Merlin Refinances Debt With €940 Million Loan

31/12/2014 – Expansión

Merlin Properties, one of the new realtors that have been listed as a REIT, announced yesterday that its subsidiary Tree Real Estate Investments (with a portfolio of 880 bank branches and five buildings leased long-term to BBVA) has signed a 10-year loan for 940 million euros with a syndicate comprised of CaixaBank, Santander, BNP Paribas, Credit Agricole, Banco Popular and Société Générale, among others.

The loan is secured by the asset portfolio of the subsidiary itself. The company will allocate part of the funds to repay existing debt of 828 million that is to mature in 2017 and interest rates ranging from 2.5% and 7.75% on top of the Euribor.

Lower cost

The new loan comes as an addition to the funding for 70 million euros based on an asset portfolio located around Madrid’s A-1 highway, signed in October. The Merlin leverage ratio will stand at 39%, with gross financial liabilities of 1.01 billion euros. The average maturity of debt will be 9.1 years, with an average cost of Euribor plus 1.76%. Part of the existing hedges will be held until maturity of the debt, so the cost of financing will be approximately 4% until 2017, compared to more than 6% today. The cost will go even further down, below 3%, afterwards. Merlin will go on working on the financing of two other assets from its portfolio, worth over 150 million euros, as part of its borrowing strategy, with up to 50% leverage.

Original article: Expansión

Translation: Aura REE

Martinsa Challenges Creditor Banks By Going To Court Without Agreement

31/12/2014 – Expansión

NEW PROPOSAL / The realtor should have paid back 23% of its debt today, but for now it is escaping liquidation by requesting amendment to the terms of its agreement from the commercial court.

Martinsa Fadesa is in a new headlong rush to avoid liquidation. The realtor, headed by Fernando Martín, presented yesterday at the Commercial Court of A Coruña a request to amend the agreement with creditors which allowed it to lift from receivership in 2011, being the most important such case in Spanish corporate history.
This step means a challenge to the creditor banks but thanks to it, Martinsa avoided, in dire straits, liquidation, since the company failed to abide by the repayment schedule agreed with its creditors for a second consecutive year. Specifically, the group controlled by Martín had to repay today, at the end of the year, 23% of its debt, amounting to 3.5 billion euros.

Unable to repay and having failed in the negotiations with banks, Martinsa welcomed the new rules adopted by the Government in September to allow the continual existence of companies that agreed to a repayment plan at the beginning of the crisis and cannot afford to follow it today. This formula, known as reconvenio (new agreement or re-agreement), has just been tried by Habitat, who starred in another major insolvency case back in 2008 in the sector.


Martinsa Fadesa’s decision to go to court to request a new agreement involves an all-or-nothing move of a dozen of the company’s creditor banks that have not wanted to accept the new terms offered by the company. The negotiations held over the past three months ended without agreement on Monday, as banks and SAREB consider the company’s proposal unviable and unserious. “What we are asking is that Martinsa make a refinancing proposal consistent with the enormous debt it has,” says a representative of one of the consulted banks, upset by the fact that Martin wants to send out the message that it’s the banks who do not want to sign an agreement. “We’re not giving up but we’re dealing with unviable proposals that overestimate the value of their assets,” they explain.

The new agreement proposal submitted to the judge in La Coruña — and whose specific terms remain unknown — is a reformulation of the plan that has been proposed so far by Martinsa to the banks – transfer of ownership of a 70% stake in exchange for debt reduction. Yesterday the company notified the National Securities Market Commision (CNMV) that it will now be up to the commercial judge to change terms of the proposal for the different creditors. However, creditors holding 75% of ordinary debt as well as the judge will have to give their approval in order for the new agreement to succeed. According to the realtor, the final draft of the proposed amendment will be submitted to the market regulator, “as soon as the transfer of ownership to the creditors proceedings are initiated.”

Martinsa was the star of the Spanish real estate boom. The company bought the listed Fadesa for more than 4 billion, but the collapse of sales in the beginning of the crisis led it to receivership in 2008 with 7.5 billion in debt.

Original article: Expansión (by S. Saborit)
Translation: Aura REE

Habitat Presents First Major New Agreement With A Debt Relief Of 85%

The company will pay back banks in three months and suppliers within a year and a half. The new repayment plan, which has already received considerable support, is a reality check.

Promociones Habitat was a protagonist in the largest receivership case in history of Catalonia of December 2008, with a debt of more than 2.8 billion euros. It presented a proposal to amend the agreement with creditors last week in the courts of Barcelona, which the judge approved in April 2010. This is the first major amended agreement proposal reaching the courts in Spain – an option which the government introduced with the last reform of the bankruptcy law in order to allow the continual existence of companies that agreed to a payment plan at the beginning of the crisis that they can no longer afford.

In the case of Habitat, there had already been breaches. A few weeks ago, the Royal Bank of Scotland filed a lawsuit against the company and asked the judge to order its liquidation. This legal action will not succeed because it came about when Habitat was about to present its new agreement proposal, which had already been accepted by the bank and SAREB — its top creditor — of more than 60% of its debt. Javier Castrodeza, from Cuatrecasas, has represented the banks throughout negotiations and Raimon Tagliavini, from Uriah, has defended the interests of Habitat.

The new agreement is, above all, realistic. There are no other options left, as there is almost nothing to distribute and the few assets remaining are not enough to cover the 1.2 billion euros still outstanding. This is the reason why Habitat has proposed to the banks an 85% relief of the initial debt within a repayment plan in which the remaining 15% due will include payables that have already been accumulated over the past four years.

The resulting amount shall be paid out in the form of land; the bank will also cover all legal and transaction costs as well as corresponding tax liabilities. The entire shareholder loan (400 million) will be forgiven. Deloitte and Valuation Society have estimated Habitat’s assets that creditors will be allocated by lottery. The process will consist of a repayment within three months after the new agreement is approved by the judge.

Unsecured creditors will also have to undergo a debt relief of 85%, but will be paid in cash: 20%, in three months; a further 30% in November 2015, and 50% in June 2016. Now, once the agreement is submitted, its processing will turn into a process which SAREB, Santander, BBVA and Popular — whose debt exceeds 50% of the liabilities — have already approved.

Predictably, the new Habitat agreement will put an end to the real estate company’s judicial history, preventing liquidation in legal terms,though not in practice. In 2008, the company fell victim to the ambition of its owner, Bruno Figueras, after the purchase of Ferrovial Real Estate for 2.2 billion euros in the eve of the crisis, back in December 2006. The burst of the bubble led the company to enter into an agreement with its creditors for the first time, which the subsequent Great Recession prevented it from complying with.

Original article: La Vanguardia (by Lalo Agustina)
Translation: Aura REE

Andratx Makes Its Way Into Luxury Residential Ranking

30/12/2014 – Cinco Días

The German realtor Engel & Völkers, a leading upmarket player, has just produced the first ranking of the most exclusive areas to buy property in the world. To work out such a ranking, the realtor has considered the most expensive real estate transactions that have taken place in recent months, as well as various market analysis reports.

The Mallorcan port of Andratx is placed at No. 19, the only one representing Spain on the list of 25 most exclusive enclaves to reside in, as it records transactions in which the price per square meter can reach up to 27,000 euros.

But what is it about these residential areas that makes them classified as premium by the experts?

Experts from Engel & Völkers explain that neither the economic situation in the host country of purchase nor housing investment is are defining here, since “international demand for this kind of property is very high”. International buyers value other features such as unique locations, dwellings equipped with all luxuries and amenities, great services available as well as breathtaking views, among other aspects. “Ever more investors, especially from Eastern Europe, Asia and South America are considering the purchase of luxury properties as a safe investment,” states Christian Völkers, president and CEO of the company.

The Saint-Jean-Cap-Ferrat peninsula, amidst the French Riviera, tops the list of the 25 most exclusive areas in the world to buy a home. It is followed no less sophisticated wealth enclaves such as Hong Kong, East Hampton, and the most upscale neighborhoods of London and New York. In fact, a villa on the Claude Vignon Ave. of that French town recently reached a sale price of about 120 million euros. It has an area of 600 square meters, which translates into a price of 200,000 euros per square meter, the highest recorded in an transaction by Engel & Völkers.

Hong Kong ranks second, after the penthouses for sale in the elitist Twelve Peaks building in the upper-class Victoria`s Peak district reached 82.3 million euros, equivalent to no less than 190,000 euros per square meter.

Tight Supply

The third place on the luxury podium goes to East Hampton, located on the eastern-most end of Long Island, New York. A sale of an exclusive property whose generous land lot featured a private lake has been recently closed. The price per square meter was 168,600 euros and the villa was sold at 118 million. In the luxury market, as in other markets, prices increase further when the supply is limited.

As Völkers points out, “The critical factor in the case of high-end properties is always the micro-location, which may even be the right side of a street or one featuring unforgetable views. Furthermore, residences in these places hardly change ownership.” This means that when demand is strong, prices soar, suggest other consulted experts.

Monaco, Sardinia, Cannes,Gstaad, Geneva, Paris, Saint Moritz, Zurich and Vienna, typical for such classifications, are other locations that slip onto the list of the 25 most exclusive areas. Germany has managed to get cities like Munich, Hamburg and Berlin on the elite list thanks to high prices being recorded in some transactions from their new development projects.

London and New York are also regular names on these rankings. In fact, a two-story penthouse located in London’s One Hyde Park complex in Knightsbridge, was sold for 150,000 euros per square meter. Meanwhile, on the other side of the Atlantic, apartments surrounding Central Park, New York, are often a traditional target purchase. On 59th and Fifth Avenue, penthouses have been purchased for 120,600 euros per square meter — something very few can afford.

New areas join the more traditional ones

The U.S.: There are prime locations like Greenwich, Connecticut; Palm Beach, Florida and Los Angeles, where Holmby Hills, Bel Air and Beverly Hills form the traditional “Platinum Triangle”.

Russia: Moscow ranks 12th thanks to transactions in its exclusive Kropotkinskaya district.

Asia: Singapore and Tokyo occupy positions 13 and 14 thanks to the upward trend registered in sales of luxury homes in their skyscrapers.

Original article: Cinco Días (by Raquel Díaz Guijarro)

Translation: Aura REE

Martinsa Draws Agreement Proposal To Avoid Liquidation

30/12/2014 – Cinco Días

Martinsa Fadesa intends to present an agreement proposal to the bankruptcy court judge in La Coruna on Tuesday, thus preventing the opening of liquidation proceedings for the company. Representatives of the real estate and major creditor banks have been meeting today in Madrid at least until 5:30 pm negotiating the contents of the proposal.

According to sources close to the company, the financial institutions’ Boards of Directors will have to be the ones to assess and approve the agreement proposal. Martinsa Fadesa must submit an agreement proposal to the judge by December 31st in order to avoid liquidation after failing for a second consecutive year to comply with certain repayment terms. While it is true that this would put brakes on a potential liquidation, the groups still needs to convince at least half of the creditors adhere to this proposal.

The company has proposed to the creditor banks to transfer 70% of its capital. Financial sources say the proposal which Martinsa will present on Tuesday before a judge is not acceptable, and insist on appointing a manager to lead the company. Sources close to the company say that the major creditor banks themselves have approved the agreement in principle, “but it will have to be the banks’ Boards that give the final approval.”

Martinsa Fadesa was declared insolvent in mid-2008 with a debt of around 7 billion euros. In 2011, it reached an agreement with its creditors, leaving its insolvency behind. Of Martinsa Fadesa’s total insolvency debt of 6.6025 billion, 1.4578 billion correspond to its number-one creditor SAREB, followed by CaixaBank (907.9 million); and Popular (574.2 million).

Original article: Cinco Días (by Alberto Ortín Ramón)
Translation: Aura REE

San José Stock Rebounds With Upcoming Debt Refinancing

30/12/2014 – Expansión

The San José group’s stocks are now among the winners of the Spanish Stock Exchange after the company notified the CNMV regarding its upcoming debt refinancing, envisioning its real estate business to remain in the hands of creditors.

The stocks of the group – whose debt amounts to 1.6 billion euros – rise firmly almost 6%, up to 0.73 euros, although they sporadically pick up to 10%.

The company has assured investors earlier today that it is “in the closing phase of its refinancing process” and that it will sign agreements with its creditors “during the day.”

San José added that as part of these agreements, they are considering to have creditors control the entire capital of San José Desarrollos Inmobiliarios “by converting part of their debt claims into stocks of the company.”

Original article:

Translation: Aura REE

Real Estate Sector To Close A Record Year In Spain

30/12/2014 – Expansión

BOOM INVESTOR / The arrival of international funds and launch of large investment REITs have increased investment over previous years to 9 billion euros. Both number of operations and total figures have soared. Large shopping malls and prime-location office buildings have been the most sought-after assets in 2014.

After more than five years of business decline, it was forecast that recovery would come to the Spanish real estate sector in 2014. However, the most optimistic scenario has played out in reality and exceeded all expectations.

Awaiting the year-end figures, this is already the second best year over the past decade, surpassed only by 2007, amidst the boom of the Spanish economy. “The market this year has been considerably more active than back in 2007. A larger number of assets and in higher volumes have been purchased, when compared to the 2007 prices,” explained experts from the Research division of JLL España.

So far this year, more than 6.18 billion euros have been invested in real estate for tertiary use (i.e. non-residential), according to Deloitte Real Estate.

This figure goes even further up to 9 billion, according to the Aguirre Newman consultancy, taking into account various debt portfolios secured with real estate assets as well as sale of land and housing.

These figures are double those recorded in 2013, 2012 and 2011 and attributable to a combination of several factors. “2014 was a year in which we had all the factors to foster investment: overall improvement of the economic situation, the rise of new players with liquidity and willingness to invest (the REITs), the return of funding and the need to sell certain close-ended funds,” says Javier Garcia-Mateo, director of Deloitte Real Estate.

New investors

Among the factors which most influenced the increase in investment are the new players in the sector: the REITs. Only four major listed real estate companies – Merlin Properties, Real Hispania, Lar Spain and Axia Real Estate, have invested over 2.4 billion euros. Among those investments made by December 24 was the purchase of the largest shopping mall in 2014: the Marineda City in La Coruña, by Merlin Properties for 260 million euros.

Just three days ago, the British realtor Intu Properties beat this record by paying €451 million for Puerto Venecia in Zaragoza. With these transactions, investment in shopping malls in 2014 amounted to €3 billion, the same amount invested in the entire real estate sector back in 2013.

The malls are not the only type of commercial property that has defined large-scale transactions. Street locations have also been blue-chip investment. Thus, companies such as Mango bought properties in Madrid and Bilbao to open large stores, while international funds, such as Axa Real Estate and Deka seek to be the landlords of the major brands on Gran Via in Madrid.

In the case of office space, investment has soared from January to September over 200%, up to 2.4 billion, according to CBRE. These figures are due to the purchase of portfolios, as for example, in addition to its four buildings in Barcelona and Madrid, Blackstone has acquired other four from SAREB a few days ago.

In terms of offices, it’s worth noting the purchase of two properties in Barcelona — Torre Agbar and Paseo de Gracia 111 — that will be turned into luxury hotels, as well as the numerous buildings sold by public administrations like that of the Generalitat.

“We are at the close of a fiscal year of a great deal of investing activities and we should expect the same level of activity for the next year on the market, though with certain changes in the investors’ profile,” states Jaime Pascual, CEO of Aguirre Newman.

Original article: Expansión (by Rocío Ruiz)

Translation: Aura REE

Husa Negotiates With Investors To Overcome Insolvency

29/12/2014 – Expansión

The Husa hotel chain is holding talks with several investors to try to get a partner to inject liquidity and lift it out of the bankruptcy proceedings to which it has been subjected since February, according to Europa Press’s inside sources linked to the proceedings.

Predicted by the incumbent judge of the Commercial Court No. 3 of Barcelona, José María Fernández Seijo, the regular phase of the bankruptcy proceeding will be complete in early January, after which the company must submit an agreement proposal with its creditors.

The Hostelería Unida insolvency proceeding — which brings together a great number of companies from the Husa group — was announced on February 11th, and nine more companies have been added since then.

The group has sold some hotels or transferred profitable business units, including the iconic Hotel Palace in Barcelona, which was transferred to owners who have taken over the management of the establishment and all the employees. The group has also reduced its workforce of about 500 employees to about 200 currently.

According to the report of the insolvency administration, submitted in late October when there were still only six companies in state of insolvency, the group’s negative shareholders’ equity amounted to € 153 million — the difference between its € 68.5 million of consolidated assets and 221.8 of accumulated total liabilities. Administrators had, nonetheless, already predicted that this figure could exceed 200 million due to the likelihood of adding other companies into the proceedings.

Of the group’s debt of 221.8 million euros, 40.2% correspond to public credit–primarily from the Tax Agency and Social Security Servicе; 26.4% to financial creditors–the main ones being CaixaBank and Banco Sabadell; and the remaining 31.3% to general creditors.

Hostelería Unida accounts for the greater chunk of the negative stockholders’ equity – 115.7 million euros, as it has assets worth only 34.7 million euros and liabilities amounting to 150.4 million.

Original article: Expansión (by Europa Press)

Translation: Aura REE

Housing Market Volume Rises To €32.516 Billion By September, Up 25%

29-12/2014 – Expansión

The Spanish non-subsidized housing market has risen to €32.5 billion between January and September 2014, a 25% increase over the same period last year (€25.99 billion).

The volume of non-subsidized housing has thus stayed on a positive trend until September after three consecutive years of decline, according to data of the Ministry of Public Works, collected by Servimedia.

The €32.5 billion correspond to 240,763 non-subsidized housing transactions that were made throughout the first nine months of the year – 22.6% more than a year earlier.
In particular, second-hand non-subsidized properties moved up to €27.249 billion (a 30.1% increase), whereas the volume corresponding to new housing units was much lower – €5.267 billion (up 4.1%).

Madrid was the region with the largest volume recorded in non-subsidized housing transactions over the first nine months of the year, with €6.234 billion, followed by Andalucía – €5.866 billion, Catalonia – €5.855 billion, and Valencia with €3.934 billion.

Down the list are the Basque Country – €1.588 billion, the Balearic Islands – €1.451 billion, the Canary Islands €1.418 billion, Castilla y León – €1.104 billion, Galicia – €1.018 billion), Castilla-La Mancha – €832.8 million, Murcia – €756.6 million, and Aragon – €708.4.

Meanwhile, the regions with the lowest non-subsidized housing transactions volume were Asturias €438.2 million, Navarra – €375.5, Cantabria – €353.5, Extremadura – €307, La Rioja – €180.8, and Ceuta and Melilla – €91.2, both together.

Original article: Expansión

Translation: Aura REE

Martinsa Agreement Due In 48 Hours: SAREB And La Caixa To Ruthlessly Decide For 14 Banks

29/12/2014 – El Confidencial

The 14 banks which have been discussing these days the survival of Martinsa Fadesa have ruthlessly delegated their representation on a steering committee, formed by four major entities, which are the following, in order of their shares as creditors: the so-called ‘bad bank’ SAREB and the allegedly ‘good’ ones La Caixa , Popular and Abanca, formerly NovaCaixaGalicia.

The quartet has not stopped giving thumbs up as a sign of acceptance of the newly-drawn agreement proposal submitted by the company and the specter of liquidation is beginning to seem nothing more than desperate attempt to bluff on behalf of Fernando Martín.

In just 48 hours all question marks will disappear, as this Tuesday, at the end of the year, the realtor must present its new refinancing agreement before the Court no matter what.

Otherwise, all bets are off for the company which declared a default in July 2008 with a record debt currently totaling at 7 billion euros. Apart from the chilling scale of these figures, Martinsa’s disappearance would expose the claim about the end of the crisis that Mariano Rajoy wants to brandish as an achievement on his curriculum vitae for next elections. The housing market is beginning to awaken from the coma induced by the housing bubble’s burst and the demise of one of its most distinguished player would not exactly be a good reason to look forward to 2015 with optimism.

The exuberance, brought about by loans to developers in the middle of the last decade, stirred up the flame among thrill-seekers who – convinced they could do away with business cycle theory – defied the laws of economic gravity. There was not enough shrewdness to foresee the end of the spell that many associated with a fake miracle; however, those who fell down were as guilty as those who pushed towards the abyss. This is why the banking system had to be bailed out to avoid overall uncertainty in the country. Now in the wake of recovery, it would be an ill-omened contradiction in terms to let a corporate bankruptcy of this magnitude to take place for no reason. There could be no worse disaster possible at this time than the liquidation of a group employing 3,500 workers, for the most part indirectly, and consisting of 80 companies with about 5,000 urban development projects underway, in addition to 1,500 housing units under construction and 850 contracts outstanding with customers.

New regulation on defaults

Martinsa’s bailout, also coined under the pompous designation the ‘Aurora Project’, constitutes a veritable challenge for the Government, a sort of Litmus test to demonstrate the validity of the Royal Decree on urgent measures regarding receivership, now being processed as a bill in Congress. Luis de Guindos, Spain’s Minister of Economy and Competitiveness, has taken great pains to extend the advantages granted in the pre-bankruptcy phase to ensure the renegotiation of agreements, in a clear wink to the real estate company which has been debating these days whether to remain in the intensive care unit of the banking system.

Political determination to avoid bankruptcy of operationally viable businesses is a ‘letter of safe -passage” ensuring a favorable starting point for Martinsa’s refinancing. SAREB, as the state-controlled entity in charge of the reorganization of the banking system and recovery of the housing market, is willing to back this new agreement. This is a ‘detail’ truly worth keeping in mind as far as bad bank is concerned; as the heir of Bankia’s debts, it is now the number-one creditor of the real estate company headed by Fernando Martín, with 21% of its ordinary debt.

“Political determination to avoid bankruptcy of operationally viable businesses is a ‘letter of safe -passage” ensuring a favorable starting point for Martinsa’s refinancing.”

The company’s total liabilities amounted to 6.915 billion euros, but the financial relief and bailout went mostly for its €3.537-billion financial debt. The rest are mortgage loans, privileged and subordinated debt, plus stockholder’s loans and commercial debt. Martinsa proposes payment of 34% after a debt relief of 66% which would require it to gather adherents of a minimum of 75% debt to approve the agreement secured creditors. Any option below this bar would be desirable but impossible, in which case the company could save itself the trip to La Coruña because the Commercial Court No. 1 of the Galician capital would have no choice but to urge liquidation as a mere formality.

Isidro Faine has the final say

The 14 syndicated banks around the realtor account for 84% of its ordinary debt so any entity owning more than 9% of it has the right to decide on the outcome of the company. This is the case of SAREB as well as CaixaBank, whose share accounts for 16% of the liability. These two entities are taking the lead in the negotiations and their driving force is essential for Martinsa’s salvation or doom. If we consider that SAREB, chaired by Belén Romana, has refused in advance to serve as the hatchet man in this case, everything seems to indicate that it will be Isidro Fainé who will have the last word on Martinsa’s fate.

The newly-drawn agreement proposal includes the option to hand over majority ownership of the company to the group of creditor banks within a timeframe of up to nine years but which could be shortened to only four years. Financial institutions would thus control 70% of the capital, while Martin and his partners – the remaining 30%. Management would remain in the hands of the current president, although the new agreement has a provision for setting up of a monitoring committee comprised of the creditors that keep a watchful eye on all strategic decisions of the real estate giant.

The new Martinsa would also capitalize on debts amounting to 3,000 million to secure a balance position that brightens up the future of the company until the housing market’s gloomy days are definitively over. The ‘Aurora Project’ outlines a company with 890 million in assets, 680 million in liabilities and owners’ equity of 169 million. With these figures, the New Year may mark the the beginning of a new life for Martinsa, along with the banks. Otherwise, it will be a dissolution verdict, the end of the company and dividing up its remaining assets among over 6,000 creditors in the largest bankruptcy in Spain’s corporate history.

Original article: El Confidencial (by José Antonio Navas)

Translation: Aura REE