Month: August 2017

Spain’s Property Developers Accelerate Their Land Purchases

31 August 2017 – Expansión

Spain’s large real estate companies have launched ambitious investments plans with the aim of starting to build thousands of homes over the next few years, whereby benefitting from the upwards cycle that the housing market is currently enjoying.

The most active players include some of the new property developers led by investment funds such as Neinor Homes, Vía Célere and Aelca. These companies, the first of which is listed on the stock market and the latter two which have plans to make their stock market debuts within the next few months, have accelerated their land purchase plans in recent months, backed financially by their owner-shareholders and loans from the banks.

Such is the case of Neinor Homes. The property developer owned by Lone Star has invested €157.5 million so far in 2017 on the acquisition of various plots of land spread across locations such as Valencia, Málaga and Madrid. These purchases will allow it to build 1,750 homes, in addition to the around 4,000 units that it already has underway.

In the case of Vía Célere, acquired in February by Värde and five other funds, its land purchases so far in 2017 amount to €100 million, which has allowed it to increase its portfolio of land by 212,016 m2 to 2.7 million m2.

Another one of the companies that has invested a lot in land in recent months in Aelca. The company led by Värde and its founding partners, Javier Gómez and José Juan Martín, has spent €170 million so far in 2017 to increase its buildable portfolio by 362,000 m2. Following these purchases, it plans to build around 3,900 homes.

New leader

But the leader of this growth is Metrovacesa. The property developer led by Jorge Pérez de Leza has started a new phase this year, following the transfer of its rental assets to Merlin, with the ultimate aim of recovering its leading position in the sector, this time, focusing on the residential market. To this end, its main shareholders, Banco Santander and BBVA, have transferred it land worth €1,108 million, covering a buildable surface area of 3.1 million m2.

Metrovacesa’s plans for these plots, which have capacity for 24,000 homes, include the sale of some of the asset to competitors, which are eager to expand their portfolios. Currently, the property developer owned by Santander and BBVA is the second largest landowner in the country, with land spanning 6 million m2, exceeded only by Sareb.

Meanwhile, the ACR group (which has invested in some projects together with Allegra, the investment arm of Mario Losantos, the former owner of Riofisa) has purchased land worth €43 million, with a buildable surface area of 88,000 m2, where it plans to build 810 homes. (…).

Amenabar has a similar investment policy. The Basque real estate company, the current leader house building ranking in Spain, with more than 4,000 units underway, has acquired land covering more than 352,000 m2 this year, which will allow it to build another 2,976 homes. (…).

Another of the classic property developers, Quabit, has undertaken 13 operations involving buildable land in just two months, allowing it to incorporate almost 120,000 m2 into its portfolio. (…) The listed company will build 1,097 homes with a forecast revenue of €196 million.

Meanwhile, the Inbisa group has invested more than €80 million in the residential market over the last 18 months and plans to spend another €30 million before the end of the year.

Another fund that has made a significant commitment to the housing market in Spain in ASG. That firm, which also invests in commercial properties, has spent €200 million this year on the acquisition of 16 urban plots of land.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Property Developers Expect The Housing Sector To Normalise By 2019

31 August 2017 – El Mundo

Spain’s real estate developers estimate that this year will close with the construction of around 85,000 new homes and that the “normalisation” of the sector will happen at the beginning of 2019, when new home output will cover demand (between 120,000 and 130,000 units).

That is according to the General Secretary of the Spanish Association of Property Developers (APCE), Daniel Cuervo, who said that the data regarding the evolution of the real estate market is “reasonable” and in line with expectations, both in terms of transactions and prices.

According to the latest statistics from the College of Registrars, house prices in Spain rose by 4.4% during the second quarter of 2017 and 119,408 transactions were recorded (up by 10.7%). In a statement to Servimedia, Cuervo explained that this evolution is “what was expected”, and he added that 2017 would close with 500,000 house sales, mainly (between 80% and 85%) second-hand homes.

Although the weight of new build homes is lower than that of second-hand homes, the General Secretary of the APCE said that the evolution in terms of new builds is “positive” and that production will grow by around 15,000 properties this year, up from just over 60,000 in 2016 to around 85,000 in 2017.

In any case, Cuervo said that there is still a gap with respect to demand, given that the planned creation of new homes, estimated to amount to between 120,000 and 130,000 per year, exceeds production. Therefore, “there is still scope to continue building”.

The real estate world “has learnt its lesson”

The General Secretary of the trade association believes that the “normalisation” of the market, with similar levels of supply and demand, will be reached within two years, by the beginning of 2019.

Cuervo highlighted the need to achieve and maintain a “reasonable” output of housing, understood as a “sustainable” increase that may be “assumed” by demand and that “goes hand in hand with the growth in people’s wealth”.

In this sense, he says that the sector “has learnt its lesson” and is not planning to build homes that it cannot sell, and that the industry has to adjust to demand to “avoid generating stock that nobody wants”.

Original story: El Mundo

Translation: Carmel Drake

KKR & Cabot Compete To Acquire Hipoges

31 August 2017 – Voz Pópuli

KKR and Cabot Financial are competing in one of the processes that has generated the most excitement amongst overseas funds in recent months. The two Anglo-Saxon investors are the finalists in the bid to acquire Hipoges, a platform created at the end of 2008 by former directors of Lehman Brothers, the investment bank that went bankrupt in September of that year.

The platform is controlled by Cerberus, with a 40% stake, and by its CEO, Juan Francisco Vizcaíno, who owns 18.3%. It is not clear how much of the company is up for sale, although the various sources consulted by this newspaper explained that the initiative to launch the sales process has been taken by the directors. The final price of the transaction could amount to €25 million.

The bid is being led by Alantra as an advisor and funds such as Bain Capital have participated in it, in addition to Cabot and KKR.

Hipoges has a presence in four countries, although most of its business is concentrated in Spain. In total, it administers almost €8,000 million for 22 clients, above all overseas opportunistic funds and financial institutions.

Intense competition

The platform advises investors regarding the acquisition of portfolios and the subsequent management of the assets acquired. Hipoges is responsible for administrating debt, filing claims to recover it, going to court and in the event that a property is repossessed, managing and selling it. It also competes with the major real estate companies, such as Haya Real Estate, Altamira, Servihabitat, Aktua, Aliseda, Solvia and with other independent firms such as TDX, Finsolutia and Copernicus.

Of the €8,000 million that it administers, 72% are unpaid loans granted to property developers and mortgages. The remainder are loans to SMEs (14%), consumers (12%) and invoices (2%).

By entering this process, KKR wants to take another step forward in its real estate strategy in Spain. After purchasing a portfolio of mortgages from Abanca – formerly NCG Banco – the North American fund is negotiating the acquisition of a platform that will allow it to continue gaining experience in the property sector.

Meanwhile, Cabot is another of the foreign groups that is most committed to the purchase of banking assets. It arrived in Spain in 2015 with the acquisition of Gesif and is hoping to enter the real estate business with Hipoges.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Neinor Secures €150M In Funding To Accelerate Land Purchases

30 August 2017 – La Vanguardia

Neinor Homes has signed a financing agreement with JP Morgan for €150 million, funds that the company will use to accelerate its land purchases for the construction of homes, according to a statement issued yesterday by the listed real estate investment company (Socimi).

The loan is due to mature in two years and Neinor plans to repay it using cash generated by its ordinary business.

According to the same source, the new financing will allow the company to optimise its business plan because it can bring forward the land purchases initially forecast for 2018 to the second half of 2017, “whilst maintaining its conservative debt ratios”.

“With this operation, Neinor Homes is seeking to take advantage of the good times and great opportunities that currently exist in the Spanish residential market”, said the Socimi, which is currently holding advanced negotiations to close land purchases amounting to more than €100 million.

In its opinion, the new financing demonstrates the strength of the company and the confidence that the financial institutions have in its balance sheet and its execution capacity.

In the event that it uses up the entire financing line buying up land during the second half of the year, and then launches a significant proportion of those projects “successfully”, it may consider reviewing the targets set in its business plan for 2020.

In a statement published by the Socimi, Neinor Homes said that it continues to lead the residential development market in Spain, with the largest bank of high-quality buildable land, worth more than €1,300 million and spanning more than 1,250 million m2 across Madrid, Cataluña, Baleares, País Vasco, Andalucía and Valencia.

Original story: La Vanguardia

Translation: Carmel Drake

 

Sabadell Engages Lazard To Evaluate Future Of HI Partners

29 August 2017 – Expansión

Banco Sabadell is studying the best solution for its hotel manager HI Partners. To this end, the financial entity has engaged the investment bank Lazard to analyse the private sale of its subsidiary or to search for a shareholder to acquire a majority stake in the company, according to market sources.

In this way, Sabadell is opening a window of opportunity to those who may be interested in taking full or majority control of its hotel management company, whilst it continues, in parallel with the IPO of the same entity.

These two options will allow Sabadell to make cash on the one hand and undo its positions, taking advantage of the current investor appetite in the real estate sector and, specifically, the interest in hotel assets, and secondly, to find a partner to take a majority stake and whereby deconsolidate the business from its balance sheet.

The operation, known in the market as a dual-track deal, allows the company to launch a sale and the search for interested parties in parallel to and at the same time as it undertakes the stock market debut process.

In this way, Lazard’s commission is independent of the contract that HI Partners signed to evaluate the feasibility of listing the company on the stock market.

Opportunities

Sources at the bank consulted by Expansión have indicated that this represents a “very preliminary sounding out” of the various deconsolidation and value-generating options. (…).

In this sense, the CEO of Sabadell, Jaime Guardiola, said during the presentation of the bank’s most recent results that the vocation of the financial entity is not to remain as managers over the long term: “we want to exit and we have a very good opportunity ahead of us”, he explained.

HI Partners is led by Alejandro Hernández-Puértolas (pictured above centre), CEO of the company, who, together with Sergio Carrascosa (pictured above left) and Santiago Fisas (pictured above right), two other former executives of Reig Capital, comprise the management team.

The group was created in 2015 following the transfer of around twenty hotels by Banco Sabadell. The financial entity had foreclosed those assets during the crisis following the non-payment of debts. Moreover, HI Partners is responsible for managing the bank’s hotel debt.

IPO

To control these assets, the hotel investment and management arm of Banco Sabadell created two companies: one to hold the best hotels in the chain, HI Partners Holdco Value, and another containing smaller hotels in secondary locations, HI Partners Holdco Gestión Activa, with the intention of improving their management to then sell them on.

For the time being, Sabadell is not ruling out any of the options and is continuing to analyse the debut of its hotel management and investment subsidiary on the stock market.

Before the summer, the bank engaged the investment banks Citi, JPMorgan and Credit Suisse to sound out the market and analyse the feasibility of listing its hotel management subsidiary on the stock market (…).

In the event that the bank decides to debut the company on the stock market, the operation will focus on the company that controls the most strategic assets: 14 high-end hotels located in the main tourist areas and which, as at 30 June, had a combined appraisal value of €689 million, with more than 3,700 rooms in the portfolio.

Original story: Expansión (by R. Arroyo and J. Orihuel)

Translation: Carmel Drake

Carmila Secured 91 New Tenants During H1 2017

29 August 2017 – Expansión

Carmila, Carrefour’s real estate subsidiary, has closed the first half of the year having signed 213 commercial operations in Spain, according to a statement issued by the company.

Specifically, the company led by Sebastián Palacios signed 91 new rental operations during H1, corresponding to an increase in the gross leasable area of more than 10,000 m2.

In addition, Carmila signed 122 rental contract renewals with operators that decided to continue their agreements with the company, covering another approximately 10,000 m2 in terms of surface area.

