Month: September 2015

Operación Chamartín: The Plot Thickens

30 September 2015 – El Confidencial

The small print of the agreements signed between the Government and the developers of Operación Chamartín, BBVA and San José, includes an important payment in kind that has gone undetected until now. A payment that will convert the Ministry of Development into one of the largest landowners of this development.

And so, not only will the company formerly known as Duch, now Distrito Castellana Norte, have to pay €1,240 million in cash to acquire the land (covering an area of almost 2 million m2) currently owned by Adif, it will also have to make a payment in kind, involving the transfer of urbanised land with buildability of 100,000 m2 for residential use.

This payment forms part of the principles of the agreement signed on 22 January between Duch and the public entities Adif, Renfe Operadora and Adif-Alta Velocidad, the owners of the land where the majority of Operación Chamartín is expected to be constructed and, therefore the main beneficiaries of this urban planning project.

Specifically, when this development, whose official sign off has so far been delayed for more than two decades, was reactivated at the beginning of the year, the economic agreement was structured around three pillars: the payment of a cash fee amounting to €984 million, the payment of interest linked to this expenditure over the next two decades (which takes the total amount of the cash payment to the aforementioned figure of €1,240 million), and the payment in kind in the form of plots of land.

But the public administrations’ role as landowner goes much further than that, given that the land that the Ministry of Development will take control of will be added to the plots (covering an area of almost 600,000 m2) that will correspond to the Town Hall of Madrid.

The Local Government, led by Manuela Carmena (who has the ultimate power to unblock this development) is set to become the second largest landowner, as a result of the sum of: the space (165,000 m2) it currently owns in the area; the area (150,000 m2) that houses the EMT’s garages in Fuencarral; and the land (300,000 m2) that corresponds to it from the transfer of 10% of the land from the developers, as required by legislation.

Sell or develop

At the current market price of €1,000 /m2, the value of the plots of land owned by the Town Hall could amount to around €600 million, whilst the land owned by Adif could be worth around €100 million.

In both cases, the public administrations have the ability to benefit from their roles as landowners to develop social housing on the Operación Chamartín site itself or to make profits to return to society.

And one of the main attacks launched against the developers of this site has been they are simply seeking to “strike it rich”, criticism that has been fuelled by the fact that the development is located in the north of the capital, an area traditionally regarded as very wealthy, and because the original plans include just 10% of social housing.

The reason why it looks like the people responsible for Distrito Castellana Norte are planning to construct so few VPO homes is partly because these calculations do not include the uses that the public administrations will make of all of their plots of land. Therefore, it is up to Carmena and Adif to increase the volume of social housing in this development.

Between the two of them, they own more than 20% of the total surface area (3.1 million m2) that makes up the Operación Chamartín site.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

BNP: RE Investment To Exceed €10,000M In 2015

30 September 2015 – Cinco Días

Real estate investment in Spain is reaching historical highs in 2015, exceeding even the levels recorded during the boom in the sector, which ended in 2007 and gave rise to the subsequent crisis. Those are the conclusions of a report about the market presented yesterday by BNP Paribas Real Estate, the real estate division of the French bank. It says that the total figure for the purchase of assets such as offices, shopping centres, hotels, residential properties (excluding those sold privately to individuals) and logistics assets will come close to €10,000 million this year, and will even reach €12,500 million if corporate operations, such as the purchase of Testa by the Socimi Merlin Properties, are included.

And it is precisely this “hyperactivity” by the Socimis, the new players in the market, who first appeared in 2014, that is proving key to this huge increase (in investment) from the minimum levels recorded in 2012, when total investment amounted to just €1,785 million. Investment this year is expected to exceed even the level recorded in 2007, the year before the crisis when €9,200 million was invested. “The Socimis are spending a lot. I do not think that they will be able to invest as much in 2016”, said Jesús Pérez, President of BNP Paribas.

The Socimis, which emerged in 2014 – including Merlin Properties, Axiare, Hispania and Lar España – have raised capital quickly, earning the trust of many large international investors, and they have used this capital to acquire assets. “The Socimis are a key driver behind this peak in investment as they have (successfully) channelled capital from overseas”, confirmed Ramiro Rodríguez, Head of Research at BNP Paribas Real Estate.

This year, the entity expects that these listed company will invest around €4,200 million between them (they spent €1,900 million in 2014). Large funds have backed the resurgence of the Spanish real estate market by investing in these companies, which are managed by specialist managers in the sector who have teams with lots of experience.

According to BNP’s calculations, during the year to August, total investment in our country amounted to €7,560 million. However, the entity expects that only €8,000 million will be invested in total in 2016, partly because the Socimis will be forced to rein in their spending.

The other major reason as to why funds and investors are interested in this sector is because there are still opportunities to be found. “Prices have decreased by 40% since 2008”, says Pérez, who highlights that the residential and land markets are also on the rise, partly driven by property developers “who are rising up from the ashes”.

The reactivation of the sector stems from economic recovery and employment, and so investors expect that the improvement will increase occupancy rates in offices, footfall in shopping centres and drive up logistical activity…and that that will, in turn, lead to increased income and higher rents for tenants. In fact, BNP Paribas thinks that the volume of office rental transactions will increase by 100,000 m2 in Madrid and by a further 84,000 m2 in Barcelona.

Nevertheless, the office availability rate is decreasing slowly, partly due to the long duration of the companies’ existing contracts, which prevent them from moving, according to these experts. However, the shortage of space is being seen above all in prime areas, i.e. in the best business areas of these two cities. This deficit – and the pressure from potential buyers – explains why prices have risen in these areas this year by 17% in Madrid and 15% in Barcelona.

Pérez is certain that the independence process has not deterred investors from investing in the market in the Catalan capital. “Investments have only been delayed in two or three specific cases”, he said.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Bankia Puts 4,500 Homes Up For Sale With Discounts Of 40%

30 September 2015 – Expansión

Bankia has put 4,500 homes up for sale in Spain with discounts of up to 40%. The campaign, which is being marketed under the slogan “I deserve my own home” (“Me merezco mi propia casa”) will run until 30 November.

The properties for sale are second-hand homes, located all over Spain. They include urban and coastal homes, as well as properties located in major capitals, commuter towns and small towns.

The properties may be acquired through Bankia’s branch network or online at www.haya.es, the real estate portal of Haya Real Estate. Haya is the real estate management service company responsible for selling the bank’s properties.

By autonomous region, Cataluña has the largest supply of properties in the portfolio, with 1,104 homes. It is followed by Castilla-La Mancha, with 977; the Canary Islands, with 873; Andalucía, with 675; Valencia, with 543; and Madrid, with 422.

For those purchasers requiring financing, Bankia will offer mortgages at competitive rates on the basis of their relationship with the entity. (…)

Original story: Expansión

Translation: Carmel Drake

Ministry of Development: Housing Permits Up By 27% YoY

30 September 2015 – El Economista

According to the latest information from the Ministry of Development, the number of permits granted by the college of technical architects for the construction of homes shot up by 27.5% during the first seven months of the year to 28,870, the best figure recorded during that period since 2011.

Housing permits started the year (2015) with an increase of 37% to 3,466 in January. In February, the YoY growth rate shot up to 57%, before decreasing in March by 13.5%. In April, the number of permits increased again by 50%, then by 22% in May, 48% in June and 12% in July.

This growth in the number of permits comes after a slight increase (0.003%) was recorded during 2014 to 34,873, the first rise in the construction sector indicator after seven years of decreases.

Despite the increase recorded during the 7 months to July, the total number of housing permits still falls well below the maximums registered in 2006, during the height of the boom in the real estate sector, when 496,071 permits were issued during the first seven months of the year, 94% more than this year.

New builds, renovations and extensions

The total number of permits granted for new builds, renovations and extensions during the seven months to July was 45,345, which represents an increase of 20.3% with respect to 2014.

By type of property, permits to construct blocks of housing increased by 31% (to 20,184 licences), whilst the number of permits for detached homes rose by 19% to 8,671.

In terms of surface area, the average size of detached homes was 202 m2, whilst the average size of flats was 112 m2.

The number of housing permits began to decrease in 2007, when it fell by 24.8%, since when the downwards trend continued to record its lowest ever annual figure last year.

Since the Ministry of Development began compiling these statistics in 1991, the number of permits reached its historical minimum in August last year, when just 1,585 permits were granted. The historical maximum was recorded in September 2006, with 126,753 permits granted.

Original story: El Economista

Translation: Carmel Drake

Segro Plc Acquires Its First Assets In Spain For €10.4M

30 September 2015 – Company Press Release

Segro Plc has completed its first acquisition in Spain, with the purchase of 5.6 hectares of industrial land near Barcelona for €10.4 million. It purchased the plot, which has scope for the development of logistics platforms and warehouses measuring up to 36,800 m2, through its company Asociación Logística Europea SEGRO from Domar, SL.

The plot is located in the industrial area of Martorelles, approximately 20 km northeast of Barcelona, near the A7 and AP7 highways, which lead to France and the national highway network. The site is currently home to a disused industrial building, which will be demolished to make way for a new development that will be equipped to the latest-generation, highest quality facilities.

David Alcázar, Director of SEGRO in Spain, said:

“Securing a significant development opportunity in a privileged location is a great first step for the expansion of our logistics operations in Spain. We are going to continue our search for opportunities to grow our presence in the main markets of Barcelona and Madrid, focusing on development, since our aim is to provide high quality storage space in these markets”.

Martorelles is a magnificent setting, as it provides a strategic link between Spain and the rest of the continent. It is currently used by companies such as Coca Cola for manufacturing and distribution, as well as by Mango, which is constructing a 460,000 m2 distribution centre 8km away.

SEGRO was advised by Estrada & Partners, the company appointed to market the logistics platform.

About SEGRO and SEGRO Asociación Logística Europea (“SELP”):

SEGRO UK Real Estate Investment Trust (REIT) is a market leader in the development and management of logistics platforms, storage facilities and data processing centres.

It owns and manages 5.7 million m2, with assets worth €6,000 million (as at 31 December 2014), serving 1,200 clients across a wide range of industrial sectors. Its properties are located on the outskirts of major conurbations and in key transport hubs in eight European countries, primarily France, Germany, Poland and UK.

SEGRO Asociación Logística Europea (“SELP”) is a JV company in which SEGRO owns a 50% stake. It was created in October 2013 and has €1,700 million in assets under management (as at 31 December 2014) in seven continental European countries. (…).

Estrada & Partners is a national real estate consultancy firm, specialising in the industrial and logistics sectors, as well as real estate investment. It renders the following services: brokerage, property management, asset valuations, consultancy and land development. It is currently marketing logistics parks comprising more than 200,000 m2 in Spain and it has three offices, in Madrid, Barcelona and Valencia.

Original story: Company Press Release

Translation: Carmel Drake

Sareb To Allocate c.1,000 More Homes To Social Housing Stock

29 September 2015 – Expansión

The financial sector is continuing to make grand gestures towards society’s most underprivileged groups. Barely a week after the banks decided to add 4,000 homes to the Social Housing Fund (‘Fondo Social de Viviendas’ or FSV) taking the total number of homes to 10,000, Sareb is considering increasing its social housing stock by 1,000 to 3,000.

According to sources consulted, this possible increase comes at a time when almost all of the 2,000 homes that were initially allocated to the stock have been assigned.

Before the summer, Sareb had transferred just over 1,000 homes to Cataluña, Aragón, Galicia and País Vasco. But since then, negotiations with other autonomous regions, such as the Balearic Islands, Canary Islands and Castilla y León, have accelerated and an agreement is now close to being signed. Sareb is also holding talks with Castilla-La Mancha, Madrid, Cantabria and Comunidad Valenciana.

In addition to granting homes to autonomous regions for social purposes, the company led by Jaime Echegoyen (pictured above) is beginning conversations with several town halls, such as those in Madrid and Barcelona, to offer up homes in cases of emergency. The homes in question could be used by the town halls in the event that, for example, a building collapses or refugees arrive.

Help for entrepreneurs

Sareb has recently added a new initiative to its existing portfolio, with the aim of helping entrepreneurs. The company intends to implement a plan to offer cheap rents on retail premises and offices for new entrepreneurs. The plan would involve spaces being granted to certain corporate projects, with the tenants being required to cover the maintenance costs of the properties only. Sareb currently holds 3,500 retail outlets and offices on its balance sheet.

The drive from the banks to support social initiatives comes at a time when the rise of political parties such as Podemos is calling into question the banks’ activities, with measures such as the tax on empty homes introduced in Cataluña.

Besides its social initiatives, Sareb is also currently focusing on completing the migration of its assets from their former managers – entities that transferred homes and loans – to the new administrators: the platforms of Haya Real Estate, Altamira, Solvia and Servihabitat. This situation has caused a slowdown in house sales through the retail channel, but Sareb may offset that through the sale of large portfolios to funds before the end of the year.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

Testa Becomes A Socimi & Puts Its Residential Portfolio Up For Sale

29 September 2015 – Expansión

The real estate company Testa is making progress with its integration with the Socimi Merlin Properties. Yesterday, the company held an extraordinary shareholders’ meeting to approve a change in the corporate structure of the real estate company into a listed real estate investment company (Socimi).

The decision comes after an agreement was made between Sacyr and Merlin in June to sell Testa for €1,793 million. Currently, the Socimi led by Ismael Clemente (pictured above) controls 77% of Testa’s capital and is expected to own 100% of the shares before the end of June 2016.

The Socimi-conversion will apply (retrospectively) from 1 January 2015, which means that Testa may benefit this year from the tax advantages afforded to this kind of company, although they have yet to be quantified.

At the meeting yesterday, the shareholders approved the appointment of Ismael Clemente as a Director of Testa; he currently also serves as the Chairman and CEO of Merlin Properties. In addition, Miguel Ollero, a Director of Merlin, was also appointed as an independent Director of Testa, following the resignation of Juan María Aguirre Gonzalo.

