Month: July 2015

Urbas To Earn €250M From Sale Of 1,600 Homes Over 5 Years

29 July 2015 – El Economista

Urbas has launched a new business plan that forecasts the sale of 1,600 homes, located in 49 developments, over 5 years, through which it expects to generate turnover of €250 million and profits of more than €40 million.

The company has calculated this turnover volume on the basis of an average expected price of €167,000 per home, said the Urbas Grupo Financiero in a statement today. The company expects to begin selling the homes it owns in Spain during the third quarter of the year (…).

The company will also deal with more than 9 million square metres of land, commercial premises and buildings that it holds, most of which is located in the Corredor de Henares and Guadalajara.

Integration of assets

This represents a new stage for the company, which has spent the last year completing all of the regulatory processes and appraisals necessary following its absorption of the assets previously owned by Aldira Inversiones Inmobiliarias and Alza Residencial. The transaction has allowed Urbas to increase in size by a factor of 13 in the last year, whereby “gaining financial muscle and increasing its volume of assets, to become one of the medium-sized listed real estate companies on the market”.

With the final integration of the assets, approved by the General Shareholders’ Meeting on 10 July 2015, Urbas is now redirecting its own resources to positive figures, through a capital increase amounting to €384 million, which will result in a market capitalisation of approximately €600 million and a reduction in its debt ratio to 33%.

The General Shareholders’ Meeting also approved the new corporate regulations to update and improve its corporate governance. The company’s share capital has been divided into three basic packages of similar proportions, which are controlled by the groups Darivenia Markets, Quantium Venture and Alza Residencial.

The rest of the capital will continue to trade on the stock exchange, ensuring that the company has “a high volume of liquidity, which has made it one of the most active companies in terms of share sales on the Spanish stock exchange in recent years”.

Following the transformation of its financial structure, in line with the economic recovery, and given that none of its shareholders are financial institutions, the group hopes to leave the economic crisis behind and embark on a promising future, focused on the real estate sector and its listed status on the stock exchange.

Original story: El Economista

Translation: Carmel Drake

NH Cuts Its Losses By 59% To €17.9M In H1 2015

29 July 2015 – El Economista

The NH Hotel Group cut its losses by 59.2% during the first half of 2015 with respect to the same period in 2014, to €17.4 million, after recording positive results in the second quarter, according to its report to Spain’s National Securities Market Commission (CNMV) yesterday.

The hotel chain highlighted that its strong performance last year accelerated further during the second quarter, to generate a net profit of €11.8 million, compared with losses of €4.2 million one year ago.

These positive figures were achieved thanks to an improvement in the volume of activity and the initial results of the initiatives launched as part of the group’s five-year strategic plan. Since launching the plan, the group has completed the renovation of 27 hotels.

This situation allowed NH to generate income of €665.3 million in Q2, i.e. 8.3% more than in Q2 2014, including the sales of Grupo Royal, whose results have been consolidated with NH’s since 4 March 2015 (€643.9 million excluding them).

The company highlights the strong performance of its turnover in Spain and Italy, with increases of 7.6% and 10.3%, respectively, during the first half of the year. Similarly, it has retained control over its costs, which have grown by much less than revenues. As such EBITDA increased by 25.2% to €57.2 million, whilst recurring profits rose by 36.7% to €62.5 million (€60.3 million excluding Hoteles Royal). (…).

The company’s net consolidated debt amounted to €814.9 million at 30 June…having increased by €40.5 million with respect to the end of Q1. This increase is due mainly to investments in the repositioning and maintenance of its hotels, and a payment to the minority shareholders of Hoteles Royal.

Echenique’s departure

In addition to these results, the NH Hotel Group also announced that its non-executive President, Rodrigo Echenique, will step down within the next few months to focus on his new role at Banco Santander where he was appointed Chairmain for Spain on 30 June, and also serves as the entity’s fourth Vice-President. The change will take place once NH has found the right person to take over from him. (…).

Echenique’s departure comes despite the fact that his continuation in office was ratified very recently, specifically after the entity led by Ana Botín sold its stake in the hotel chain on 20 May. Echenique has served as the President of NH since November 2012, when he took over from Mariano Pérez Claver.

Original story: El Economista

Translation: Carmel Drake

Arcano Launches Its First RE Investment Fund

29 July 2015 – El Economista

Arcano, one of the most active players in the asset management sector (with private equity funds of funds and funds with loans for companies, with €3,000 million of managed or advised assets) has decided to launch a third business line: investment in all kinds of real estate assets.

According to José Luis del Río (pictured above), CEO of Arcano Real Estate, the first fund will have a budget of €200 million. “We hope that, a year from now, once we have completed the fund raising process, we will have more overseas investors than domestic. For our first partial close in July, we have secured commitments amounting to €50 million, of which three quarters have been pledged by Spanish players. We wanted to start by inviting local investors as we have been working with them for many years”.

Arcano has created an integrated team, comprising seven property management professionals, to evaluate its investments. They are looking to benefit from opportunities in a sector that is currently undergoing a strong recovery after eight years of falling prices.

Differentiation

“We want to differentiate ourselves from the large international funds that focus on securing the lowest possible prices, and from the socimis, which are paying over the odds in some cases as they seek to secure rental income to pay their shareholders. We want to add value and through that, build the return for the fund. We will not act in an opportunistic way”.

Between 50% and 70% of our investment will be focused on the residential market. From the development of land in good locations, in cities or on the coast, in conjunction with real estate developers, to the renovation of buildings. “Local developers will be our partners, not our competition”, explains Del Río, who has 25 years of experience in the sector, first as Head of Real Estate at AB Asesores, then at Morgan Stanley (which acquired AB) and subsequently at N+1, where he was the Director of Real Estate until 2011.

We will differentiate ourselves by entering operations that require investment and specialist management, such as the transformation of buildings to change their use, for example from a hotel to an office. “Provided these changes of use are already approved, we will not have to assume any urban planning risk”, says the Director.

In terms of regions, the team will focus primarily on Madrid and then on the coast, Bilbao and Sevilla for residential assets. For offices, it will look only at Madrid and maybe Barcelona; and for hotels and shopping centres, it will consider the whole country. Finally, for logistics assets, it will analyse Madrid, Barcelona, Zaragoza and Valencia. “We will be a very small and very RE-focused fund. And we will work quickly. We will close the first transactions before the end of the year, possibly in Madrid”. The average ticket will be between €5 million and €25 million.

Original story: El Economista (by Carlos Pizá)

Translation: Carmel Drake

Bankinter Expects House Prices To Rise In 2015 & 2016

29 July 2015 – Expansión

Bankinter expects average house prices to rise gradually in the short term, with increases of close to 2% this year and 4% in 2016, in select locations.

Price rises are a contributing factor to the recovery of the sector, which is also marked by an increase in the volume of house sales, according to the report.

The entity believes that the improvement in employment, lower financing costs and the increased attractiveness of housing as an investment compared with other types of property, will all act as catalysts for demand, which will grow at a moderate rate in the short term to exceed 400,000 homes in 2016.

Furthermore, although the current recovery cycle is not expected to generate a new “boom” in housing demand, it is creating the conditions for sales to increase during the course of this year to 380,000 homes and next year to 420,000 homes.

Bankinter considers that 50,000 new homes will be sold in 2015 and that this figure will increase to 70,000-80,000 new homes in 2016.

In this sense, the entity points out that the outlook for the sector is continuing to improve and that 2015 will be the second consecutive year to register an increase in house sales of almost 4%.

In this context, Bankinter considers that the era of price adjustments is now over and that 2015 will be the year of stabilisation, prior to future price increases. However, it does not expect that house construction will ever return to the peak levels seen in the years before the crisis.

The possible increase in demand in the residential real estate market next year will depend on the acceleration of economic growth, the conditions for accessing financing and high liquidity and the attractiveness of housing as a good investment.

On a positive note, the entity highlights the increasing volumes of investment in large asset portfolios for their subsequent rental and management, as well as the rise in average rental prices for offices and shopping centres – their future evolution depends not only on changes in town planning regulations, but also on political uncertainty, which is leading to the postponement of certain investment decisions.

In short, the real estate sector is offering attractive investment opportunities, says Bankinter, which considers that the best investment options involve the purchase of real estate assets in prime locations in large cities and tourist resorts, with a target net return of around 3% and a minimum investment period of 3 to 5 years.

Nevertheless, the behaviour of the sector will also depend on the decline in the population and the unemployment rate, which it forecasts will continue to exceed 19%.

Original story: Expansión

Translation: Carmel Drake

Carmena Halts The Sale Of 2,000+ EMVS Homes

29 July 2015 – Cinco Días

Manuela Carmena, the mayoress of Madrid has announced that the Town Hall of Madrid will not sell any of the 2,086 rented homes, owned by the EMVS (Municipal Company for Land and Housing or ‘Empresa Municipal de la Vivienda y Suelo’), to vulture funds and that it will put a stop to 70 planned eviction processes. Her statement came after a meeting on Tuesday with the “Yo no me voy” platform, supported by more than 220 residents in five of the affected buildings in the ‘Centro’ neighbourhood of the city.

The beneficiaries of the social housing rental properties owned by the EMVS across the city started to receive notifications and visits in 2012, informing them that their contracts would not be renewed. Previously that was something that had happened automatically, every two years, provided two requirements were fulfilled, in accordance with Decree 100/86: the household income must not exceed a certain level and the tenants must not own any property in the Community of Madrid. In total, 2,086 contracts of this type are currently in place across the city’s 21 districts.

The EMVS started proceedings against tenants who refused to leave their rented homes. “To date, there are 70 processes underway, but these families have now recovered their homes. No-one is going to be kicked out on the street. The Town Hall of Madrid is going to withdraw all of those processes. For us, the right to housing, as recognised by the Constitution, is fundamental”, said Carmena. The EMVS’s commitment extends to 2,086 homes. (…).

Manuela Carmena said that the Town Hall is now “making contact” with residents who are currently “confused” because they think that their social housing contracts are going to be terminated and that their homes are going to be sold. We will explain to them that the contract “is valid and that they will not lose their homes”.

The councillor has not denied the “immense distress” that these tenants have gone through, after finding out that they had to leave the homes they had lived in for more than 20 years. (…).

Original story: Cinco Días

Translation: Carmel Drake

Project Big Bang: Bankia Open To Offers For Its €4,200M Portfolio

29 July 2015 – Expansión

Big Bang. That is the name of the large operation that Bankia has launched to sell a huge portfolio of real estate assets, including foreclosed residential and commercial properties, whose gross value currently amounts to €4,200 million.

These are assets that were not transferred to Sareb back in their day because they did not fit in its perimeter.

After the summer, the entity led by José Ignacio Goirigolzarri will evaluate offers submitted by potential buyers to decide whether to go ahead with this project, which represents the largest single divestment project launched to date by the nationalised entity. Its successful completion would represent a definitive boost to the clean up of Bankia’s balance sheet. Blackstone, Lone Star and Apollo have all expressed interest in the portfolio.

“By September, we will have received clear expressions of interest”, revealed the CEO of Bankia, José Sevilla (pictured above), at a presentation to analysts of the results for the first half of the year, which showed an attributable profit of €556 million, up 11.5% on the same period last year. “Then we will decide whether the operation makes sense or not”, he added. (…)

Sources close to the operation state that the portfolio is flexible, in the sense that, it may be sold in one block or divided into several sub-portfolios based on asset type, to suit investors’ preferences.

After accounting for provisions, the net book value of the foreclosed portfolio amounts to €2,875 million. The majority of the assets, worth €2,122 million, were originally loans for house purchases, whilst those relating to real estate construction and development amount to €315 million – most related to finished buildings, but some also corresponds to land.

During the first half of 2015, the entity sold 4,135 properties, more than twice the volume sold in the same period last year (1,919), at discounts of between 30% to 35%. This may serve as a benchmark for the sales price that Bankia expects to obtain for the Big Bang portfolio. (…).

The act of managing the foreclosed assets represents a cost for the entity, whose objective is to use some of the funds it obtains from the sale to finance investments that boost its business, which is now focusing on granting credit to consumers and SMEs. (…).

In parallel, Bankia wants to accelerate the sale of its doubtful debt portfolios; and it expects to achieve the objective it has set of reducing the balance by €2,000 million in 2015. (…).

During H1 2015, the entity reduced its doubtful balances by €1,239 million, bringing the total down to €15,310 million and thus established a default rate of 12.2%, which represents a decrease of 0.7 p.p. since the end of 2014. Moreover, recoveries (€2,490 million) exceeded gross defaults (€1,720 million) during the six months to June.

Original story: Expansión (by Alicia Crespo)

Translation: Carmel Drake

Husa Emerges From Bankruptcy After €130M Reprieve

28 July 2015 – Expansión

Yesterday, Husa managed to secure the support of its two main creditors, Deutsche Bank and Banco Sabadell, for its proposed agreement to exit from the bankruptcy proceedings that it has been immersed in for the last year and a half.

The hotel chain owned by the former President of FC Barcelona, Joan Gaspart (pictured above), will surrender assets worth €80 million to the banks and others worth a further €25 million to the public administrations. A discount of more than 95% will be applied to its ordinary loans, which amount to more than €90 million.

Twelve companies filed for creditors bankruptcy in total, of which eight will go into liquidation, leaving an unpaid balance of €40 million, therefore, in total, the company will benefit from a “reprieve” of around €130 million.

Yesterday, at the creditors’ meeting for four of the group’s companies, Husa secured sufficient support for two of them: Hostelería Unida 2 and Jardines de Albia. Hostelería Unida is expected to also secure sufficient support (based on the agreements made yesterday and the support it expects to receive by post from the overseas financial institutions). A fourth company, Solsibu, is still waiting to secure sufficient support.

Creditors

Husa won the support of its two large creditors only: Deutsche Bank and Sabadell. The other creditors that participated in the meeting yesterday, such as the Social Security, the Tax Authorities and other suppliers of the group, all voted against the proposed agreement.

One of them, the company Denbolan, which operates in the temporary work sector, spoke at the meeting, stating that it would appeal against the proposed agreement. “It is regrettable that the law is designed in such a way so as to inflict the most harm on small creditors”, said its legal representative.

After the meeting, the President of the Husa Group, Joan Gaspart, said that he was “saddened by the gravity of the situation”, but also “grateful and hopeful about the future”.

The former President of Barça is hopeful that the support received yesterday will represent “a second chance” for Husa, which will work in collaboration with its new partner, Park Street. (…).

Original story: Expansión (by Marisa Anglés)

Translation: Carmel Drake

WPP Buys, Sells & Leases Back New HQ In Madrid

28 July 2015 – Expansión

The British group WPP has closed a simultaneous operation for the purchase, and subsequent sale & leaseback, of Telefónica’s former headquarters on Calle Ríos Rosas in Madrid.

The investment, including the purchase and subsequent renovation of the property, will amount to €150 million. Following the refurbishment, the communication and publicity company will occupy the building under a lease contract and locate its Spanish headquarters there.

According to the real estate consultancy firm, Knight Frank, this purchase is one of the largest office building transactions carried out for own use in the Spanish capital. The consultancy firm has advised the seller of the building, the asset division of Nozar, which is currently immersed in bankruptcy proceedings.

Simultaneously, the communication and publicity group has sold the building to a British fund manager through a sale & leaseback transaction, in such a way that the British firm will occupy the property as the tenant and the fund manager will be the landlord.

The building is located at number 26, Calle Ríos Rosas in Madrid and has a surface area of 36,000 m2. WPP’s objective is to unify its offices in Madrid. In total, 2,500 employees work in the city at various companies, including Ogilvy Group, Burson Marteller and Hill & Knowlton.

Original story: Expansión

Translation: Carmel Drake

RE Megaprojects Return To The Costa Del Sol

27 July 2015 – Málaga Hoy

The property market on the Costa del Sol is showing signs of recovery. After years of crisis and turmoil in the construction sector, domestic and international investors are putting their faith in the region once again as they undertake new developments and generate profits. In the last three months, three large million-euro initiatives have been launched in Estepona, Marbella and Mijas, together with others, on a smaller scale, along other parts of the coast.

In Estepona, the company Ikasa has announced that it will invest €205 million in the construction of 400 luxury homes in an urbanisation that will be called ‘Panoramia Estepona’. It will be built over eight years, in a series of phases that will depend on the behaviour of the market; work will begin on the first phase this summer. (…).

The second mega-project is in Marbella and will involve the injection of €150 million from one of the largest US investment funds, for the construction of 200 luxury homes next to the Santa Clara Golf urbanisation. The first of the four phases could be completed by the end of the year and will include the creation of 20 independent villas, each with its own exclusive design, styled under the supervision of six of the country’s leading architects and with prices that will range between €900,000 and €2.5 million. 70% of the units in this development have been sold in just one month. And this is just the first of several projects that the developer Urbania International is planning in the area. (…).

Finally, last Monday, the company Taylor Wimpey España announced that it will invest €21 million on the construction of 48 apartments and 55 terraced houses in La Cala Resort, in Mijas, over the next five years, mainly aimed at foreign customers. (…)

In the international real estate market, Marbella portrays an image of quality, exclusivity, privacy and security. It is not surprising that the most luxurious private urbanisation in Europe, La Zagaleta, ended 2014 with a record turnover of €40 million and a three-fold increase in its profits compared with the previous year. So much so that the stock of newly constructed properties on the site has now dried up, and so plans are afoot for the construction of six new villas in 2016, which will have prices of between €8 million and €15 million.

