Reig, Koplowitz & Cutillas Dread the Future of Their Real Estate

30/04/2014 – El Confidencial

On May 5th, when Eurohypo finally seals the sale of its Spanish mortgage portfolio, María Reig (Reig Capital), Alicia Koplowitz (Omega Capital) and Carlos Cutillas (Inmobiliaria Chamartín) among others will get to know the new owner of their debt.

Since the branch of Commerzbank announced the sale of the €4.5 billion credit portfolio in January, many debtors started to suffer from insomnia. The threat that ApolloLone StarBlackstone or Cerberus could acquire the lot and through the debt execution snap all their most valuable assets is the doom´s day scenario for them.

Cutillas and his Inmobiliaria Chamartin are in the worst situation as Eurohypo´s Octopus Project contains €450 million in his loans.

Apart from Inmobiliaria Chamartin, the portfolio contains credits granted to such real estate giants as RealiaMartinsa-FadesaTesta and Metrovacesa, hotels like AC HotelesMeliáTrypHotusa and Kempinski and stores groups like HinesEroskiSonae and Rodamco.

Also, large private investors have a reason to fear. The most prominent in this case is Alicia Koplowitz who owes €100 million to Eurohypo through her manager Omega Capital. She used the financing given by the bank to buy the Rey Juan Carlos hotel and a building on the Castellana Street in Madrid and 50% of the Ritz hotels in Barcelona. Unfortunately for Koplowitz, the properties call great attention of investors exploring the Octopus Project assets.

In turn, businesswoman Maria Reig has got inside the portfolio a €120 million debt proceeding from acquisition of Mutua Madrileña with headquarters on the Almargo Street in Madrid.

 

Original article: El Confidencial (by Carlos Hernanz)

Translation: AURA REE

The ECB Gives Spanish Banks Between 6 & 9 Months to Meet Working Capital Needs

30/04/2014 – Cinco Dias

After knowing the results of the Asset Quality Review test or the endurance test basic scenario measured with the core equity intruments (Common Equity Tier 1) ensuring the capacity of loss absorption, the European Central Bank informed Spanish banks that they shall raise the amount they are still missing.

The results will be made public in October along with the endurance test outcome. The latter examination will be conducted by the ECB, the European Banking Authority and the European Systemic Risk Board with taking into consideration an adverse scenario occurance.

The ECB expects the banks to raise the missing capital unearthed during the AQR and in the basic scenario of the endurance test within six months. For finding the money for the adverse scenario they have a 9 month period.

In the capital scheme the entities can include their withheld profits, minor bonus payments, new ordinary share issues and selected asset sales which go in line with market prices.

Nearly 6.000 supervisors and auditors are working on the quality review and the endurance test. Warrant, provision and exposition revisions are to end in summer.

 

 

Original article: Cinco Días

Translation: AURA REE

Santander´s RE Servicer Reduces Loss to €146 Mn

30/04/2014 – La Informacion

The company established by Santander with view to managing the its real-estate-owned assets was hit by €146 million detriment in the first quarter of 2014. To compare, in the same period in 2013, the unit brought a €175 million loss.

The news was told by Grupo Santander´s financial director José Antonio Álvarez at a recent press conference when the officer also added that the target of the bank is to continue trimming its balance, as at the end of March it marked €10.3 billion.

This way, March concluded for the bank with a 14% lesser exposition to real estate activity.

Santander´s property-backed loans had a 51% coverage, while the REO assets were covered in 55% (out of which 43% corresponded to buildings and 63% to land).

 

Original article: La Información

Translation: AURA REE

End of Property Speculation, Return of Home For Living

30/04/2014 – Cinco Dias

Information provided to the Association of Property Registrars is priceless. Especially, when it is piled up and shows a really interesting statistical picture.

During the golden times of real estate boom, overhelming numbers of houses were being sold. Some defended that it has not only occured as a result of cheap mortgages and excellent economic situation but was also due to Spain´s being the main tourist destination.

At the whirl of housing price spiral upward movement, the proportion of houses owned per each household post 1.45. There have been years that even the Stock Exchange could not compete with returns given by a house sale. Numerous transactions sometimes did not bother of property registration. However, they were ought to be declared in case of “an investment component” involved.

Yesterday, the Association published its Property Registry Statistics Report which shows that in 2007 more than a half of the houses (56.2%) were registered at least five years before their acquistion, while last year they performed a meagre 26.8%.

In parallel, the number of homes that remained in possession of the same owner for more than 10 years (briefly, the owner lived in there) rose significantly from 19.90% in 2007 to 33.22% in 2013.

The main responsibles for the phenomena are the arrival of the recession and consequent difficulties in selling the property. Average possession time increased from 7 years and 4 months in 2007 to 9 years and 10 months noted down last year (by 34.09%  more). Property speculation is not devoid of risk anymore.

 

 

Original article: Cinco Días (by Raquel Díaz Guijarro)

Translation: AURA REE

S&P Says Housing Prices Will Bottom Out in 2014

30/04/2014 – El Mundo

Standard & Poor´s credit rating for twelve Spanish banks indicates no changes for majority of the entites, taking into account that they have absorbed most of the losses caused by the loans adjusting to the bubble burst and double recession.

In the agency´s opinion, market correction is “at the verge of ending” and prices and activity are likely to remain on minimum levels this year. S&P´s also adds that “a slight rebound” has been observed in Spain´s collapsed economy.

“Hence, we expect the non-performing loans´ provisions to decline in 2014 and 2015 and settle on normal levels in 2016″, S&P says. The agency estimates that over the past five years the banks registered losses deriving from loans equal to 13.5% of all credits existing at the beginning of the crisis.

Moreover, the agency “sees balanced tendency in the sector” but it denies the rating improvement unless “a significant” capital reinforcement is detected.

In the review, Standard & Poor´s raised the rating of Banco Financiero y de Ahorros (BFA), from ‘B-‘ to ‘B’ with a negative outlook and decreased the outlook for Cecabank from  ‘positive’ to ‘stable’ in ‘BB+’ rating.

 What is more, the agency gave CaixaBank ‘BBB-‘ with ‘stable’ outlook, while Kutxabank and Barclays Bank S.A.U were labeled as ‘BBB-‘ with ‘negative’ outlook. Additionally, S&P´s considers lowering the note of La Caixa (presently ‘BB’).

Bankinter (‘BB’ with ‘positive’ outlook), Ibercaja (‘BB’, ‘stable’), Sabadell (‘BB’, ‘negative’), Bankia (‘BB-‘, ‘negative’) and Popular and NGC (both ‘B+’ with ‘negative’ outlook) have not changed their scores at all.

 

Original article: El Mundo

Translation: AURA REE

FCC: Losses 78% Down, Ebitda 72% Up

30/04/2014 – Expansion

In the first quarter of 2014, FCC decreased its debt from €140 million to €31 million. The company hopes to squeeze the amount to zero in the following months. 

The losses include discontinued operations which showed €8.8 million in 2014, while in 2013 they turned €154.7 million as a result of FCC´s Energia portfolio value deterioration. 

The firm´s business turnover increased 2.7%, from €1.397 to €1.435 million, whereas ebitda shot up by 72%, from €97.4 to €168 million.

Improvement has been felt in all FCC´s activites, but especially in the construction field. Its operative margin increased from 7% to 11.7%. However, Spain performed worse with a 4.9% depreciation, while internationally the firm earned 14.8%. Business in Southern America jumped by 48% (€184 mn), in the United Kingdom by 12% (€200 mn) and in the Middle East by 52% (51.8 mn).

 

Original article: Expansión

Translation: AURA REE

Santander Strives For €800 Mn in Loans of Eurohypo

29/04/2014 – Expansion

Santander is to bid for a part of impressive property-backed credit portfolio of Eurohypo in Spain. The bank chaired by Emilio Botin has already defined the part of Commerzbank´s branch to bid for.  In total, Santander could vie for between 10 and 15 loans valued at between €600 and €800 million.

All these credits are outstanding and represent between 13% and 18% of all loans put up for sale. The rest of the “Octopus” portfolio will fall into hands of Apollo, Santander´s ally at the bidding.

According to sources from the financial sector, the bank has carefully chosen Eurohypo´s crown jewels, such as loans granted to Sol Meliá hotel group. These credits have got several most important hotels in the group as collaterals, two of which are found in Madrid: the Gran Meliá Fénix and the Meliá Galgos.

The rest of the loans picked by Santander are linked to property in Madrid, Barcelona and Valencia.

Sources with knowledge of the market expect Apollo to look for another partner to acquire the remaining part of Octopus worth €3.7 billion. The U.S. fund alone could pay 85%-90% of the total volume.

At the beginning of May, Santander and Apollo shall hand over their binding offer. They will fight against other fund-bank pairs: Blackstone and Deutsche Bank, Lone Star and JPMorgan and Cerberus with Credit Suisse or Bank of America. What is more, several funds will bid for a piece of the portfolio: Goldman Sachs, Värde Partners and Orion Capital.

Along with the loans lent to Sol Meliá, the auction includes debt of Bami, Testa and Inmobiliaria Chamartín. Furthermore, it contains large shopping malls, like Zielo de Pozuelo and H2O in Madrid, and hotels like the Ritz.

 

 

Original article: Expansión (by Jorge Zuloaga)

Translation: AURA REE

Rodex Forges Socimi to Buy the Castellana 200

29/04/2014 – Expansion

Anchorage and its Spanish partner Rodex Asset Management are racing against time to raise €150 million required to close the purchase of the Castellana 200 complex, including two office buildings, a parking lot, a shopping center and 52% of developable hotel area.

Rodex, controlled by listed Alza Real Estate led by Luis López de Herrera-Oria, who informed the CNMV (Spain´s Stock Market Commission) about promoting a new Socimi (Spanish REIT company).

The complex is currently in hands of Santander, Sabadell, BBVA, Sareb and Reyal Urbis. At the beginning of March, they picked the offer proposed by Rodex and Anchorage, however the partners failed to deposit the money on time.

Many funds (Morgan Stanley to highlight) got invited to participate in the acquistion through the newly created Socimi. It is ought to become listed in the upcoming four weeks and join other REIT vehicles, like Merlin, Hispania or Lar.

In the meantime, the banks and the real estate firm have decided to re-start negotiations with all finalists. Pimco and Talus presented the second best offer (€160 million) and the third was Perella.

 

Original article: Expansión (by Rocío Ruiz)

Translation: AURA REE

Not Enough Quality Property For the Socimi Boom

29/04/2014 – El Economista

Spain´s REIT firms (widely known as Socimis by their local acronym) are presently the main and the fastest growing players on the market. However, the same factor that adds to their popularity may turn out lethal to them. 

In just a few months, such large listed trusts as Merlin, having €1 billion to invest in assets or Hispania and Lar that dispose of €500 million each, broke into the market. According to Patricio Palomar, Research Director for CB Richard Ellis, the existence of these investment vehicles influences positively the market´s health but the high amount of the capital they possess wakes worries within the sector as Spanish property may not be enough to meet the money disbursement.

The three firms “have got €2 billion, with assumption of a 50% deleveraging the amount can inflate to €4 billion, and that is a lot of money. If they are not able to purchase for the value of the capital they have raised, the system will strangulate and they will be forced to start selling”, explains Palomar.

Socimis are obliged to buy rented assets casting low risk and their shareholders expect considerable returns.

Oriol Barrachina, Cushman & Wakefield´s CEO claims that in order to solve deadlock, obsolete property problem and develop it and launch on the stock market, changing their use will be necessary.

“Barcelona has already tested this pipeline with office assets by converting 5.5 million square meters into residential use and therefore obtained better yield”, he says.

Moreover, he adds that due to the fact that Barcelona experiences shortage in hotel use property type, more assets shall be converted into hotel spaces.

One of the most illustrative examples might be the Torre Madrid owned by Metrovacesa which changed its use from office to luxury apartment and hotel type.

As the lack of investment over the past years brought obsoleteness to offices, both experts agree that cities should invest in their renovation.

At the moment, CBRE´s forecasts are optimistic as the firm predicts a €5 billion investment in Spanish real estate throughout 2014.

 

Original article: El Economista (by Alba Brualla)

Translation: AURA REE

House Purchase by Foreigners Marks Record High in 2013

29/04/2014 – Expansion

Foreign investors represented 11.1% of all buyers who purchased a house in Spain throughout 2013. 36.600 units were acquired last year by foreigners, by 36.6% more if juxtaposed with the 26.790 dwellings purchased in 2012.

The data provided by Spanish Association of Registrars also indicates that since the beginning of the recession (2009) the appreciation was of 4.24% up to 11.15% (2013).

The Association reckons that foreign buyers constitute a spur for housing demand, especially visible over the past few quarters.

The report stresses out transformation of the purchaser´s profile. Great majority of the acquired stock corresponds to housing for holiday purpose, while before the recession foreigners would rather have bought property in Spain to stay to work.

Moreover, the “abrupt slump” in prices has become a “great opportunity” for nations less affected by the recession. Talking about nations, Britons still lead in home purchases with 15.1% of the total sales to foreigners.

They are followed by the French with 9.8%, the Russian (8.5%), the Belgian (7.26%), the German (7%), the Swedish (5,6%), the Norwegian (5.2%), the Italian (3.6%), the Algerian (3.2%) and the Chinese (3%). 

In large majority foreigners target areas with a lot of available stock, i.e. the Islands and the Mediterranean Coast. Thus, the Balearic Islands gather 30.73% of all acquistions, the Valencian Community 24.83% and the Canary Islands 24.60%. Madrid scores shy 3.8%.

Only 4.7% Sold For >500.000 Euros

On the other hand, the annual report reminds that recent changes in foreign purchasing regulation allows obtaining a permanent residence if the house price is equal to or exceeds €500.000. As the statistics show, in 2013 only 4.7% of all houses changing hands were as much expensive or more. To compare, in 2012 the percentage showed 5.2%, having in mind that the number of transaction that year was far smaller.

It is worth to mention that 42.1% of the purchases were carried out by non-residents (41.5% in 2012), whilst 57.8% were residents of Spain.

Considering the over-500.000 Euros acquistions in geographical terms, 14.3% of them incurred in the Balearic Islands, 10.8% in the Basque Country, 7.4% in Andalusia and 6.5% in Catalonia.

 

 

Original article: Expansión

Translation: AURA REE