Month: February 2018

Town Hall of Madrid Is Building 2,300 of the 4,000 Homes Promised by 2019

14 February 2018 – Madridiario

On Wednesday, the mayor of Madrid, Manuela Carmena, and the delegate for Equality, Social Rights and Employment, Marta Higueras, visited several developments currently under construction by the Municipal Housing and Land Company (‘Empresa Municipal de la Vivienda y el Suelo’ or EMVS) in the districts of Villaverde and Puente de Vallecas (Madrid).

The Town Hall of Madrid, through the ‘Empresa Municipal de la Vivienda y el Suelo’, has 2,356 homes under construction, at different stages, of the 4,000 that it has committed to building in total during this legislature. All of them are destined for rent and represent a change of tack towards “social needs” with respect to the previous PP Government, because “they are not being built to make money”.

That is according to the delegate for Equality, Social Rights and Employment, Marta Higueras, speaking on Wednesday. She detailed that, under the previous regulations, people who can now be awarded homes and who receive income for the entire family unit of between €600 and €700, were previously not allowed to register as applicants for homes (…) as they did not meet the minimum economic requirements.

“Only those that exceeded the IPREM by three times were allowed to register, but we have turned around that social approach because we are not looking to make money (from the process)”, said Higueras, who added that some rents start at as little as €65/month.

Meanwhile, the mayor of Madrid, Manuela Carmena, recalled that the responsibility for housing, both in terms of its construction and provision, lies with the Community of Madrid (regional Government) but, in fact, it is the Town Hall “that is proving to be the first port of call for citizens and that is having to find a solution”. To emphasise this point, Higueras contrasted the more than 2,300 homes that the Town Hall has underway, in different phases of construction, with the 140 homes planned for the capital by the regional executive.

Of those 2,536 homes in different phases of construction, 970 of them have already been started or will be started soon. They are joined by 458 under public tender, which will soon be awarded to the construction company and 212 in the phase of project supervision and licence management. Another 200 are inter-generational homes in the Ecobarrio de Vallecas, which are under tender and 516 are in the internal tender publication process for the drafting of plans.

Original story: Madridiario

Translation: Carmel Drake

Renta Corporación Fattens Up its Socimi with Flats Acquired through Suquía’s Bankruptcy

24 February 2018 – Voz Pópuli

The Socimi Vivenio, created by Renta Corporación and the Dutch pension fund APG, has reached an agreement with the Suquía group to acquire homes in Vallecas (Madrid) for a price of more than €13 million.

The real estate company Suquía, which is headquartered in San Sebastián and which was declared bankrupt two years ago, has recently reached a payment agreement with its creditors, the majority of which are financial institutions, to avoid the bankruptcy situation in which it is immersed.

During the negotiations to reach the agreement with its creditors, the company has made several deals to sell assets, including one with the Socimi Vivenio, which has agreed to purchase more than 100 homes located in a building on Calle Arte Pop, in the Vallecas neighbourhood of Madrid, for €13.54 million.

The agreement between Renta Corporación’s Socimi and Suquía values most of the homes at a price of less than €200,000, with the exception of the penthouses, which are reportedly worth more than €300,000. The sale agreement is pending authorisation by the judge of Mercantile Court number 1 in San Sebastián, which is in charge of Suquía’s bankruptcy proceedings, after having already requested it during the insolvency administration.

The creditors of the real estate company include Sareb, which has agreed that its mortgages on the homes that Vivenio is going to purchase may be cancelled simultaneously, as part of the bankruptcy process

Promociones Suquía was constituted in 1986, with a registered office for corporate and tax purposes in San Sebastián. It was declared bankrupt in December 2015. In 2016, according to the accounts filed by the company with the Mercantile Registry, to which this newspaper has had access through Insight View, it recorded losses of €1.8 million. The company ended that year with non-current bank debt amounting to €39.2 million and current bank debt of €8 million. Sources close to the real estate company indicate that following this agreement and the authorisation from the court, the company will continue with its property development activity in Bilbao, San Sebastián, and Madrid.

Renta Corporación, which has joined forces with the Dutch fund APG, plans to debut Vivenio on the stock market next year. The Socimi has set itself the objective of acquiring assets worth €1.5 billion in total, primarily properties in Madrid and Barcelona, with a minimum investment of €10 million.

Original story: Voz Pópuli (by Alberto Ortín)

Translation: Carmel Drake

‘Valencia Parque Central’ Hopes to Raise €300M From Sale of Buildable Public Plots

22 February 2018 – Eje Prime

Valencia’s public institutions want to recover some of the investment that they are making in Parque Central. The company that is promoting the development, which is owned by the Government of Spain (50%), the Generalitat Valenciana (25%) and the Town Hall of Valencia (25%), hope to raise €300 million from the sale of the buildable public plots in this area. Those proceeds would cover 15% of the total cost of the building work, which has an approximate cost of €2 billion.

According to explanations provided by the Town Hall, the intention of the company is to propose a first public auction of the land to the Board of Directors. The Director-General of Valencia Parque Central, Salvador Martínez, has explained that “they will study two formal questions: the specifications that regulate the sales process and the sales strategy”, according to Valencia Plaza.

The work that needs to be carried out in the Russafa and Malilla areas will bring with them the largest urban planning operation underway in Valencia. This is a railway and urban project, in which, in addition to placing the railway underground and building a new train station, the city will benefit from a new green space with a park spanning 230,000 m2. The company’s forecasts suggest that the garden will be inaugurated in June.

Original story: Eje Prime

Translation: Carmel Drake

Forcadell: 12% More Office Space was Leased in Barcelona in 2017 (340,000 m2)

23 February 2018 – Eje Prime

In 2017, the office business in the Catalan capital recorded its highest volume of activity for ten years. According to the real estate consultancy Forcadell, 340,000 m2 of office space was leased in Barcelona in 2017, up by 12.2% compared to the previous year and also higher than the volume recorded in 2015, even though both years also saw record leasing figures. Moreover, the lack of space in the city of Barcelona has driven the office market to the outskirts of the city over the last 2 years – peripheral areas accounted for 20% of all of the space leased in 2017.

According to data from Forcadell, the availability rate of offices in Barcelona is continuing its downward trend, moving from 9.3% during the first half of 2017 to 8.8% by the end of 2017.

“That gradual decrease in product availability is due to the good leasing rate and the rapid absorption rate recorded over the last 2 years, and in particular during 2017”, say sources at the consultancy firm.

In terms of demand, the office market in Barcelona closed the second half of 2017 with an increase in demand of 9.2% with respect to the same period a year earlier. Demand for surface areas spanning more than 1,000 m2 was concentrated in the New Business Districts, specifically in 22@ and the Zona Franca, whilst demand for smaller surface areas rose in the prime and Central areas.

According to Forcadell, the average price per m2 of offices in Barcelona amounted to €13.5/m2/month at the end of 2017. During the second half of the year, office rents in the Catalan capital continued to show moderate increases in almost all areas, in line with the trend observed over the last 5 years. The average YoY variation in Barcelona amounted to 8%, identical to the increase recorded in H1 2017.

The consultancy firm’s outlook for the year ahead is that the office market in Barcelona will continue to attract interest from investors. “They are increasingly demanding a minimum rating category, given that that has become an essential requirement for companies moving into new work spaces”, say sources at Forcadell. Moreover, international funds specialising in the comprehensive renovation of office buildings have also shown interest in the Barcelona market, a trend that is expected to intensify during 2018 and 2019.

Original story: Eje Prime 

Translation: Carmel Drake

Neinor Starts Buying “Non-Finalist” Land

23 February 2018 – Expansión

With its first birthday as a listed company just around the corner, Neinor is making a strategic shift. It is negotiating the acquisition of “non-finalist” land (plots that require urban planning management to become developable) to maintain its pace of development once it has reached its cruising speed in 2020. Specifically, the property developer, which has plots of land on its radar worth €500 million, is holding negotiations with banks, private investors and institutional funds regarding the possible completion of three land purchase operations involving “non-finalist” plots for around €200 million. They will allow for the construction of around 1,000 homes spread over various cities, including Madrid and Barcelona.

Under the framework of the negotiations, Neinor plans to make an initial payment of almost 10% of the total price to take control of the “non-finalist” land and to pay the remaining balance once the plots have been granted their corresponding urban planning permits, within a period of between three and five years. “My concern now focuses on acquiring a land bank to put into production from 2022 onwards”, explains the CEO of the company, Juan Velayos (pictured above).

The real estate firm, which announced results yesterday, closed last year with losses of €4.6 million but expects to become profitable in 2018. If we take into account the incentive plan for directors amounting to €19 million – of which €10.6 million corresponded to the CEO – paid in its entirety by the fund Lone Star, and the costs associated with the stock market debut,  then the property developer lost €25.9 million last year.

In 2017, Neinor generated revenues of €225 million, of which €77 million proceeded from its property developer business. It also recorded cumulative pre-sales of €746 million. The company, which delivered 313 homes in 2017, expects to hand over 1,000 units in 2018. It then plans to double that figure in 2019, to 2,000 units; and reach its cruising speed from 2020 onwards with 4,000 units. That would represent the high end of the range announced initially, although it will do so with an evolution in “more conservative phases to protect margins, improve the quality of revenues and deliveries”, he said.

Neinor owns 1.5 million m2 of developable land with capacity for the construction of 12,500 homes and a gross asset value (GAV) of €1.7 billion. The company, which invested €286 million in land in 2017 for the development of 3,100 units, plans to disburse another €200 million on purchases this year. Neinor’s share price closed trading down by 4% yesterday at €16.66.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Témpore Properties Secures Sufficient Minority Shareholders Ahead of its MAB Debut

23 February 2018 – La Información

The team at Sareb has overcome the penultimate obstacle to enable the Socimi that it has created, Témpore Properties, to take the final step towards starting to trade on the Alternative Investment Market (MAB), as set out in the initial plan drawn up by Jaime Echegoyen (pictured above) almost a year ago. According to sources familiar with the process, Témpore has now successfully completed the incorporation of around twenty minority shareholders into its share capital, as required by the MAB, so that the Socimi can trade on that market.

And this latest milestone is no mean feat. Sources in the sector say that around half a dozen Socimi projects, driven by large fortunes and family offices, have run aground due to their inability or lack of interest in fulfilling that requirement. Specifically, the MAB requires at least €2 million of a company’s share capital (or 25% of the equity if the company has a share capital of less than €8 million) to be owned by around twenty minority shareholders. The managers of the MAB also require that those minority shareholders have no family or business links with the owners of the company and that no single shareholder holds a participation equivalent to more than 5% of the total or worth less than €60,000. The reasons? On the one hand, to emphasise the nature of Socimis as collective investment instruments; but also, to prevent any kind of activity that seeks to use investors as “mariachis”, which is what triggered the inspections against Sicavs back in the day.

Over the last two months, Nicolás Díaz Saldaña, the Director General of Sareb and person responsible for the Témpore Properties project, and his team have maintained permanent contact with investment banks, funds and offices representing large fortunes to search for the most appropriate and most interested profiles to form part of Témpore. That process has also been supported by Ázora, Sareb’s advisor in everything relating to the Socimi’s stock market debut.

Offers to buy Témpore

According to financial sources, investors have welcomed the presentation of the Témpore project with enormous interest, and not only with a view to participating as minority investors. Sareb has received several offers from investment funds and even from other Socimis to acquire Témpore Properties, an investment vehicle in which the so-called bad bank has placed 1,554 of its best rental assets (mainly homes) with an aggregate value of €175 million.

Sareb’s Management has even been seriously considering some of the offers received, according to sources familiar with the contacts, but in the end, it has opted to go with the initial plan and push ahead with the project to have the Socimi debut on the MAB independently, at least to begin with. The next step in this process will be the presentation of the prospectus, which will mark the beginning of the final phase of the stock market debut of Témpore Properties.

The debut of Sareb’s Socimi on the stock market has taken longer than originally planned. Initially, Témpore Properties was expected to make its debut before the end of 2017 and, in fact, in September last year, Sareb formally requested the mandatory authorisations from the MAB and the Ministry of Finance to make its debut in 2017. Nevertheless, the turbulent political panorama and the difficulties that have marked the configuration of the project have delayed the timeframes initially established and now the only objective is for Témpore to make its debut before the end of June 2018.

Original story: La Información (by Bruno Pérez)

Translation: Carmel Drake

 

Velayos: Neinor Plans to Deliver 15,000 Homes by 2022

23 February 2018 – Eje Prime

Despite ending last year with a loss, Neinor Homes seems to have everything under control. The property developer is now heading into a new  five-year phase during which time it expects to leave behind those losses and invest almost €1.5 billion in the purchase of new land and to deliver up to 15,000 homes, according to explanations provided by Juan Velayos (pictured above), CEO of Neinor Homes, speaking to Eje Prime in an interview.

“You always have to read the cycle and, now, is a good time for the real estate business”, explains Velayos. “We complain that there is not as much land as we would like in the market, but the reality is there is, just not in the hands of property developers”.  Over the next few years, new land will start to be released, which will satisfy the desire of companies such as Neinor Homes, and other players that operate in this sector, including Aedas Homes, Vía Célere and Metrovacesa, to continue growing.

In 2018, Neinor Homes plans to invest around €250 million in land. “At the moment, we are studying land on our radar worth around €500 million, of which €151 million is already in the negotiation phase, another €145 million is under analysis and the remaining €217 million is strategic land for Neinor Homes”, says the director.

Over the next few years, Neinor Homes has set itself the challenge of investing between €300 million and €350 million in the purchase of new land until, at least, 2022. “Nevertheless, we are negotiating several purchase operations for non-buildable plots, minimising the use of own funds, whereby following the Anglo-Saxon model,” said Velayos, as one of the alternatives that he has found to continue gaining ground in the development of its business plan.

In terms of the delivery of homes, since its creation until 2017, Neinor Homes has delivered 432 homes, with a gross margin of approximately 28%. Now, the company has set itself the objective of handing over 1,000 homes in 2018, in order to reach its cruising speed over the following years and double the delivery of finished homes year after year. In this way, Neinor Homes expects to hand over 2,000 homes in 2019, 4,000 homes in 2020 and 8,000 homes between 2021 and 2022.

Currently, Neinor Homes has a portfolio of 12,472 homes in stock, including finished homes, homes under construction and homes under design, compared to 9,025 a year ago, which represents an increase of 28%. The property developer owns a portfolio of buildable land spanning 1.47 million m2, which has also grown since last year, by 29%.

In terms of Neinor Homes’ debt, according to Velayos, it is “more than under control”. The company has net debt amounting to €382 million, up by 31% compared to last year, when its credit obligations stood at €291.6 million. “It is healthy and an indicator that the business is performing well: we finance the construction phases using bank debt and the purchase of land using own funds”, says the executive. The group’s loan-to-value is 22%.

2018 – the turning point

The property developer lost €25 million in 2017, weighed down by the costs of its stock market debut, as the group reported yesterday to the National Securities and Exchange Commission (CNMV). Nevertheless, Neinor Homes still has the objective of becoming profitable in 2018. If Neinor Homes fulfils all of its objectives for the coming year, the company will sell and deliver (and receive the proceeds for) 1,000 homes, at an average price of €300,000. As such, with a return of 20%, the property developer could generate profits of €60 million.

The revenues of the company, which has been listed since March 2017 and for that reason does not compare its accounts with those of 2016, amounted to €225 million, of which €77 million proceeded from the new build property developer business and more than €114 million from the sale of “legacy“, assets proceeding from the real estate subsidiary of Kutxabank, which its former shareholder Lone Star purchased in 2015 to create it.

Following the same calculations, the turnover of the company from the handover of homes in 2018 would thus amount to €300 million, excluding any pre-sales that may be closed during the course of the year, which Neinor calculates will amount to €750 million.

Original story: Eje Prime (by Custodio Pareja)

Translation: Carmel Drake

Forcadell: New Home Sales Rose by 28% in Barcelona in H2 2017

21 February 2018 – Eje Prime

Barcelona is growing with new homes, even though they are more expensive than they were five years ago. The Catalan capital is experiencing significant growth in the sale of new homes from its residential stock, despite the socio-political situation that has been rumbling along for several months. During the second half of 2017, the sector saw the number of new house sales grow by 28% in the province of Barcelona compared to the same period in 2016, according to a report from the real estate consultancy Forcadell.

In addition to transactions, the price of new homes and the number of developments also increased, although the consultancy indicates that the current supply of homes in this segment is still scarce in the city of Barcelona, due to the lack of space. The only land reserves left are located in the 22@ district and in Poblenou, “which makes an increase in building renovation activity very necessary in the Catalan capital. Currently, such activity only accounts for 3.5% of new residential developments”, according to Forcadell.

During the second half of the year, the report highlights the activity recorded in the months of July and November, with significant peaks in the number of new home sales: 717 and 607, respectively, according to data from the National Institute of Statistics (INE). In this sense, and given the lack of land in the Catalan capital, the Barcelona market is expanding towards its neighbouring municipalities, such as el Barcelonès, el Baix Llobregat and el Vallès Occidental.

Within the city of Barcelona, the district that had the largest supply of new build homes between June and December was Sarrià-Sant Gervasi, whilst Ciutat Vella and l’Eixample put the most renovated assets on the market. Prices in the capital grew by 2.7% in half-yearly terms, with an overall average price of €5,439/m2. In this area, Sant Andreu was the neighbourhood with the highest increase in prices; and for this year and next, Nou Barris is set to see the highest increases in the price of new homes, according to Forcadell. The overall trend for this year is also expected to be bullish.

Forecasts from the consultancy firm indicate that construction activity in Barcelona will continue to increase over the coming months, above all in the towns adjacent to the city. Nevertheless, the lack of buildable land and the delay in the granting of licences may water down the good times that the property development sector will enjoy from 2019 onwards.

Rental market – mismatch between supply and demand

The rental market, which has been so in vogue recently, suffered from an important mismatch between supply and demand for rental homes costing between €850 and €1,000. This situation has resulted from an increase in the interest from clients in the metropolitan area.

In terms of demand, Forcadell indicates that during the second half of the year (…) rental prices continued to rise.

In this way, the report from the consultancy firm places the average price of a rental home at €15.50/m2/month, up by 1.9% with respect to the same period in 2016. Ciutat Vella is the district that registered the highest rents in the Catalan capital, of €19/m2/month, but Forcadell estimates that the trend will stabilise in the city in 2018 (…).

Moreover, the sale of second-hand homes recorded a YoY increase of 5.1%, with 31,485 operations. According to Forcadell, l’Eixample was the district with the largest supply of homes in the second half of the year, followed by Sant Martí, Ciutat Vella and Sarrià-Sant Gervasi.

The sales prices of second-hand homes increased by 1.7% between the first and second halves of 2017, to record an increase of 6.8% with respect to the end of 2016. The average price paid for a home measuring 90 m2, with three or four bedrooms, in Barcelona was €2,952/m2.

Original story: Eje Prime 

Translation: Carmel Drake

JP Morgan Negotiates €2bn Loan with Owner of Santander’s HQ

22 February 2018 – Voz Pópuli

There’s a new player in the complicated game of chess involving the bankruptcy and liquidation of the owner of Banco Santander’s headquarters, the Ciudad Financiera, in Madrid. One of the largest investment banks in the world, JP Morgan, is negotiating a €2 billion loan to unblock the bankruptcy proceedings, according to financial sources consulted by Vozpópuli. JP Morgan declined to comment about the rumours in the market. Market sources indicate that the loan has not been granted yet.

In this way, the US entity would support one of the shareholders, the company Edgeworth Capital, owned by the Iranian businessman Robert Tchenguiz. That banker is trying to get Marme Inversiones 2007, the company that owns the office complex, to emerge from bankruptcy without having to file for liquidation. To this end, it has asked Mercantile Court number 9 in Madrid to give it the green light to negotiate an early termination for payments with the creditors.

That is where JPMorgan comes in. Tchenguiz has managed to convince the entity to consider financing almost €2 billion, which would have to be used to repay all of the creditors, including several banks such as CaixaBank, ING, RBS and Santander itself, as well as funds such as GSO (owned by Blackstone), Canyon, Burlington, Värde Partners, Centerbridge and Monarch.

Many of these creditors, above all the funds that purchased debt at a discount, agree with Tchenguiz. But not the other shareholder, the British magnate Glenn Maud, who is preparing to make a rival offer, or Santander, which is leaning towards the proposal put forward by the Arab fund AGC.

Status of proceedings

After years of bankruptcy and hundreds of resources, the situation is closer than ever to being unblocked. In fact, the court has already given the green light to the liquidation plan for Marme Inversiones 2007. The problem is that two other parent companies, Delma and Ramblas, are still immersed in bankruptcy proceedings. A resolution is expected before the summer.

Unless there is a new legal war, all indications are that the financial situation of the owner of the Ciudad Financiera will be resolved this year.

Along with the proposal from Tchenguiz, the fund AGC and the consortium Madison-Maud-GCA are studying putting between €2.7 billion and €2.8 billion on the table for Santander’s headquarters, within the liquidation process.

Together with JPMorgan, Goldman Sachs is also positioning itself in this operation. It has been advising Santander for months on the solution that may be found to resolve the situation of its headquarters.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Goldmans & Oaktree to Bid for €100M Land Portfolio that Iberdrola will Auction on 28 Feb

22 February 2018 – Voz Pópuli

On Wednesday 28 February, Goldman Sachs and Oaktree are scheduled to submit binding offers for a portfolio of land owned by Iberdrola Inmobiliaria. The subsidiary of the multinational energy company has thus started one of its largest asset sales processes in recent years, coinciding with the recovery of the sector and the voracious appetite shown by international funds for land in the Spanish market.

The two US investment banks have expressed their interest in what is considered, in the Spanish real estate sector, to be a very good portfolio of land. It is ready for the construction of more than one thousand homes in locations such as Madrid, Málaga and Granada (more than half), as well as Navarra, Salamanca, Murcia, Cantabria and Valencia. The valuation of the plots amounts to around €100 million, according to sources familiar with the negotiations.

The sources consulted warn that if the offers prove to be unsatisfactory, the door will be opened to other investment funds “who are queuing up to participate in the operation”. In total, the plots, owned by the subsidiary of the group chaired by Ignacio Sánchez Galán, that have been put up for sale span a buildable surface area of 126,000 m2.

Iberdrola Inmobiliaria, with which Vozpópuli made contact yesterday, denies the existence of this operation. Nevertheless, two different sources consulted by this newspaper confirm that Banco Sabadell is also participating in the process. According to the sources, Solvia Desarrollos Inmobiliarios, the subsidiary of the financial institution, is going to create a joint venture with the buyer of the land to construct homes, whilst Iberdrola Inmobiliaria is expected to retain a minority stake in the new company.

The Spanish energy group created Iberdrola Inmobiliaria in 1991. The company managed to survive the greatest crisis in the history of the Spanish real estate sector – the one suffered following the burst of the bubble at the end of 2007 – and now owns a portfolio of assets worth more than €1.7 billion. Moreover, it is a highly respected manager in the sector.

Just before the start of the economic and financial crisis, Iberdrola Inmobiliaria undertook significant investments in projects in Spain, Mexico and Bulgaria. In 2015, Iberdrola injected €616.7 million into its real estate subsidiary through a capital increase of €154.2 million and the rest as an issue premium. In 2016, Iberdrola Inmobiliaria recorded revenues of €63.8 million and profits of €3.2 million, according to the latest accounts filed in the Mercantile Registry to which this newspaper has had access through Insight View.

According to those same accounts, the Board of Directors of Iberdrola Inmobiliaria, chaired by José Sainz Armada, led by Emilio Sánchez Castellano and in which Ignacio López del Hierro participates as director, did not receive any remuneration in 2016, but they were paid for out-of-pocket expenses amounting to €196,000 (€206,000 in 2015). The CEO and four other directors earned €1.25 million

Original story: Voz Pópuli (by Alberto Ortín)

Translation: Carmel Drake