2015: A Record Breaking Year For RE Investment

3 December 2015 – Expansión

Real estate investment in Spain will close 2015 at record breaking levels. According to the consultancy CBRE, the purchase of hotels such as the Ritz in Madrid, shopping centres such as Plenilunio and offices such as Torre Espacio, as well as operations such as the purchase of Testa, have driven up investment volumes in the sector to reach €12,250 million by 1 December. CBRE expects the sector to close the year with volumes of around €13,000 million, a figure never seen before in the Spanish market.

“2014 was a record year in terms of tertiary investment (non-residential assets). This recovery in the market saw investment volumes of more than €10,000 million, which equalled those seen in 2007 – the previous record-breaking year -. 2015 has not only seen a strengthening of this trend, it has also seen growth of 25%”, said Mikel Marco-Gardoqui, Head of Investment at CBRE España. “Moreover, it is worth noting that asset prices are now 30%-40% lower than they were in 2007”, adds Julián Labarra, Director of the real estate consultancy.

This record level has been boosted by the largest operation ever seen, namely the Socimi Merlin Properties’s purchase of the real estate company Testa for €1,800 million. Testa holds a portfolio of assets – mainly offices – worth more than €3,000 million. Nevertheless, even excluding that transaction, investment is growing at “an exponential rate”, with increases in the purchase of all types of assets. (…).

Offices, which continue to be investors’ preferred asset, have now reached an investment volume of €5,600 million, thanks to purchases such as Torre Espacio, by the Philippine businessman Andrew Tan for €558 million, and Castellana 89, by Corporación Financiera Alba for €144 million.

Currently, these properties in Spain offer investors minimum yields of between 3% and 3.75% in the case of well-located commercial premises and maximum yields of 6.5% in the case of specific logistics assets.

Hotels

Hotels, in particular, have experienced a significant boost this year. “In 2014, hotel investment volumes amounted to around €1,100 million and so far this year, that figure has already surpassed €1,900 million, which means that we expect to close the year with an investment volume of €2,000 million”, says Marco-Gardoqui.

The boost from investors has not only been felt in the purchase of non-residential assets, interest has also increased in the acquisition of land and property developments for joint promotion with local property developers. (…).

Looking ahead to next year, the experts at the consultancy firm expect that interest from the funds will continue. “We think that investment will amount to around €10,000 million in 2016, because although there will be fewer operations, prices will increase. Many funds are still raising funds, with specific amounts earmarked for Spain”, says Heriberto Terual, Director of Corporate Finance at CBRE.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Testa & International Funds Have Driven RE Inv’t In 2015

3 December 2015 – Expansión

According to the consultancy firm CBRE, investment in offices, commercial assets, hotels and logistics warehouses will amount to €13,000 million by the end of this year.

Real estate investment will close 2015 at record breaking levels. The arrival of international funds and the launch of the Socimis have driven the purchase of assets to levels exceeding even those seen at the height of the boom in 2007, and are expected to close the year with a total volume of €13,000 million. “2015 has not only seen a strengthening of the recovery that started in 2014, it has also seen growth of 25%, resulting in record levels (of investment)”, explains Mikel Marco-Gardoqui, Head of Investment at the real estate consultancy firm CBRE.

By type of asset, offices continue to be the preferred asset, but all of the sectors have experienced growth in 2015, according to the experts at CBRE. “All of the sectors, including offices and shopping centres, as well as hotels, have grown significantly this year and are now at record levels”, says Lola Martínez, Director of Market Analysis at CBRE.

By type of investor, 70% of the investment volumes have come from overseas investors, including those who have entered Spain by acquiring shares in Socimis.

Some the operations that have most boosted volumes include: the purchase of Testa by the Socimi Merlin Properties for €1,800 million, the acquisition of Torre Espacio by the Philippine businessman Andrew Tan for €558 million and the purchase of Gran Vía 32 by Amancio Ortega for €400 million.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

How Will Sareb Value 250,000 Homes In 3 Months?

2 December 2015 – Cinco Días

Value around 2,778 properties per day. Broadly speaking, that was the contemporary Herculean task that the Bank of Spain entrusted to Sareb when, after more than a year and a half of deliberations, it published legislation on 2 October to govern the accounts of the bad bank.

The new regulations gave the firm until the end of the year to re-appraise at least half of its portfolio – it must complete 100% of its re-appraisals by the end of next year – to value its assets at market prices.

The exercise involves the valuation of 250,000 properties, some of which are physically owned by Sareb and others, which serve as collateral for the problem loans that the bank inherited, in just three months. The company expects to complete this milestone by block booking the sector’s largest appraisal companies and taking advantage of a couple of valuable concessions to the rules.

The first, and perhaps most important, is that not all of the appraisals require an expert to actually visit the properties to perform the valuations in situ. These, known as ECO appraisals, are typically used when granting mortgages, and in this case are only compulsory for the valuation of Sareb’s assets worth more than €1 million.

Next, for completed residential properties, the bad bank may rely on statistical valuation models. The company is hoping to use this option whenever possible, according to sources close to the process, which will allow it to quickly re-appraise 43% of the value of its foreclosed real estate assets and 36% of its loans. In total, around 40% of the total value of the €45,000 million assets that it holds.

Finally, the regulations allow Sareb to develop its own methodological models to establish the price of very specific non-residential assets worth less than €1 million.

The option of avoiding thousands of visits and appraiser measurements in the field will allow Sareb, which finds itself in a race against the clock, to save precious time.

Extra time

Nevertheless, the race is a bit more relaxed than it might seem a priori. Although in theory, Sareb must comply with the obligation to re-appraise half of its portfolio before the end of 2015, in reality, it will be sufficient for the bad bank to request that the appraisals be completed before 31 December, even if some of them are not actually completed until January 2016.

In any case, the task must be completed before the company presents its results for the current year, given that it must recognise provisions in its income statement for the losses that it detects.

As a result, Sareb has commissioned almost all of the appraisal companies approved by the Bank of Spain that have coverage across the country and that invoice more than €1 million per year, in response to the mandate issued by the financial supervisor.

Beyond the small concessions described above, Sareb expects to achieve its objective thanks to the fact that it has already completed some of the work. On the one hand because its everyday commercial activity requires it to value all of the assets it puts up for sale, which has enabled it to accumulate a significant number of updated appraisals during the year.

On the other hand, given that the first draft of the accounting legislation was published a year and a half ago, Sareb’s team has been preparing itself for the consequences that it knew would arise when it was finally approved. In this way, the firm led by Jaime Echegoyen has created a cross-company working group to boost the rate of appraisals being performed and to make use of them to speed up its sales at the same time.

Original story: Cinco Días (by Juande Portillo)

Translation: Carmel Drake

The Socimi Zambal Debuts On MAB With 4.84% Rise

2 December 2015 – El Economista

The Socimi Zambal, owner of the ABC Serrano shopping centre, amongst other properties, has debuted on the Alternative Investment Market (‘Mercado Alternative Bursátil’ or MAB) with a 4.84% increase, after it recorded an initial price of €1.30/share, compared with the price it set to go public (€1.24).

Zambal, the eleventh real estate firm of its kind to debut on this market, is the owner of nine office and commercial buildings in Madrid and Barcelona.

Besides the ABC Serrano shopping complex, located in the centre of the capital, the firm is the landlord of Día, Unidad Editorial, BMW Ibérica, Enagás and Vodafone España, since it leases buildings in Madrid in which these companies have their respective corporate headquarters.

In the commercial sphere, Zambal is the owner of a property in Plaza de Cataluña in Barcelona, which El Corte Inglés occupies under a lease contract.

Zambal listed on the MAB under the ticker ‘YZBL’ and its shares were traded through a fixing system. At the first auction, held at 12:00h, the company sold 1,500 shares.

Original story: El Economista

Translation: Carmel Drake

Wanda Negotiates Purchase Of 75% Of Marina d’Or For €1,200M

2 December 2015 – Expansión

The Wanda group is holding negotiations to acquire 75% of the shares in the Spanish holiday complex Marina d’Or, located in Oropesa del Mar (Castellón), which is currently owned by the businessman Jesús Ger.

The purchase will amount to around 8,200 million Chinese Yuan (i.e. around €1,200 million), according to reports yesterday by Diario del Pueblo.

The newspaper reports in its digital edition that the founder and president of the group, Wang Jianlin, the richest man in China, has already visited the complex (which includes a golf course, a theme park, five hotels and a spa, amongst other buildings) together with other representatives from the company.

The official body of China’s Communist Party cites own sources for the basis of its information. When contacted by Efe, the Wanda group declined to make any comments on the subject for the time being.

Meanwhile, the Castellon group did not want to confirm or deny the talks and merely stated that it has been in touch with several Arab, Chinese and other investors over the last few months regarding their interest in its iconic project: Marina d’Or Golf, an urban development plan that was suspended several years ago. The group itself valued the project at €1,300 million, even though not a single brick has yet been laid.

In July, Jianlin revealed that his company would make at least three major overseas acquisitions over the next six months, after it expanded its entry into the sports sector this year with the purchase of Triathlon Corporation, the owner of events’ rights such as Ironman, and Infront, one of the largest sports rights companies in the world. (…).

Original story: Expansión

Translation: Carmel Drake

JP Morgan Declares That It Holds A 3% Stake In Realia

2 December 2015 – El Economista

JP Morgan has declared that it holds a 3.1% stake in the share capital of Realia, a percentage valued at €7 million on the basis of the current market price of the real estate company controlled by Carlos Slim.

In this way, the entity has become a shareholder of the company in which Slim holds a 25.10% stake and FCC, the construction group in which the Mexican businessman also holds a stake, holds another 36.8%.

JP Morgan holds a package of 9.55 million shares in Realia, and therefore on 25 November, it exceeded the 3% capital threshold in the firm that requires it to declare its stake, according to the registers of Spain’s National Securities Market Commission (CNMV).

The entity has taken this position in the real estate company after Carlos Slim took control of the firm through a public share acquisition (takeover) and the real estate company announced a capital increase with a view to strengthening its financial structure.

The capital increase will amount to €87 million, and Slim has already expressed his commitment to participate in the operation, whereby he will inject around €21 million.

With this operation, Realia seeks to strengthen its financial structure, as a preliminary step prior to the launch of the restructuring of the company’s debt, which amounts to €1,067 million, half of which matures next year, in June 2016.

The clean up of the real estate company constitutes one of the main objectives of the new majority shareholder, as stated in the prospectus for the takeover that he launched for the company.

Original story: El Economista

Translation: Carmel Drake

Investment In Commercial RE Exceeds Pre-Crisis Levels

1 December 2015 – El País

The real estate companies are dealing with the recovery in the sector by restructuring their portfolios in favour of commercial properties. During the first nine months of the year, according to the consultancy CBRE, investment in offices, hotels, shopping centres and industrial warehouses amounted to €10,791 million. That figure exceeds the total amount invested during the whole of 2014 and ranks above pre-crisis levels. Operations undertaken by listed real estate companies and Socimis amounted to €6,300 million, i.e. almost 60% of the total, when in 2014, they accounted for 36%.

The €10,791 million spent on commercial properties during the first three quarters of the year by the Socimis, real estate companies, investment funds and individuals overtakes the total investment recorded during 2007, the best year of the real estate bubble era. The Director of Capital Markets at CBRE, Mikel Marco-Gardoqui, says that by this point in the year, total investment will have exceeded €11,500 million. “This is going to be a record year, and we expect investors’ appetite to continue in 2016”, he says. But the sector also warns that the “aggressiveness” associated with certain purchases raises concern against “semi-bubbles” in certain assets.

Socimis accounted for 46% of total investment during this period, which has allowed them to continue increasing their portfolios. Merlin Properties, which acquired the real estate company Testa for €1,793 million, leads this group of companies dedicated to rental properties, with assets worth €5,800 million, followed by Hispania (€775 million), Axiare (€773.4 million) and Lar Real Estate (€594.9 million). The ten Socimis listed on the Alternative Investment Market (‘Mercado Alternativo Bursátil’ or MAB) own around €3,058 million assets between them.

Strategic plans

It is not just these companies, with their tax advantages, that are participating in the bids for assets. Real estate companies – both listed and unlisted – have participated in another 13% of operations. The seven largest real estate companies on the stock market hold a portfolio of commercial properties worth almost €16,000 million.

Colonial, with a portfolio worth €6,290 million, expects to invest €1,500 million between now and 2019 through the purchase of new buildings, whilst Renta Corporación will spend another €500 million on acquisitions over the next two years. (…).

The restructurings carried out and the plans announced have been applauded by the markets, which have rewarded the majority of these companies with an improvement in their share prices. During the year to date, the value of Renta Corporación has increased by 55%; Realia by 39%; Hispania by 25%; Colonial and Axia, by 18.7%; and Merlin by 17.6%.

Moreover, Socimis and real estate companies are mediating a large part of the overseas investment arriving into the sector. For example, the main shareholders of Colonial include the sovereign fund Qatar Investment Authority and the English millionaire Joseph Lewis; meanwhile, various overseas funds holds stakes in Merlin Properties, and George Soros and John Paulson are shareholders of Hispania.

According to Marco-Gardoqui at CBRE, a significant difference between the investment that arrived in 2007 and this year is that the majority of the volume associated with the bubble was achieved through debt; today the funds come from private capital, although the banks have started to open the financing tap for the sector. (…).

Original story: El Páis (by Lluís Pellicer)

Translation: Carmel Drake

Bankia Extends Property Campaign Until 31 Dec

1 December 2015 – Cinco Días

Bankia has added 1,300 homes to the discounted portfolio that it has put up for sale, as part of the “I deserve my own home” campaign, which contains 5,800 properties in total, with discounts of up to 40%. The entity has also extended the campaign’s term by one month to 31 December.

That is what Bankia explained in its blog, in which it said that following the strong interest shown in the campaign, launched at the end of September, it has decided to extend the term until the end of the year. The entity has already received more than 500 reservations as a direct result of the campaign.

The type of assets up for sale are all second-hand, but otherwise they are very diverse. They include urban and coastal homes, as well as those in large capital cities, commuter cities and small towns.

The majority of the assets are located in Cataluña (1,500); followed by Valencia (1,400), Castilla-La Mancha (1,000), the Canary Islands (900) and Andalucía (700).

The remaining assets are distributed across the other autonomous regions, according to Bankia, who reminded potential buyers that they may acquire properties through Bankia’s branch network, as well as through www.haya.es, the real estate portfolio of Haya Real Estate, the company responsible for selling the financial entity’s properties.

Moreover, Bankia is offering mortgages to those buyers in need of finance, with competitive terms depending on their relationship with the entity.

Bankia has explained that during the first nine months of the year, it sold 6,100 properties, which represented a 77% increase with respect to the same period last year.

It has generated revenues of €384 million from these sales.

Original story: Cinco Días

Translation: Carmel Drake