The 4 Largest Socimis Will Specialise By Asset Type

31 January 2017 – Cinco Días

Hotels, logistics assets, offices, shopping centres. The four largest Socimis – Merlin, Hispania, Lar España and Axiare – are entering their third year of life, and as they do so, they are embarking upon a new phase of specialisation by type of asset – the aim is to make their management more effective and ensure that they remain attractive to large international funds. (…). 

Between them, Merlin, Hispania, Axiare and Lar España now own assets worth almost €14,000 million – they have created small empires out of nothing.

Hispania looks set to become one of the major stars of 2017 with a series of operations planned to strengthen its already high degree of specialisation in hotels. The Socimi, in which the magnate George Soros owns a 16% stake, has a portfolio worth €1,793 million (including its most recent purchases at their acquisition prices). 61% of the portfolio value relates to hotels and most are located in the Canary Islands (70%) and the Balearic Islands (16%).

The experts forecast that this company, managed by Azora and led by Concha Osácar, will put the majority of its offices and residential assets on the market, and at the same time, will continue to buy up hotels. (…). 

Meanwhile, Merlin has taken steps to divest its residential and hotel assets, transferring them to Testa and Foncière des Murs, respectively, and is continuing to expand its core portfolio with its recent purchase of the Torre Agbar office block in Barcelona for €142 million. The Socimi’s portfolio currently comprises offices (48%), shopping centres (18%) – Merlin is now one of the major players in this segment – retail premises (22%) and logistics assets (5%). Experts consider that the latter have enormous potential to generate higher returns for this Socimi.

Axiare, led by Luis López Herrera-Oria, has already focused heavily on offices, which account for 73% of its €1,300 million portfolio. It has enhanced its presence significantly in recent weeks through its acquisitions of the headquarters of PSA, Cuatrecasas, McKinsey and Vocento for €242 million in total.

The Socimi’s high decree of specialisation in offices has led Colonial to take advantage of the fund Perry Capital’s departure from its share capital to acquire 15% of the Socimi. Some in the sector view this move as a precursor to a possible takeover bid, but the Catalan real estate company has denied the claim repeatedly. (…). 

Finally, Lar, led by José Luis del Valle and Miguel Pereda, has managed to specialise mainly in shopping centres, which now account for 75% of its €1,201 million portfolio. With shareholders that include Pimco and Franklin Templeton, the company owns 17 assets including shopping centres, retail parks and hypermarkets.

In just three years, Lar España has risen up the ranks to become the third largest owner of shopping centres in Spain, behind Unibail and Merlin. (…).

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

The EBA Lobbies For The Creation Of A European Bad Bank

31 January 2017 – El Economista

On Monday, the European Banking Authority (EBA) urged the European Union (EU) authorities to establish an alternative investment fund to acquire delinquent loans from the European financial sector, with the aim of stimulating economic growth in the region.

In a speech in Luxembourg, the President of the EBA, Andrea Ernie, highlighted that tackling the high level of delinquent debt in the EU – which stands at approximately €1 billion – is an “urgent and viable” issue, according to Reuters.

In this sense, Enria indicated that EU banks may sell some of their non-performing loans to an EU “asset management” company.

Enria proposes assigning an agreed “real economic value” to the non-performing loans sold and for the investment fund that buys them to act as a “bad bank”, given that it would have the obligation to dispose of the assets within three years at their real economic value, rather than at market price.

“If that value is not achieved, the bank must bear the impact at the market price and a public recapitalization must be carried out with all the conditions that accompany the process”, said the President of the EBA.

In this regard, the Managing Director of the European Stability Mechanism (MEDE), Klaus Regling, welcomed the EBA’s initiative and added that the proposal does not involve sharing banking risks between member states, which is something that Germany has firmly opposed in recent years.

“It is likely that the public sector will have to play a role”, said Regling at the event, where he also said that the “bad bank” should aim to acquire up to €250,000 million of non-performing loans.

