Month: January 2016

Mazabi Acquires Hotel Madrid & Teatro Albéniz

29 January 2016 – El Confidencial

Knowing how to combine business with respect for our national heritage. That has been the key that has enabled Mazabi to acquire Hotel Madrid and the historical Teatro Albéniz, an asset that the Community of Madrid had decided to protect as a Property of National Interest (“Bien de Interés Patrimonial”or BIP) and which the family office has acquired from Neinor, after resolving the associated urban planning problems.

Last Friday marked the closure of the period for public claims that the regional Government, led by Cristina Cifuentes, had opened to declare the historical building a BIP. The proposal was undertaken to ensure the survival of the property and avoid its demolition, something that several citizens’ groups had been demanding for some time. Following that deadline, the last great uncertainty surrounding the building was lifted and that has paved the way for the definitive agreement between Mazabi and Neinor.

The real estate company, which is controlled by Lone Star, inherited both the hotel and the theatre from their former owner, Kutxabank, after it had previously foreclosed both assets. The company has been in exclusive negotiations with Mazabi for four months. To seal the deal, a solution for the Teatro Albéniz needed to be guaranteed, and that option was resolved on Friday, when the period for claims came to an end. Sources at the family office have confirmed the deal, but have declined to make any further comments.

Sources close to the transaction say that Mazabi’s plans now involve returning the two buildings to their former splendour, and leasing them in their entirety to a luxury hotel chain. The growing interest from these types of operators in locating themselves in the centre of Madrid will certainly play into the hands of the family office; and the development may include the renovation of a theatre annex as a means of allowing (the chosen hotel chain) to offer a differential value proposition.

The theatre’s future

In total, the operation involves a surface area of 13,000 m2, which have been assigned various uses. In the case of the Hotel Madrid, besides tourism, it has a 1,000 m2 retail outlet on Calle Carretas, the street that links Puerta del Sol with Calle Atocha. Meanwhile, the upper floors of Teatro Albéniz may be used for residential or hotel purposes, and the three underground floors, which were destroyed by fire five years ago, have a surface area of 2,000 m2 and may be used as a nightclub.

Given the level of protection announced by Cifuentes, the survival of the entire stage house is guaranteed, and the door is also opened to “all other uses that are compatible with the space and its layout, in other words, plays, shows, concerts, conventions…, in other words, all activities that need a stage and a public…” said the regional government in December.

Having acquired the two buildings, which share a plot of land that used to house the Royal Press in the 18th Century, Mazabi will now begin two years of construction work to completely refurbish them. Although the consideration paid has not been revealed, the valuation of these properties may reach between €70 million and €80 million, on the basis of market rents and once the restoration work has been completed, according to one real estate expert.

Both the hotel and theatre have been closed since 2008. The former was occupied by hundreds of squatters for a time, before the police evicted them at the end of 2011, just after the fire in the basement of the Teatro Albéniz. (…)

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

PwC: High-Quality Asset Shortage Boosts RE Development

29 January 2016 – Cinco Días

The abundance of capital and shortage of high-quality assets will drive real estate development in 2016, as well as boost investment in alternative sectors. Those are the findings of a report, Trends in the European Real Estate Market in 2016, prepared by PwC on the basis of 550 interviews with key players in the sector.

Capital will continue to force its way into the market, thanks to the sustained environment of low interest rates in Europe – and the consequent greater appeal of real estate investments versus the low returns on fixed income products and the volatility of the markets – the majority of the cash flows from outside Europe will come from Asia and America.

Nevertheless, there will continue to be a scarcity of high-quality assets, and those that are available will be overvalued, in almost every European market. In this context, property development is the best option for acquiring high-quality assets with good prospects in terms of returns.

The property development drive will be accompanied by an increase in activity in other segments – beyond the traditional commercial and office properties – such as health centres, hotels, student accommodation, data centres and logistics assets.

The document reflects the optimism of the funds, institutional investors, real estate companies and banks, although to a lesser extent than last year. Expectations are especially high in countries in Southern Europe, including Spain. Financing has completely disappeared from the list of (these players’) concerns about the sector.