Following the entry of these two new Directors, Testa’s governing body comprises seven members, including the Chairman, Fernando Rodríguez Avial and the CEO, Fernando Lacadena.

Once the purchase of the whole company has been completed, the two companies will merge into a single Socimi. The new Merlin Properties will have assets worth around €5,000 million.

Having taken control of Testa, the Directors of Merlin have decided to divest the real estate company’s residential portfolio, which contains around 1,500 homes. They have engaged two consultancy firms to coordinate this process, which is expected to begin within two weeks.

Potential purchasers of the portfolio include other Socimis and investment funds.

In addition to the sale of this package of properties, which generates annual rental income of €10.5 million, Merlin has also announced that it will sell the portfolio of hotels currently owned by Testa, before the end of the year.

Merlin’s shares closed trading on the stock exchange yesterday at €10.72 per share, up 0.33%, taking its market capitalisation to €3,461.3 million, whilst the market capitalisation of Testa is €2,055.5 million.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Knightsbridge To Build A New Hall Of Residence In Madrid

29 September 2015 – Expansión

Knightsbridge, the British company specialising in the management of student halls, has bought a former printworks located in the centre of Madrid, with the aim of converting it into a student hall of residence.

Knightsbridge Student Housing has acquired the printwork building on la Cuesta de San Vicente, which used to house the old presses of the publishing company La Gaceta de Madrid, from Sucesores de Rivadeneira, and plans to convert it into a modern hall of residence with 350 bedrooms, as well as study rooms, a gym and leisure space. Knightsbridge made its first acquisition in Spain in 2002 with the purchase of the Galdos halls of residence for more than €20 milllion.

It is currently preparing for the opening of two halls of residence in Madrid, due in 2016, and is also constructing two other student halls in Alcalá de Henares and Barcelona.

Original story: Expansión

Translation: Carmel Drake

Axiare Buys Portfolio Of Madrid RE Assets For €88M

29 September 2015 – Te Interesa

The Socimi Axiare Patrimonio has acquired a real estate portfolio containing three office blocks and one retail park, located in Madrid, for a total consideration of €88 million.

One of the three office buildings, which have a combined gross leasable area (GLA) of 25,637 m2 and 757 parking spaces, is located in the business district of Arroyo de la Vega, whilst the other two are situated alongside the M30-A2 intersection, according to a statement made by the company yesterday.

Meanwhile, the retail park, known as Las Mercedes Open Park (pictured above), has a GLA of 21,111 m2 and 540 parking spaces. It is located next to the Plenilunio shopping centre on the A-2.

Original story: Te Interesa

Translation: Carmel Drake

Reyal Urbis To Appeal Judge’s Latest Ruling

28 September 2015 – El Economista

Reyal Urbis is just one step away from liquidation after Commercial Court Nº 6 in Madrid dismissed the real estate company’s proposed agreement to exit from bankruptcy, which it filed for more than two years ago.

On Friday, the company announced that it will lodge an appeal against the ruling made by the judge Francisco Javier Vaquer and will request the suspension of the effects arising from it, until the appeal has been settled.

The previous intervention by the judge took place on 6 March, when he asked Reyal Urbis, which has bankruptcy debt amounting to €4,236 million, to remedy some of the errors identified in its proposal. Specifically, the judge demanded a “necessary and essential objective justification” of the proposed discounts and settlements.

The real estate company, led by Rafael Santamaría (pictured above), proposed two payment alternatives for its primary creditors. Under the first, the loans would have a discount of 90% and the remaining 10% would be paid through the transfer of assets in lieu of payment. The batches would be awarded to the entities by drawing lots, a process that Reyal confirmed was conducted in the presence of a notary on 10 February. The second option for these loans consists of applying discounts of between 88% and 93%, on the basis of the syndicated loan tranches, and then deferring the loan repayments for 6 years, with a further 4 years of interest-only payments.

The judge also asked that the “drag effect” be eliminated, since Reyal was planning to extend the effects of the agreement to any dissident creditors, if approval was obtained from 75% of them. According to sources close to the process, this would mean that creditors with joint mortgages would lose their privileged position, since the current law does not provide for this effect, and so it would only be possible if the creditors voluntarily relinquished their rights.

Insolvent until 2023

According to the bill that the Economista has had access to, these matters have not been remedied by the company. Moreover, the judge ruled that the restructuring proposed by the real estate company is “clearly detrimental to the rights of the creditors” and does not guarantee the viability of Reyal. Thus, the real estate company will record “negative equity until the end of 2023 for amounts exceeding €90 million, and the plan does not set out how to eliminate this cause of company dissolution from a situation of insolvency”.

Original story: El Economista (by Alba Brualla and Lourdes Miyar)

Translation: Carmel Drake