The Costa del Sol is a gold standard, but the experts insist that the local and provincial administration must be more efficient in their bureaucratic management to secure continued investment and ensure greater legal security. (…).

Who are the buyers of these luxury homes?

Most of the buyers are foreigners, but “they are no longer seeking out the bargain that they thought they were going to find in years gone by”, says Pía Arrieta Morales, Partner at the real estate company Diana Morales Properties – Knight Frank. (…)

Kristina Szekely, Director of the real estate company that bears her name says that clients with less cash to invest are mainly looking for apartments with a price tag of between €200,000 and €300,000, not far from the beach, but not necessarily within the Golden Mile. Whereas, those with more capital prefer residences of between 800m2 and 2,500 m2, with an average value of €2.5 million, located in the Golden Triangle, including in La Zagaleta. But customer preferences are also a question of culture. “Russian and Arabs look for large, light-filled spaces, whilst Scandinavians prefer quiet places with views that are not necessarily overlooking the sea”.

Ricardo Arranz, the President of the Andalucían Federation of Town Planners and Residential Tourism added that the three most important factors for buyers on the Costa del Sol at the moment are: the best climate in Europe, security and infrastructure. There is a special emphasis on the integration of foreign residents with the opening of 12 international schools with pupils from 42 different nationalities in the Golden Triangle alone. Arranz notes that more than 30,000 homes worth more than €1 million have been constructed and sold in this area and another 35,000 homes that are worth between €400,000 and €600,000. (…).

Original story: Málaga Hoy (by A. Recio and E. Moreno)

Translation: Carmel Drake

Sabadell To Release 800 New Homes Onto The Market

27 July 2015 – Expansión

The improved outlook regarding the performance of the Spanish economy is reflected in the real estate market, where prices are stabilising and even increasing in certain areas of Madrid and Barcelona. And the stocks of newly constructed homes are drying up in some towns, due to a lack of new developments in recent years.

Against this background, cranes are returning to the domestic landscape and banks are taking on a new role in the market for real estate development, as they aim to generate returns from the land and half-finished construction projects that they foreclosed in exchange for debt payments. And Sabadell is playing a very active role. It will release 800 homes onto the market over the coming months.

The bank led by Josep Oliu is currently developing eleven of its own real estate urbanisations, most of which are located in Barcelona, Andalucía and Levante, but also in País Vasco and Asturias. The construction work will be completed during the remainder of 2015 and 2016, and will culminate in the release of more than 400 homes – flats and houses – onto the market, over several stages, with some of the properties already being sold.

Beside these developments, which spread across the country and whose degree of completion ranges between 15% and 100%, three other new developments will be started after the summer in Madrid – in the towns of Colmenar Viejo and Alcalá de Henares – and Levante. Once finished, these urbanisations will contain approximately 400 homes.

During the first half of 2015, 46% of Sabadell’s property sales were made in cash, whilst 37% were financed by the bank and the remaining 17% were funded using loans from other entities. In fact, the Catalan bank is offering buyers both variable rate and fixed rate mortgages – at Euribor plus 1.6% and 2.9%, respectively.

The entity’s real estate and mortgage offer is in line with those of other banks such as Santander and BBVA, which are developing 600 different urbanisations at the moment, as well as with that of Sareb, which will release 1,200 homes onto the market during the remainder of 2015, in some of the 30 developments that it completed last year and the 42 that it currently has on-going.

Signs of recovery

After an intense and long-lasting period adjustment, both in terms of activity and prices following the burst of the real estate bubble, the sector is now showing clear signs of recovery, to the extent that foreign funds have also entered the sector for the development of homes. But, is there a risk of excess supply?

Residential development is likely to grow over the next few years, says Javier López Torres, the partner responsible for the real estate sector at KPMG in Spain. And there is still room for more new builds without any risk of a new real estate bubble, says an expert from Andbank, Rocío Ledesma. And Sabadell wants to maximise the opportunities in the market through its development company Solvia.

Solvia is dedicated not only to the development of urbanisations owned by the bank, it also works for third parties. It is a servicer with assets under management amounting to €28,000 million, and it offers services ranging from the management of loan portfolios, to the development of land, as well as the management and administration of assets. In fact, Sareb awarded its first asset management contract to Solvia.

Original story: Expansión (by Alicia Crespo)

Translation: Carmel Drake