By retail sector, the largest volume of space secured was recorded in the restaurant segment, with 13 new contracts. Specifically, brands such as Burger King, Gino’s, Lizarrán and La Tagliatella signed up to join Carmila’s centres.

That segment was followed by the fashion sector, with the signing of new contracts with brands such as Zara, Bershka and Free Base.

For the second half of the year, Carmila forecasts “very favourable” results, not only in terms of new contracts but also renewals.

In this sense, during the second half of the year, the company will launch the renewal of the rental contracts for eight shopping centres, including the Los Patios Shopping Centre in Málaga.

Carmila was constituted in April 2014 by Carrefour, which controls 42% of its capital, with the aim of obtaining value from the shopping centres located next to its hypermarkets. The other shares in the company are held by large institutional investors.

According to the latest published data, Carmila owns 70 assets in Spain worth €1,100 million.

Original story: Expansión (by R. Arroyo)

Translation: Carmel Drake

The Race To Buy Hotels On The Costa del Sol Intensifies

29 August 2017 – Málaga Hoy

More than 20 hotels along the Costa del Sol and in Málaga have changed hands in just three years. The exceptional data in the tourist sector and the lack of interest in other assets have converted hotel investment into a highly disputed prize. At the beginning of August, Internos Global Investors, a real estate investment fund founded in 2008 by Jos Short and Andrew Thornton, two Brits with prior experience in the real estate sector in the USA, confirmed the purchase of Vincci Posada del Patio, a five-star property located in the centre of Málaga, for €26.7 million. This is just one example of a phenomenon that seems unstoppable right now.

In July, the Hotel Príncipe Sol de Torremolinos changed hands for the second time in two years. The Meliá group sold it in 2015 to the US investment fund Starwood Capital. That operation formed part of a global agreement comprising seven hotel complexes in Spain. Nevertheless, the US firm held onto the property for just 24 months and sold it in July to the British fund London Regional Properties.

At the beginning of the year, Hispania Activos Inmobiliarios (….) acquired its third hotel in the province: namely, the NH Málaga, a complex for which it disbursed €23 million with the commitment of undertaking an extension amounting to an additional €18 million. In 2015, it acquired Vincci Málaga (€20 million) and in 2014, it purchased the four-star Hotel Guadalmina from the Moroccan businessman Judas Azuelos in an operation estimated to be worth €21.5 million.

(…) One of the Hispania’s rivals in the hotel market is HI Partners, created by Banco Sabadell in 2015 (…). That entity currently owns more than 30 establishments, of which three are located in Málaga. In 2015, it purchased the Hotel Silken Puerta Málaga, which has been renamed Sercotel Málaga (…). In 2016, it acquired Incosol (…) and at the end of last year, it bought the four-star Hotel Málaga Palacio from the AC Group (…).

In addition, at the end of 2016, the French fund Foncière des Régions spent more than €500 million on 19 hotel establishments that Merlin Properties owned in Spain, including the Tryp Alameda in Málaga. That operation was signed almost at the same time as the arrival of Activum SG Capital (….), which acquired the Marqués de Sonora building located on Calle Granada from the Azucarera Larios company, which it plans to convert into a luxury hotel with 82 rooms.

Moreover, Mazabi, an investment fund that manages the wealth of eight Spanish families, acquired the former Hotel Senator de Estepona at the end of 2015 (…).

Plenty of other groups have also expressed their interest in joining the ever-expanding list of investors with properties along the Costa del Sol, including the Mallorcan entity Logitravel, the hotel group Palia and the Catalan firm Estival Group (…).

Original story: Málaga Hoy

Translation: Carmel Drake

INE: Foreigners Account For 82% Of Overnight Stays In 5-Star Hotels

29 August 2017 – El Economista

Foreigners who visited Spain in July registered more than 1.9 million overnight stays in five-star hotels, representing 82% of the total number of nights sold in the most luxurious category of hotel accommodation.

According to data extracted by Servimedia from the Tourist Hotel Environment Survey from the National Institute of Statistics (INE), five-star hotels recorded the highest percentage of clients from overseas, exceeding the average for hotel accommodation as a whole, where foreign clients accounted for 67.2% of all rooms, by 15 percentage points.

In fact, 6.5% of the overnight stays by foreigners in Spanish hotels were registered in five-star hotels, a percentage that more than doubles the 2.8% recorded by domestic clients in high-end establishments.

Meanwhile, four-star hotels registered more activity in Spain by both overseas and domestic tourists. The presence of foreign clients amounted to 69.3%, with 14.6 million overnight stays, compared to 6.4 million overnight stays by domestic visitors.

This figure of overnight stays in four-star hotels accounted for 49.7% of all stays registered by overseas tourists in the country, compared to a percentage of 45.2% in the case of domestic tourists.

If we add together the overnight stays registered in the two highest categories, we see that 56.3% of the foreigners that visited Spain in July slept in four and five-star hotels, whilst in the case of Spaniards, that percentage amounted to 48.1%.

After four star hotels, the accommodation most used by foreigners and by local tourists alike were three-star hotels, which hosted 33.2% of overseas tourists and 28.8% of domestic visitors.

Specifically, international tourists registered 9.7 million overnight stays in three-star hotels in July, accounting for 70.2% of the total in that category, compared to 4.1 million domestic overnight stays.

In the remaining categories, 1.4 million overnight stays or 4.7% of the total number of stays by foreigners were in two-star hotels; 0.4 million or 1.5% were in 1-star hotels; 0.5 million or 1.9% were in three- and two-star hostels; and 0.6 million or 2.1% in one-star hostels.

Of these four categories, domestic clients accounted for a higher percentage of total stays than foreigners in the lowest three, whilst overseas tourists accounted for 52.2% of overnight stays in two-star hotels. Specifically, domestic clients accounted for 54.3% of stays in one-star hotels, 58% in three- and two-star hostels and 50.7% in one-star hostels.

Original story: El Economista

Translation: Carmel Drake

Värde Seeks Advisors For Aelca’s IPO

28 August 2017 – Expansión

The US fund, which has already hired an underwriter for the stock market debut of its other property developer, Vía Célere, has asked for proposals from investment banks and advisors to list the company Aelca on the stock market.

A new real estate company is getting ready for its stock market debut. After the successful IPO of Neinor Homes, the first property developer to debut on the stock market in Spain in almost a decade, several companies in the sector have placed their focus on the stock market.

The latest company to join the party is Aelca. The Madrilenian property developer, or more specifically, its majority shareholder, the US fund Värde Partners, has invited the main investment banks and advisory firms to submit their respective proposals to support the debut of the company on the stock market, according to sources in the sector.

Founded in 2012 by Javier Gómez (pictured above right) and José Juan Martín (pictured above left), Aelca owns a portfolio that is currently worth €650 million. In June 2016, Värde acquired 75% of the property developer from the construction group Avintia. The remaining stake is held by the two founding partners, who serve as the senior executives of the real estate company.

The first round of contact with the possible underwriters was made at the end of July, with the aim of the debut taking place in 2018.

Ahead of that, Värde wants to list another property developer on the stock market: Vía Célere, in which it holds a 51% stake. The US fund has already chosen Credit Suisse, Jefferies-Arcano and CaixaBank to lead that placement, which could materialise this year, whereby taking advantage of the high degree of interest that exists in investing in Spanish real estate.

Investment

Like in the case of Vía Célere, the US fund will try to grow Aelca as much as possible before its debut on the stock market, with the aim of achieving the maximum return. Värde paid €50 million for 75% of the company, an investment that it will easily recover through the placement.

In total, since acquiring its stake in Aelca’s share capital, Värde has spent €200 million on land purchases, according to its founders in an interview with Expansión in April.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Nine Projects Planned in Barcelona Will Increase Tourist Capacity

 

24 August 2017

Developers planning four hotels, three guesthouses, a hostel and a block of apartments have requested permits in peripheral areas, the only areas allowed by the Colau plan.

While still waiting to discover what impact the terrorist attack of the 17th will have on the tourism sector, Barcelona had attracted new hotel investments. The nine projects will provide 900 beds and the developments are planned in peripheral neighbourhoods, the only areas in which the tourist accommodation plan that came into effect at the beginning of 2017 permits new accommodations.

Since then, the City Council has received nine license applications for projects in these areas, which are necessarily less attractive, being far removed from the principal tourist areas. The municipality has concluded that the projects all comply with the new municipal regulations put in place by the current mayor, Ada Colau.

The projects include four hotels, three guesthouses, a block of tourist apartments and a hostel, as the deputy mayor of urbanism, Janet Sanz, told Expansión.

The exact location of the hotels has not yet been determined. The only specific details that the municipal government provided were that the projects will be in Sants-Montjuïc, Horta-Guinardó, Sant Andreu, Sarrià-Sant Gervasi and Nou Barris, which will receive a guesthouse.

The Barcelona City Council has not provided any further details to date, although industry sources have given additional information on some of these projects.

The hotel with the greatest number of rooms, 200, will have four stars and will be in the neighbourhood of La Marina, in the district of Sants-Montjuïc, next to the fairground of Gran Via, at 40 Calle Alts Forns.

Another hotel, which will have one star and 70 rooms, will be located at 250 Meridiana, in the Sant Andreu district, near the La Sagrera interchange.

The new tourist accommodation regulations came after a moratorium that was imposed by Ada Colau in July 2015, just after being elected mayor. The measure prevented further licensing of hotels throughout the city, something that will now only be allowed in peripheral neighbourhoods. However, there were 72 projects that managed to circumvent the new regulations, because they had already previously acquired a license or certificate. Of these 72 hotels, about thirty have been opened and are managed by chains such as H10, Núñez i Navarro, Princess and Accor.

The new regulation divides Barcelona into four zones. In the first, which covers the most central and tourist areas, a policy of “de-growth” has been established: not only will new licenses not be granted, but, if one establishment closes, it cannot be replaced by another.

Zone 2, a first belt around the centre, is subject to a policy of “maintenance”: that is, no new accommodations will be created, but if an establishment closes, another would be allowed to take its place.

The growth of hotel spaces, in a “contained” way, will only be permitted in Zone 3. Projects must also meet other requirements, such as being located on wide streets and not exceeding a certain density threshold. The municipality will ascertain whether each project complies with regulations and if this is the case, it guarantees that the processing of the application will go forward. In Zone 3, regulations that are specific to the historical centres of the old municipalities that were eventually incorporated into Barcelona must also be considered.

Finally, Zone 4 includes three developing neighbourhoods that will also have their own urban regulations. They are La Marina, the future AVE station in La Sagrera and its surroundings, and the Poblenou neighbourhood, where the 22@ district was launched 15 years ago.

The effects of the plan

The tourism sector has assessed the Colau plan from different points of view. Initially, it opposed the plan, although the Barcelona Hotel Association has since softened its position because one of the effects of the regulations is that existing hotels will have much less competition.

Juan Gallardo, of Bric Consulting, predicts that, if the city maintains its attractiveness as a tourist destination, the plan could imply “a price increase”, which would be added to the price increases that occurred because of the moratorium.

The new regulation has been the subject of a total of 17 contentious-administrative appeals in the courts, although only one of them is demanding compensation from the municipality. If rulings are declared that are contrary to the Colau plan, the city council could be forced to rectify the plan and elaborate new regulations. The Barcelona Hotel Association is the author of one of the appeals because it believes that the regulatory reforms would force hotels in the centre of Barcelona that undertake renovations to reduce the number of rooms, which would condemn them to decline and eventual “decadence”, Gallardo pointed out.

Original Story: ProOrbyt Expansion – David Casals

Translation: Richard Turner