Month: June 2014

Soros Offers €1.5 Bn to the Koplowitz For Rescue of FCC & B-1998

George Soros laid his cards on the table. To help Esther Koplowitz to avoid the implementation from the side of her lenders, the US magnate offers a €1.5 billion fresh capital injection in FCC and B-1998.

The capital enlargement for FCC will amount to €1.35 billion with refinancing tranche interest rate of between 11 and 16%. It is very high as it almost quadriples current differentials. The company is unable to pay them.

On the other hand, the equity that Soros is going to pump into B-1998, family office of the Koplowitz controlling 50.1% of FCC, will help the firm to face its €1 billion indebtness.

FCC stopped returning dividents without which Esther Koplowitz will not manage to meet requirements established by BBVA and Bankia (the main lenders).

The only drawback of Soros´s offer is the demand of a 40% discount on FCC´s shares value. Moreover, the investor wants a cut in debt from the creditors justified by the company´s being the FVC.

The proposal is so confrontational that at first both the family and the banks rejected it. However, the situation of the firm is too tough to give the talks up. If B-1998 does not find a new partner before July 31st, BBVA and Bankia will take control over the builder.

 
Original article: El Confidencial (by Agustín Marco)
Translation: AURA REE

Soros Offers €1.5 Bn to the Koplowitz For Rescue of FCC & B-1998

26/06/2014 – El Confidencial

George Soros laid his cards on the table. To help Esther Koplowitz to avoid the implementation from the side of her lenders, the US magnate offers a €1.5 billion fresh capital injection in FCC and B-1998.

The capital enlargement for FCC will amount to €1.35 billion with refinancing tranche interest rate of between 11 and 16%. It is very high as it almost quadriples current differentials. The company is unable to pay them.

On the other hand, the equity that Soros is going to pump into B-1998, family office of the Koplowitz controlling 50.1% of FCC, will help the firm to face its €1 billion indebtness.

FCC stopped returning dividents without which Esther Koplowitz will not manage to meet requirements established by BBVA and Bankia (the main lenders).

The only drawback of Soros´s offer is the demand of a 40% discount on FCC´s shares value. Moreover, the investor wants a cut in debt from the creditors justified by the company´s being the FVC.

The proposal is so confrontational that at first both the family and the banks rejected it. However, the situation of the firm is too tough to give the talks up. If B-1998 does not find a new partner before July 31st, BBVA and Bankia will take control over the builder.

 

Original article: El Confidencial (by Agustín Marco)

Translation: AURA REE

Soured Loan Volume in CatalunyaBanc Reaches 22.3% Cap

26/06/2014 – El Confidencial

As per rating agency Moody´s, at the end of the first quarter of 2014, default rate at CatalunyaBanc shot up and stood at 22.3%. The score puts the bank in negative outlook in the light of the ongoing auction of the entity.

The volume consists of non-performing, sub-performing and awarded loans. Nevertheless, Moody´s admits that putting the €6.5 billion NPL portoflio apart might improve the rate which presently ranks the worst among the Spanish banks. The entity has already registered better figures in terms of deleveraging and coverage.

The US agency points out that even though the bank transferred all troubled loans to Sareb, its assets went on loosing their value. “After falling to 16.4% at the end of 2012, the rate jumped again in the first quarter of 2014”, Moody´s justifies the B3 mark . The entity itself told the rate post 13% at the end of 2013 but has not given the exact number of the doubtful loans.

Around 20% of the “Hercules” corresponds to highly demanded loans. Not the default itself is the biggest problem but the dramatically low profitability of the entity. According to the provided by the agency, without the carry trade CatalunyaBanc´s average profitability per benefit before provisions on risk-weighted assets shows a paltry 0.4%.

If that weren´t bad enough, Moody´s warns about the certain risk that the bank might fail the ECB´s stress test.

Given all that, the bidding has been abandoned leaving only Santander and La Caixa on the battle field. Still, the Frob (the Fund for Orderly Banking Restructuring) may count on an interesting price thanks to the merger of Caixa Catalunya, Manresa and Tarragona.

 

Original article: El Confidencial (by Eduardo Segovia & Agencias)

Translation: AURA REE

Quabit Readies a Socimi With €500 Mn in Funds

26/06/2014 – Cinco Dias

Listed real estate firm Quabit aims at setting out its own Socimi (Spanish REIT company). Thereby, it will give the investors another opportunity to put equity in this kind of investment vehicles focused on properties for rent. The new Socimi will be launched before the year end, according to the information published by the CMNV (Spain´s Stock Exchange Market Commission).

