Changes Afoot: Sareb Considers Modifying the Management of its €35.5bn Portfolio

29 May 2018 – Eje Prime

The bad bank is rethinking its future. The company is analysing the possibilities that the current servicer market offers it in terms of restructuring the approximately €35.5 billion that it has on its balance sheet in a completely different way. The objective of the move, according to sources close to the group, is to generate more profitability.

When at the end of 2014, the bad bank launched the so-called Project Ibero, it awarded the management of its portfolio to four servicers: Haya Real Estate, Altamira, Servihabitat and Solvia, and it distributed the work between the entities, according to El Economista.

Now, the company is analysing what would be the most efficient way of segmenting the assets, and the possibilities that it is considering include the option to “regionalise” the portfolio by geographical area. Likewise, it could organise its catalogue by asset type, given that more sophisticated operators now exist that were not on the scene in 2014, and they specialise by market segment focusing on areas such as logistics, retail and hotel.

In the review of its new strategy, the entity chaired by Jaime Echegoyen (pictured above), is also considering bringing some of the management activity in-house, like it has been doing to date with the large bankruptcy cases, such as for example Martinsa Fadesa. Another example is the property development department, for which it is now looking for an industrial partner, in a process that includes finalists of the calibre of Vía Célere, Aedas Homes and Aelca.

The first contract that Sareb has started to review, which expires at the end of 2019, is the portfolio currently in the hands of Haya Real Estate, with a net value of around €12.5 billion at the end of 2017. The next contracts are not due to expire until 2021, since the duration of the agreements that Sareb signed range between five and seven years from the date they entered into force.

Original story: Eje Prime 

Translation: Carmel Drake

Habitat Appoints José Carlos Saz as its New CEO

29 May 2018 – La Vanguardia

Habitat Inmobiliaria has appointed José Carlos Saz (pictured below) as the CEO and most senior executive of the company, with the objective of boosting growth in the Spanish real estate market through an active investment policy.

Saz has said that the target will be “high-quality urban development projects” close to large Spanish cities, according to a statement issued by Habitat today.

Habitat Inmobiliaria’s new CEO holds a degree of Industrial Engineering from the Escuela Superior de Madrid and is a graduate of the Director Development Program at IESE.

In recent years, Saz has served as the Operations Director at Neinor Homes and prior to that, he held positions of responsibility at LV Salamanca Ingenieros, Abengoa, Mutua Madrileña, Mace and the British construction firm ISG, amongst other companies.

Original story: La Vanguardia

Translation: Carmel Drake

Testa Postpones its Stock Market Debut Due to Political and Market Instability

29 May 2018 – Europa Press

Testa Residencial has postponed its debut on the stock market, initially planned for June, in light of the volatility on the stock market due to the political instability in the country, according to sources at the company speaking to Europa Press.

The rental home Socimi in which Santander and BBVA hold stakes has also decided to debut on the Alternative Investment Market (MAB) rather than list directly on the main stock market as originally planned.

In this way, in order to not lose the status of Socimi, which establishes a deadline for the firm to debut on the stock market, Testa Residencial will have to list on the MAB before 30 September, although it does not rule out debuting on the main stock market in a second phase.

Testa Residencial is whereby the second company, after Azora, to decide to delay its planned debut on the stock market, although in the case of that real estate asset management firm, it attributed its postponement to the takeover that Blackstone has launched over Hispania, one of its main clients.

In the case of Testa, the firm had planned to start trading on the stock market during the second half of June, and was looking at the 22nd of the month as the likely debut date.

The rental home Socimi had planned to make its debut through a public offering of shares (OPV) and a public subscription offering (OPS) of new shares, the latter for €130 million, both aimed at institutional investors.

Second postponed debut

In this way, Testa was going to become the second entity to debut on the main stock market this year, after Metrovacesa in February, but now it is the second real estate company to decide to postpone its debut.

The decisions by Azora and Testa may influence other firms in the sector that had also planned to make their own stock market debuts, such as Vía Célere and Haya Real Estate, the servicer owned by the US fund Cerberus. In that case, the firm’s debut is dependent on the closure of the asset management contracts that it is currently negotiating with BBVA and Sareb.

In terms of Testa Residencial, by virtue of the OPV, the Socimi Merlin Properties had planned to exit its share capital, by placing on the market its entire 17% stake in the firm.

The market was also expecting that Santander and BBVA would sell some of their shares in the rental home company, which amount to 37% and 26%, respectively. Acciona, meanwhile, had not yet taken a decision regarding its 20% stake in the company.

Testa Residencial is one of the largest rental home companies in the country, given that it owns a portfolio of 10,700 homes, worth €2.275 billion.

With its leap onto the stock market, the firm intends to consolidate its position as a new real estate giant, unprecedented in the country, given its specialisation in primary home rentals, at a time when that segment is experiencing in a boom in Spain.

Original story: Europa Press

Translation: Carmel Drake

Blackstone to List New Socimi with 4,000 Rental Homes Purchased from Sabadell

29 May 2018 – El Confidencial

One of the first funds to bet on the boom in rental housing in Spain, Blackstone, is on the verge of listing its fourth Socimi to specialise in this market, an area that is really blossoming.

The Socimi in question is Torbel Investments, a vehicle that primarily comprises the so-called Project Empire, a portfolio containing almost 4,000 homes, parking spaces, premises and storerooms that Banco Sabadell sold to the US fund two years ago.

At the time, the operation was worth around €600 million, although in net book value terms, Blackstone has recorded the assets at €113 million, according to Torbel’s most recent official accounts, corresponding to the year ending 2016.

Currently, the fund is on the home stretch of the procedures necessary with the CNMV – Spain’s National Securities and Markets Commission – to list the vehicle, whose natural destination is the MAB – Alternative Investment Market – given that Blackstone’s objective is, simply, to fulfil the demands of the Socimi regime to list the company so that it can benefit from the tax advantages.

That point means that this placement is completely different from the one being finalised by Testa, another giant in the rental housing sector in Spain, which is expected to make its debut on the main stock market in June, with €1.834 billion in assets.

Plethora of Socimis

Since it acquired these homes from Sabadell, Blackstone has managed all of the flats through its own servicer company, Anticipa, the firm that is behind the day to day operations of all of the large residential acquisitions carried out by the fund.

By geographical distribution, both in terms of property value and rental income, the main markets in which the Socimi has a presence are Madrid, Alicante, Murcia and Valencia, in other words, regions where the former entity CAM – Caja de Ahorros del Mediterráneo – had its greatest presence before it was acquired by Sabadell and whose foreclosed assets comprise this portfolio.

Blackstone is competing head to head with Testa to be the largest landlord in Spain, but it is adopting a very different strategy given that whilst the firm in which Santander, BBVA, Acciona and Merlin all hold stakes is opting to concentrate the greatest number of homes possible in a single company, the US fund is playing its hand by backing several smaller vehicles.

For the time being, Blackstone has already listed Fidere, which owns more than 5,700 homes, many of which have some kind of public protection;  it also has Albirana Properties, owner of another 5,000 rental assets; and Corona Patrimonial. But, in addition, the fund has been creating other Socimis such as Tourmalet and Pegarena.

All of these companies are expected to continue expanding their portfolios with assets from Project Quasar, the portfolio that Blackstone acquired from Santander, and which contains a sizeable portfolio of homes from the former Banco Popular.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Large Investors Manage Only c. 3% of Spain’s Rental Homes

28 May 2018 – Cinco Días

In recent months, a new name has been added to the list of alleged culprits to blame for the fact that rental prices in large cities are rising at a dangerously accelerated pace – they increased by between 10% and 18% last year. They are what the experts call the large owners of rental home portfolios. And are otherwise known as Socimis, investment funds, servicers and, to a much lesser extent, public companies.

But, how many homes are we talking about (…)? And what percentage do they represent over the total stock of rental homes? Taking into account that no official figures are compiled for the number of rental homes in Spain, and that we only talk about percentages of the total number of households (…) the truth is that the task seems complicated.

Nevertheless, according to the calculations performed by Cinco Días and after having requested data from the large funds, the resulting figure is so small, both in absolute and relative terms, that it seems to have almost no or limited influence on the evolution of rental prices. The figures compiled by CBRE reveal a balance that ranges between 2% and 4% of the total stock of rental homes. “It is possible that they have an influence at the local level in areas where more homes managed by those kinds of companies are concentrated, but it is clear that they cannot be blamed for what is happening to rental prices”, explains Sandra Daza, Director General at Gesvalt.

Thus, the statistics compiled by the Government and Eurostat reveal that approximately 22% of Spanish households live in rental properties, a figure that has increased considerably from 15% before the outbreak of the crisis (…).

Multiple factors

In this way, if we take as the reference the most recent figure for the number of households during the first quarter of this year, according to the Active Population Survey (EPA), of the 18.55 million households in Spain, 4.07 million were rental homes.

Of that volume of household-homes, a total of 114,000 homes are in the hands of the 15 largest investors, which together account for just 2.8% of the total stock of rental homes (…).

As Samuel Población, the National Director of Residential and Land at CBRE, explains, the increase in this regime of tenure over buying is driven by several factors. The new labour market, with more instability and lower salaries, is forcing many households to rent, plus all the demand that was expelled from purchasing during the crisis (…).

This increase in demand has not been accompanied by a parallel rise in the supply to the same extent and that is what is causing most of the tension in terms of rental prices, together with the effect of tourist apartments in certain neighbourhoods of large cities and higher visitor numbers. Not even the fact that one out of every five homes purchased is destined for rent to make the investment profitable has managed to generate more homes for rent.

“The current rise is a consequence of the large gap between demand and supply”, says Wolfgang Beck, CEO of the Socimi Testa Residencial, one of the largest owners of this kind of asset (…).

“It does not make sense to attribute the rise in rental prices to the funds. They have a long-term focus and are actually responsible for increasing the stock of rental homes on the market”, says Javier Rodríguez Heredia, Head of the Residential team at the housing manager Azora.

“Establishing regulations that provide certainty for institutional investors to make it attractive for them to enter the sector would result in the creation of a rental home stock commensurate with the needs of the country”, he said (…).

Original story: Cinco Días (by Raquel Díaz Guijarro & Alfonso Simón)

Translation: Carmel Drake

Spain’s Banks Race Against the Clock to Sell Off Their Problem RE Assets

28 May 2018 – Eje Prime

The banks are facing a new record. The entities have cut their problem assets almost in half over the last four years, but now they are trying to get rid of thousands of properties in record time to keep the supervisor happy, along with investors. The Bank of Spain warned just this week that the volume of impaired assets continues to be high, given that foreclosed assets amount to €58 billion and doubtful loans still amount to almost €100 billion, something that concerns the ECB and penalises the sector on the stock market.

Specifically, Spanish banks’ problem assets amounted to €152 billion at the end of 2017, a very high volume, but 46% lower than the €280 billion registered as at December 2013.

In addition to the cost that maintaining these assets on the balance sheet has for entities, they also prevent them from allocating resources to other activities more in keeping with the banking sector that would generate higher returns, which worsens the problems of returns in the sector especially at a time of very low interest rates.

In 2017, in the face of clear pressure on the banks to significantly reduce their problem assets, the Spanish market resurfaced to account for approximately 50% of the European market for the sale of problem assets, recall the experts.

The announcement by Cerberus of its purchase of 80% of BBVA’s problem assets and the acquisition by Blackstone of 51% of Aliseda and of Popular’s non-performing assets clearly marked a turning point.

And currently, taking into account the portfolios that are up for sale and the forecasts for the reduction in non-performing assets in the plans of many Spanish banks, a high volume of transactions is also expected in 2018.

The entities are on the case

Sabadell is planning to decrease its non-performing assets by €2 billion per year until 2020, although, depending on investor appetite and the agreements with the Deposit Guarantee Fund (FGD), that figure may rise considerably in 2018, explain sources at Funcas.

Meanwhile, in its strategic plan for 2018-2020, Bankia is forecasting the sale of €2.9 billion problem assets per year, even though the entity got rid of much of its real estate hangover with the creation of Sareb, the bad bank.

The placement on the market of this significant volume of assets is not only limited to the large entities; it is also involving smaller firms such as Ibercaja and Liberbank, which are also planning to divest assets.

In the case of the former, its plans involve cutting its problem assets in half between now and 2020, which translates into a decrease of around €600 million per year, whilst Liberbank is looking at reductions of €900 million per year until 2020.

For 2018, Santander has set itself the objective of €6 billion, whilst Sareb is aiming for €3 billion, which shows the real commitment that the entities have to cleaning up their balance sheets and to keeping the supervisor, and the markets, happy. Now they just need to deliver.

Original story: Eje Prime

Translation: Carmel Drake

M&G Invests €80M to Strengthen its RE Portfolio

29 May 2018 – Expansión

The real estate division of the London-based firm M&G Investment has decided to bet significantly on the Iberian market, where its exposure now exceeds €500 million. “We are partners of institutional investors looking for core properties in the best locations across Europe. We opened our office in Spain in 2016, but we completed our first operations there a year earlier”, explains Federico Bros, Director of Asset Management for Spain and Portugal.

Its first operation involved the purchase of the former headquarters of Telefónica located on Calle Ríos Rosas (Madrid) and leased to the advertising giant WPP. “It is an example of what we look for, well-located assets with long-term contracts, 17 years in this case. Between the renovation and purchase we will invest €175 million in that property”, says Bros.

After that acquisition came others, such as an office building in Barcelona’s 22@ district and, recently, five operations with a very diverse profile. On the one hand, M&G purchased three commercial assets: two in Madrid and one in Granada. “The premise in Granada, measuring 2,500 m2, is located on Reyes Católicos, the best shopping street in the city”, explains Bros. In the case of Madrid, M&G acquired two retail premises on Gran Vía 68. “We closed this operation in May but we have been negotiating it for months, given that the building was being renovated. A few months ago, a large Tony Roma’s restaurant opened there and Sabadell is going to open its flagship branch in the other premise in a matter of days”, he said.

Similarly, the firm acquired two industrial assets in Madrid, specifically a logistics platform, leased to Teka, in the Corredor del Henares, and another complex in Getafe. Those two sites span more than 55,000 m2. In total, the firm has invested €80 million on its latest operations, channelled through two funds: MEP and EuroSPIF.

More opportunities

Following these investments, the manager is still looking for opportunities in the Spanish market.

“We are involved in several processes, both official and off-market, in Madrid, Barcelona and prime locations in other cities. Spain is a priority country for us”, says Bros.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

HardRock to Invest €2bn in Future Leisure Mega-Complex in Tarragona

25 May 2018 – Eje Prime

Hard Rock has been given the green light to build its gaming and leisure mega-complex in Tarragona. The Generalitat de Cataluña has unblocked the plans of the US group, which is going to invest €2 billion in this complex. The economic plan includes one line item amounting to €300 million for the purchase of land, located in Vila-seca, from CaixaBank.

The Ministry of Economy reported on Friday that it had awarded the US company the authorisation to install and operate a gaming casino, which will be located at the centre of the project and which is going to be called Hard Rock Entertainment World.

The next step that the group must take is to make a €10 million deposit within the next ten days, although that amount includes the €3 million that the company already paid in June last year to guarantee its involvement in the project.

Despite those assurances, Hard Rock has not had a rival in the public tender that was opened to develop the complex. The first multi-national leisure project in Spain will have a gaming area spanning 7,595 m2, as well as two large hotels with a surface area of 63,000 m2.

Similarly, the US company will promote a commercial space measuring 15,000 m2 in which 6,000 m2 will be dedicated to an extensive restaurant offering and the same amount of space will be used for the centre itself, where leisure and live entertainment spaces will also be opened.

€700 million to begin with

During the first phase of the project, Hard Rock is going to invest €700 million to purchase the land, cover the construction and financing costs and to acquire furniture, amongst other aspects.

The group expects that its multi-million euro investment to set up this mega-complex, will allow it to reach an economic impact in the tourist area of Tarragona, where it is located, on the Costa Dorada, of €1.3 billion. The Port Aventura World leisure resort is located in the vicinity of the future Hard Rock Entertainment World.

Original story: Eje Prime

Translation: Carmel Drake

Taylor Wimpey Enters Sotogrande & Strengthens its Presence in Ibiza

28 May 2018 – Eje Prime

Taylor Wimpey España is entering one of the most luxurious urbanisations in Spain. The Spanish subsidiary of the British real estate group is backing Sotogrande, synonymous with luxury housing, in its business plan for 2018, which also includes the launch of around twenty developments in the Balearic Islands, Costa del Sol and Costa Blanca, the three markets where it already has a presence and “in which we will continue working”, says Reyes Coll, Marketing Director at Taylor Wimpey in Spain, speaking to Eje Prime.

So far this year, the real estate company has launched eight new projects. Four of them are located on the Costa del Sol, three in Mallorca and the eighth is in Alicante. The aim of the company is to “launch between five and ten more promotions before the end of the year”, says Coll.

Taylor Wimpey’s main business in Spain is second homes for foreigners, which account for more than 90% of the company’s housing reservations.

In the Balearic Islands, where land is scarce and prices are growing rapidly, the company is finalising the requirements necessary to bring three new projects onto the market: Cala Lliteras, Cala Vinyes and Cala Gració. The latter is located in Ibiza, an island on which the real estate only has 22 homes to date, in Can Misses. The other developments in the Balearic region are located in Mallorca (…).

Almost twenty developments on the market

Without taking into account the aforementioned projects and those in the pipeline, the real estate company already has 19 developments up for sale in the country. Mallorca and the Costa del Sol are the two regions where most of its developments are located, with seven residential projects up for sale, whilst the company has five urbanisations on the market on the Costa Blanca.

Taylor Wimpey España’s business depends on foreigners interested in buying a second home in the country. This profile of buyer is growing again in line with the recovery of the economy. Indeed, the company recorded a 10% increase in its portfolio of international clients. “German, Scandinavian, British, Russian and Belgian buyers all stood out”, explains Coll. The General Council of Notaries explained recently in a report that those nationalities account for the fact that 20% of the homes purchased in Spain are acquired by foreigners. In 2017 alone, the company completed operations involving new homes with buyers from 32 different countries.

In the case of buyers from the United Kingdom, players in the Spanish residential market were fearful of the consequences that Brexit might have on sales. Nevertheless, sources at Taylor Wimpey explain that reservations from Brits have increased over the last nine months.

40% growth in post-crisis reserves

The end of the real estate crisis has also arrived for Taylor Wimpey España, whose reservations grew by 40% in 2015 and have continued to increase ever since (…).

According to its roadmap, the company is not planning any changes to the line of business that it has operated for sixty years. The property developer will continue to specialise in the construction of apartments and terraced homes in the most touristy areas of the country and will finance them solely using own funds.

Original story: Eje Prime (by J. Izquierdo)

Translation: Carmel Drake

Arrasate & Ibosa: Favourites in the Bid to Build Bilbao’s Star Residential Project

28 May 2018 – Eje Prime

Up to eight property developers are willing to pay between €30 million and €50 million to build residential properties in Bilbao. The two favourites in the battle are Arrasate and Grupo Ibosa, which have submitted two of the highest offers for this housing plan, which forms part of Project Garellano and which is being managed by Bilbao Ría 2000.

One of the key factors behind Arrasate and Ibosa’s strong chances of winning the tender is that both have the architect Richard Rogers in their project, which gives them an extra 5% in their scores. The vast majority of the score (75%) in the auction corresponds to the economic offer, and the remaining 20% relates to the assessment of the business plan and the construction, according to El Confidencial.

The future tower will be 119 m tall and will comprise 36 storeys in which 200 homes will be constructed. The location of the residential property will be prime, given that it is being built right in the heart of the city.

The plot that the public company Bilbao Ría 2000 has put up for sale has a surface area of 2,247 m2 and a buildability of more than 25,000 m2. The building will also have five underground floors with 235 parking spaces and storerooms for its future inhabitants.

In addition to Arrasate, a Basque cooperative manager (…) and Ibosa, the company led by Juan José Perucho, other companies participating in the auction for this development include the listed company Neinor Homes, ACR and a JV between the Madrid-based property developer Pryconsa and the local firm Amenabar.

Original story: Eje Prime

Translation: Carmel Drake