Month: March 2014

Soros & Paulson Gamble on Spanish Real Estate Market

04/03/2014 – ExpansionPro

George Soros and John Paulson are buying large stakes at Spanish groups´flotation. That proves the growing trust among investors in the economic recovery of the country.  The two great hedge fund managers – the first and the fourth in the world in the total profits gained in 2013 ranking – have acquired the stakes for €92 million in Hispania Activos Inmobiliarios.

Last week, Hispania declared a plan to launch a public value offer containing the remaining shares and by now it has already raised a considerable part of the foreseen €500 milion through the down payments. The documents are awaiting approval.

Investment Fund

Hispania will become listed on the Madrid´s Stock Market as a real estate investment trust (REIT), specialized in property with growth margin, especially in main cities. It aims at offering an annual yield of two numbers for 6 years. The trust will be managed by Azora.

If successful at the takeover bid plan, Hispania will become the second real estate group listed on the Stock Market since the recession began. Two weeks ago, Lar España was registered as a pioneer and raised €400 million.

The real estate assets in Spain, after losing one third of their value from 2007 through 2013 as the ECB told, become more and more popular among investors, mostly due to improvement on the British and the Irish markets. Investment in Spanish property doubled in 2013 in regard to the previous year and represented €2.700 million, according to the data from Cushman & Wakefield. 

Takeover Bids

(…) The news on the investment of the hedge fund managers  in Hispania arrives in the moment of increased gambling on the south of Europe. Funds related with Soros invested in indebted Spanish construction company FCC last month, while Paulson invested in Greek banks in autumn.

Original article: ExpansiónPro (Kate Allen/Miles Johnson)

Translation: AURA REE

Soros & Paulson Gamble on Spanish Real Estate Market

George Soros and John Paulson are buying large stakes at Spanish groups´flotation. That proves the growing trust among investors in the economic recovery of the country.  The two great hedge fund managers – the first and the fourth in the world in the total profits gained in 2013 ranking – have acquired the stakes for €92 million in Hispania Activos Inmobiliarios.

Last week, Hispania declared a plan to launch a public value offer containing the remaining shares and by now it has already raised a considerable part of the foreseen €500 milion through the down payments. The documents are awaiting approval.

Investment Fund

Hispania will become listed on the Madrid´s Stock Market as a real estate investment trust (REIT), specialized in property with growth margin, especially in main cities. It aims at offering an annual yield of two numbers for 6 years. The trust will be managed by Azora.

If successful at the takeover bid plan, Hispania will become the second real estate group listed on the Stock Market since the recession began. Two weeks ago, Lar España was registered as a pioneer and raised €400 million.

The real estate assets in Spain, after losing one third of their value from 2007 through 2013 as the ECB told, become more and more popular among investors, mostly due to improvement on the British and the Irish markets. Investment in Spanish property doubled in 2013 in regard to the previous year and represented €2.700 million, according to the data from Cushman & Wakefield. 

Takeover Bids

(…) The news on the investment of the hedge fund managers  in Hispania arrives in the moment of increased gambling on the south of Europe. Funds related with Soros invested in indebted Spanish construction company FCC last month, while Paulson invested in Greek banks in autumn.

Original article: ExpansiónPro (Kate Allen/Miles Johnson)
Translation: AURA REE

Monthly Mortgage Payment to Rise From March On

Mortgage bargains in Spain come to an end. The Euribor, a benchmark for 80% of all mortgages, finished February with 0.549%, below the first-positive-score from January (0.562%). By now, considering an average €120.000 mortgage for 20 years, savings would reach €36 in annual and €3 in monthly terms. (…).

In case of a greater amount, for example €300.000 for 25 years, the monthly payment would be smaller by €6 and by €72 annually.

In contrast, if your mortgage review embraces six months, the payment will climb up, by few cents or Euros monthly, though. Not enough to affect home budgets of millions of families throughout the country.

At present, the Euribor marks 0.55%. (…) In March 2013, the indicator was set at 0.545%. The slight rebound has been caused by improvement in overall economy state and cheap mortgages will not be seen again until a new recession looms. (…).

The decrease in the mortgage signing represented -27.8% in 2013 (…).

