Month: June 2015

US & Asians Investors Want To Construct More Homes In Spain

30 June 2015 – El Economista

There are 439,000 empty new homes in Spain. However, that figure is not deterring international investors, who are coming here to construct more homes. According to Roger Cooke, Senior Advisor in the Real Estate Transactions team at EY: “US and Asian investors are very interested in buying land in Spain for the development of homes”.

This is a significant development in the market. “In the 20 years that I have been working in the Spanish real estate sector, this is the first time that international investors have been interested in Spanish land for residential development”, explains Cooke, who remembers that before the crisis, foreign investors channelled funds into property development, but only in non-residential segments, whereas most of the investors in the residential sector were domestic.

Nowadays, many overseas investors are looking to build partnerships and work together with Spanish developers – under these arrangements, the investors inject the majority of the capital and the developers provide the local knowledge.

In fact, some of the large funds have already managed to reach such agreements in Spain, for example, the case of Lone Star, which will invest €1,000 million this year buying land through Neinor Homes. Together, they hope to launch ten developments and sell more than 2,000 homes.

Space in the market for everyone

With figures of this magnitude, it is easy to think that the country must be heading towards another real estate bubble. However, Cooke considers that there is sufficient demand for new housing developments in Spain. (…).  He says that there are currently two types of buyer, which reflect the two types of development: those where construction has not yet started; and those properties that were built before the crisis.

Moreover, on the one hand, there are buyers who look for the best price. They want to acquire properties constructed before the crisis, in peripheral and/or sparsely populated areas. On the other hand, there are more sophisticated, primarily international investors, which are more focused on new developments on the coast. These types of clients are willing to pay more money, but for homes that are built to their liking and have high standards of quality. (…).

For now, the residential market is recovering in cities such as Madrid and Barcelona, but Cooke warns that “we must look towards the coast, because that is where we see demand for holiday homes”.

In this segment, European buyers are the most active, although potential buyers from outside Europe are also arriving on the scene.

Asian investors have also seen the opportunity in this market and are starting to buy land to develop certain projects.

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake

Santander & BBVA Are Developing 600 RE Sites In Spain

30 June 2015 – Expansión

The crisis filled up financial institutions’ balance sheets with property, as banks foreclosed all kinds of real estate assets in exchange for the payment of debts. Now that the economic recovery in Spain is gaining strength, those same entities are taking the lead in the property development segment – completing half-built properties and constructing others from zero – in order to obtain returns on the land that they now own.

Together, Spain’s two largest banks, Santander and BBVA, are currently involved in 600 property development projects all over Spain. Their rates of completion vary between 5% and 100%. And those figures do not include projects that the banks are financing separately.

BBVA’s real estate arm, Anida, owns 293 developments, which once complete will contain 2,418 homes in total. The majority will be finished between now and the middle of 2016. The bank has taken charge of building 21 of these developments from scratch, using land that it had both foreclosed and acquired.

Meanwhile, Santander is constructing 300 developments. The entity chaired by Ana Botín, has a policy that it only begins construction work once 30% of the homes at a given site have been sold off-plan. In this way, it ensures that the locations are appropriate and have sufficient guaranteed demand.

In both cases, the potential purchaser of a home enjoys advantages when it comes to taking out a mortgage with the corresponding bank. For example, the banks are willing to offer financing for up to 100% of the appraisal value of homes in these cases, when they would normally offer a maximum of 80%.

With this strategy, the entities seek to accelerate a reduction in the losses generated by their real estate divisions. At Santander, those losses amounted to €95 million during Q1 2015, which represented a 35% decrease YoY and the lowest negative contribution recorded since the creation of the RE arm three yeas ago. The bank sold 2,500 real estate units, including homes, offices, garages and storerooms during the first quarter of the year.

At BBVA, the losses amounted to €154 million during the same period, which represented a YoY decrease of 37%. It sold 2,100 real estate units in total. The entity chaired by Francisco González expects that its property division will emerge from its loss-making position in around two years.

Original story: Expansión (by Alicia Crespo)

Translation: Carmel Drake

Quabit Reaches Agreement With Sareb To Restructure Its Debt

30 June 2015 – El Mundo

After several months of negotiations, Quabit Inmobiliaria and Sareb have reached an agreement to restructure the debt that the RE company owes the ‘bad bank’ – it represents 72% of the Quabit’s total financial debt and was due to mature in 2016.

The agreement has been ratified by the Boards of Directors of both companies, and is pending legal implementation, which is expected to take place in July.

Under the terms of this new agreement, Quabit commits to make an advanced payment of €35.6 million before the end of the year, which will allow it to free up assets with short term development potential, where there are plans to build around 1,000 homes. In parallel, a new calendar of maturities has been established, which extends until 2022.