Just like every year, the report analyses the main European cities and classifies them on the basis of their investment and development prospects. Madrid and Barcelona fair well. The Spanish capital maintains its position as the fourth most attractive city in Europe, behind Berlin, Hamburg and Dublin. Between October 2014 and September 2015, Madrid was the fifth most active market in Europe, during which time €5,000 million was invested in the city. Barcelona rises one place in the ranking – from thirteenth to twelfth.

Original story: Cinco Días (by Carlos Santana)

Translation: Carmel Drake

Fotocasa: Rental Prices Rose By 3.6% In 2015

29 January 2016 – Cinco Días

At the beginning of the economic crisis, rental housing became the preferred option for those who could not afford to buy a house, either due to personal circumstances or because of the credit lockdown. Those people were called tenants by obligation, but increasingly they have been joined by tenants of conviction, citizens who can actually afford to buy homes, but who instead choose to be tenants because of their reluctance to take on debt (a mortgage) with a 20-year (or more) term.

And as the short and medium term outlook has improved, the creation of employment has accelerated and financing has returned, a new group has joined two these two categories of tenants – namely, buy-to-let purchasers. There are even cases involving tenants as buyers (of other properties) – they are people who manage to save up enough money to buy a home, but who decide to let it out and continue as tenants themselves elsewhere. (…).

In addition, the figures are beginning to show that this market could be facing one of the best moments in its recent history. The internet portal Fotocasa.es has just published its annual report about the rental sector, in which it concludes that last year, the average price of homes for rent increased by 3.6%. That represents the first YoY increase since 2007 and the highest that year too, which is when the portal began compiling these statistics.

For the company’s managers, the increase in rents is the result of the explosion that the (rental) sector has experienced in recent years, as well as the change in mentality in favour of rental properties. “Moreover, the high returns that this market offers, up to 5% according to our data, have encouraged many investors to buy homes for the purpose of letting them out”, explains Beatriz Toribio, Head of Research at Fotocasa.es.

By autonomous region, only the Páis Vasco recorded a slight decrease in rental prices, of -0.3%. By contrast, last year, rents shot up by 10.7% in Cataluña, where much of the demand is concentrated.

Rental yields

Idealista has also just published a study, which shows that real estate investments, across all products, offered higher rates of return at the end of 2015 than they did a year before, with the exception of offices. (…). To calculate the average gross return on a rental home, Idealista divides the average sales price of homes, in m2, by the average rent requested by owners. In the residential sector, this calculation results in a gross yield of 5.5%, above the figure in 2014 (5.3%).

Similarly, the study analyses the returns generated by other products, such as retail outlets, which are currently the most profitable investments, with an average yield of 7.3%, followed by offices, at 6.6% (6.7% last year).

By contrast, garages were once again the assets that generated the lowest returns, at 4.4%; however this figure represents an improvement with respect to the return obtained a year before (3.6%). Once again, as is usual in this sector, returns vary significantly by region.

Llérida is the most profitable city in which to rent a house, since the average gross return for landlords there last year amounted to 7.9%. It was followed by Las Palmas (6,4%), Palma de Mallorca (6,2%), Alicante (6%) and Huelva (5,9%). Yields in Barcelona amounted to 5.4%, a tenth higher than the returns in Madrid (5.3%). Orense (3.4%), San Sebastían and La Coruña (both 3.6%) were the least profitable cities for leasing a home.

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

Ministry Of Development: Housing Permits Rose By 39% In 2015

29 January 2016 – Expansión

Permits for the construction of new homes are at a five-year high, but the figures are still tiny compared with their pre-crisis levels.

The number of permits requested for the construction of new homes soared by 39% last year, to around 48,600, according to official data published by the Ministry of Development for the 11 months to November.

In this way, requests for the construction of new homes recorded a second consecutive year of increases and reached a five-year high, not seen since 2011.

Between January and November, requests were made for 44,577 permits to construct homes, which represents an increase of 35% compared to the previous year.

If we assume that this rate of demand was maintained during the last month of the year (around 4,050 per month), then the total would have amounted to around 48,600 permits by year end.

Despite these figures reaching their highest levels for five years, they still fall a long way below the series maximum, recorded in 2006, just before the crisis when the sector was at the height of its boom and 865,561 permits were requested. To put this into context, the number of permits requested during the whole of last year was equivalent to the number requested in just one month in 2006.

During 2015, 69% of all permits requested related to the construction of new blocks of flats, with 33,900 units, representing a YoY increase of 45%.

The other permits requested last year related to single-family residences, with 14,700 requests in total, up by 27% compared with the previous year.

More renovations

Similarly, in 2015, the number of permits requested to renovate or restore homes increased by 14%, to reach 25,668.

By contrast, during the same period, the number of requests for home extensions decreased, albeit more moderately (by 3%), from 1,485 in 2014 to 1,428 in 2015.

Original story: Expansión

Translation: Carmel Drake

Anida Sells Office Building In Valencia To Family Office

29 January 2016 – Misoficinas.es

The real estate consultancy firms Catella and CBRE have advised a family office and Anida Inmobiliaria BBVA on the purchase and sale (respectively) of an office building on Calle Alfahuir, 45 in Valencia. This modern asset is located in one of the most dynamic business areas in the city. It is currently leased to several prestigious clients, including Fujitsu and Sage, amongst others.

The building has a total surface area of 8,000 m2, with a gross leasable area of 5,305 m2 spread over nine floors. It is well connected to the city centre by public transport (metro and bus).

According to Belén Díaz, Director of the Capital Markets Department at Catella, “this transaction reflects the shortage of products with attractive returns in the office markets in Madrid and Barcelona, which means that investors are now looking for opportunities in other locations, such as in Valencia, Bilbao, Sevilla and Málaga”.

According to Víctor Gregori, Director of Agency & Business Development at CBRE Valencia: “The real estate market in Valencia experienced a very positive year in 2015 and all indications are that 2016 will continue along the same path, with operations such as this one, involving domestic and international investors seeking attractive returns”.

Original story: Misoficinas.es

Translation: Carmel Drake

Axiare Acquires Office Building In Madrid For €13M

29 January 2016 – Misoficinas.es

Axiare Patrimonio has completed the purchase of a new office building in Madrid. As a result, its portfolio of assets under management in Madrid and Barcelona now contains 17 buildings with a total surface area of 558,000 m2. The company has invested €13 million on the purchase of the property, which has a leasable surface area of 5,640 m2.

This new asset is located in the M30/A2 business park in Madrid, which the company regards as a strategic location; it already owns five other office buildings there. Axiare Patrimonio expects to see a strong recovery in the area, which is where the new headquarters of Banco Popular is currently being constructed. Meanwhile, 190,000 m2 of Axiare’s office portfolio is located in very established areas, and 38% of those assets are situated in the CBDs and main business districts of Madrid and Barcelona.

The newly acquired property, located on Calle Josefa Valcárcel, number 24, houses the Spanish headquarters of a US multinational technology company; the building has a 90% occupancy rate. It is a stand-alone building, comprising seven floors, each with an average surface area of 700 m2 – the ground floor has a surface area of almost 1,500 m2 – and 90 parking spaces.

Barbori Real Estate has participated in the transaction as the coordinator of the sale. Meanwhile, Axiare Patrimonio has received technical advice from the consultancy firm Homu Project and legal counsel from the law firm Gómez-Acebo & Pombo.

“We have a very active investment policy, in line with our business strategy. We are strengthening our commitment to the office segment, in a district that we consider is strategic for the generation of greater value for our shareholders”, said Luis López de Herrera-Oria, the CEO of Axiare Patrimonio. According to Axiare Patrimonio’s business plan, its investment objectives include: building a portfolio of assets, with a special emphasis on the office segment in the CBDs and main business districts of Madrid and Barcelona; and maximising their value through active management, with the aim of positioning them as the best assets in their respective areas of influence.

Original story: Misoficinas.es

Translation: Carmel Drake

CBRE: Renovations & New Builds Will Drive Inv’t In 2016

The real estate sector is entering 2016 with optimism and is glimpsing a panorama of new opportunities, thanks to a boost from the property development and residential redevelopment segments, which are being reborn for the first time since the start of the crisis. That is according to the findings of CBRE’s Real Estate Barometer, prepared on the basis of the opinion of almost 100 directors (in the sector).

The study shows that the real estate sector will take off once again in 2016, driven by the recovery in rents in Madrid and Barcelona, the construction of new developments and the return of land as a sought-after asset. (…).

In terms of residential real estate development, 49% of the directors surveyed think that the segment for refurbishments is the one with the most opportunities. Nevertheless, the most interesting finding is that, for the first time since 2007, 40% of the directors surveyed point to new housing as a segment with significant potential, double the figure that thought the same a year ago.

Specifically, almost half of the directors surveyed believe that the number of new homes will amount to between 100,000 and 175,000 in 2016, compared with 40% in the previous survey, whilst an additional 20% expect that range to amount to between 175,000 and 250,000, compared with 15% a year ago. (…).

Prices have bottomed out

In terms of prices in the residential market, 83% of the directors surveyed think that prices have now bottomed out, compared with 46% last year. Of the remaining 17%, 38% forecast that prices will fall by less than 5% in 2016, whilst a similar percentage expect prices to drop by between 5% and 10%. Nevertheless, the responses certainly point to the two-speed evolution of the market, with localised, rather than generalised, increases in prices, primarily in Madrid, Barcelona and the Costa del Sol.

In the same way, the directors surveyed expect rental prices to rise. Specifically, 95% believe that rental prices will increase in centrally located offices, compared with 76% a year before. In the same way, 65% expect rental prices in the industrial and logistics segment to increase this year, compared with 31% a year ago. (…).

“2015 was undoubtedly a record year for real estate investment in Spain, with total investment amounting to almost €13,000 million. If we analyse the players behind these purchases, we see that the Socimis invested 42% of the total, but other domestic buyers, financial institutions and real estate companies that had been recapitalised also grew in importance”, says Lola Martínez-Brioso, Head of Research at CBRE.

Regarding the Socimis, 55% of the directors surveyed think that the growth of these companies on the stock market is sustainable, compared with 45% who think the opposite.

The study also reveals that institutional funds will lead the investment market in 2016. Specifically, 33% expect institutional investors to be the most active this year, followed by collective vehicles (30%) and real estate investors (28%). By contrast, only 4% think that vulture funds will be the most active players.

Offices

Meanwhile, offices will continue to be objects of desire. Thus, 42% of the directors surveyed will prioritise this segment, followed by 22% who plan to focus on the residential segment. Something similar is happening with the investment plans of those surveyed looking beyond Spain, since 35% say that offices will be their main objective abroad.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Slim Launches Voluntary Takeover For 100% Of Realia

28 January 2016 – Expansión

The Mexican multi-millionaire Carlos Slim has launched a takeover bid for 100% of the real estate company Realia, in which he already holds a 30.4% stake, at a price of €0.80 per share. The voluntary offer represents a premium of 17.6% with respect to the trading value yesterday, when the share price remained stable (at €0.68/share).

In March last year, after acquiring Bankia’s stake in the real estate company, the Mexican businessman, who is also the majority shareholder of FCC, in which he holds a 27.4% stake, launched a takeover for 100% of the real estate company Realia, at a price of €0.58 per share, for which the Socimi Hispania also made a bid. In turn, FCC holds a 36.9% stake in Realia.

On this occasion, Slim, through his company Inmobiliaria Carso, has decided to formulate his offer on the understanding that a strategic plan will have to be prepared for the Realia group, in order to clean up the company and turn it into a business with a stable level of recurring income, that is balanced with its debt, according to a report submitted to Spain’s National Securities Market Commission (CNMV) yesterday.

On the other hand, by launching a voluntary takeover in this way, Slim avoids the need for the CNMV to set an equitable price, which in all probability could be higher. Carso has been advised by the law firm Ontier.

The Mexican businessman considers, in addition, that by formulating a takeover at an equitable price, a new window of liquidity will be opened for the minority shareholders, which will allow them to take a decision as to whether to continue in the company or sell their stakes. The operation is subject to approval by the CNMV.

On 8 February 2015, the Mexican multi-millionaire advised the CNMV that his stake in Realia exceeded 30%, following the subscription of shares under the framework of the capital increase, which the real estate company launched for €87 million.

At the time, he announced that he was going to request a waiver from the obligation to launch a takeover for 100% of the company, although in the end, he has decided to submit a voluntary takeover bid.

Nevertheless, and despite having exceeded the 30% stake in the company’s share capital, which requires the launch of a takeover for 100% of the company, Slim believes that the criteria for the aforementioned waiver apply in this case.

He says that he has not appointed the majority of the Board members or of the Executive Committee, he has not exercised any of the voting rights that apply to holders of stakes of more than 30% in Realia. Furthermore, none of the events established in Article 5 of the takeover law that would attribute additional voting rights in Realia to his company, have taken place, besides those already mentioned.

The Mexican businessman ranked in second place on the Forbes list of the richest people in the world.

Original story: Expansión (by M. Anglés)

Translation: Carmel Drake

Merlin Finances Logistics Assets With €68M Loan From ING

28 January 2016 – Expansión

The Socimi Merlin Properties has financed a portfolio of logistics assets through a loan from ING, amounting to €67.9 million. The loan contract has a five-year term and the debt represents around 55% of the asset value.

The seven distribution plants that Merlin has financed are located in logistics estates in areas of influence in Madrid, Valencia, Zaragoza and Vitoria. In total, they have a total leasable surface area of 211,291 m2.

It is not the first time that the largest Spanish Socimi has financed assets with the help of ING. Yesterday, the Director General of ING Wholesale Banking, Íñigo Churruca, said that “this operation is the third financing arrangement between the two companies”.

Merlin Properties, which joined the Ibex 35 in December, is the largest Spanish Socimi by asset volume. In total, it owns 990 properties, worth €5,807 million. It is also the largest Socimi in terms of logistics assets, with a total surface area under management of 1.3 million m2.

The Socimi, created by the management team of Magic Real Estate, with Ismael Clemente (pictured above, centre) at the helm as the President, signed its largest financing operation to date in December, when it secured a loan for €1,700 million from ten overseas financial entities, including ING.

That loan was used to pay off the debt owed by Testa, the real estate company purchased by the Socimi from Sacyr.

The remainder of Merlin Properties’s portfolio includes office buildings, bank branches, a shopping centre and a hotel, and its average occupancy rate amounts to around 94.5%.

Original story: Expansión (by M. Anglés)

Translation: Carmel Drake

Corpfin Capital Lists 2nd Investment Vehicle On MAB

28 January 2016 – Expansión

After debuting its first Socimi on the Alternative Investment Market (MAB) last September, Corpfin Capital is trying its luck on the Madrid stock exchange once again, just four months later, in the form of its second listed investment vehicle, Corpfin Capital Prime Retail III, which starred yesterday in the first ring of the bell in 2016.

The real estate arm of Corpfin Capital, which has so far launched four investment vehicles, is intending to create a fifth entity this year with a view to entering new businesses and expanding the mix of assets to include the residential, hotel, office and retail segments. “We are exploring other types of investments, but through another vehicle”, explained Javier Basagoiti, Managing Partner of Corpfin Capital Real Estate and President of the new Socimi.

Specifically, the two Socimis have a joint investment capacity of €110 million for 2016 and they have already spent €76 million. “The remaining €30 million has already been allocated to the purchase of assets, mostly in Madrid”, says Basagoiti, who rules out a capital increase for the time being.

The Director explained that he expects (the vehicle) to provide investors with an annual return of more than 15%, compared with the current yield of 7%.

Despite the sudden rise of the Socimis – Corpfin Capital Prime Retail III is the twelfth company of its kind to list on the MAB –, Basagoiti denies that a Socimi bubble is emerging, instead he regards the vehicles as investment “opportunities”. “A bubble would be created if the investment policy was no good and it was playing on the change in the (economic) cycle with risky investments”, he said. 90% of the company’s investors are domestic and 10% are from the United Arab Emirates. “We focus on small-time savers and private banking clients”, he says.

The real estate area is one of Corpfin Capital’s core business areas; its primary activity is the management of private equity funds.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake