

In total, Popular has got 10.614 assets for sale, out of which 5.332 are houses at average discount of 11.7% and maximum of 30%. A great majority of property managed by Aliseda, in which Popular holds a 49% stake, are located in Andalusia, Valencia and Catalonia. In the first two months of 2014, the entity practically tripled sales in reference to the previous year. In January and February it sold €131 million in property, while a year before a mere €46 million.

España Duero´s Giasainversiones.es trades more than 3.500 properties (1.900 houses). The group transferred to Sareb 18.115 units valued at €3.1 billon currently offered on its website and mainly found in Valladolid, Burgos, Madrid and on the coast.

In turn, Bankinter has been less vulnerable to the recession and right now possesses only 3.000 properties for sale, most of them houses. Through the bank´s office and APIs networks, in 2013 it reduced its REO portfolio by 1.762 assets valued at €240 million, more than 38% of the total. The entity pursues at raising sales by 15% to €275 million this year.

The next group markets around 5.000 properties on its website www.unicajainmuebles.com. The financial entity has got plenty of stock in Andalusia. In its catalogue one may find wide variety of property, ranging from simple houses in Valencia for €23.000 to historical estate in Cadiz for €269.000.

The BMN Group consists of Caja Granada, Murcia and Sa Nostra. It granted 16.000 properties estimated at €5.8 billion to Sareb. In the last quarter it sold a thousand units and expects to conclude the year with 5.000 properties less in the protfolio. Through a campaign in which the bank offered 50-inch television sets, it closed sales of 500 houses.

Catalunya Banc and its CX Inmobiliaria trades 2.800 dwellings with a mean discount of 35%. About 60% of all properties are located in Catalonia and around 20% in Levante. In 2013, the real estate company sold 6.000 assets for €680 million. In 2014, it has already sold 1.200 units for €150 million. The entity launched a campaign on its new houses.

 Ibercaja, a Zaragoza-based group, applies 40% discounts on its 2.000 properties. This year it expects to sell 1.000 dwellings.

Kutxabank has got 1.281 REO assets for sale, including 1.039 houses. This year the bank wishes to sell 1.900 units for €336.4 billon. Mean discount is of 10% and on www.kutxabankinmobiliaria.es one may find houses in La Rioja at prices ranging from €23.000 for an individual house to a house in Biscay for €470.000 with 40% discount applied.

 

 

Original article: Expansión (A. Antón/D. Esperanza)

Translation: AURA REE

Ten Real Estate Jewels Seek Buyers

31/03/2014 – Expansion

Banco Santander has found a sublime purchaser (Wang Jianlin) for its jewel in Madrid: the Edificio España building that had remained empty for 10 years. (…). Another sale that reverberated through the sector is the Castellana 200 complex that currently is experiencing purchaser recognition troubles.

The interest of foreign investors in Spanish property becomes ordinary matter, however one may ask what is being offered on the market right now? A great deal of offer search is focused on Barcelona and Madrid.

(…) Not only companies and banks sell out their property. Also, public administrations like the City Council of Madrid or the Government decided to take an advantage of the growing interest. The Community of Madrid has organized an auction of several buildings (the one situated at 20 Gran Vía Street for €19.9 million among them). The Gran Vía Street hosts two other buildings for sale: at number 30 sold by pieces and the Palacio de la Música, almost acquired by Mango from Fundación Caja Madrid.

When it comes to Barcelona, the local government is seeking purchaser for 13 public buildings.

Apart from large office buildings located in city centers, hotels and trading assets (premises and shopping centers) there are lots of other asset types up for sale. For instance, the ABBA Atocha hotel in Madrid and four shopping malls from old portfolio of ING Real Estate in Alcalá de Henares, Madrid, Vigo and Vitoria are looking for a buyer that would pay €400 million for all of them.

 

 

Original article: Expansión (Rocío Ruiz)

Translation: AURA REE

Moody´s: Housing Prices Have Not Hit the Bottom Yet

31/03/2014 – Expansion

In a report published last week, Moody´s reminds that in the last quarter of 2013 the deliquency reached 37.05%.

The continuous rise in mortgage defaulting badly influences credit quality of the Spanish banks and proves that the price adjustment has not come to an end yet.

Considering the supply-demand relation, the agency foresees that throughout this year the prices will keep tapering down. In turn, that will affect the banks´balance sheets due to depreciation of the collateral property.

Moody´s estimates that in September 2013 the banks´credit portfolios were worth of €105 billion.

In regard to the housing price development, the agency indicates that just on the contrary to what occured in Ireland, the United Kingdom or the United States (where real estate bubble also burst), Spain has been recovering slowly and the corrections have not finished yet.

Given the big number of empty homes, it will still take several years to absorp the houses in excess.

At the end of 2013, the number of credits tied to the property represented 57% of all credit portfolios granted by banks to companies and families (…).

 

 

Original article: Expansión 

Translation: AURA REE

Evictions Go Down by 9.8% in 2013

31/03/2014 – Expansion

According to statistics of the General Council of the Judiciary, the eviction trials begun in 2013 represented 82.860 cases. The number means a 9.8% decrease in comparison to the previous year.

As the Council explained, the lower number “could be backed by the amended Law that allows protective measures for the mortgage debtors, debt restructuring and social renting”.

Moreover, the report reveals that the number of evictions conducted by lower and joint courts showed 67.189 cases, out of which 38.4% derived from mortgage executions, 56.8% corresponded to the Urban Letting Act and 4.8 % to other reasons.

 

Original article: Expansión

Translation: AURA REE

Confusion About the Castellana 200 Purchase

28/03/2014 – El Confidencial

The sale of the Castellana 200 building complex is currently the talk of the town. It turned out that its buyer does not exist. Despite the announcement that the offer of €145 million presented by Anchorage was the best one, nothing is formally cofirmed for the reason that in fact the real purchaser is a half-created Socimi promoted by Rodex, a Spanish consultant firm.

At the final stage of sale, Anchorage was assumed as the buyer. However, one shall look back at the Copernicus Operation (Eurohypo´s credit portfolio sale at the end of 2012) where the Australian fund together with Scandinavian Värde were backed financially by Luis López de Herrera-Oria from Rodex (who also supported Prima Inmobiliaria, Alza Real Estate…). The scheme was to be repeated at the Castellana 200 acquisition.

Thus, Anchorage is one of investors of a Socimi embracing property worth of €1 billion and forged by Rodex. Hipotetically, according to plans made by López Herrera-Oria, the Australian fund will be assisted by other first-class investors, like CitiMorgan Stanley and Bank of America. 

The newly created Socimi was about to debiut with purchase of one of the few remaining jewels in Madrid and by doing so attracting more investors that feverously search property market nowadays. However, the problem is that Rodex will not make it on time, before the deadline set by the complex´s owners (BankiaSabadellSantander,BBVA and Caixa).

The whole fuss gives an opportunity to Perella and Pimcoother finalists in the bidding that now could acquire the property for less than €145 million. “Plans have been mistaken for reality”.

The tension reached the boiling point because of the looming threat that the offer issued by Rodex and assumed as the winning one will not be formalized. Moreover, Spanish reputation also hangs by a thread as there are other 22 bidding offers waiting in the queue and other units for sale (for example the Castellana 89 building).

Now, as the real estate market revived again, every transaction seems possible. Given that the purchaser exists.

 

 

Original article: El Confidencial (Carlos Hernanz)

Translation: AURA REE

Sareb Destined €38 Million For Nearly 300 Contracts With Advisors & Consultants

28/03/2014 – El Confidencial

Sareb intended at least €38 million in 2013 to sign contracts with 259 providers of various services related to its real estate and fiancial management activity. Such over-employment contributed to the bad bank´s €261 million losses registered last year.

According to Belen Romana, Sareb´s chairwoman, most of the money was spent on the due dilligence process coordinated by lawyers, auditory companies and real estate brokers. As Romana admits, the cost could have been considerably reduced if the work conducted inside the bad bank.

Yesterday the company presented annual results revealing that 74% of overall expenses (non-financial), that is €401 million spent in 2013, corresponds to “external services” (the rest is personal expenses and Property Ownership Tax – IBI in Spain – cost). The majority of the services that consumed €196 million were management and marketing fees paid to old banks that transferred assets to Sareb and that are responsible for selling or renting the property. Next €39 million are the Owners Association expenses, €38 million “independent professional services” and another €25 million assigned as unprecised “others”.

The massive agreement signing pushed Sareb towards drawing its own business plan handed to Álvarez & Marsal and then to KPMG. Later on, the bad bank´s IT platform has been outsourced to regional banks.

The greatest part of the contracts were of due diligence type as Sareb was obliged to revise 200.000 assets, including loans and property, in its balance sheets. 13 firms lead by Clifford Chance were chosen for the task (5 lawyer offices: Gómez-Acebo Pombo, Pérez Llorca, Ramón y Cajal, Deloitte Legal and Broseta Abogados, and 6 consultants: CB Richard Ellis, Gesvalt, Savills, Knight Frank and Cushman & Wakefield) and again KPMG that revised transfer prices paid to aided entities and IBM as an IT solutions provider. Later, Cuatrecasas joined the crowd.

After that, various advisors entered the stage of large asset portfolio sales to majority shareholders as indpendent rental management and maintenance, insurance, property managers and so on to reach jointly 279 providers.

According to Sareb itself, the expenses could have been cut if all the proceedings had been conducted at home. Hiring more people would be much more economic and other experts, like notaries and land registrars could have done the work. The shower of contracts has evoked suspicion of illegal practics. However, without exaggeration: “Sareb is to disappear in 15 years and at this speed of spending money it might not survive by that time (…)”.

In spite of numerous agreements, still the problem of lack of a servicing platform has not been solved. Sareb does not have a unified market for all the properties in its possession and the banks that granted their assets to it (i.e. Bankia, NCG Banco, Catalunya Banc, Banco Valencia-Caixa, BMN, Ceiss and Caja3-Ibercaja) yet continue to manage them.

Romana explains that “various servicers offering banks´platforms are being created“, referring to Santander, Popular, Caixa and Bankia, and aditionally to Liberbank, BMN and Cajamar that have recently put on sale their platforms. “When we are sure where each of them ends up, we will take a decision”, she concludes.

 

To learn more about the Spanish bad bank, visit our SAREB section.

 

Original article: El Confidencial (Eduardo Segovia)

Translation: AURA REE

Merlin Properties to Create a Socimi

28/03/2014 – Bloomberg

Merlin Properties SA is prepping for becoming the largest Socimi in Spain, oversizing even Hispania Activos Inmobiliarios that debiuted on the stock market at the beginning of the month and that is presently worth of €530 million. Another popular freshly listed Spanish REIT company is Lar España Real Estate, currently valued at €417 million.

David Brush, ex-executive of Brookfield Property Group, will be in office of the chief investment officer. Also, Ismael Clemente and Miguel Ollero, ex-directors of RREEF Spain and founders of Magic Real Estate will join the listing team.

Among potential investors appear Pacific Investment Management Co.’s Bill Gross, Quantum’s George Soros and billionaire John Paulson . The two latter have previously invested in Spanish Socimis.

The shares´ sale will be coordinated by Credit Suisse Group AG together with UBS AG and Deutsche Bank AG.

Merlin will target mainly commercial property in Spain with an option to extend to Portugal. The newly listed company will be registered as a Socimi.

 

Original article: Bloomberg (Sharon Smyth)

Summary: AURA REE

Bad Bank Lost €261 Million in 2013

28/03/2013 – Expansion

Sareb´s business plan, drafted by KMPG in March 2013, augured net losses oscilating around €47 million, while the huge gains were expected for 2016, said to represent €762 million. Last year, gross operating profit (EBIDTA) reached alomost €1.2 billion, while real estate and financial asset management and divestment generated total gains of €3.8 billion. The amount allowed it to pay-off its €2 billion debt and to redeem another €1.2 billion of interests.

In 2014, Sareb wants to advance in debt repayment and redeem 50% more in respect to 2013 (about €3 billion). Moreover, the business plan prepared for this year includes adding to asset value by €7 billion before the bad bank´s ceasing in 2027.

At the end of February, Sareb named Jaime Echegoyen the new CEO that will supervise such initiatives as completing unfinished houses or breaking into rental market. (…).

Out of the €3.8 billion earned in 2013, 41% originated from divestment (21% from property and 20% from credit sales). Assets for rent added 2% to the total revenues. The remaining 57% derived from loan interests, repayments and collection. In total, Sareb sold 9.000 properties, 2.500 hectares of land in retail sales and 12 large portfolios consisting of both properties (20%) and loans (80%).

In the retail channel, the bad bank appeared among the top 10 sales agents with sales rate of 25 units per day. In 2014, Sareb aspires for entering among the top 5 and increase the rate to 30 properties a day that would be by 15% more than in 2013. Moreover, it targets the largest property markets (Madrid, Barcelona, Alicante, Valencia and Malaga).

Throughout 2013, the Spanish bad bank kept in contact with 600 international investors. (…).

 

To learn more about the Spanish bad bank, visit our SAREB section.

 

Original article: Expansión (E. P.)

Translation: AURA REE