 
 
Original article: El Confidencial (Elena Sanz)
Translation: AURA REE

Mortgages Below 2% Are No Novelty Anymore

Banks´war on the mortgage signing goes on. After the attack of Santander with the Euribor + 1.99% mortgage at the beginning of the year, the idea has been soon seized upon by ING Direct and now other financial institutions join the “below 2%” trend.

Caja España-Duero has overturned mortgage offer and launched the “Hipoteca Net Futuro” mortgage of a 1.95% interest rate, via a 1.35 point reduction. The first year in the “Net Fidelis” mortgage is now charged with 3%, while the next with 1.65%. In turn, “Net Oro” mortgage for new clients offers 2.75% during the first and 1.75% during the following years. “Net Portal Inmobiliario” mortgage of the bank intended for its houses only, includes a 2.75% fixed rate for the first two years and Euribor + 1,85% for the next (up to) 40 years. However, obviously the mortgages are bond with various bonus requirements, such as salary or pension deposit, purchase with credit cards, signing life and household insurances and a pension scheme. (…).

Caja Rural de Granada has just launched the “Hipoteca Libre” mortgage, offering a 1.85% differential rate. The first and the second year is charged with a 2.85% rate. There are no commission fees, however one becomes obliged to deposit their three salaries, buy life and household insurances, pay more than €600 each six months with credit card and create an electronic bank account and an e-mail address. Without meeting the conditions, the rate rises to 3.25%. (…).

Also Novagalicia Banco trimmed interest rates and launched its new “Hipoteca Bonificada” mortgage. Now the bank offers a 3.50% rate in the first year and a 2% one for the rest of the (up to) 30 years, provided that a client buys other products, like a life insurance, a multi-risk insurance for home, payment protection, pension scheme, apart from obvious salary deposit and paying with cards. Otherwise the interest soars up to Euríbor + 2.50%.

 
 
Original article: Cinco Días (Miriam Calavia)
Translation: AURA REE

How to Protect Credit From Vulture Funds?

Private equity risk firms, known as vulture funds, are taking advantage of the urgent necessity of banks to shed their real property. They buy both property and credit portfolios at bargain prices. The transactions not only ease the banks, but also affect debtors who have the right to re-buy their credits at prices paid by a purchaser.

Defaulting credits of the Spanish banks reached €200.000 million in 2013, excluding the asset transfers to Sareb. Legal regulations that oblige to provision 100% of such credits after 12 months, have fueled the leakage of these assets from banks´portfolios. Santander, CaixaBank or Bankia have been the most active in terms of mortgage lot sales to such international companies as Fortress, Cerberus or Lone Star.

Recovery of the sold credit is not easy for the reason that the right to withdrawal (stated in the Civil Code of Spain) has got a nine-day complaint term which, in turn, is a subject to a series of requirements. First of all, the credit must be under court litigation proceedings. (…) However the allegation margin has become more flexible since the failure of the Court of Justice of the European Union concerning abusive clauses within the mortgage law.

Another challenge is knowing the identity of the new debt buyer as usually debtors do not receive any information about their credit having been sold, in spite of the legal obligation to send a notice about that. The notice, however, if eventually sent, lacks information about the purchase amount and is not registered. That handicaps manifestation when the nine-day term had begun. (…).

The latest credit portfolio sales reached 80% discounts. (…) The debtor, let it be a company or a legal person, could cut-off by this amount interest and court expenses.

 
Original article: Cinco Días (David M. Pérez)
Translation: AURA REE

Ex-Executives of Altamira & Sareb Buy Asentia

Colonial transferred its real estate branch Asentia to consultant company Eneas, chaired by José Luis Contreras, an ex-executive of Altamira (Santander´s RE platform) with view to restructuring and maintaining the company´s liability.

Also, MainSpring, represented by César Goyache, ex-executive of Sareb and Alvarez & Marsal, has taken part in the transaction.

According to the sources with knowledge of the operation, Crédit Agricole and Colonial hold 20% of Asentia´s capital each.

At the extraordinary meeting in Barcelona in January, the managing board of Colonial agreed upon a €1.000 million capital enlargement, due to its €1.759 million debt expiring this year.

By now, Asentia has been put up for sale with debt equal to €1.428 million. (…).

 
Original article: Cinco Días (Alberto Ortín)
Translation: AURA REE

Ex-Executives of Altamira & Sareb Buy Asentia

3/03/2014 – Cinco Días

Colonial transferred its real estate branch Asentia to consultant company Eneas, chaired by José Luis Contreras, an ex-executive of Altamira (Santander´s RE platform) with view to restructuring and maintaining the company´s liability.

Also, MainSpring, represented by César Goyache, ex-executive of Sareb and Alvarez & Marsal, has taken part in the transaction.

According to the sources with knowledge of the operation, Crédit Agricole and Colonial hold 20% of Asentia´s capital each.

At the extraordinary meeting in Barcelona in January, the managing board of Colonial agreed upon a €1.000 million capital enlargement, due to its €1.759 million debt expiring this year.

By now, Asentia has been put up for sale with debt equal to €1.428 million. (…).

 

Original article: Cinco Días (Alberto Ortín)

Translation: AURA REE

The Perfect Moment to Invest in Real Estate Firms?

Investors aim at Spanish listed real estate companies. Last Friday, Colonial finished the day with the highest price that advanced by 19%, adding to the revaluation begun in 2013 to 57.6%.

Better rating of Spain by Moody´s and the optimistic outlook revive the sector. “Investment in the real estate and construction companies serves the Spanish economy´s reversal” points out CapitalBolsa. With such background, firms like Colonial, Urbas, Realia, Montebalito and Quabit register upsurge between 23% and 60%. Withal, one must remember that their quotation has been firecely penalized since the recession hit and the fact is still being reflected in the depreciation of between 80% and 99% in comparison with the 2007 scores.

Experts vow to differentiate between the truly promising companies for the future (like Colonial, Realia) from the ones noting down appreciation due to rumours and transient improvements. Last week Colonial announced deconsolidation of Asentia through stake reduction from 100% to 18.9%. By deed it meets terms and conditions set for the €500 million capital injection by Grupo Villar Mir, MoraBanc and Santo Domingo. (…). When it comes to Realia, on Friday it sold for €1.21, that is 42% above the target price (set at €0.70).

 The rest of the real estate firms have no linear listing and most of them reach prices below one Euro. (…).

 
 
Original article: ExpansiónPro (C.R., Lunes 3 Marzo 2014, pp 15)
Translation: AURA REE

More Than 20 Grandeur Fortunes Plan to Transform Their Estate Into a Socimi

At least 20 large Spanish fortunes, three companies from Ibex and various communities and city councils are weighting up converting their patrimony into a Socimi (the Listed Investment Company in the Property Market, a Spanish counterpart of a REIT). Registered Advisor at the MAB, Antonio Fernandez from Armabex, confirmed the news, adding that currently there are 30 open files for companies yearning for the fiscal benefits a Socimi gives, such as 0% corporate tax rate (presently marking 30%) or no taxes on the property sales, provided that a property has been placed for at least 3 years in a Socimi´s portfolio.

Besides, another appealing incentive is an opportunity of capitalization that would allow liquidity. “However, some of the companies simply seek efficient ways of sharing estate yield among their family members as dividends” – explains Fernandez. Currently, the dividends for resident partners in Spain represent between 21% and 27% retention (none for non-residents).

During the last weeks, two first Socimis have become listed on the MAB: Entrecampos and Promorent. It is predicted that more of them will appear on the Alternative Stock Market in the forthcoming months, due to the number of the open files. The minimum free-float for a Socimi is €2 million or 25% of the capital that will guarantee a family office the fiscal benefits. Moreover, the future Socimi owner must pledge that at least 80% of their portfolio will consist of property or land of urban nature for rent. (…). What is more, 80% of income from the yield and 50% of the capital gains from asset sales must be divided via dividends if not reinvested.

The awakening of such vehicles shall be assigned to the amendment of the Law 11/2009 from 26th October in December 2012, that eliminated the corporate tax from Socimis (then at 18%) and allowed them to become listed on the MAB instead of on the Continuous Market.

 
Original article: ExpansiónPro (Ana Antón, Lunes 3 Marzo 2014, pp 12)
Translation: AURA REE

Jones Lang LaSalle: First Signs of Reversal on Industrial & Logistics Market in Spain

3/03/2014 – Jones Lang LaSalle

The Report on Industry and Logistics (El Informe de Industrial y Logística) by Jones Lang LaSalle analyzes movements within the sector underlining the lack of significant purchase transactions due to the fact that the cut-off in financing undermined the sector. Nonetheless, according to the report, the year 2014 casts positive outlook inasmuch as on the one side the country risk faded away, we think that the yield hit the bottom, therefrom recovery shall be imminent and finally, the returning international investors who start to demand new industrial plants that implies creation of new spaces.

Madrid´s industrial area and land

The demand from the part of small and medium-size businesses is scarce due to serious insolvency and financing problems. However, the ones that are powerful enough to buy the industrial plants come across considerable opportunities.

When it comes to supply, the price of finished product shows the impact of continuous decrease, let alone the interesting assets proceeding from arrangements with creditors.

Land purchase presents poor numbers, basically due to lack of demand. At present, we find a wide offer of outstanding land at an attractive price in all rings.

On the other hand, some developer companies are willing to buy and develop land for tender finalists, however the terms and conditions offered by the lattest in agreements make accomplishment of the projects impossible.

Logistics in Madrid

The demand in Madrid has not got back on its feet as companies still cannot afford vacant spaces. In the primary areas availability is scarce (7.5%) and that pushes investors to surrounding areas. The demand aims at the second and the third ring, where availability rate demonstrates 9% and 42% respectively.

Jones Lang LaSalle´s report also analyzes supply and assures that the availability rate remains stable in the second quarter of the year, however shrinking number of large industrial buildings is noteworthy. In the second and third ring there are lots of obsolete property in need of low-cost trading.

In the primary zones, we observe an improvement in rental fees (4,80€/m2), whereas in the second and the third ring the prices reach 3,10€/m2 and 2,15€/m2 respectively. (…)

Talking about transactions, high-quality and well-situated demand turns towards 2.000-3.000 m2 in all facilities areas. The logistic space absorbtion in Madrid during 2013 showed 355.190 m2. (…)

Industrial product and land in Barcelona

Demand analysis in 2013 presents prectically no significant operations within this area, although the demand in Barcelona´s surroundings is high and supply low. (…). Still, financing is scarce, so most of the transactions are paid from own resources. The land prices ranged between  150€/m² and 400€/m².

Demand for industrial buildings is also poor, not in primary zones, though, where prices vary from 3,50€/m²/month and 5,25€/m²/month.

Logistics Barcelona

In the last quarter of the year, the absorbtion of logistic space was equal to 106.200 m² that added to the 205.000 m² from the previous quarters give 311.200 m² throughtout 2013.

The supply of industrial buildings in Barcelona is currently set at 672.300 m², about 6% less than a quarter before and the availability rate is 10.7%. Within primary zones, the rate shows 10%, whereas in the second and the thrid ring represent 7.2% and 15% respectively.

Maximum rental rates in the last months of 2013 showed 6,25 €/m²/month in the primary zones and 5 €/m²/month and 3 €/m²/month in the 2nd and 3rd ring, respectively.

The greatest transactions of the year are the following: Docout´s renting an industrial building of 22.848 m² from Prolongis and the rent of old buildings of Ochoa in L’Hospitalet del Llobregat, Cornellà del Llobregat, El Prat del Llobregat and La Bisbal del Penedès, at a tender sale.

 Investment market: Industrial and Logistic

The year 2013 was a turning point for the sector. The most active, opportunistic investors are continously looking for great volume and bargains.

Primary yields in Madrid showed 8.25% (expected to fall sharply during 2014 due to strong investment and long-term contract signing), while in Barcelona they settled at 8%.

The report by Jones Lang LaSalle highlights that the year 2013 ended up with €100 million investment and throughout 2014 the number might even triple. (…). Since the beginning of 2014, we observe improvement in activity within the sector and we expect better contract signing rates this year.

Original article: Jones Lang LaSalle

Translation: AURA REE