Month: February 2015

Ministry Of Development: House Prices Rise For First Time Since 2008

27 February 2015 – El Correo

House prices rose by 0.5% in the last quarter of 2014; and the average price per square metre amounted to €1,463.1.

Average house prices increased by 0.5% in the last quarter of 2014, the first quarterly increase since the beginning of 2008, the year in which the crisis began. Meanwhile, the average price per square metre amounted to €1,463.10, according to reports from the Ministry of Development.

Despite the quarterly increase, house prices closed the year (2014) with an inter-annual decrease of 0.3%; although this percentage was negative, it was more moderate than the -4.2% recorded in 2013.

In this way, house prices recorded seven consecutive years of decline, during which time the cumulative decrease from the peak prices recorded in 2008 amounts to 30.4%. In real terms, after accounting for the variation in CPI, this decrease rises to 36.9%.

Also, despite the slight quarterly increase, the average price per square metre was still at similar levels to those recorded at the beginning of 2014.

By type of property, both new builds and second-hand homes ended 2014 with price increases. Homes that were less than two years old became 1.2% more expensive, to reach €1,517 per square metre, and second-hand homes rose by 0.2% to €1,441 per square metre.

In the subsidised housing segment (vivienda protegida or VPO), the price per square metre amounted to €1,099.90 in the fourth quarter of 2014, representing a year-on-year decrease of 0.3% and an inter-quarter increase of 0.2%.

In this way, the general price index registered a rise of 0.3% between October and December last year, with respect to the previous three months and a year-on-year decrease of 0.3%. With this year-on-year decline, the general price index has now recorded 25 cumulative quarters of negative growth.

Prices decreased the most in Asturias and Navarra

By autonomous region, five regions experienced year-on-year increases in the price of (unsubsidised) homes: Cantabria (+3.6%), the Balearic Islands (+2.4%), the Canary Islands (+1%), Valencia (+0.6%) and Madrid (+0.5%).

By contrast, the largest year-on-year decreases were recorded in Asturias (-5.2%), Navarra (-4.2%), Castilla y León (-3.7%), Castilla-La Mancha (-3.1%) and Galicia (-2.8%).

In terms of towns with more than 25,000 inhabitants, the highest prices per square metre were found in San Sebastián (€3,117/m2), Getxo (€2,696.40/m2), Calvià (€2,526/m2), Alcobendas (€2,477.2/m2), Pozuelo de Alarcón (€2,471.6/m2), Barcelona (€2,416.3/m2) and Majadahonda (€2,399.7/m2).

The lowest prices in towns with more than 25,000 inhabitants were recorded in Elda (€557.3/m2), Crevillent (€597.3/m2), Tomelloso (€600.8/m2), Jumilla (€605.2/m2), Ontinyent (€606.7/m2), Villarrobledo (€609.6/m2) and Hellín (€618.5/m2).

Original story: El Correo

Translation: Carmel Drake

Osácar: “Rental Housing Will Account For 20% Of Total Stock”

“Rental property is here to stay”. That was the powerful message from Concha Osácar, the founder of Azora, who added that demand for rental housing from young people has increased by 10% in the last year, up from 36% to 46%. In her opinion, 20% of the total housing stock, which comprises around 15 million main homes in total, will be used for rental over the next few years, up from the current level of 15%.

At the ‘I’ real estate forum held yesterday at IESE, organised by Aguirre Newman and Tinsa, Osácar said that the rental market is growing. Based on her experience, rental contracts are perceived to offer greater stability and occupancy rates are beginning to increase. She also highlighted the arrival of foreign capital (players) willing to invest in rental housing.

In fact, she called for institutional buyers to play a greater role. “The basic model focuses on the sale of homes to individuals, but we should (also) encourage sales to institutional investors”. In her opinion, foreign financing is available and (those overseas investors) are willing to buy portfolios of property and then offer them on the rental market.

Osácar said that 15% of the stock of 15 million main homes are currently used for rental, but she thinks that it would be reasonable for this percentage to increase to 20% over the next few years. According to the most recent data published by the Bank of Spain, the percentage of owned homes has decreased to account for 77.7% of the housing stock, returning to levels last seen 26 years ago. By contrast, rental homes have increased by more than 36% in the last 10 years.

Original story: Idealista (by P Martínez-Almeida)

Translation: Carmel Drake

Housing Permits Rose Slightly In 2014 After 7 Years In Decline

27 February 2015 – Expansión

The Colleges of Technical Architects granted 34,873 permits for the construction of homes in 2014, a very small increase, of 0.003%, but still an increase and the first sign of growth after seven years of decreases, according to the most recent information published by the Ministry of Development.

Despite this increase, (the number of) housing permits remains well below the peaks recorded in 2006, during the height of the real estate sector boom, when they exceeded 865,000 in one full year. Since then, the cumulative decrease amounts to 96%.

The number of housing permits started to fall in 2007, by 24.8%, and since then have continued on a downwards trend to reach their lowest levels at the end of last year.

Since 1991, when the Ministry of Development first started to compile this data, the number of permits reached their historic monthly low in August last year, when there were only 1,585 granted. The historical (monthly) peak was recorded in September 2006, with 126,753 permits granted.

In total, the number of permits granted for new builds, renovations and extensions amounted to 58,776 (last year), which represented an increase of 0.06%, with respect to 2013.

By type of property, permits to construct housing blocks increased by 1.6%, with 23,301 licences, whilst permits to construct family homes rose by 1.4%, to 23,301.

In terms of size (surface area), the average size of family homes was 198 square metres and the average size of apartments was 112 square metres.

Original story: Expansión

Translation: Carmel Drake

Melia Will Make Gains Of €35m From Its Partnership With Starwood Capital

27 February 2015 – Cinco Días

The transaction amounts to €176 million.

Melia and Starwood Capital are going to create a joint venture for the purchase and operation of seven of the hotel chain’s establishments. The fund and the hotel chain will take an 80% and a 20% stake, respectively, in the new company, in a deal worth €176 million. The partnership has been made public in the same week that Barceló and Hispania announced the creation of the first Socimi in Spain dedicated exclusively to the vacational hotel sector, which will acquire up to 16 of the Mallorcan chain’s hotels.

The transaction will (also) serve to relaunch the Sol brand. In this way, the seven acquired hotels will be remodelled, which will require an investment of €30 million. Four of the establishments are located in the Balearic Islands, another two in the Canary Islands and one on the Costa del Sol.

Melia will operate the seven hotels for the next 15 years. According to the Relevant Fact submitted to the CNMV, the hotel transfer is pending the agreement of bank financing. Both sides hope to have the process completed by May.

The transaction will generate gains of €35 million for Melia and forms part of the company’s debt reduction program through the rotation of assets. The CEO of Melia, Gabriel Escarrer, said in January that the company expected to spend around €100 million on the rotation of assets this year.

Original story: Cinco Días

Translation: Carmel Drake

The Banks Reject Martinsa’s Plan And Plunge It Into Liquidation

27 February 2015 – Expansión

The real estate company owned by Fernando Martín has liabilities amounting to €6,600 million.

In 2008, the real estate company Martinsa filed for the largest bankruptcy in Spain’s history.

On Thursday, the creditor banks put a final end to the adventure that Fernando Martín first began back in 2006. Then, the property developer from Valladolid, who appeared in the Forbes list of the richest men in the world, was evaluating the purchase of the Galician company Fadesa, a real estate giant with assets valued at more than €13,000 million located in 13 countries.

The financial institutions plunged Martinsa Fadesa into liquidation, by definitively rejecting the proposed agreement that Martín submitted to Commercial Court number 1 in A Coruña on 30 December, as they considered it to be “unacceptable”, according to comments from various creditor banks. The company has liabilities of €6,600 million, of which €5,500 million relate to financial debt.

In 2008, Martinsa Fadesa filed for Spain’s largest ever creditor bankruptcy, with a debt that amounted to €7,800 million at the time. Although the company reached an agreement to exit from that judicial process, it admitted last year that it was incapable of meeting the obligations of the (revised) agreement for the second year in a row, and it warned of an equity imbalance of €4,473 million. All of that led directly to its liquidation. Following the reform of the bankruptcy laws, Martín presented successive proposals, baptised with the name Aurora Plan, to the creditor banks, to renegotiate the debt. The bank rejected them time and again.

The latest plan, which was presented to the court unilaterally, proposed a 70% reduction to the debt balance and the liquidation of some of the liabilities through deeds in lieu. As a sweetener, Martín included the share of the capital that he thought he would obtain from a potentially favourable sentence in the lawsuit that he had brought against the former owner of Fadesa, Manuel Jove. He filed a claim for €1,576 million against him, on the basis that the sale had gone ahead despite certain irregularities. Martín’s plan involved slimming down the property developer to leave it with a structure of €883 million in assets and €489 million in liabilities.

Financial sources agree that they never accepted any of these conditions: they thought that the discount was excessive, that the assets held overseas were overvalued by 417% and that Martín was going to retain ownership of the best plots of land and properties in the portfolio. In the end, the Supreme Court ruled in favour of Jove and ordered Martín to pay the legal costs, which had risen at least €60 million, an amount the company simply cannot afford to pay.

The negotiations with the banks were led by a group of four banks, comprising Sareb – the bad bank – CaixaBank, Banco Popular and Abanca, which held almost 60% of the financial debt. The entities – altogether the company owes money to around twenty – decided to take control of the real estate company, just like they did with Metrovacesa and Colonial, respectively. Industry sources explained that most of the entities had already made provisions against their loans to Martinsa Fadesa, which filed for bankruptcy in 2008. However Sareb has not, since it acquired the toxic loans from nationalised banks at substantial discounts.

The real estate company, which employs around 70 people, does not have any developments underway. Therefore, in the end, the banks preferred to let the company fail, and for the judge to set in motion the process of orderly liquidation, whereby subjecting the company’s assets to a strict valuation.

Original story: Expansión (by Lluís Pellicer)

Translation: Carmel Drake

Remax Forms Alliance With BBVA To Supply Mortgages

26 February 2015 – ABC

The estate agent Remax and BBVA have signed a collaboration agreement, whereby the bank will provide specialist financial services for mortgage opportunities generated by the realtor, according to a statement made by the agent.

Through this agreement, the two companies seek to coordinate to provide “the best financial services” to clients in the estate agent’s network.

For Remax, the greater ease of access to home ownership “adds value” to the estate agent’s services.

At BBVA, they believe that this alliance will help the entity become a “benchmark within Remax”.

Original story: ABC

Translation: Carmel Drake

Solvia Will Take Over Management Of Ceiss’s Assets From Next Week

26 February 2015 – Expansión

From next week, Solvia, the real estate arm of Banco Sabadell, will gradually incorporate assets from Sareb, the so-called bad bank, into its managament portfolio. Specifically, it will take over the management of assets that were originally held by Banco Ceiss.

In November last year, the Asset Managament Company for Bank Restructurings (Sareb) awarded Solvia, the real estate arm and recovery platform of Banco Sabadell, the management of a portfolio of 42,900 assets that had been originally held by Bankia, Banco Gallego and Banco Ceiss.

In total, 7,000 assets were held by Banco Ceiss; they will be added to those from Banco Gallego that Solvia is already managing. Only the management of the assets originally held by Bankia will remain pending; and that is expected to happen within the next few months”, according to Solvia.

Original story: Expansión

Translation: Carmel Drake

Sareb Holds Board Meeting As Martinsa’s Deadline Looms

26 February 2015 – Cinco Días

Sareb held an ordinary Board meeting yesterday (as it does once a month) with the case of Martinsa Fadesa on the table. The creditor banks of the real estate company have until today, Thursday, to decide whether or not to approve the new proposed agreement presented by the company to avoid its liquidation. According to financial sources, the debt obligations that Sareb holds in Martinsa Fadesa amounted to €1,457.8 million as at June 2014. The (real estate company’s) second largest creditor is Caixabank with €907.9 million.

Martinsa Fadesa submitted a new proposed agreement to avoid its liquidation to its creditors on 30 December, since it is unable to make some of the payments stipulated in the previous agreement. Under the new proposal, the company highlighted that if it won its claim in the Supreme Court against Manuel Jove, the former chairman of Fadesa, against whom it had filed a multi-million euro lawsuit, then it would allocate the resources to pay its creditors.

Fernando Martín (pictured above) agreed the purchase of Fadesa from Manuel Jose between 2006 and 2007, in a transaction valued at €4,045 million. In 2008, Martinsa Fadesa filed for bankruptcy, the largest ever case in Spain, with debts of approximately €7,000 million. In 2011, the company reached a payment agreement with its creditors and so emerged from bankruptcy. That same year, the company decided, in its shareholders’ meeting, to file a social responsibility claim against Jove and the former CEO of the company, Antonio De la Morena, for €1,576 million. The former Chairman of Fadesa, who is now the Chairman of the Inveravante group, said then that the measure was “absolute nonsense”. The Commercial Court number 1 in La Coruña and the Provincial Court of La Coruña rejected the claim filed by Martinsa Fadesa, and so the company appealed to the Supreme Court. This month, the Supreme Court also rejected Fernando Martín’s claim.

The blow dealt by the Supreme Court to Martinsa Fadesa damages the real estate company’s prospects of avoiding liquidation even further. In addition, the Supreme Court ordered the company to pay all of the legal costs, which will require the immediate disbursement of several million euros (up to €60 million, according to legal sources).

Between January and September 2014, Martinsa generated turnover of €95.2 million, an increase of €24.5 million on the same period in the previous year, and it recorded losses of €201.6 million (vs. losses of €322.9 million during the first three quarters of 2012). In 2013, the group lost €652 million, and recorded negative equity of €4,288 million.

Like many other real estate companies, despite having a negative net equity balance, Martinsa avoided the requirement for dissolution under the Companies’ Act, thanks to Royal Decree Law 10/2008, which removes the requirement to account for impairments relating to real estate investments. Martinsa’s financial position is clearly very delicate and may be further compounded by the fact that the Government may decide not to renew the relevant regulation this year.

Representatives of the creditors met with the company last week and called for the departure of Fernando Martín as owner and shareholder, according to sources. Although liquidation may seem like the most logical course of action for the company, the same sources do not rule out the possibility of a last minute agreement being reached to avoid that measure.

Original story: Cinco Días (by Alberto Ortín Ramón)

Translation: Carmel Drake

Echegoyen Appoints Two New Executive Directors At Sareb

26 February 2015 – Expansión

Sareb’s Chairman, Jaime Echegoyen (pictured centre) has appointed two new Executive Directors, Manual Gómez (pictured left) and Óscar García (pictured right), with the aim of making the company “more cohesive and efficient and able to take full advantage of the recovery in the market”.

In a statement today, the company detailed that Manuel Gómez, who has been CFO of Sareb until now, will take on the role of Director of Global Resources. Iker Beraza will take on his previous responsibilities, along with the strategic management of the company.

Meanwhile, Óscar García, current secretary general and company secretary, will become the new Director of Corporate Development and Legal Affairs, a role that he will combine with those he has been carrying out until now.

Original story: Expansión

Translation: Carmel Drake

Hispania Records Net Profit Of €17.5m In Its First 9 Months

25 February 2015 – Hispania Press Release

GAV as of year-end amounted to €422M, with an EPRA NAV of €555M

CBRE’s valuation has recognised capital gains in the acquired assets of €14 M, 5.5% above purchase price and 3.4% over its book value

As of 31 December 2014, €433M for investment had been committed

With the hotel investment announced earlier today (c. €368M total investment in a resort hotel REIT along with Grupo Barceló), Hispania will have invested fully the proceeds raised in its IPO and reaches committed investments for c.€800M, equivalent to 90% of its full investment firepower

Hispania Activos Inmobiliarios, S.A., (hereinafter, Hispania) closes its first year of activity with Net Profit amounting to 17.5 million euro. As of 31 December, 25 assets had been acquired, 55% in offices, 23% in residential and 22% in hotel assets.

In just 9 months, Hispania has implemented the strategy announced in its IPO and has fulfilled the commitments acquired with its investors. As of year-end, according to CBRE’s valuations, consolidated GAV amounted to 422 million euro. This implies the recognition of capital gains amounting to 14 million euro, which represent a revaluation of 5.5% on purchase prices and of 3.4% on book value.

NAV according to EPRA’s recommendations amounted to 555 million euro, implying an NAV of €10.08 per share (vs. NAV of €9.77 per share as of 30 September 2014).

It is remarkable that 76% of these acquisitions have been executed as a result of off-market negotiations with a relevant degree of complexity. This has allowed Hispania to access high-quality assets, with important repositioning possibilities and at exceptionally attractive entry prices.

Outlook for 2015

Considering the hotel investment announced today, Hispania will have committed total investments amounting to c.800 million euro in hotels (60%), offices (22%) and residential (12%). Moreover, Hispania still has an abundant pipeline of opportunities which perfectly fit the strategy and return targets of its business plan.

Regarding the assets which currently conform Hispania’s portfolio, the company foresees a relevant total capex investment of 27 million euro for its improvement and repositioning to be implemented in 2015 and a further 12 million euro over subsequent years.

“2014 has been a very fruitful year in terms of our investment activity, thanks to the abilities of the management team when it comes to identifying and executing the acquisition of assets with a clear revaluation potential, as it is already becoming evident”, highlighted Concha Osácar, Board Member of Hispania. “2015 has started with the announcement of the Barceló transaction, which will represent a total investment for Hispania of c. 368 million euro. During the rest of this year it will be equally important for Hispania to continue with an intense investment activity as to go on managing, repositioning and financing the assets which already conform our portfolio”, she added.

Original press release: Hispania

Edited by: Carmel Drake