The REIT, still without a name and the flotation date,  will begin with €500 million in funds raised at the initial public offering. The equity will be destined for “diverse quality assets of all types: residential, commercial, offices and logistic”. Quabit will look for them in Madrid, Corredor del Henares and Barcelona. Underwriters are already preparing a roadshow through the United States, Germany and the United Kingdom.

Quabit managed to refinance €820 million debt and dodge insolvency last year, despite the bankruptcy of its main stakeholder, Rayet (54.7% stake).

The company assured that this year it would start construction of new housing developments in Zaragoza and Malaga.

Spanish Socimis become more and more popular due to their tax perks (profits are exempt from fiscal contribution). Two other successful vehicles backed by big-name investors currently found on the stock market are Lar España and Hispania Activos Inmobiliarios with €400 million and €500 million funds respectively.

 

Original article: Cinco Días (by David M. Pérez)

Translation: AURA REE

“Real Estate Investment Will Cross €22 Bn in 2014”

26/06/2014 – Cinco Dias

Adolfo Ramirez Escudero joined CBRE in July last year, substituting Eduardo Fernandez-Cuesta as the head of the real estate consultancy division in Spain. The newly named president set the main target at doubling the size of the branch in only two years.

Asked what according to him is the most attractive feature of Spain for investors from all around the world right now, Ramirez tells there were two operations last summer that triggered the interest in the once-crashed Spanish market: the purchase of 1.860 houses for rent in Madrid (Blackstone & Magic Real Estate- transl. note) and the sale of 3.000 dwellings also in Madrid by Ivima to Goldman Sachs and Azora. Moreover, he points at the creation of Sareb and several governmental reforms that influenced the return of investors.

Speaking of the investment outlook for this year, CBRE Spain´s president reminded that during the 2007 peak, the investment reached a staggering €12 billion and then it went on declining until landing at meager €2 billion in 2010. “Last year, we registered a rise to €5 billion but in 2014, we need to re-define the measure: direct asset sales are to jump up but one shall also take under consideration the assets which have been thought uncomputable, such as the real estate debt. The “Octopus” solely amounts assets worth €4 billion, but there is also the “Hercules” and operations of Sareb. Altogether, the indebtness sales volume may hit €16 billion. The amount shall be supplied by 6 or 7 billion Euros in direct sales (we already register a €4 billion scope). In total, the sector will exceed a €22 billion investment”.

Moreover, Adolfo Ramirez claims the annual investment in the following years may settle down at €5 billion. “We have seen opportunistic funds flocking into the country but now also less-risky capital is eyeing our property”.

Furthermore, the chairman mentions two buildings sold in Madrid (on the Castellana and the Serrano Streets) and the State debt sales as the proof of divestment with profits.

On the market recovery, he says the sector is watching a huge polarization as the best office assets and luxury property are already increasing their prices, while many dwellings remain empty.

Ramirez admits real estate appraisers had their hands full and played an important role during the property boom. For the future, he calls for a total independence for these companies and unification of international regulations for valuation and appraisals.

 

Original article: Cinco Días (by Alberto Ortín)

Translation: AURA REE

CX to Be Sold Still Before August

26/06/2014 – Expansion

Third time lucky. The motto has been taken by the Frob (Fund for Orderly Banking Restructuring) which believes the acquisition of CatalunyaBanc (CX) may be completed still before August.

First, five funds will present their final offers for the €6.5 billion mortgage portfolio at the beginning of July. Binding offers for the rest of the entity shall arrive before the 14th July.

“The turnout both for the loans and the bank is satisfactory”. Mariano Rajoy, Spain´s Prime Minister, assured the sale process will be “fair, transparent and competitive”.

 

Original article: Expansión

Translation: AURA REE

Sareb´s Chairwoman Reckons "There Are No Good Or Bad Assets, Everything Depends on the Price"

Belen Romana, the chairwoman of Spain´s bad bank which pools all toxic assets of nationalized banks, has told that “perception of the country has radically changed over the past months” and the vivid interest in assets shown by investors has shot up significantly.

“In 2013, we have held meetings with more than 600 both financial and property investors, almost 2 per day, and the pace is still sustained” assured Romana at the Most Powerful Women Summit 2014 organized by the Fortune magazine in London.

She admitted to be targeting at rapid sales and stated “the assets are not either bad or good because what really matters, is the price. When it is good, the asset seems good as well”.

At her hearing, Romana had to explain what the Sareb is and how was the first and a half year of its lifespan. “Our company was born with a misguiding name: we are not a bank and if you begin called ´the bad bank´that does not give a nice outlook either. We have inherited troubles made by others and (…) we had to contruct a plane already being in the air”.

The chairwoman said she accepted the position for two reasons: firstly, she felt she had to do something more for her country and secondly, because she knew well how to deal with the mix of public and private issues thanks to her professional experience. Belen Romana worked as a director of the Treasury and an advisor at such entities as Banesto, Acerinox, the Bank of Spain and the CNMV (Spanish Stock Market Commission). She was also a strategical director of telecommunications supplier Ono.

 Sareb manages a €50 billion worth of assets, out of which only 20% are of the real estate type, while the rest are financial assets.

Asked about her cooperation with hedge funds, she told “our most challenging task is to set the rules at the game because we are going to stay in the market for the next 15 years.

Original article: Expansión (by Amparo Polo)

Translation: AURA REE

Sareb´s Chairwoman Reckons “There Are No Good Or Bad Assets, Everything Depends on the Price”

26/06/2014 – Expansion

Belen Romana, the chairwoman of Spain´s bad bank which pools all toxic assets of nationalized banks, has told that “perception of the country has radically changed over the past months” and the vivid interest in assets shown by investors has shot up significantly.

“In 2013, we have held meetings with more than 600 both financial and property investors, almost 2 per day, and the pace is still sustained” assured Romana at the Most Powerful Women Summit 2014 organized by the Fortune magazine in London.

She admitted to be targeting at rapid sales and stated “the assets are not either bad or good because what really matters, is the price. When it is good, the asset seems good as well”.

At her hearing, Romana had to explain what the Sareb is and how was the first and a half year of its lifespan. “Our company was born with a misguiding name: we are not a bank and if you begin called ´the bad bank´that does not give a nice outlook either. We have inherited troubles made by others and (…) we had to contruct a plane already being in the air”.

The chairwoman said she accepted the position for two reasons: firstly, she felt she had to do something more for her country and secondly, because she knew well how to deal with the mix of public and private issues thanks to her professional experience. Belen Romana worked as a director of the Treasury and an advisor at such entities as Banesto, Acerinox, the Bank of Spain and the CNMV (Spanish Stock Market Commission). She was also a strategical director of telecommunications supplier Ono.

 Sareb manages a €50 billion worth of assets, out of which only 20% are of the real estate type, while the rest are financial assets.

Asked about her cooperation with hedge funds, she told “our most challenging task is to set the rules at the game because we are going to stay in the market for the next 15 years.

Original article: Expansión (by Amparo Polo)

Translation: AURA REE

Unsold Housing Stock to Persist Until 2022

“Very slow”. This is how Fernando Rodríguez y Rodríguez de Acuña – chairman of RR de Acuña & Asociados – forecasts housing market recovery in Spain, recognizing a turn in tendency observed for the last 6, 7 years.

At the presentation of “The Annual Statistics of the Spanish Real Estate Market 2014” report, Fernando Rodríguez told that the imbalance between supply and demand produced since 2007 will re-establish at much slower pace than some companies claim. In fact, the firm´s chairman accused the recent, optimistic data of distorting the reality in the sector.

Thus, the director maintains the housing values will continue their free fall by 5 to 7 percent more annually in the years 2014-2016 due to the abundant supply and weak demand. He estimates the unsold stock represents 1.7 million units. 23% of them (400.000) belongs to banks. In his opinion, the only way towards absorption leads through cuts in prices.

What is more, Rodríguez points out that the demand will return “leisurely” for average salaries and job precariousness. He also takes into account the inheritance rate “launching houses on the market and increasing” due to population aging and decline in new construction.

In such context, the company calculates the houses in excess will linger until 2022 on average, while in some areas they will never be absorbed. The stock will diminish progressively to 1.5 million dwellings in 2016 and with the demand at 230.000 units, it will boost sales by 24%.

Nevertheless, Fernando Rodríguez takes a “moderately optimistic” stance and he assures the situation varies in each area. The only exceptions are Madrid and coastal areas of Malaga and Alicante. In there, the stock is predicted to disappear within 2, 3 years.

Moreover, basing on the information made public by the Mercantile Registry, the report says around 30% of the real estate developers (9.000 firms) went bankrupt, accounting for 30% of all the loans granted by banks and Sareb.

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