Month: March 2015

Housing: Completions Exceed New Starts For 7th Year

30 March 2015 – Cinco Días

It is not easy to measure how robust activity is in the real estate sector. But if there is one indicator that has been taken into account historically to assess the sector’s health, it has been the volume of housing starts. That is where the problems begin. The permits that developers have to obtain to enable them to begin construction work did not always used to correspond to the exact number of homes that were built in the end, and so the gross figure that was published, had to be carefully extracted.

And this market suffers from another peculiarity. Since house building is a slow process, which tends to take between 12 and 24 months, it is not easy to halt developments that are already underway, even once it has been established that most of the homes under construction may not be sold upon completion.

These two aspects help us to understand what has happened in recent years, when we analyse the data for housing starts and completions. If we take the year 2000 as a starting point, when nobody doubted that the real estate market was heading towards a boom of as yet unknown proportions, the number of house starts began to open up a sizeable gap over the number of completed homes, of more than 40%, approximately. The former moved in the vicinity of 500,000 homes, whilst the latter remained at just over 350,000.

Right after that, house production volumes climbed to more than 600,000 per year, spurred on by demand for a primary residence by one of the largest population cohorts in Spain’s recent history (the baby boomers), strong employment and the almost unlimited access to very cheap financing over almost “eternal periods”.

Thus, the gap between the two variables continued to grow until 2008, when everything came to an abrupt end. In fact, that year closed with 264,795 housing starts, when just a year before the figure had amounted to no fewer than 651,427. In 12 months, activity had collapsed by 59%, but the majority of the construction work underway continued to run its course (only a minority of developments were left unfinished even during the worst years of the crisis), which explains why since then, the number of finished homes has exceeded the number of house starts, year after year, for seven years in a row.

Shortage of new supply

In 2014, this trend was almost reversed, but in the end it was not. Last year, construction of 34,873 houses began, which represented a slight increase of 1.7% compared with the figure a year before, but still a long way below the 865,561 homes that developers began building in 2006, during the height of the boom. This means that today, the number of homes being constructed accounts for barely 4.02% of the volumes that were being constructed during the economic boom. Moreover, the figure is slightly lower than the number of homes that were completed last year (46,795), which in turn represented 7.29% of the number of homes that were finished in 2007 (the peak of the series), when 641,419 homes were completed.

All indications are that this year will be the first year that the two curves cross again, in such a way that more homes are started than are completed. In fact, if this does not happen, there could be problems due to a shortage of stock of new homes in places where the stock has already been absorbed and demand is beginning to intensify. Another important indicator for the sector, namely the consumption of cement, also indicates the same trend. During the first two months of this year, cement consumption has increased by 6.6%, to amount to almost 1.6 million tonnes, which corroborates the theory that the cranes are returning, albeit in a selective way.

Another business niche, which is key to the recovery of the construction sector, but which does not seem to stop decreasing is: refurbishments. According to figures from the Spanish Confederation of the Construction Product Manufacturers Association (Cepco), 2014 closed with 22,428 permits for the renovation or refurbishment of homes, down 0.80% on the previous year. And the number of building permits barely grew (rising by only 2.8%).

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

Hispania Buys Residential Complex And Office Block For €86M

30 March 2015 – Hispania Press Release

Hispania has closed two separate deals: the acquisition of an office building located on C/ Príncipe de Vergara – for €25 million – and the purchase of a residential complex containing 284 dwellings in Sanchinarro, Madrid, for €61.15 million.

Following these transactions, Hispania now has committed investments amounting to an aggregated GAV of €877 million. 

Hispania Activos Inmobiliarios, S.A., through its 100% subsidiary company Hispania Real Socimi, has closed two off-market transactions in Madrid for a total amount of €86.15 million, which have been fully financed using Hispania’s own funds.

Office building on Príncipe de Vergara, 108 (Madrid)

Hispania has acquired an office building located on C/Príncipe de Vergara, 108, where the street intersects with C/Joaquín Costa. The acquisition price amounted to €25 million (€3,718 /sqm).

The asset is located in the city centre of Madrid and enjoys excellent visibility. The building has a GLA of 7,324 sqm, distributed over 12 floors and commercial surface, as well as 68 underground parking spaces.

Residential complex in Sanchinarro (Madrid)

Hispania has also purchased a residential complex in Sanchinarro (Madrid) with a GLA of 39,000 sqm, distributed across 284 dwellings (2 and 3 bedroom properties), 311 parking spaces, 284 storage units and a retail unit, which is currently occupied by a major supermarket chain. The dwellings are in a closed complex with garden areas.

The total purchase price amounted to €61.15 million. The purchase price of the dwellings -excluding annexes and a retail unit- is equivalent to €2,050/sqm above ground. The dwellings are currently rented, with an approximate occupancy rate of 80%. Hispania’s business plan involves investing in the asset and expanding the surrounding facilities in order to convert it into a unique asset in the residential rental market in the Sanchinarro area, with the ultimate aim of optimizing its occupancy rate.

Located to the north of Madrid’s city centre, Sanchinarro is one of the most dynamic residential areas in Northern Madrid. Over the last few years, various companies have chosen to locate their corporate headquarters in Sanchinarro and its surrounding areas. This has increased the already strong demand for residential properties in the area.

“These two deals prove, once again, Hispania’s ability to invest in high-quality assets through off-market deals in consolidated areas”, said Concha Osácar, Board Member of Hispania.

Hispania has committed investments amounting to €877 million during the last 12 months.

After these two transactions, Hispania has committed investments amounting to an aggregated GAV of more than €877 million. Hispania has a committed asset portfolio with an office GLA of 97,940 sqm –mainly in Madrid and Barcelona- 683 dwellings in Madrid and Barcelona and 22 hotels in Madrid, Barcelona, the Costa del Sol, the Canary and Balearic Islands and the Costa de la Luz.

Original press release: Hispania

Edited by: Carmel Drake

Reyal Urbis Appeals To Judge To Advance Its Payment Plan

27 March 2015 – Expansión

Negotiations / The real estate company, which has a debt of €4,000 million, has appealed against the judge’s request to change and clarify certain points of its proposed agreement.

The negotiations to enable Reyal Urbis to emerge from bankruptcy have taken an unexpected turn. The real estate company, chaired by its largest shareholder Rafael Santamaría, has decided to appeal against the request from the judge in charge of the bankruptcy process to modify various points of its proposed agreement.

The decision by the real estate company to postpone the changes requested by the judge has come as a surprise, given the very difficult situation it finds itself in. Reyal Urbis has debt amounting to €4,435 million, whilst its assets are valued at €1,345 million. Moreover, it has an equity deficit of more than €3,000 million.

In 2014, the company recorded a loss of more than €694 million. It has not made a profit for five years, due to the depreciation of its real estate assets and declining sales.

On 6 March 2015, the judge Franciso Javier Vaquer, head of the Commercial Court No. 6 in Madrid, asked the company to remedy deficiencies in the feasibility plan that it had presented a few days earlier. The proposal by Reyal Urbis included a discount of 90% for those creditors with mortgage guarantees from bilateral loans. In the case of creditors of syndicated loans, which included entities such as Santander, Sareb and Barclays, the real estate company proposes two options: one of them involves a discount of 90% and the payment of the balance using certain assets (Reyal reserved some of its portfolio, worth €260 million, for itself).

The second alternative is a discount of between 88% and 93% and a six year wait for the payment of the remainder, with a grace period of four years. In both cases, the discount to be applied “far exceeds the legal limits”, something which is not justified in the feasibility plan presented by Reyal Urbis, according to the judge.

Moreover, the judge also considers that in its business plan the real estate company does not explain how it is going to obtain the funds to pay the remainder of the debt.

These high discount rates would not apply to the Tax Authorities, another one of Reyal Urbis’s creditors, with a liability of €400 million, which the judge asks them to justify “if the bankrupt entity is willing to grant the AEAT (State Tax Administration Agency or Agencia Estatal de Administración Tributaria) unique, special or beneficial treatment that differs from that offered to other creditors of equal ranking (…), then Reyal should explain all of the details behind the unique, specific or preferential treatment or treat AEAT in the same way as it would treat creditors of similar loans with no option to refer to a subsequent agreement”.

The “Drag effect”

In its proposal, Reyal Urbis clings onto the bankruptcy reform law, approved last year, to obtain its exit from bankruptcy, even without the support of all of its creditors. “The company interprets that Article 121.4 of the Insolvency Act allows a vote in favour of the proposal by 75% of the creditors (by grouped liabilities) of the aforementioned syndicated loan to “drag” the remaining 25%”, they say at the company. This is something the judge rejects, since the waiver of the rights to receive (funds) should be made expressly.

The appeal raised against the judge’s request has surprised the financial creditors, which had expressed their willingness to accept significant discounts in exchange for holding onto the assets that were already provisionally awarded through the drawing of lots, and which featured as collateral in the refinancing agreements signed in previous years.

The main creditors believe that these changes requested are necessary, before they will consider submitting the possibility of accepting this plan or not to their respective boards of directors. If it fails to gain the support of the majority of the debt holders, Reyal Urbis will have to follow in the steps of its counterpart Martinsa Fadesa, which is in the middle of liquidation.

Nevertheless, the creditors have not completely given up on the process and believe that the appeal may afford Reyal extra time to present a proposal by consensus.

Original story: Expansión (by R. Ruiz and S. Arancibia)

Translation: Carmel Drake

Solvia Plans To Purchase Other RE Platforms

27 March 2015 – Expansión

The real estate platform expects to hire 200 people this year / Banco Sabadell is giving greater autonomy to its subsidiary, Solvia, which has taken a big step forward after being awarded the management of 42,900 assets by Sareb, worth €11,500 million.

Banco Sabadell wants to covert Solvia into a leading player in the Spanish real estate sector. The entity has proposed that it lead the consolidation process that the servicers in the market are expected to undergo (in the coming months and years). Servicers are the asset management platforms that were created in Spain following the burst of the real estate bubble and the restructuring of the financial sector. These companies were created as “bad banks”, in which entities placed the (distressed) assets that were accumulating on their balances sheets. In recent years, almost all of the financial institutions have opted to sell all or part of their platforms to specialist funds. Nevertheless, Sabadell has chosen to retain full ownership of Solvia and to promote its growth to the maximum.

“Solvia is the only servicer whose capital is held 100% locally; it is supported by a committed shareholder, a strong brand and an excellent system and team of professionals”, says Miguel Montes, CEO of Sabadell and the head of the real estate company.

As one of the winners of the contract to manage some of Sareb’s portfolio, Solvia now manages assets amounting to €34,000 million, with a portfolio of 135,000 units. Of this, €25,000 million relate exclusively to property and the remaining €9,000 million relate to loan portfolios.

Potential IPO

According to Montes, Solvia will grow through the purchase of new product portfolios and the acquisition of other platforms, since some of them have been left with small portfolios. “In Spain, there will be a consolidation (of the number of players) in the servicer market. Solvia will opt to purchase (some of its smaller competitors) to increase its size. We think that this is a business that is worth investing in”, he assures.

According to the director, if it grows in size, Solvia may consider an IPO. “Now is still not the right time to list the company on the stock exchange; before considering that, Solvia must establish itself as an independent multi-client servicer, but the stock exchange is not the only alternative, there are other options”, he says.

To accelerate growth and facilitate its ability to work with all kinds of external clients, Sabadell has decided to grant Solvia maximum independence, by providing the entity with the resources and structure necessary to operate autonomously. Thus, the company will depend increasingly less on the bank’s central services and will have its own management team. As such, it has launched a serious offensive to attract talent and recruit experienced professionals.

Solvia closed 2014 with a workforce of 240 people and this year expects to hire 200 more, to take its total number of employees to 440.

The real estate company recently hired Francisco Pérez – former director of the real estate developer Vertix – as the regional director in Cataluña. To strengthen its office in Madrid, it has hired Javier Román Palero from the fund Apollo.

The majority of the properties that Solvia manages following the award of Sareb’s portfolio, which in turn came from Ceiss, are located in the central region of Spain. Under project Ibero, Solvía also won the management of properties from Sareb that had previously belonged to Banco Gallego and Bankia. In total, 42,900 units with an original value of €11,500 million, although Sareb purchased them for €7,000 million. “We have completed the migration of the portfolio of assets that came from Ceiss and Banco Gallego; the migration of the properties from Bankia will be completed in May”, explains Montes.

To strengthen its autonomy, Solvia is expected to adopt a brand that differentiates it from Sabadell. In fact, at its regional headquarters in Barcelona, it already has a sign that does not include the letters “B” or “S” in the logo, which identify the bank.

Alicante

In parallel, Solvia has relocated some of its team to Alicante, where it has opened the registered headquarters of the property marketing platform. “In 2014, Solvia sold 16,200 units for €2,750 million. None of the banks sold as much as us”, highlights Montes.

In parallel to the sale of properties from the portfolio, Solvia’s other main business line is the direct development of newly built homes on land that it owns. “We have 1,400 homes under construction” – he says – “and we expect an annual production of one thousand newly-built homes”. According to the director, Solvia has already sold several entire developments. “The number of “off-plan” sales that we are recording is spectacular”, he notes.

Montes says that Solvia’s business is “strategic” for Sabadell, since it will allow the entity to harness the potential being offered by the change in the cycle of the Spanish real estate sector. “Instead of leaving it for someone else to do, we are willing to invest and work hard in this business to leverage the potential value of the real estate market”. He argues.

Solvia has also started to sell land, a market that was completely paralysed until now.

Original story: Expansión (by S. Saborit/S. Arancibia)

Translation: Carmel Drake

Bankia And BMN Both Put NPL Portfolios Up For Sale

27 March 2015 – Expansión

Divestments / Bankia and BMN are seeking to replicate the transaction completed by Catalunya Banc in 2014 on a smaller scale. The market expects a “boom” in these sales in 2015.

After two years divesting shareholdings and bad debts, Bankia considers that the time has come for it to transfer some of the non-performing mortgages that it deems to be unrecoverable. The entity led by José Ignacio Goirigolzarri has put a portfolio amounting to €1,300 million up for sale, of which more than €900 million relate to unpaid mortgages. BMN has also put a similar package of loans up for sale, amounting to €160 million, of which €52 million relate to mortgages.

Investors have received these operations with a great deal of anticipation, because since Catalunya Banc transferred a portfolio of problem mortgages amounting to €6,500 million to Blackstone last summer, no other entity had decided to follow suit.

After the step taken by Bankia and BMN, a number of entities are expected to join the band wagon and put some of their real estate loans to individuals up for sale.

Change of course

Until now, the bank had been reluctant to sell mortgages to opportunistic funds for reputational risk reasons. To avoid this, Bankia and BMN have decided to exclude loans relating to subsidised and social housing (from their portfolios). Moreover, sources in the financial sector explain that overseas funds may offer more alternatives for non-performing loans than the banks, since they purchase the loans at a discount and so can offer discounts themselves. These investors, just like the banks, must comply with the Code of Good Practice developed by the (Ministry of) Economy in 2012.

The sale launched by Bankia forms part of Project Wind, advised by KPMG . In total, the portfolio contains overdue loans amounting to €1,300 million, which are split into three sub-portfolios: mortgages; loans to SMEs and real estate developers, secured by properties, worth €180 million; and unsecured loans amounting to €210 million.

The mortgage portfolio comprises 4,300 loans, with an average value of €214,000. Most of the mortgages were granted to purchase property in Cataluña (32%), Madrid (25%) and Valencia (18%). Furthermore, 83% of the 4,300 non-performing loans are involved in judicial proceedings.

These types of transactions allow banks to remove non-performing assets from their balance sheets, release provisions and devote new resources to new more profitable activities.

Foreign funds will monitor this transaction very closely, especially those who have purchased a real estate platform in recent years: Cerberus (Haya Real Estate), Apollo (Altamira), Centerbridge (Aktua), TPG (Servihabitat), Blackstone (Catalunya Caixa Inmobiliaria) and Värde Partners y Kennedy Wilson (Aliseda). Having purchased the real estate management platforms in 2013, these investors are now keen to nurture (feed) them with their own assets, and whereby obtain profitability from their investments.

In addition to this transaction, Bankia has two other deals in the pipeline: the sale of hotel loans – Project Castle – for which it has received non-binding offers of between €200 million and €300 million; and the transfer of syndicated and bilateral loans amounting to €500 million – Project Commander – which Deloitte is advising.

On a smaller scale

In the meantime, BMN has put a similar portfolio up for sale to that offered by Bankia as part of Project Wind. It amounts to €160 million, of which one third are unpaid mortgages. The sale of this portfolio, known as Project Pampa, is being managed by N+1. Almost all of the 300 mortgages included in this portfolio are secured by properties in Cataluña.

BMN hopes to close the sale of its portfolio by the end of May. In the case of Bankia, the transfer process may last until the middle of the year.

Original story: Expansión (by Jorge Zuloaga)

Translation: Carmel Drake

Meridia Acquires 11 Office Buildings For €100M

27 March 2015 – Cinco Días

Meridia Capital has purchased eleven office buildings in Madrid and Barcelona from GE Capital Real Estate for €100 million. Together the buildings have a total surface area of 84,000 square metres.

Seven of the assets acquired are located in Barcelona and the other four are in Madrid; all of them are located in the main business areas of the two cities.

The portfolio acquired in Barcelona includes the Meridian building, an 18-floor office block measuring 24,000 square metres.

Specifically, the buildings in Madrid are located on Calle Alcalá, 518 and Calle Gobelas, 35-49, according to Cushman & Wakefield, the real estate consultant that has advised the sale, which was signed on Thursday.

The properties acquired in Barcelona are located in the 22@ district (on Joan d’Àustria, 39-47; Paseo Garcia Faria, 49-51; and Calle Josep Ferrater i Mora, 2-4), Avenida Rio de Janeiro, 56-66, Via Layetana, 4, Calle Girona, 2 and Calle Pare Rodés de Sabadell, 26.

In a statement, the CEO of the real estate company Meridia Capital, Juan Barba, highlighted that the transaction, the fourth signed by its fund “Ibérica Fondo Inmobiliario Meridia” in Spain represents “a significant step forward” because it “significantly” increases its exposure to the office segment.

For his part, the founder and CEO of Meridia Capital, Javier Faus (pictured above), reiterated the firm’s commitment to continue investing in the Spanish real estate sector, which he considers “offers very exciting opportunities”.

Original story: Cinco Días

Translation: Carmel Drake

Overseas Funds On The Hunt For Holiday Hotels

26 March 2015 – Expansión

Socimis (‘socidedades cotizadas de inversión inmobiliaria’ or listed real estate investment trusts) and the appetite of overseas investment funds are driving the professionalization of the hotel sector in Spain, to separate the ownership of properties from the management of establishments, in line with the Anglo-Saxon model.

That is one of the conclusions to come out of a conference held in Madrid yesterday about the evolution of the hotel sector over the last decade. The conference was organised by Magma Hospitality Consulting and the Intercontinental Hotels Group (IHG), the largest hotel group in the world by size.

Liquidity

“Socimis are an essential tool that Spain has needed for a long time, to provide liquidity to a portfolio of assets, respond to generational renewal and professionalize management”, said Luis Migual Martín, Investment Director at Azora.

This company launched a Socimi (Hispania), which formed an alliance with Barceló at the start of the year to create the first listed investment vehicle specialising in the hotel sector (Bay Hotels), which has assets of more than €420 million.

For his part, Alejandro Hernández Puértolas, CEO at HI Partners, the hotel fund driven by Solvia – Banco Sabadell’s real estate arm – added that “the Socimis could bring together assets in Spain amounting to €8,000 million”. In the USA, the REITS – equivalent to Socimis – that specialise in the hotel sector have (assets under management amounting) to more than €70,000 million.

Nevertheless, there is still room for improvement. For Martín “there needs to be a change to the current legislation to reflect the management model, which now falls outside of (the scope of) the Socimis”. Arturo Díaz, CEO of Business Development at Renta Corporación, added that “other instruments will be created besides the Socimis”.

In the case of international funds, the focus has shifted from the city to the beach. “Institutional investors are starting to get involved into the vacation segment. The main difficulty is obtaining a portfolio of assets, but the appetite is there”, said Díaz, who called for restraint when it comes to changing the use of office buildings and homes into hotels.

Original story: Expansión (by Y. Blanco)

Translation: Carmel Drake

Colonial Plans To Invest €300M In 2015 And Focus On Spain

26 March 2015 – Expansión

During 2015, the company plans to buy (properties) in Madrid and Barcelona, where “asset values have more potential (to increase)”.

Colonial has an annual budget of €300 million to purchase office buildings. The CEO of the real estate company, Pere Viñolas (pictured), explained yesterday that Colonial invested that amount in property in 2014, although the majority was spent in Paris, where it purchased a building for €230 million. In 2015, however, the company expects to allocate the majority of its budget to the acquisition of office buildings in Madrid and Barcelona.

According to Viñolas, “asset values have more potential (to increase)” in the Spanish real estate market than in Paris. Although, in his opinion, “the Spanish market is not as good as people think, but then the French market is not as bad as they say either”.

Investor pressure in Spain and the “abundance of money” does not mean that “there is a bubble”, according to Viñolas. “Colonial is not under any pressure to invest, and so we will avoid entering into any transactions that do not have rational criteria”, he said. Nor does the company want to deviate from its traditional business: investment in office buildings in Madrid, Barcelona and Paris, located on prime streets and with long-term profitability objectives. However, they will not only purchase prime assets, since the group wants to allocate 20% of its budget to the acquisition of buildings that need to be renovated, in order to increase their values through their refurbishment and by securing solvent tenants.

Viñolas was talking yesterday at a conference entitled Colonial, a successful transformation in the new financial environment, organised by PwC. He spoke about the massive return on investments in Spain and the new type of investor. For example, none of the traditional financial institutions feature in Colonial’s new liability structure. For this new phase, the real estate company has placed its debt in the hands of new players in the sector, such as a Singapore sovereign fund, Quebec pension funds and foreign insurance groups.

Change of cycle

Viñolas believes that it is too early to talk about a recovery in terms of rents in the office segment, but “it could happen this year or in 2016”, he said. For now, he added “companies that previously sought cheaper locations and shorter contracts, are now demanding better locations and longer-term contracts.

Original story: Expansión (by Marisa Anglés)

Translation: Carmel Drake

Blackstone Finalises Sale Of The Tucumán Building To Axia RE

26 March 2015 – El Confidencial

The Tucumán Building, located on the Glorieta de Mar de Cristal in Madrid measures 5,083 square metres. Until August 2013, when it was leased by Aegis Media, the asset was very “distressed”.

The talks are in their final phases. The fund Blackstone is finalising the sale of an office building measuring 5,000 square metres in Campo de las Naciones. The purchaser is the Socimi Axia Real Estate and the amount of the transaction is unknown. Blackstone is divesting the Tucumán Building, which it acquired from Sareb at the end of 2014 as part of the so-called Corona project, which also included the Delta Norte II and III office buildings, located to the north of Chamartín, and another office building in Montecarmelo, to the north of the capital. Three other properties also fell outside of that project, which were initially included in the portfolio of the “bad bank”, initially valued at €140 million.

It is not the first acquisition made by Axia Real Estate in Campo de las Naciones. In December 2013, five months after its stock market debut, the Socimi closed the purchase of a portfolio of buildings from Credit Suisse Asset Management for €180 million. The portfolio included the building at number 28 on Calle Ribera del Loira, in the business district of Campo de las Naciones in Madrid, as well as two other properties on Calle Vía de los Pobaldos, in the same area.

“The transaction will not be very relevant in terms of size, but it is very significant in several other respects. Firstly, the buyer is a Socimi, one of the most active investors in the market in the last year. This purchase would be clear signal that these companies are in ‘equity call’. That is, they are resorting to financing or may be considering capital increases to continue buying property”, explain financial sources.

Axia Real Estate raised €360 million through its IPO in July 2014. Since then, not only has it invested all of the funds it raised, it has also turned to financial institutions. In this way, for example, it financed the purchase of a portfolio of assets from Credit Suisse through a combination of own funds and bank financing.

Moreover, this future sale will involve the rotation of the first assets acquired from Sareb and “the fact that those who bought assets are selling them now, and obtaining a profit, sends a clear message to investors, that they can make money from assets purchased from the “bad bank””, explains one real estate source.

On the other hand, according to the experts consulted, this transaction is a clear symptom of the recovery in the Spanish real estate market, since investors have increased their scope beyond the prime area of Madrid. Campo de las Naciones is a fully consolidated business park where several transactions have been closed in recent months.

Besides Axia Real Estate, at the end of 2013, Lar España Real Estate closed the acquisition of the Egeo office building in Campo de las Naciones from the German company MEAG for €64.9 million.

The Tucumán Building, located on the Glorieta de Mar de Cristal has a surface area of 5,083 square meters. It was a very distressed asset until it was occupied by Aegis Media in August 2013. “The building was empty, with no tenants and located in an area that has nothing to do with the main business area of Madrid”, say real estate sources. “Now, however, the real estate situation has changed and the fact that the building has a tenant removes the risk of the property remaining vacant”.

Original story: El Confidencial (by Elena Sanz)

Translation: Carmel Drake

Amancio Ortega’s RE Jewels In The Heart Of Madrid & BCN

26 March 2015 – Expansión

The largest shareholder of Inditex has an extensive real estate portfolio that includes properties and retail stores on the two most desirable streets in both cities.

They are the most sought-after streets in Spain for any real estate investor. On the one hand, Paseo de Gracia, in Barcelona, the star shopping street in the Catalan capital. On the other hand, the Paseo de la Castellana, in Madrid, an object of desire for any investor and a prime office location. As such, both have piqued the interest of Amancio Ortega, who owns more than ten buildings on the two thoroughfares.

Through Pontegadea, the company that the founder and majority shareholder of Inditex channels his investments through after closing his Sicavs, Ortega has purchased six buildings on the Catalan avenue and another five on the Madrid street.

In the case of the Paseo de Gracia, the most recent acquisition was made last year when Ortega purchased an office building located at number 1 on the street, on the corner with the famous Plaza Cataluña, for €44 million. This space, which has been leased to Banesto until now, will be converted into an Iberostar Hotel. A few months earlier, he acquired the commercial premises in the same building for €80 million, which are leased to Apple (see picture above). That US multinational is not Ortega’s only illustrious tenant; others include Fnac, Baker & Mackenzie, Burberry and Google.

In March 2012, Pontegadea acquired another building also on the Paseo de Gracia. In that case, Ortega’s company paid Sacyr €53.5 million for the building located at number 56. Measuring more than 9,000 square metres, it is leased to the British textile manufacturer Burberry. The Inditex owner is also the landlord of the building at number 93.

Madrid

The purchases made in the last decade have made Amancio Ortega one of the largest property owners on Madrid’s main thoroughfare: the Paseo de la Castellana. The owner of Zara joined the select club of property owners in that area in 2004, when he acquired number 92 (that same year he made a joint purchase with Metrópolis of an office building on the Paseo de Gracia, 16, which was converted into luxury housing). On the Castellana, Ortega also owns number 35, which he acquired in 2005; and number 79, the former headquarters of Axa, which he renovated to create a new office building with a shopping area, now leased to Fnac and Habitat.

But, undoubtedly, the jewel in Ortega’s crown in Madrid was acquired at the end of 2011, when he signed an agreement with FCC to purchase the Torre Picasso. He paid €400 million for the skyscraper that sits in the heart of the city’s financial district, just a few metres from the Paseo de la Castellana – a record figure for a single building, second only to the €815 million that the then Caja Madrid invested in the Torre Foster.

Nevertheless, it was not the first time that Pontegadea had paid so much in a real estate transaction. At the end of 2007, Amancio Ortega paid €458 million to Santander for the acquisition of ten buildings located in several Spanish cities, which included Castellana, 24 and Paseo de Gracia, 5.

These two great Spanish streets are just an example of Ortega’s extensive property holdings, which also include buildings leased to Inditex companies, such as for example Serrano, 23, in Madrid, which is leased to Zara. In the last full financial year (2013), Pontegadea’s assets were valued at €4,519.5 million and they generated a profit of €93.3 million, compared with €70.5 million a year earlier.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake