Month: October 2015

Merlin Invests €153M In 5 “Express” Operations

2 October 2015 – Expansión

Following its purchase of Testa, the Socimi has purchased several logistics assets and 50% of a shopping centre in Madrid.

The Socimi Merlin Properties is continuing to grow its real estate portfolio. Yesterday, the company announced the completion of five new operations, with a total investment volume of €153.1 million.

The assets include five logistics warehouses located in Madrid and Guadalajara and 50% of the Arturo Soria Plaza shopping centre, also located in the capital. To obtain this stake in the Madrilenian property, Merlin has acquired the company Obraser, administered by Joaquín Molpeceres, for €34.8 million. The remaining 50% of the shopping centre, which has a surface area of 6,965 m2, is controlled by Acciona Inmobiliaria. The chain Sánchez Romero is the owner of the supermarket for which the property is renowned.

Logistics assets

In a second operation, Merlin has purchased three logistics warehouses located in Cabanillas del Campo (Guadalajara). The assets, which have a total gross leasable area (GLA) of more than 103,000 m2, are still under construction and are due for completion at the end of 2016. Merlin will pay €46.6 million for these warehouses.

Meanwhile, Merlin has also acquired two other warehouses, in the Gavilanes industrial estate, in Getafe, for €28.1 million. Those properties are also under construction. Finally, the Socimi has completed the purchase of a logistics platform in Los Olivos, also in Getafe, which is rented to Gefco. Merlin has paid €11 million for this platform, which has a surface area of 11,488 m2.

These are the first purchases that the Socimi, led by Ismael Clemente, has made since it reached an agreement with Sacyr to purchase its real estate subsidiary Testa for €1,793 million. To complete that acquisition, Merlin Properties launched a capital increase of €1,034 million.

Months earlier, in May, it completed another capital increase, amounting to €614 million, to raise finance to purchase new assets.

Prior to this operation, Merlin had a portfolio worth €5,616 million, including €3,202 million from Testa, in which it now holds a 77% stake.

Merlin’s shares closed at €10.65 per share on the stock exchange yesterday, taking its market capitalisation to €3,440.3 million.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake

Deloitte: House Prices Up By 9.5% In Madrid & 15% In BCN

1 October 2015 – Expansión

The signs of recovery in the Spanish real estate sector are strengthening. The first sign was the arrival of international funds interested in investing in real estate assets in Spain; and now the residential market is also beginning to show the first signs of recovery.

House prices in Spain increased in 2014 after six years of decreases. According to a Europe-wide study prepared by Deloitte, average house prices in Spain’s two main cities, Madrid and Barcelona, increased by 9.5% and 15%, respectively, between 2014 and 2013. “Prices in Spain are increasing at an annual rate of 10%. The Spanish market was last in the line, in terms of the recovery in Europe, but now that trend has been reversed” explains Javier García-Mateo, Partner at Deloitte.

These signs of recovery are clearer if we analyse the results for new builds in isolation. The product has been particularly badly hit in recent years due to the over-construction that took place during the boom. “The gap between new builds and second-hand homes has increased with respect to last year and this is a sign of recovery” says García-Mateo. “New build prices are beginning to rise compared with previous years when the difference with respect to second-hand homes was less as vendors had to reduce prices to find buyers”.

Despite this growth, house prices are still below the levels seen before the crisis. In this way, house prices in Spain increased by 4% between 2002 and 2014, compared with 7% in Germany and the USA, 50% in France and 52% in the UK, according to Deloitte. “It is the start of a change in the trend, but we are not going to see a return to the boom figures. We are seeing a recovery because prices decreased so significantly (during the crisis)”.

Ireland

Since 2007, a record year for the sector, house prices in Spain have decreased by 39%, compared with an increase of 18% in Germany. In Europe, the most similar market is Ireland, where house prices have fallen by 41% over the last seven years. “Ireland is one or two years ahead of Spain; as such, it is possible that over the next few years, we will see similar data to that being seen in Dublin this year, where the price per m2 has risen by 34%”, say the Partners at Deloitte. (…).

Construction

The increase in house prices will have an effect on the launch of new developments, which reached minimum levels of 35,000 units in recent years. “We think that the recovery in the construction of homes will take place in 2016, starting from very low levels. Between 2006 and 2007, 7,000,000 homes were constructed in Spain, the same figure as in Germany, which has 90 million inhabitants”, says García-Mateo.

The construction of new developments will be reactivated despite the fact that Spain still has a stock of around 535,000 unsold homes. According to Deloitte, the stock of homes decreased by 3.2% last year and has recorded a cumulative decrease of 18% since 2009, when there were 649,780 unsold homes. “There are still a lot of homes to be sold because the population is not growing”.

In this sense, Spain, together with Italy and Portugal, is the country with the highest volume of stock at the European level.

Most of Spain’s provinces are now showing signs of recovery

The Spanish real estate market is very heterogeneous and that is reflected in the location of the stock of more than 500,000 unsold homes in the country.

According to the study prepared by Deloitte, the recovery of the residential sector is happening at three speeds across the country. The recovery will be seen first in Madrid, the Catalan provinces, Valencia and the majority of Castilla y León; meanwhile Almería, Huelva, Teruel and Castellón will be the last regions to recover.

Only three provinces still have a stock that is more than 10% larger than in 2009: Guipúzcoa, Teruel and La Rioja, which the supply of unsold homes has increased by 38%, 26% and 10%, respectively; meanwhile ten provinces have reduced their stock by less than 10% in the last five years.

At the other end of the spectrum the provinces of Cantabria, Cáceres, Badajoz and Navarra have pretty much reduced their unsold stock levels by 100% over the last five years.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake

Tinsa: House Prices Fell By 0.8% In Q3 2015

1 October 2015 – Expansión

Since their peak at the height of the real estate boom in 2007, average house prices have recorded a cumulative decline of 41.2%.

The statistics from the appraisal company Tinsa for the third quarter of 2015, published today in its IMIE Local Markets report, reveal that the downwards trend in average house prices in Spain is coming to an end, evidenced by the fact that average prices recorded a YoY decrease of 0.8% during Q3 2015, compared with a decrease of 2.9% in Q2 2015.

According to this study, since the peaks of 2007, average house prices have recorded a cumulative decrease of 41.2%.

The statistics, which are based on Tinsa’s appraisals of finished homes (new and second hand) performed all over the country, reveal a range of variations, since even in the areas that were first to anticipate the changing trend, such as the cities of Madrid and Barcelona, differences are now being seen in the evolution of prices.

Specifically, average prices in the Catalan capital rose by 7.4% in Q3 2015 with respect to the same period a year before, whereas in the city of Madrid, prices remained stable, increasing by just 0.2% YoY.

Variations by regions

Moreover, the markets showing the first signs of recovery are coexisting alongside others that have been slower to adjust and where the downwards trend will continue for a while. The latter are weighed down by a significant over-supply (of homes) and depend heavily on very local demand, where the recovery in the employment market still needs to be established.

In the third quarter of the year, the islands joined the select group of regions with positive YoY growth; during the second quarter, only Cataluña and Madrid recorded price increases. However, in the third quarter, average house prices also increased in the Canary Islands (by 2.3% YoY) and the Balearic Islands (by 0.9%). In Cataluña, prices increased by 1.4% and in Madrid by 0.7%.

At the other end of the spectrum, prices continued to decrease in Murcia (-5.1%), País Vasco (-5.6%), Extremadura (-6%) and Galicia (-6.4%), which recorded the largest YoY reductions out of all of Spain’s provinces.

Nevertheless, Castilla-La Mancha is still the autonomous region that has recorded the greatest cumulative decrease in house prices since the peaks of 2007, with a -52.1% average reduction, followed by Cataluña (-49.6%) and Aragón (-49.3%).

Original story: Expansión

Translation: Carmel Drake

Opposition Parties Force Carmena To Reduce Business IBI

1 October 2015 – Expansión

The opposition parties in the Town Hall of Madrid (namely, the Partido Popular, PSOE and Ciudadanos) have put paid to the plans of the mayoress, Manuela Carmena, to increase the IBI rate for businesses and companies to 10%. In fact, they forced an agreement for it to be decreased by 2%. (Earlier in the week), all of the political parties, including Ahora Madrid, approved a 7% reduction in the residential IBI rate, and now, the opposition parties have forced a 2% decrease in the business rate.

The agreement by the plenary session represents an overall decrease of 100% for residential properties, as well as for the vast majority of non-residential properties. The 7% reduction in the property tax, will decrease the tax from its current rate of 0.548% to 0.51%.

Moreover, the majority – the result of the vote went against Ahora Madrid – approved a commitment to continue to reduce the rate of IBI for residential properties to 0.4%, the minimum rate set by law, “respecting the payment of expenses approved by the government, as well as sustainability”.

Meanwhile, the PP congratulated itself after some of the proposals it had presented to the plenary session were approved, including: zero taxes for entrepreneurs for the first two years (…).

In the same way, it indicated that large companies should not have to pay taxes for having “larger” buildings since “the rate of IBI is progressive and so it does not make sense for smaller clinics to pay a lower rate of IBI than public hospitals”.

Begoña Villacís, from Ciudadanos, said that the Town Hall should have a “single discourse” regarding the payment of debt, and the tourist tax. Moreover, she said that her party proposes a reduction in taxes and that the Town Hall should support the cadastral review plan.

The socialist Ransés Pérez Boga pointed out that on 22 July the plenary session approved a decrease in the rate of IBI, after it had been proposed by his party. He advocated a decrease in the rate of business IBI “to maintain the social progressive nature of the tax charge”. In his judgement, the reduction will allow companies to retain their employees.

Original story: Expansión (by Mercedes Serraller).

Translation: Carmel Drake

Saint Croix Socimi To Debut On The MARF

1 October 2015 – Expansión

The Socimi Sainx Croix, owned by the Colomer family, registered its first fixed income program yesterday, for up to €80 million on the Alternative Fixed Income Market (‘Mercado Alternativo de Renta Fija’ or MARF), a financing option launched by the Government in 2013 to facilitate SMEs’ access to capital markets. In this way, Saint Croix became the first Socimi to turn to this market in search of financing.

According to a statement by the BME yesterday, Saint Croix plans to allocate the funds that it will raise through this bond issue to the acquisition of new assets and the maintenance of existing assets in its current portfolio.

Renta 4 coordinated the management and structuring of the plan and will act as the underwriter for the bond issues that are carried out. Axesor Ratings has assigned the issuer a BBB rating with a stable outlook, in other words, it is classified it as investment grade. Ramón y Cajal Abogados was engaged to provide legal advice for the design and registration of the program.

Saint Croix Holding, which relocated its headquarters to Luxembourg from Spain in 2014, owns 150,000 m2 of rentable space, with a total value of €284 million as at 30 June 2015. Its assets include several hotels, located in Huelva and Madrid, as well as the headquarters of CLH. The Socimi’s owners, the Colomer family, also own the real estate company Pryconsa.

The Socimi has included an explicit warning to investors in the bond issue brochure, about the political risks in Spain, making a clear reference to Cataluña (see page 32).

MARF

This  is a new debut for the MARF. In total, according to data from the BME, thirteen companies have decided to issue bonds through this market. Copasa, Pikolin, Tecnocom and Barceló are a few of the companies that have already successfully launched operations on this market.

Original story: Expansión (by D.B., M.S. and R.R.)

Translation: Carmel Drake