German Bad Bank Sells Spanish Bluespace Assets & Hotel Arts Debt

31/10/2014 – El Confdencial

German banks wish to cut themselves off the Spanish real estate-related risk. First to take the step earlier this year was Commerzbank that sold €4 billion NPL portfolio called Octopus to Lone Star and JP Morgan.

Now, the bad bank of Germany, FMS Wertmanagement (FMS WM), has put up for sale a €750 million worth of property-backed loans, including the Hotel Arts in Barcelona (pictured) as one of the collaterals.

The luxury hotel was bought in 2006 by a group of investors, among which one could find Host Hotels & Resorts, the Dutch Civil Servants Pension Fund (Stichting Pensionfonds ABP) and company Jasmine Hotels, an affiliate of GIC Real Estate, belonging to the Government of Singapore. The loan amounted to €417 million as at that time banks did not require any cash payment.

Second biggest mortgage bank of Germany, Hypo Real Estate, was among the lenders and afterwards it needed bail-out twice. A part of these loans was included in the now auctioned Project Gaudi, named after the famous Catalonian architect, with the Hotel Arts as the gem collateral.

FMS, German counterpart of Sareb, has run the sale with help of Cushman & Wakefield. Apart from the five-star establishment in Barcelona, Poject Gaudi is made up of 18 loans granted for another high-end hotel in Cascais (Portugal), five shopping and entertainment centers (for instance, the one in the Barrio Art Decó, Madrid), four business parks (for example the one in San Fernando de Henares, Madrid) and Bluespace´s 17 industrial storage rooms scattered around Madrid, Barcelona and Valencia. About one third of the credits are performing, and the rest are sub- or totally non-performing.

Non-binding offers are due on November 14th, and the entire process is expected to close before the end of 2014.

 

Original article: El Confidencial (by Agustín Marco)

Translation: AURA REE

Renta Corporación Appreciates 150% on Relaunch After 19-Month Suspension

31/10/2014 – El Economista

Real estate firm Renta Corporación has returned to trading on the stock exchange market after a 19-month break. Success was undeniable as its shares appreciated 150% during one session and the company hopes to equal its profits and activity to the pre-recession levels.

From the initial price set at 0.57 Euros, Renta Corporacións shares skyrocketed by 154.3% to €1.45.

Debut at 29 Euros a Share

In 2006, when the real estate firm went public for the first time, its shares traded at €29 and reached a price of €40 just before the crisis.

The National Stock Exchange Market Commission (or the CNMV by its acronym in Spanish) ordered its suspension on March 19th 2013 so that ‘it could meet the payment obligations included in the covenant with creditors and its viability plan’.

Coming back to trading, Renta Corporación will increase its capital by 14% by issuing 6 million new shares. Once that accomplished, its stake will be held as follows: 40% in hands of its founders, Luis Hernandez (32%) and Blas Herrero (8%), 14% for banks and 7 % for other significant investors, while the remaining 39% share will be destined for the free float.

Specifically, if it comes to the banks, the bad one grabbed a 5% stake, ING 3%, Caixa Geral 2%, Banco Popular 3%, while Deutsche Bank sold its 2.76% share few days ago.

 

Original article: El Economista

Translation: AURA REE

New Euro Interbank Offered Rate: ‘Euribor Plus’

31/10/2014 – Cinco Dias

The scandals about manipulation of the Euribor which involved such large banks as Société Générale, Deutsche Bank or RBS, made the European Commission work on creation of a new rate that would replace the current one and become the reference in the future.

Named ‘the Euribor Plus’, the new Euro Interbank Offered Rate will be designed in cooperation with four Spanish entites: BBVA, Santander, CaixaBank and CecaBank.

Euribor provides the basis for the price and interest rates of all kinds of financial products and mostly mortgages. In Spain, more than 80% of loans for home purchase employs the rate as a reference.

The index is an average of reference rates sent by 25 eurozone banks on daily basis. This means that the result is not the real rate applied on loans but banks’ expectations. Therefore, to avoid possible fiddling with the rate, the Euribor Plus will be calculated using the true transactions’ rates. ‘This will make the subsitute more transparent, efficient and correspondent to actual situation’, said Jorge Lopez, analyst at XTB.

However, the stumbling block for the new index may be the fact that there are almost no operations conducted within more than a three-month term, so the sampling would be small (mortgages are tied to Euribor for 12 months).

Spain sees transactions for five day term maximum. According to the Bank of Spain data, on Monday the entities lent to each other €769 million for one day and €40 million for two to five days.

While the talks are being held, Spain’s central bank is looking closely at the four banks which contribute to the rate.

The Euribor for 12 months stands currently at its historic lows as it closed September at 0.362%, while October provisional average declined to 0.336%, making revised mortgages cheaper. If the Euribor Plus brings benefits to borrowers or, just the opposite, makes them pay more, no one will venture to play with it.

 

Original article: Cinco Días (by Miriam Calavia)

Translation: AURA REE

BMP News: Banks Recognize Necessity to Improve Relations With Developers

31/10/2014 – Expansion

Spanish banks assume that after the deep recession triggered by the real estate bubble burst, they should revise the relation with property developers and reduce risk as they understand they will both need the developers and international investors to offload their repossessed assets.

Directors of some of the leading Spanish entities, Santander, BBVA and Sabadell, weighted the relation up in context of the economic recovery during a session held at real estate fair trade Barcelona Meeting Point.

General director of Banco Sabadell, Miguel Montes, warned the banks ought to ‘choose well’ their future business partners as during the boom the market was flooded with amateurs.

Furthermore, real estate director of BBVA Agustin Vidal-Aragon admitted that currently banks are reluctant to lend to developers and this financing stays at the floor levels.

However, he pointed out that in order to avoid repeating errors from the past, the renewed relation will have to base on risk analysis.

Possibly, foreign investors will start financing land projects.

Also, CEO of Sareb, Jaime Echegoyen took the floor at the debate. He reminded that Spain’s bad bank collaborates with thousands of developers from all corners of Spain on quite close basis as they help it to shed the REO volume.

Santander’s delegate leading the Collection and Recovery department of the bank, Remigio Iglesias expressed cofidence on the fact that the opportunistic investors are being gradually replaced by long-term and local buyers.

Later on, representatives of the Community of Madrid, Catalonia and Sareb held private meetings with around 15-20 prime funds on possible ways out for the available assets in their balances.

Yesterday’s Barcelona Meeting Point programme included debate titled ‘Sovereign Wealth Funds: White Sharks or White Knights?’, during which vice-president of Drago Capital Gustavo Martinez Zamora gave his speech.

 

Original article: Expansión (after: EFE)

Translation: AURA REE

Rental Yield on Homes, Retail, Offices & Garages Rises in Third Quarter

31/10/2014 – Idealista

Buy-to-let scheme in Spain becomes more and more profitable to investors, claims portal idealista.com. In the third quarter of 2014, all real estate products scrutinized by the leading property web site showed yields higher than in the previous quarter.

As per the report, which compares sale and rental prices of different products to obtain a gross yield on each of them, shops remain the most lucrative assets. Buying it to let gives back 7%, while assets like offices, residential or garages return 6.4%, 5.3% and 4.6% respectively. Still, real estate investments offer higher yields than 10-year governmental bonds (2.2%).

Quarter-on-quarter, yield on garages rose most, by 100 bps. Also, retail premises appreciated by 80 bps, homes by 40 bps, whereas offices by only 30 bps.

Yield on Homes

Talking of Spanish regions’ capitals, Lleida turns out to be the most money-making city with a 7.1% yield, followed by Las Palmas de Gran Canaria (5.9%), Huesca (5.8%), Huelva (5.6%) and Alicante (5,4%). Madrid assures a 5% yield and Barcelona 4.6%.

However, rather no-go in terms of investment in residential property are Ourense, A Coruña (both 3.4%), San Sebastian (3.7%) and Lugo (3.8%).

Yield on Retail Units

Shops return most in majority of Spanish cities with unquestionable winner Malaga (15.8%), followed by Cordoba (9.6%), Pamplona (8%), Ourense (7.8%) and Alicante (7.5%). Barcelona posts 7% and Madrid 7.2%.

In Castellon retail property returns the least (low 4.7% yield), and so it does in Salamanca (4.9%) and Tarragona (5%).

Yield on Offices

Juicy Vitoria office spaces bring an 8.1% gross annual yield. A little bit behind fall offices in Santa Cruz de Tenerife (6.3%), Palma de Mallorca (6%), Castellon and Pamplona (both 5.9%). In Barcelona and Madrid landlords may gain 5.8% and 5.6% respectively.

Idealista calculates that the poorest yields among all main cities of Spain are found in Valencia (4.4%), Santander (4.7%) and Oviedo (4.7%). As the office market is not as homogenous as of the other products, it is pretty impossible to obtain data from more than half of the regional capitals.

Yield on Garages

Garages seem to be the least lucrative assets to invest in in many big cities. Still, buying them to let is much more tempting that investing in 10-year governmental bonds which offer a 2.2% return.

Namely, in such munipalities as Almeria (5.7%), Pamplona (5.4%), Santa Cruz de Tenerife (5.1%) and Ciudad Real (5%) the yield is no further from refusal.

However, it indeed is in Vitoria (2.5%), Zamora, Salamanca and Valladolid, in all showing a mere 2.8%. In Madrid, the yield averages at 2.9% and in Barcelona it goes up to 3.9%.

 

Original article: Idealista

Translation: AURA REE

Fifteen Prominent Funds Eyeing Madrid, Catalonia & Sareb Properties

31/10/2014 – Expansion

Real estate exhibition Barcelona Meeting Point attracted between 15 and 20 big-name international funds willing to invest in the Spanish property. Representatives of the Community of Madrid, Catalonia and the bad bank, Sareb, went forward to answer their questions.

The capital met the investors in the morning, and the turn of Generalitat and Jaime Echegoyen, Sareb’s CEO, came in the afternoon.

Madrid’s delegate Enrique Ruiz Escudero said the session was ‘very good’ as assets offered by the region (office buildings, industrial, residential and technology land)  enjoyed ‘a considerable interest’.

The greatest popularity earned downtown office units which could be renovated and later on destined for touristic use. Also, funds made a petition to public administation to give more time for analysis before demanding offers.

Bank of America Merill Lynch, Benson Elliot, Deka, Red Storm, Orion, Shaftesbury, TPG or GE Capital Real Estate are only few of the 14 grandeur funds that turned up at the private meeting with the Community of Madrid.

It is expected that Sareb will gather an audience compound of funds like Oaktree, GreenOak, Grove Internacional Partners, Credit Suisse or lawyers office Greenberg Traurig.

Also, around fifteen funds confirmed participation in the meeting with local Catalonian Government. Its representatives will present the properties to be tendered in December, among which noteworthy are: the Barcelona Stock Exchange Market building at 19 Paseo de Gracia street, Barcelona, up for sale at €88.9 million, representing the real estate crown jewel of Generalitat.

Apart from this appealing unit, two other certainly deserve attention: the Torre Munoz skyscraper at 105 Paseo de Gracia and the headquarters of the Employment and Industrial Relations department located at 148-150 Sepulveda street. Both buildings are worth €79.3 million.

The local authorities hope to earn some €168 million for the three properties and potential buyers ought to deposit a 5% value of each before November 14th.

 

Original article: Expansión 

Translation: AURA REE

Court to Tender Land of Promalar Worth €60 Mn

31/10/2014 – Faro de Vigo

As soon as in November, Vigo-based Pontevedra Mercantile Court number 3 will auction more than one hundred pieces of land belonging to real estate firm Promalar. Jointly valued at €59.3 million, the properties are located nearby the towns of Cangas, Bueu, Aldan and Beluso.

The tender, to take place on November 27th, is a result of asset liquidation closing the bankruptcy procedures of the company.

Specifically, the 103 land units, in majority situated in the mountains, will be grouped into seven portfolios. Also, large part of them is mortgage-free. The most expensive package asks €20 million, next €17.5 million, €10 million and €8.5 million. The cheapest may be acquired for €385.500.

In 2006, Promalar bought canning firm Bernardo Alfageme and five years later it went bankrupt with €185 million owed to Banco Popular and NCG (now Abanca).

The process took its toll in shape of other real estate assets of the firm. In November 2013, 20 property packages were auctioned for a total of €38 million. Banco Popular and Sareb (that received the loans from NCG) seized a €22 million worth of Promalar’s assets. For instance, Spain’s bad bank repossessed a historic building at 30 Colon street which was being renovated by the company with aim of converting it into a high-end housing development. Sareb was awarded the unit for €9.5 million.

Whereas Banco Popular snapped up, among other properties, an industrial building on the Jacinto Benavente street for €5.3 million.

Also, six portfolios including homes and rural properties of a par value of €3.63 million, situated nearby the town of Redondela, were actioned.

 

Original article: Faro de Vigo (by Marta Fontán)

Translation: AURA REE

Ferrovial, Domo, Amenabar & Prygesa Compete For Alluring Plot of MOD

31/10/2014 – El Confidencial

Within less than a week the sector will know the name of the new owner of the Madrid downtown plot sold by the Ministry of Defence that is asking €90.3 million for it. Merely 500 meters from the popular Paseo de la Castellana street and located on the Raimundo Fernandez Villaverde street, one may find the most attractive 14.500 square meters currently up for sale in the capital. The piece of land has been listed at portal Addmeet.com for one and half year.

Despite the commotion and interest the parcel invoked, only four companies presented their binding bids: Ferrovial, co-ops manager Domo, Basque builder Amenabar and Prynconsa’s branch Prygesa.

Participation of Ferrovial is somewhat surprising as the firm sold its residential development arm to Habitat in 2006. Allegedly, it operates on behalf of a fund. At one time, the company constructed more than 200 dwellings on land which used to house the old Madrid’s Town Planning Department, situated in the cofluence of the Guatemala, Alfonso XIII, Paraguay and the Puerto Rico streets. The piece of land was purchased by La Cooperativa EAI 310 for €65 million. Further on, the company named Domo Gestora de Viviendas to manage and develop the project.

Domo itself is another bidder at the tender for the Defense’s plot. If the firm wins, it will build 355 homes ranging from one to five bedrooms at a price fixed between 3.200 and 3.300 Euros per square meter. True bargain as for the Rios Rosas neighborhood inside the Chamberi district, where a year ago prices oscillated around 4.400 euros per built square meter, data by Foro Consultores. Also, Domo takes part in an auction of another plot in Madrid, located at 58 Cavanilles street, up for sale by Metro.

Next candidate to buy the piece of land of the Ministry is Basque builder Amenabar. ‘It is a proven, solvent company with great potential from the economic point of view’, sources from the sector describe it. Few years ago, Amenabar purchased several plots intended for subsidized housing in Arroyofresno from the city of Madrid.

The last player is Prygesa, company belonging to Pryconsa Group, one of the few recession survivors. Its project for the land assumes construction of 310 dwellings, from two to six bedrooms. Besides, Pryconsa bids for the Cuatro Caminos depots of Metro, shoulder in shoulder with Ibosa.

To take part in the auction, all bidders had to hand a 5% deposit equal to 4.513.913,25 Euros.

How high may the price reach?

The Ministry of Defense asks €90.3 million for the plot which is, in the sector’s opinion, a very low listing price. Therefore, the offers for sure will aim above that level but will not exceed €110 million.

 

Original article: El Confidencial (by Elena Sanz)

Translation: AURA REE

Cerberus, Apollo & TPG Clash Over Preferable Contract of Sareb

30/10/2014 – Expansion

Three large international funds, Cerberus, Apollo and TPG, are competing for one of the four asset management contracts awarded by the bad bank, Sareb. This juicy portfolio includes loans of Bankia and real-estate-backed credits of Banco de Valencia.

Project Ibero, as the bidding process was named, targets at granting management of Sareb’s €50 billion load of REO assets to specialized companies. Recently, the administative board of the bad bank has decided that due to high complexity of the operation each contract will be signed in phases.

As no concrete issues have been discussed, the meeting could be attended by executives with some interest conflict: Remigio Iglesias, Santander’s CEO, allied with Apollo; Antonio Massanell (vice-president of CaixaBank) teamed up with TPG; nor Miguel Montes, general director at Banco Sabadell, whose real estate arm Solvia takes part in the bidding.

The project consists of four portfolios including: first, mentioned above €20.23 billion worth of Bankia’s loans and Banco de Valencia’s assets, second containing REO properties of Catalunya Banc, BMN and Caja 3 valued at €14.65 billion in total, third €8.01 billion in assets proceeding from NCG Banco and Liberbank, and the last carrying along collaterals of Bankia and assets and loans of Ceiss and Banco Gallego amounting to almost €7.8 billion.

The Competition

The first and most desired portfolio (as it encompasses 40% of all assets) is very likely to fall into hands of Cerberus and its Spanish spin-off Haya Real Estate. The reason is that the fund has purchased Bankia Habitat, servicer of Bankia, and outsourcing the management now would mean an enormous cost. Moreover, for Cerberus it would be equal to losing large market share in Spain. Still, Apollo with its 85% stake in Altamira and TPG with its 51% in Servihabitat could submit interesting counter-bids.

According to sources close to the task, negotiations are no walk in the park for two reasons. On one side, Sareb demands an upfront payment and on the other, if the business plan is not accomplished, management fees will be lower.

Apart from Cerberus, Apollo and TPG, other three funds strive at getting one of the contracts: Centerbridge, Solvia and Abanca.

 

Original article: Expansión (by Jorge Zuloaga)

Translation: AURA REE

Pontegadea, GMP & Insurers Vie For Old Saint Gobain Premises

30/10/2014 – Expansion

The sale of the old headquarters of Saint Gobain (pictured in the center), situated at 77 Paseo de la Castellana street in Madrid, has become a special focus of international funds and Spanish companies.

BBVA’s 16-storey property is located in the downtown and within the Azca zone has 16.000 square meter area. It stands just next to the Torre Picasso tower, owned by Pontegadea, and the Torre BBVA, unit of Gmp. In fact, the two neighbors expressed their interest in buying the property, said sources close to the process.

When it comes to Gmp, the real estate firm and its partner Singapore Sovereign Fund (GIC) has recently presented its new strategic plan.

In turn, Pontegadea, owner of the abovementioned Torre Picasso and the 79 Castellana building, has been doing shopping in markets of London and New York. If the firm of Amancio Ortega purchases the property, it will be able to create synergies as ‘the current tenants of its units want to grow and have no available space for that’, the sources assure.

Other potential bidders for the Saint Gobain tower are insurers like Mapfre or Generali, unable to resist an office building on the Castellana street.

The Price

In 2003, BBVA acquired the unit for €87.5 million from Saint-Gobain that have been renting it until last year, when it moved to 4.300 square meter office space at 132 Principe de Vergara street.

It is expected the entity will ask for a similar amount, in spite of the need of an overall renovation of the property, estimated to require an up to €10 million expense. In any way, until now BBVA has preferred to see the bids before setting any price.

 

Original article: Expansión (by R. Ruiz)

Translation: AURA REE