Similarly, regarding the debt associated with the stock of finished products (53 homes), both entities have agreed to set new minimum sales prices, which will allow them to speed up the sale of the residential “stock” and repay the corresponding debt.

The signing of this agreement will provide Quabit Inmobiliaria with the possibility of realising the capital increase that it plans to propose at its General Shareholders’ Meeting today (30 June 2015), amounting to approximately €70 million.

With respect to the rest of the group’s debt, the payment of the majority (representing 24% of the total) is limited to the specific assets that guarantee it. For the remaining 4%, the entity will have to agree similar conditions to those just reached with Sareb.

“The signing of this agreement will allow us to handle the long-term future in an optimistic way. Also, it places us in a strong position to become a leading, active agent in the sector once more. In recent years, we have been working on stabilising our financial structure and now we have the opportunity to develop new investments and projects”, said Félix Abánades, Chairman of Quabit Inmobiliaria.

On the other hand, he added that “both entities are satisfied with the joint work performed and the agreement reached. Quabit has laid the foundations to secure its future, to actively manage and develop its own assets and to meet its debt payments.

Original story: El Mundo

Translation: Carmel Drake

YTD Apr 15: Construction Permits Increase By 30% YoY

30 June 2015 – Expansión

According to the latest data from the Ministry of Development, the number of permits granted by the colleges of technical architects for the construction of homes amounted to 15,178 during the first four months of the year, up by 29.9% on the same period in 2014 (11,680).

The rate of growth increased significantly in April, since during the first quarter of the year (from January to March), the number of permits increased by just 23% YoY.

In April, the number of permits granted increased to 4,497, which represents an increase of 50.8% with respect to the same month in 2014 and a return to growth after the slow down in March.

Permits started the year with growth of 37% in January, a percentage that increased to 57% in February.

Nevertheless, in March, the trend was broken and the number of permits decreased by 13.6% in YoY terms.

In inter-monthly terms, permits increased by 46.8% in April with respect to the previous month, which represents a change in the trend, since in March, the number had reduced by 27% with respect to February.

Original story: Expansión

Translation: Carmel Drake

Reyal Urbis’ Shareholders To Approve Asset For Debt Swap

30 June 2015 – Expansión

Reyal Urbis, the real estate company chaired by Rafael Santamaría (pictured above) will today ask its general shareholders’ meeting to authorise the exchange of real estate assets for debt, as proposed in the agreement that it presented to exit its creditor bankruptcy process.

Original story: Expansión

Translation: Carmel Drake

Gilinski Acquires Hotel Villa Magna For €190M

30 June 2015 – Expansión

The Colombian investor has acquired the exclusive Madrilenian hotel for €190 million and is now negotiating the contract for the management of the property with the international hotel chains Marriott and Starwood.

The Colombian businessman Jaime Gilinski (pictured above) has agreed the acquisition of the Hotel Villa Magna in Madrid for €190 million. The proeprty is currently owned by Sodim, a holding company controlled by the Portuguese Queiroz Pereira family. The deal is expected to be signed within the next few days (…).

The transaction represents the largest hotel purchase in recent times in Madrid. Last month, the Ritz Hotel was sold to the Saudí group Olayan, in a joint venture with the Mandarin Group for €130 million; and in May 2014, Katara Hospitality purchased the Intercontinental Hotel for €70 million. The consideration also comes close to the €200 million paid by Qatari Diar in 2013 for the W Hotel in Barcelona.

The Queiroz Pereira group purchased Hotel Villa Magna in 2001 from the Japanese company Shirayama for €80 million, and spent a further €50 million on the refurbishment of the property.

The deal, coordinated by the real estate consultancy JLL, has been closed in record time since the process for marketing the property officially began less than a month ago and reflects the interest that exists for real estate assets in Spain. Gilinski’s offer exceeds the property’s asking price (€180 million) by €10 million.

Once the deal has been signed, Gilinski will focus on reaching an agreement for the management of the property. After ruling out other options, he is currently negotiating with two candidates, namely, Marriott and Starwood.

The hotel is currently operated by the Queiroz family following the departure of the US hotel chain Hyatt in 2009, which managed the property for almost two decades.

The Hotel Villa Magna has 150 luxury rooms, including suites (measuring between 30m2 to 290m2), following the refurbishment work undertaken by the former owners, between 2007 and 2009.

Commitment to Spain

The new owner of Villa Magna arrived in Spain in 2013 after acquiring 5% of Banco Sabadell. Since then, he has not only increased his stake in the bank to become the largest shareholder in the Spanish entity, he has also evaluated opportunities in other sectors, such as real estate.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Villar Mir Puts ‘Torre Espacio’ On The Market For €700M

30 June 2015 – Expansión

A new mega real estate transaction is taking shape in Spain, involving ‘Torre Espacio’ – the 236 metre tall skyscraper that the Villar Mir Group owns in the Cuatro Torres Business Area, in Madrid.

The Villar Mir Group, owner of the OHL construction company and the Espacio real estate company, has just put one of the most iconic buildings in the capital up for sale. According to sources close to the process, the property, which contains 60,140 m2 of office space, has an asking price of between €650 million and €700 million.

Villar Mir’s decision to sell the building, through a process organised by the consultancy Aguirre Newman, comes barely a month after the company was awarded the plot of land adjoining the Cuatro Torres, where it will construct a new skyscraper.

The sale of Torre Espacio, which opened in 2007, will generate significant capital gains for the company owned by Juan Miguel Villar Mir, which invested €400 million to buy the site and construct the building. That amount includes the €187 million it paid to purchase the land, as well as all of the financial expenses incurred during the construction period.

Torre Espacio, which was the first of the four buildings in the complex to open, has an occupancy ratio of 85%. Its tenants include the Villar Mir Group, some of its subsidiaries (Fertiberia, Ferroatlántica and Espacio), as well as the embassies of the UK, Netherlands, Canada and Australia.

According to initial calculations, when the tower is fully leased, it will generate annual income of €28 million.

Original source: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

BBVA Gauges Investor Appetite For Two Big Portfolios

29 June 2015 – WSJ

Banco Bilbao Vizcaya Argentaria SA is sounding out investor appetite for two large portfolios of non-performing debt and real estate assets, according to sources briefed on the potential deals, as Spain’s economic recovery helps banks shed more of their bad loans.

BBVA, Spain’s No. 2 bank by market value, has spoken with investors in recent weeks to gauge their interest in the purchase of a portfolio that could contain around €1 billion worth of non-performing real estate loans and repossessed property assets and another portfolio that could contain between €500 million to €1 billion worth of nonperforming consumer, business and real estate loans.

BBVA has not sent investors “teasers”—documents that lay out details of an operation—because the parameters of the potential deals are still being designed, and the portfolios may not materialize, some of the sources said.

One source said that BBVA could formalize the sale of the two portfolios in September, and that the large size of the potential deals indicates that the portfolios could be partitioned and sold to various investors.

A spokesman for BBVA declined to comment.

Amid strong demand for Spanish real-estate assets, BBVA has hired KPMG LLP to oversee the sale of its loan-recovery unit. (…). A spokesman for KPMG also declined to comment.

Background

The potential sale by BBVA follows efforts by other Spanish lenders to sell real estate assets. They are encouraged by an economic growth rate—forecast by the Bank of Spain to reach 3.1% this year—that is outpacing that of other major eurozone countries.

Bankia SA has recently received non binding offers for €4.8 billion of property, including 38,545 residential units, 4,938 commercial units and 2,589 plots of land throughout Spain, according to a deal document sent to investors by Credit Suisse Group AG in April. Spain spent €22.4 billion in European Union funds to bail out Bankia in 2012. (…)

Spanish lender Banco de Sabadell SA sold its unpaid debt management and collection unit last July to Norwegian debt collection company Lindorff Group.

Major investors, such as Apollo Global Management LLC and TPG Capital Management, have stepped up their presence in Spain’s property market, as the economic recovery has helped to buoy real estate prices in some cities. (…).

Blackstone Group also bought the real estate servicer of bailed-out lender Catalunya Banc SA, and paid €3.6 billion to buy €6.4 billion of home loans issued by the bank.

Apollo, TPG, Cerberus Capital Management LP and Sabadell were selected in December by Spain’s “bad bank” to market and sell billions of property assets on its behalf, a contract that brings commissions and insight into the real-estate market.

Investors and analysts expect the real-estate servicers to consolidate in coming years as investment funds continue to seek high returns while they whittle down the amount of foreclosures and bad loans they oversee.

Original story: WSJ (by Jeannette Neumann)

Edited by: Carmel Drake

Project Gaudí: Oaktree Acquires Reduced Portfolio For €260M

25 June 2015 – CoStar Finance

Oaktree Capital Management has finalised the purchase of a reduced non-performing loan portfolio from FMS Wertmanagement (Project Gaudi) paying around €260m in cash, after a back bid sale of a Bilbao shopping centre to Grupo Lar and the removal of two loans prior to transaction close.

According to CoStar News, Grupo Lar, the Spanish developer and investor, has acquired the 1.35m sq ft Megapark Barakaldo shopping centre in Bilbao, in a back to back bid for just over €150 million.

Megapark Barakaldo was previously owned by Resolution Property, who acquired the retail centre for more than €200 million in January 2006, from Arcona Iberia and its joint venture partners, financed by Hypo Real Estate Bank International and the Royal Bank of Scotland. Resolution Property sold Megapark Barakaldo to another investor in 2012, which inherited the encumbered debt.

In addition, FMS Wertmanagement removed two loans from the original €735 million portfolio, contraining 18 NPL loans (Project Gaudi):

1) The first was a loan securing the circa 333,700 sq ft Plaza Éboli shopping centre in Pinto in the south of Madrid. HIG Capital recently acquired Plaza Éboli from Doughty Hanson, the UK private equity firm, for €30m, repaying the loan back to FMS Wertmanagement at par.

2) The second was a combined €125 millioin investment, development and VAT financing facility, granted to Bluespace, formerly known as Blue Self Storage, in July 2007. It was used to fund the acquisition of 17 self-storage properties – in Barcelona, Madrid and Valencia. FMS Wertmanagement has retained that non-performing loan.

These two removed loans are thought to account for an unpaid loan balance of around €100 million in aggregate. This reduces the original nominal value of Project Gaudi’s NPL portfolio (€735 million) to an unpaid balance of €635 million.

CoStar News understands that Oaktree paid €410m for the slightly slimmer Project Gaudi, reflecting a discount of 35.4%.

Furthermore, the immediate back bid purchase of Megapark Barakaldo by Grupo Lar for circa €150 millions implies the net price that Oaktree paid was €260 million, which was likely paid on an all-cash basis by Oaktree given the final size of the deal.

FMS Wertmanagement closed the sale of Project Gaudi with Oaktree two weeks ago. This was the German bad bank’s maiden NPL portfolio sale in Europe.

CoStar News understands that FMS Wertmanagement is considering two further country-focused loan portfolio sales for the bad bank’s Netherlands and Italian sub and non-performing loans. (…)

Original story: CoStar Finance (by James Wallace)

Edited by: Carmel Drake

Project Big Bang: Bankia Selects Contenders For Final Phase

26 June 2015 – Expansión

Bankia has launched the final phase of the sale of its remaining assets, worth €4,800 million. The process is expected to be completed in July. Blackstone, Apollo, Cerberus, Deutsche and Oaktree are amongst the investors that have been selected to proceed to the final round.

Bankia’s Project Big Bang is entering the final phase. In the last few days, the entity chaired by José Ignacio Goirigolzarri has announced the names of the investors that have passed the first round of non-binding offers. Around five funds have overcome the hurdle, including: Blackstone, Deutsche Bank, Apollo, Cerberus and Oaktree.

At stake is the largest sale of real estate assets – excluding debt operations – since the economic crisis hit: foreclosed residential assets, commercial premises and land worth €4,800 million.

From next week, the selected funds will deploy their real estate teams, and those of their consultants, to undertake a more accurate valuation of the reality. This is a highly complex project because Project Big Bang comprises 46,000 real estate assets scattered all over Spain. The funds and their advisors will select the broadest samples possible to try to obtain the most accurate valuation.

The investors are going to have to work against the clock, since the next date marked in the calendar is 31 July, when theoretically, they should submit their binding offers. According to financial sources, Bankia wants to settle the transaction as soon as possible so that it is not hampered by the political uncertainty that will only increase as the general election moves closer.

Dividing up the portfolio

Even so, the competitive auction is not expected to be finalised until after the summer, since following the receipt of the final offers, Bankia and its advisors – Credit Suisse and KPMG – will have to analyse them and prepare the documentation necessary to complete the sale.

According to various funds, all indications suggest that the Big Bang portfolio will end up being divided up, since Bankia and its advisors believe that they will maximise its value that way.

The foreclosed assets amounting to €4,800 million…are recorded on Bankia’s balance sheet at around €2,900 million. That would be the base price that Bankia would expect to receive, since a lower price would mean it would have to recognise new provisions.

The portfolio for sale mainly comprises residential assets (apartments, houses and garages) – 38,500 assets in total, covering 3.6 million square metres. Around 65% of the homes are located in Valencia, Cataluña and Madrid, and 5% of them are currently rented out. The residential portion of the portfolio is worth €3,300 million.

In addition, Bankia is selling 5,000 commercial assets (offices, shops, hotels, warehouses and industrial buildings) worth €1,100 million; and 2,600 plots of land – of which 65% may be developed – worth €400 million.

Of the candidates, it seems that Cerberus is the best positioned – it purchased Bankia Habitat – now Haya Real Estate – in 2013 and therefore, knows the portfolio first hand, according to financial sources.

Apollo is also expected to bid hard for the portfolio, through Altamira. After acquiring 85% of Santander’s real estate arm, Apollo has not yet acquired any significant asset portfolios to generate returns from its platform, although it was one of the asset managers chosen by Sareb to handle some of its portfolio.

Original story: Expansión (by Jorge Zuloaga)

Translation: Carmel Drake