Socimis & Foreign Funds Boost Investment in Office Buildings

28/11/2014 – Expansion

Capgemini, IBM, Vodafone, Citibank, HP and Sony have something in common. They all have moved their Spanish premises recently. According to an update by advisor JLL, a €1.54 billion amount was spent on office buildings year-to-date, a number that may rise up to €2 billion by end 2014. It stands in contrast with €672 million investment volume in 2013. ‘Reduction in risk and appearance of Socimis – Spanish counterparts of REIT vehicles – have been the main triggers for the change’, explains Juan Manuel Ortega, Capital Markets director at JLL Spain.

The increase is also reflected in average amount of the office deals as in many cases it exceeded €100 million. To give an example, the bullet-shaped tower Torre Agbar in Barcelona (visible in the picture) was sold to Emin Capital for €150 million and destined for a top-end hotel.

Also, British fund London & Regional Properties paid €117 million for the Avenida 115 building in Madrid, and Mexican fund Finaccess spent €130 million on Morgan Stanley’s old Madrid headquarters of IBM.

In Barcelona, Axa Reim purchased the Diagonal 00 building, formerly housing Telefonica, for €107 million (white building at picture’s bottom).

Other large-volume investments were carried out by insurer Zurich and private equity fund Blackstone which purchased building packages.

The Socimis

While deals sealed by the international funds were reaching €100 million, office building acqusitions closed by Spanish firms and investors oscillated around €40 milion. ‘The Socimis are thought to have spent most, however large part of their funds has foreign origins‘.

‘Currently, transactions valued at €500 million are pending closing and this will probably happen in the first quarter of 2015′, says JLL.

 

Original article: Expansión (by Rocío Ruiz)

Translation: AURA REE

Sabadell Expects New Developer Credit to Rebound

28/11/2014 – Expansion

Spanish banks detect improvement in the real estate market, including segments so much battered by the crisis as the housing development.

At the latest meeting organized by Esade Business School, Sabadell’s Property Investment head Joan Bertran (pictured leftmost) assured that the entity noticed an increase in applications for new home construction loans. Moreover, he foresaw that the financial sector will grant €5.5 billion to developers in 2015.

Mr. Bertran explained that around 15%-20% of 300.000-350.000 homes sold each year is new. And of those, 80% have been raised relatively recently.

In the director’s view, banks should approve the loans as they are demanded by ‘best developers who survived the recession and for quality product. This might not be seen in the next years’, he added.

Deleveraging

A year back, such an increase in developer lending was unthinkable because this kind of asset turned toxic and made up to €320 billion in 2009 in the Spanish entities’ balances. Since then, until the end of the first half of 2014, a €161 billion amount has been deleveraged, as the Bank of Spain informs.

Likewise, Spain’s bad bank’s CEO Jaime Echegoyen (pictured next to Bertran) explained that the banks return to lending due to engines like carry trade effect, bringing 15% of the revenues, having disappeared. Speaking of Sareb’s future, Mr. Echegoyen foresees closing ‘large, living-up and complex’ – five or six – deals.

Among the portfolios he referred to one may find €250 million outstanding developer loan Project Olivia, a €130 million worth of hotel credits inside Project Meridian, Project Aneto with  €40 million in non-performing loans given for land and residential purchases, €80 million residential loan portfolio with collateral property in the Balearic Islands called Project Dreamland, as well as Project Agatha including debt linked to subsidized apartments and Project Corona and its four office buildings located in the north part of Madrid.

 

Original article: Expansión (by J. Z.)

Translation: AURA REE

Lone Star Closer to Acquisition of Kutxabank’s Neinor

28/11/2014 – Expansion

Kutxabank is at the brink of successfully closing one of its largest divestments in the Spanish financial sector in 2014. The Basque group is giving the finishing touch to an agreement with U.S. fund Lone Star on sale of its real estate developer Neinor together with a repossessed asset portfolio. The transaction’s price may reach €800 million.

In the final phase of the tender called Project Lion, Lone Star outbidded investment banking tycoon Goldman Sachs and now negotiates with the vendor on the exclusive basis. In spite of the privilege, still key matters shall be discussed, such as volume of the REO assets to be included in the sale. It is estimated that a €500 million worth of land and a €1 billion of ongoing housing developments will be transferred to the fund.

Last year, Neinor lost €58 million and owned €175 million in properties. Two-thirds of its sales were sealed in the Basque Country region, whereas the remaining 34% in Navarre, Malaga and Cantabria. ‘The company specializes in urbanization, development and land, home and industrial warehouses’ sales, as well as managing other firms’, its annual report states.

With the buyout, Lone Star demontrates its stake on the residential market turning around in Spain. Few months ago, the fund bought a huge €4.5 billion NPL portfolio from Eurohypo , including credits to developers and the retail indistry. Allied with JPMorgan, Lone Star paid €3.5 billion for this Project Octopus.

Optimistic Outlook

A recent report by Arcano forecasts ‘a real estate speedup’ for 2015. ‘In Spain as a whole, prices have hit the bottom and they will rise more than predicted in Madrid, Catalonia and the Basque Country, driven up by huge demand on the part of foreigners (one third of the total) and family offices, which have healthier balances and are eligible for mortgages. New housing development is reviving in low-supply areas‘, Arcano claims.

According to financial sources, other funds are likely to follow the example of Lone Star and team up with developers throughout 2015. Their objective is to grow the business beyond apartment sales through servicers bought from Spanish banks, like Altamira, Aliseda or Servihabitat.

Kutxabank performed best among the entites at the latest stress test by the ECB.

 

Original article: Expansión (by Jorge Zuloaga)

Translation: AURA REE

Eighty Spanish Shopping Malls Waiting For New Owners

28/11/2014 – Expansion

They reign in the real estate industry of Spain. Big or small, in the outskirts of large cities or in the centers of towns, shopping centers account for most of property deals in the country.

From January 1st to November 15th, almost 30 of them changed hands. According to Deloitte Real Estate, investment in the Spanish retail assets amounted to about €1.63 billion.

5% of Europe’s Total

In the first half of the year, €890 million were spent on shopping malls in the entire Europe. Investments in Spain represented 5% of the total, beaten only by the UK and France.

By transaction volume, over-€200 million amounts were destined for purchases of the Islazul retail park (Madrid) bought by fund Tiaa Henderson for €230 million and the Marineda (La Coruña) sold to Socimi (REIT) Merlin Properties for €260 million. Another Socimi, Lar España, has invested a little bit more than €160 million in five shopping centers.

All the Spanish Socimis, opportunistic funds and institutional investors contributed to the avalanche of deals on the national market.

‘Private equity investors, who accounted for majority of acquisitions last year, now are ceding the ground to more conservative buyers like the Socimis, German property and American pension funds’, explained Javier Garcia-Mateo, Real Estate head at Deloitte.

Among the steps taken by these new players on the Spanish ground, noteworthy are: the purchase of the Castellana 200 complex in Madrid, including a shopping mall and office space, by Canadian PSP, and the acquisition of 50% of the Zenia unit in Alicante, performed by the Alaska Permanent Fund. The two totally different properties prove interest in all kinds of retail assets.

Thus, year-to-date, a package of eight shopping parks was sold to a consortium of funds for €160 million, as well as the Boulevard in Vitoria for an amount of €153 million.

Aside from the January-November investment volume, further deals worth at least €600 million are expected to be sealed still before the end 2014. For instance, the Plenilunio shopping mall in Madrid (pictured), put up for sale by Orion at €400 million. The fund paid €262 million for it in 2009.

As Deloitte Real Estate assures, there are more than 80 more shopping centers in Spain currently up for sale. It is said they will be handed over to best bidders within the next six months and the total amount proceeding from their sales will reach €3.5 billion.

‘Large part of prime assets have depreciated by 30% on average in less than a year, and the secondary by 14%’, says Mr. Garcia-Mateo. ‘And this did not happen because rental prices had gone up but because of the yields’.

Presently, there are 547 shopping malls in Spain, with Madrid concentrating almost 100 of them. Their gross lettable area totals at 15.43 million square meters.

 

Original article: Expansión (by Rocío Ruiz)

Translation: AURA REE

Sareb Assigns Alfredo Guitart to Coordinate Freshly Established Transformation Office

28/11/2014 – Spanish Real Estate

Spain’s bad bank Sareb has managed to reinforce its structure before new managers start servicing its portfolio in 2015, once Project Ibero awarded. In order to ensure orderly portfolio transfer and adequate transition from old to new administrators, the company chaired by Belen Romana (pictured) has created a department which will be responsible for cooperation with outgoing and incoming managers, as well as with its own experts. The new team’s task will be ‘to lead, to coordinate and to supervise the challenges they are going to face’.

Alfredo Guitart was handed over management of the new Transformation Coordination department. Prior to taking the position, he was handling the Corporate Resources. In the new office, Mr. Guitart will orchestrate co-working with each of the parties, as well as initiatives for meeting the technological and operating services requirements stated in the Ibero asset management auction’s underlying principles.

At the same time, Sareb assigned Idoia Maguregui as the new Corporative Resources head. Prior to joining Sareb, the specialist held an office of Media general director at NCG Banco and of CEO and advisor at GNEIS Global Services, a transaction and technology firm of Bankinter.

 

Original article: Spanish Real Estate

Translation: AURA REE

Carlos Slim Rescues Koplowitz & FCC

27/11/2014 – El Mundo

Mexican tycoon Carlos Slim, one of the richest men in the world, has become the main shareholder of one of leading Spanish builders, Fomento de Construcciones y Contratas (FCC).

Controlled by the Koplowitz family for over six decades, the contractor reached an agreement with Slim on decreasing the holding percentage of Esther Koplowitz (pictured) from 50.01% to around 22.43%, while the Carso group of the Slims will receive a 25.63% stake. Spanish Stock Exchange Market Regulator CNMV informed the partners agreed on joint ownership of FCC without obligation of pursuing a takeover bid for the entire builder.

Slim is bound to pay over €650 million for the share, of which €500 million will be injected into FCC’s capital and the remaining amount will allow the investor to seize the pre-emptive rights of Koplowitz. The capital hike means a double victory for the businesswoman as she will be able to get out from her defaulting personal debt owed to Bankia and BBVA and to prevent her properties from being foreclosed.

The entrance of the Mexican magnate means contribution to only half of the foreseen €1 billion capital increase in FCC, thereby allowing other investors to join the hike.

On news on the agreement being at the verge of sealing, FCC’s stocks jumped up 3% and closed yeasterday at a price of €14.63 a share, meaning a total market value of nearly €1.95 billion.

Last Monday, the contractor announced it had broken negotiations with Soros and started dealing with the Carso group.

Carlos Slim will be the second prominent stakeholder in FCC as Microsoft founder Bill Gates already has a 5% share in the firm.

 

Original article: El Mundo (by Carlos Segovia)

Translation: AURA REE

Permission Granted For Demolition of Vicente Calderón Stadium

27/11/2014 – Cinco Dias

Project on re-urbanization of the area where formerly stood an old brewery of Mahou and currently is found the Vicente Calderón stadium of the Atlético de Madrid football club, has been approved by the City Hall of Madrid.

Madrid’s Town Planning and Housing department head Mari Paz Gonzalez Garcia justified the plan fits in the strategy undertaken in 2009 to invest in nature-friendly residential projects and give dotations for land which used to be classified as industrial or residential. As she portayed, thanks to the design, Mahou’s (meaning private) 92.000 square meters and Atlético’s (public) 112.000 will be finally developed.

Moreover, the project assumes undergrounding of a part of the M-30 ring road and subsequent construction of two well-gardened boulevards stretching from the Puerta de Toledo monumental gate to park Madrid Rio.

In total, four blocks of apartments will be raised on the plot but they will occupy a mere 23% of the total area to be developed. New green zones will cover a 36.000 square meter area, and new industrial parkings will appear in there as well. Developers will bear the entire implementation cost, including 57% of the undergrounding expense.

Opposing voices say that the Public Administration has nothing to gain from the project and it puts shoulder to the wheel to facilitate ‘a barbarism’ to ‘private developers’, while it should focus on relocation of Atlético de Madrid to its new stadium in the Peineta area.

 

Original article: Cinco Días 

Translation: AURA REE

Qatari Royal Family Buys 25% Stake in Spanish Builder Ecisa

27/11/2014 – Cinco Dias

Al-Alfia Holdings, a company of Qatari royal family, has purchased a 25% stake in Spanish builder Ecisa for €40 million.

Alicante-based Ecisa controlled by the Pelaez family conducted a capital increase in order to catch eyes of international investors.

Once the transaction closed, Ecisa will run new business plan centered on international expansion and a goal set at gaining abroad €300 million by 2018 and therefore tripling its 2013 revenues.

Precisely, by subscribing to the capital hike, the Qatari company will receive a 25% share in Ecisa Compañía General de Construcciones and 51% in Harinsa Qatar, an affiliate of the Spanish builder operating in the country for the last 7 years.

Ecisa’s chairman Manuel Peláez claims both companies complete each other’s strengths. ‘Until now Ecisa specialized in water projects, as well as construction and railway and airport infrastructures. Thanks to the alliance with Al-Alfia we can widen our offer to new sectors like oil and gas’, he said.

The contractor has got a €500 million portfolio of building projects pending implementation, of which 80% corresponds to international ventures. The firm has been growing its portfolio over the past years and presently it has building sites in Spain, Portugal, Ireland, Taiwan, Mozambique, Chile, Qatar, Algeria and Morocco.

In turn, Al-Alfia Holdings successfully operates in the oil and gas industry in the Middle East and Australia, as well as in infrastructure construction in both countries.

 

Original article: Cinco Días

Translation: AURA REE

Property Prices Decline by 2.9% in Q3

27/11/2014 – El Mundo 

Unsubsidized dwellings continue to cheapen, not as abruptly as they used to, though, when the slump repeatedly reached 10%. Accordig to data provided by the Ministry of Public Works, Spanish home price fell by 2.6% in the third quarter of 2014 from Q3 2013. To compare, in the second quarter the depreciation showed 2.9%. Currently, a residential square meter costs 1.455,8 euros on average.

From the second quarter, the price has stagnated (down 0.2%).

Considering the age of the properties, new house price (less than 2-year old) and the value of existing units practically coincides as first lost 2.9% and the other 2.6%.

 

Original article: El Mundo

Translation: AURA REE

Parallel With VTO For Realia, Hispania Ponders New Acquisitions

27/11/2014 – Expansion

Hispania Activos Inmobiliarios, listed investment vehicle of fund manager Azora and held by billionaire George Soros, is in talks – with different advance stage – on real estate deals for joint amount of  €1.49 billion which could be sealed before the takeover bid for Realia realized.

Thus, the REIT, known as a Socimi in Spain, is negotiating on two off-market hotel operations totalling at €29 million. Both transactions, missing signatures only, embrace 175 keys located in Malaga and Barcelona, Spanish Stock Market Commission (CNMV) informed.

Apart from those portfolios, another 16-holiday-resort package is currently found in the “due diligence” phase. The establishments amass more than 6.000 rooms and they are situated in Andalusia, the Canaries and the Balearic Islands. This €425 million worth is expected to be transferred to Hispania within 4-5 months.

Likewise, a 7.000-dwelling residential portfolio is going through the same valuation stage. These properties are located in Spain’s most important regions, mainly in Madrid, and their value amounts to €1 billion.

Furthermore, Hispania is in advanced talks on purchase of a Canaries resort asset with 700 keys and worth €40 million.

In case when the takeover bid submitted for 100 % of Realia, proposing a price of  €0.49 per share, wins the tender, Hispania will have met its spending goal set up for its net funds raised at its IPO in less than 18 months.

However, as the company says, it will be inevitable to raise new capital to keep on investing in the identified opportunities.

Hispania reckons the real estate market recovery will have a positive impact on the Spanish economy throughout the upcoming years.

On the other hand, at the nearest general shareholders’ meeting to take place on December 26th, the new capital hike and amortization of a bridge loan will be proposed.

Also, Hispania will ask for exceeding a 40% LTV (loan-to-value) limit in line with the market and investment opportunities, but only until reaching a 50% cap.

 

Original article: Expansión

Translation: AURA REE

Photo by Ángel Cerdán