Original story: El Economista

Translation: Carmel Drake

Pontegadea: Global Political Uncertainty May Impact RE

30 January 2017 – Expansión

Speaking last Thursday (26 January), Roberto Cibeira, CEO at PontegadeaAmancio Ortega’s investment vehicle – highlighted the “significant uncertainty” that exists in the real estate sector regarding the UK’s exit from the European Union. “Depending on what Brexit looks like, the economy will evolve, along with the demand for space. Companies are being very cautious”, said the Director, who was participating in the Third Real Estate Meeting, organized by the IESE.

The UK is one of the top five most important countries for Pontegadea on the basis of turnover; it accounts for a significant proportion of the firm’s business. “London is London, it is always going to be there. We are hopeful and are waiting for opportunities to invest”, said Cibeira, who indicated that the company will continue to focus on the countries in which it already has a presence (Spain, USA, Canada, Mexico, France, UK, Italy, Portugal and South Korea), although growing in Asia “is also a possibility”.

Moreover, the Director said that Pontegadea’s debut on the stock market “goes without saying”, although he did not want to comment further and said that the real estate market in Spain is characterised by three features: “A shortage of supply, a lot of overseas investors and a great deal of competition”.

The Trump Administration

Pontegadea’s CEO was guarded in his comments regarding Donald Trump’s arrival at the White House. “If the country’s economy performs well, then it will be good for everyone. People are still waiting to find out about Trump’s economic policies. The decrease in taxes is good for companies operating in the US and is regarded as a good thing in the short term”, he said.

Regarding the real estate market in the country, the Director said that “it is beginning to explode. But that there has to be a limit to these rent hikes”. The words of Cibeira relate specifically to the rents for stores on Fifth Avenue in New York, where rental prices have risen to $5 million/year per 100 m2.

Original story: Expansión

Translation: Carmel Drake

Sabadell Still Struggling To Digest CAM’s RE

30 January 2017 – El Mundo

Real estate is continuing to weigh down heavily on Banco Sabadell’s balance sheet, above all due to the complications involved in digesting the enormous portfolio of properties that it inherited from CAM, most of which are located in the Community of Valencia. The entity is selling more properties than ever, its revenues have soared, the number of assets being sold exceeds the number of properties being foreclosed and the prices at which it is selling its real estate are continuing to rise, however, the overall impact of the initiative is still generating losses, albeit for the time being. Specifically, Sabadell’s real estate asset business unit lost €908.4 million in 2016, according to the Group’s annual results, which were presented in Barcelona on Friday.

Those losses already reflect the effect of the Asset Protection Scheme (EPA), which the entity relies on to cover 80% of the losses generated by CAM’s real estate portfolio.

The Catalan bank still holds €9,035 million in real estate assets on its balance sheet, which represents just 2% less than at the end of 2015. Most of those properties (land, buildings, homes etc) belong to the stock of loans that it inherited from CAM and are located in that former entity’s areas of operation, in other words, the Community of Valencia and Murcia. Of those €9,035 million real estate assets, €7,166 million stem from foreclosed assets and embargos of construction companies and property developers, which were unable to repay their loans, and of those €3,851 million corresponds to land. In other words, 42% of the entity’s stock is land, the least liquid asset.

Sabadell owns finished homes worth €1,377 million. Moreover, its properties from unpaid mortgages amount to €1,918 million.

Overall, the bank has managed to offset the mass entry of properties onto its balance sheet with an intensification of sales. For example, it closed 2016 with the entry of properties (homes, land, premises, etc) worth €384 million, whilst the sale and divestment of these assets amounted to €457 million. In other words, it is now selling more than it is taking on.

Solvia is working hard too

In addition, Solvia, the bank’s real estate subsidiary, which has its operations centre in Alicante, sold assets worth €1,557 million last year, up by 40% compared to the previous year, with 14,553 operations, i.e. 27% more. The entity said that “the reduction in the sales discount and the overall increase in prices are signs of the recovery”. Last year, Solvia relied on sales of large asset portfolios to institutional investors to improve its ratios. Not in vain, 22% of its sales are made to that kind of buyer. (…).

Original story: El Mundo (by F.D.G.)

Translation: Carmel Drake

Donpiso Will Open 50 New Offices In 2017

30 January 2017 – Expansión

The real estate broker Donpiso will open between 40 and 50 new offices this year, with the aim of strengthening its commercial network in the Spanish market. The company opened 30 new offices last year and brokered operations worth €375 million in total, up by 76% compared with the previous year (€213.4 million). In 2014, its brokered volumes amounted to €139.4 million. The company brokered 2,503 operations last year, almost twice as many as during the previous year.

Donpiso’s plans include having 120 offices in its network by the end of the year. Most of the new offices will be opened in the Community of Madrid, the Community of Valencia, País Vasco, Andalucía and the Canary Islands.

Last year, the most significant increase in terms of office numbers was seen in Cataluña, where the firm’s central headquarters are located.

The company’s expansion is based on a mixed model. Of the new offices opened in 2016, eight were owned offices and 22 were franchises. This year, the firm wants to maintain the same proportion, and whereby exert full control over c. 25% of its offices.

Donpiso, which recorded turnover of €7.5 million last year, will invest €2.5 million on its expansion plans, of which €500,000 will be allocated to opening its own offices and the remainder to its franchises. The company will recruit 120 workers during this process.

The company is also constructing 13 urban developments, all of which are in different phases of progress. Its developments are mainly located in Barcelona, as well as in towns in the Catalan capital’s metropolitan area, such as Badalona, Sabadell and Cornellà.

Recovery

The firm has enjoyed a progressive recovery since 2009, when the current Director General, Luis Pérez, acquired the Donpiso brand for €1 million.

The company, which was owned by Ferrovial until 2006 and by Habitat for the next three years, had a network of almost 400 offices across the Spanish market before the crisis hit.

Original story: Expansión (by E. Galián)

Translation: Carmel Drake

Testa To Approve Receipt Of Homes Worth €665M From Its Shareholder Banks

30 January 2017 – Expansión

The Socimi Testa Residencial, which is owned by Merlin and the shareholder banks of the former Metrovacesa, is holding an Extraordinary Shareholders’ Meeting today to approve the contribution of new homes to its portfolio by Santander, BBVA and Banco Popular. The homes have a combined value of €665.5 million.

Specifically, the operation will be structured as a capital increase through non-monetary contributions, with a nominal value of €52.6 million and an overall value (nominal value plus issue premium) of €665.5 million.

The operation, which was announced on 15 September 2016 by the President of the Socimi Merlin Properties, Ismael Clemente, means that Testa Residencial – which owns the Group’s rental homes following the merger with Metrovacesa – may double in size thanks to the contribution of homes that the shareholder banks are expected to make.

At the time, Clemente revealed that Santander could end up contributing 4,000 homes and BBVA may provide 1,500 homes to Testa Residencial, which was initially created with 4,700 homes, a pro-forma gross asset value of €980 million and a net asset value of €617 million.

By contributing more homes, the banks may increase their stakes in the company, to the detriment of Merlin. Merlin currently owns 68.76% of the share capital, whilst the remaining 31.24% is held by the former shareholders of Metrovacesa.

Moreover, Testa Residencial’s Extraordinary Shareholders’ Meeting will approve an increase in the company’s share capital through monetary contributions for an overall value (nominal value plus issue premium) of €322.4 million with preferential subscription rights. (…).

Regarding the debut of the Socimi Testa Residencial on the stock market this year, the Corporate Director General of Merlin Properties, Miguel Ollero, said that it will not happen this year and that there is no rush, although the entity does have an obligation to debut on the market within two years.

Original story: Expansión

Translation: Carmel Drake

Ibercaja Puts 1,000 Discounted Properties Up For Sale

30 January 2017 – Expansión

The real estate portal Casaktua has launched a commercial campaign to sell a portfolio of almost 1,000 properties owned by Ibercaja with average discounts of 10%. By autonomous region, most of the assets are located in Aragón, La Rioja, Castilla y León, Castilla-La Mancha, the Community of Valencia and Cataluña, which is where Ibercaja has the greatest presence.

By type of property, the portfolio includes homes with between one and four bedrooms, which have an average surface area of 160 m2 and an average price of €64,000, having decreased from €67,200.

In terms of the non-residential assets, the portfolio contains a wide range of garages, retail premises, warehouses and storerooms.

Casaktua and Ibercaja have launched promotions on other occasions. At the end of last year, they put 1,300 homes on the market.

Original story: Expansión

Translation: Carmel Drake

AEW Europe Opens Office In Madrid

30 January 2017 – Investment Europe

Property manager AEW Europe has opened an office in Madrid following its acquisition of four assets in Spain for €153m over the last couple of years.

AEW Europe has made these acquisitions for several core and value add funds and mandates. The real estate manager’s assets under management in Spain have reached €343m and the firm has set itself an AUM target of around €500m over the next few years.

AEW Europe has appointed Carsten Czarnetzki as Head of Spain. In this role, he will oversee the company’s investments and asset management in the country. He will retain his role of portfolio manager of the Europe Value Investors fund.

Based in Madrid, Czarnetzki will report to Russell Jewell, Head of Private Equity Funds at AEW Europe.

Original story: Investment Europe (by Adrien Paredes-Vanheule)

Edited by: Carmel Drake

Meridia Acquires Minority Stake In Andilana

30 January 2017 – Expansión

The private equity firm Meridia Capital has acquired a minority but significant stake in the restaurant group Andilana, which operates 25 restaurants in Cataluña and Madrid and five hotels in Barcelona, the Costa Brava and Madagascar.

The aim of the operation is to simplify Andilana’s ownership structure and support its growth plan, which involves new openings in the Spanish capital, as well as in other cities with tourist potential.

Andilana generates turnover of €40 million, employs 645 people and receives 2.5 million clients per year.

Original story: Expansión

Translation: Carmel Drake

PwC: Spain’s RE Sector Retains Appeal As World Uncertainty Intensifies

26 January 2017 – Cinco Días

According to the findings of the Real Estate Market Trends in Europe 2017 report, prepared by PwC and the Urban Land Institute, the real estate market is currently preparing itself to face a 2017 full of geopolitical uncertainties, just like it had to last year when Spain had an acting Government for more than 10 months. The RE report has been compiled on the basis of a survey of 781 of the main players operating in the sector.

In this way, the year that has just begun is probably full of more uncertainties across more countries than ever before (Brexit and up-coming elections in France, Germany and The Netherlands, as well as potential repercussions from the new policies of Donald Trump in the USA) and in the face of such situations, investors tend to react with caution.

In the real estate sector, experts forecast that the market will continue to evolve in a positive way because it will remain attractive thanks to the relationship that exists between risk and return. Within Europe, Spain stands out amongst the major markets thanks to its attractive prices and the potential it has across many segments, such as the hotel sector, residential segments (including halls of residence for students, nursing homes for the elderly and the health sector) and offices for shared services.

In this way, the experts that participated in the preparation of this study agreed that whilst the returns offered by the real estate sector in the main countries in Europe will grow at a slower rate because this business is starting to stabilise, Spain will continue to be one of the most attractive destinations.

In terms of the potential effect of Brexit, most investors agree that its impact is going to be limited to the British real estate sector and will not have a significant impact on property-related investments in other EU countries. What’s more, 76% of those surveyed said that, in their opinion, such investments will be maintained or may even increase. Nevertheless, the expectations in terms of returns from the real estate sector as a whole across Europe are more moderate this year following several years of extraordinary growth.

Moreover, 35% of those surveyed expect to receive lower returns on their assets over the next 12 months and 53% recognise that it will be very hard to improve upon the returns achieved last year. Another aspect described in this report is that the European market in general and the Spanish market in particular is characterised by a scarcity of prime or premium assets and the feeling is, according to 58% of those surveyed, that those assets that are available, are starting to become over-valued. In this environment, “the importance of asset management intensifies as it is the key element for managing risk and return”, explained Rafael Bou, Partner responsible for Real Estate at PwC. (…).

Looking ahead to the future, 91% of those surveyed said that technology “is going to change” the way we use real estate assets. The most important trends between now and 2030 relate to: the boom of the collaborative economy, robotisation, teleworking, self-driving cars and new buying habits.

According to the report, Berlin leads the ranking of European cities with the best investment prospects for the second year in a row. Madrid and Barcelona occupy 9th and 16th positions, respectively, given the “strong outlook for rents and the improvement in the country’s overall situation”.

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake