Year: 2019

Lone Star & Cerberus Increase their Commitment to Spanish Property

21 February 2019 – Expansión

The need for the banks to reduce their exposure to property and the funds’ appetite for the Spanish real estate sector have converged in recent years leading to the transfer of portfolios of debt and foreclosed assets worth millions of euros. Blackstone, Cerberus, Lone Star, the Canadian pension fund (CPPIB), Bain, Axactor and Lindorff are the funds that have been behind most of the major transactions involving portfolios of bank debt secured by real estate collateral during that period.

Emilio Portes, Director of Quantitative & Risk Management at JLL for Southern Europe, said that, following a frantic 2017 when more than €55 billion was transacted, last year saw portfolios sold with a gross value of more than €45 billion (…).

In 2018, the indisputable star was Lone Star, which took control of a portfolio worth around €12.8 billion from CaixaBank. Specifically, CaixaBank sold that portfolio along with Servihabitat to a company called Coral Homes in which Lone Star owns an 80% stake. Cerberus was also active last year with the purchase of several portfolios from Sabadell, Santander and CaixaBank with a total gross value of €12.5 billion. Behind it, came CPPIB, Axactor, D.E. Shaw and Lindorff, according to data provided by JLL.

“The sum of the transactions recorded over the last two years exceeds €100 billion, which places Spain as one of the countries with the largest transaction volume in Europe and the most liquid in terms of real transactions”, says Portes. In those portfolios, there are various types of assets, mainly residential, but also land, offices, premises and hotels.

The year ahead

During 2019, the banks will continue to divest assets, although with smaller portfolio sales. “In 2019, we expect a transaction volume of €20 billion, in addition to whatever Sareb ends up doing”, revealed Portes. He explains that most of the large Spanish banks have now reduced their NPA (non-performing asset) ratios to below 5%.

Following the activity undertaken by the large banks, all eyes are now focused on the medium and small-sized entities, particularly those with the greatest property exposure and therefore most pressure, as well as on Sareb, which has assets worth more than €35 billion still left to sell (…).

The heirs of the banks’ property, having purchased at significant discounts, have an average investment horizon of five years before they undo their positions (…)

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Unibail’s Profit in Spain Falls by 3.6% Following the Sale of 4 Assets

20 February 2019 – Idealista

The French shopping centre giant has seen its profits in Spain decline due to one of the operations of the year. Unibail-Rodamco earned 3.6% less in the Spanish market in 2018, specifically, €155 million, following the sale of its portfolio of four shopping centres to the South African fund Vukile for around €500 million, as reported by Idealista News last July. If it had not carried out that sale, the group’s profits would have grown by 2.8%.

The company ended last year in the Spanish market with a net profit of €161 million, up by 10.3% compared to 2016, when the group earned €146 million. Until now, Spain had been one of the fastest-growing countries for Unibail-Rodamco.

Across all of the markets in which it operates, the French company recorded a net profit of €1.9 billion, up by 36.9% YoY. That increase in gains was due, in part, to the purchase of the Westfield shopping centre group.

Whilst the area where Unibail-Rodamco increased its profit by the most in the last twelve months was Central Europe, up by 21.7%, France was ranked in second place, with growth of 5.3%. Behind France was Austria with an increase in profits of 4.3%.

Mega-operation with Vukile

Unibail-Rodamco became one of the stars of the sector last July when it closed the sale of four shopping centres to the South African fund Vukile, through its Spanish real estate vehicle Castellana Properties Socimi for €489 million (…).

Currently, the group led by Christophe Cuvillier (pictured above) owns a portfolio in Spain worth €3.6 billion, which receives 126.2 million visitors per year. Those assets account for 10% of its global portfolio.

Original story: Idealista (by Custodio Pareja)

Translation: Carmel Drake

Cerberus Starts to Value the 160,000 Assets it has Acquired in Spain Ahead of their Sale

19 February 2019 – Voz Pópuli

Last year, the giant Cerberus strengthened its team with the appointment of the former JLL director Maurice Kelly as its Vice-president of Real Estate in Spain. The professional has become a key person for the fund, given that he is now responsible for meeting with the real estate consultancies regarding the valuation of the 160,000 assets that the investment giant has acquired in recent years in Spain, according to financial sources consulted by Vozpópuli.

Its haul also includes assets acquired in the Apple Portfolio from Santander, a sale that was negotiated in 2018 and which is expected to close between February and March. Moreover, that figure could increase during the coming months due to the great activity that there is in the market at the moment.

The fund wants to generate value from everything that it has purchased from the banks through large portfolios and has now spotted a window to put its acquisitions on the market from April onwards and over the next two or three years. Similarly, the fund is constantly rotating the assets that it acquires and assessing everything that it purchases for its subsequent placement on the market.

New portfolios

The first sale strategy involves the placement of new portfolios, of medium sizes, ranging between €100 million and €200 million, and will be distributed amongst medium-sized funds, above all those from the UK, Ireland and the Netherlands (…).

Another way to sell is through operations involving “unique assets”. In other words, buildings that have added valued and that may be of interest to a private investor or family office. The price of those would be over €50 million.

Finally, the most typical approach will see it sell portfolios of homes, in groups of more or less 500 units, for between €10 million and €20 million apiece.

The valuation of those 160,000 assets is included within the Cerberus European Servicing division and the placement of them is not going to be easy, given that “the fund has purchased a lot” and has “things” that even it does not know about. “It has picked up a lot of parking spaces and assets of that kind that are going to be very difficult for it to place”, warned the sources.

A taste for Spain

Cerberus has invested more than €10 billion in Spain in total and now wants to operate new lines of business such as rental and logistics. It is also planning to multiply its property development activity three-fold by purchasing more land and following its acquisition of Inmoglaciar (…).

Cerberus entered the Spanish market at the height of the financial crisis (between 2010 and 2012) with the aim of taking over banks and real estate firms, like it did in other countries. The former did not work out well following several attempts with former savings banks. But its conquest of property has proved a lot more successful.

Its next acquisition could be the property developer Solvia Desarrollo Inmobiliario (SDIN) from Banco Sabadell, which has put land worth more than €1 billion up for sale. The bid for those assets has already started and financial sources say that the fund has expressed interest in them.

Original story: Voz Pópuli (by David Cabrera)

Translation: Carmel Drake

Dutch Firm Ten Brinke Buys 50,000 m2 in Ciempozuelos for New Retail Park

20 February 2019 – Eje Prime

New investment by Ten Brinke in Spain. The Dutch company dedicated to the development of residential properties and retail parks is going to build a new shopping complex in Ciempozuelos. The company has acquired a plot of land spanning 50,000 m2 and, over the next few weeks, it is going to begin work on the urbanisation of the future space. The new retail park will be a commercial hybrid with operators from the food, leisure and restaurant sectors, amongst others, although the company has not yet set a date for its future inauguration.

This project will join the one that the company is building in the Bahía de Cádiz with an investment of €20 million. There, Ten Brinke Desarrollos is building a new retail park on the Batería de la Ardila road, on the site of the former Tiro Janer industrial estate in the municipality of San Fernando. In that case, the property developer expects to finish the building work in 2020, and to open the complex the same year (…).

Ten Brinke Group is a Dutch multi-national with 115 years of experience in the development of residential properties and retail parks. It has been present in Spain for more than ten years and has offices in Madrid and Barcelona. The company also has offices in Germany, Portugal, the United Kingdom and Greece. On the global scale, it generates turnover of more than €950 million and has more than 950 employees, according to the latest data available on the company’s website (…).

Original story: Eje Prime (by Roger Arnau)

Translation: Carmel Drake

Madrid’s Office Market in 2019: Stable Yields & Investment of €3bn

20 February 2019 – Eje Prime

Investment in offices in Madrid is on the rise. Total investment of €3 billion is forecast in the office market in the Spanish capital this year, which will see it maintain the yield for prime offices at 3.75%. In terms of office rents, a boom of 9.8% is forecast, along with a decrease in the availability rate, which is set fall from 11.6% in 2018 to 9% in 2021. Modest growth forecasts for the sector, with a lower supply of prime spaces, are going to contribute to an increase in rents.

With this data, Madrid is positioning itself amongst the capitals with the lowest yields on its luxury offices, with a figure comparable to those of Singapore (3.34%), Amsterdam (3.35%) and Paris (3%), but well below those of Moscow (8.5%) and Washington DC (6.2%), according to the Global Outlook 2019 report, compiled by Knight Frank.

In terms of the growth forecast for office rents, the Spanish capital is expected to maintain stable growth (…).

In terms of the availability rate, Madrid is forecast to decrease from 11.6% in 2018 to 9% in 2021, placing it amongst the cities with most available offices, well below Berlin, with a forecast rate of 2.2% (…). Available prime offices will also decrease, which will lead to a rise in rents. According to the study, this is the result of the recovery of the residential market, which is also sparking interest amongst investors.

One of the greatest opportunities in the sector are the coworking offices, which are transforming conventional offices into new spaces for working and incentivising employees. “Whilst some markets are reaching maturity, at the global level, we expect to see a boost to this business in 2019”, say the authors of the report.

In summary, the office market in Spain is expected to be relatively stable during the year ahead, despite global challenges (…).

Original story: Eje Prime (by Marta Casado Pla)

Translation: Carmel Drake

Thor Equities Finds a Tenant for its Jewel on Gran Vía

20 February 2019 – Eje Prime

Thor Equities has found a replacement for Sfera in the heart of Madrid. The US fund, which last year acquired number 30 Gran Vía for €75 million, has leased one of the commercial premises in the property to the sports fashion retailer Décimas.

The company has taken over the space measuring 600 m2 from Sfera, the fashion chain owned by El Corte Inglés. That retail company had occupied the premises since 2005 but decided to vacate it last year because it was too small for its new commercial format (…).

For Décimas, this new store represents a new step onto a prime thoroughfare. The chain concentrates the bulk of its store network in shopping centres, although it also has a flagship store on Calle Fuencarral (…).

Original story: Eje Prime (by Silvia Riera)

Translation: Carmel Drake

Brownfields Enters Spain with AC Realty to Buy & Rehabilitate Contaminated Plots

19 February 2019 – El Economista

The infrastructure fund Brownfields is arriving in Spain with a new business for the country, which involves the purchase of contaminated land with the objective of rehabilitating the plots and giving them a new lease of life.

For its first operations, the international group is teaming up with the local firm AC Realty and Management, with which it is already working on three projects in Madrid. They will involve an investment of around €120 million, according to explanations provided by José María Carpio, CEO and founder of AC Realty and Management, together with Francisco Alba, speaking to El Economista.

The two directors launched the real estate service boutique a year and a half ago, and now they are backing this market with the creation of a new division specialising in contaminated assets, which is going to be led by Pedro Flores.

“Two of the operations that we are working on with Brownfields are going to be logistics projects, whilst the third will likely be a mixed office-residential development”, explains Carpio, who says that they are working with a minimum land transaction price of €5 million, “given that smaller figures do not justify all of the investment that is necessary for these types of projects. We have to manage a very intensive process involving decontamination, administrative and change of use processes (…).

The projects being launched by Brownfields and AC Realty provide a solution to one of the main problems that investors complain about: the lack of available land for construction. In Madrid alone, more than 130 contaminated plots have been detected, which could be given a new use, according to the inventory compiled by the Community of Madrid (…).

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake

CaixaBank Granted Loans Amounting to €2.2bn to Hotels in 2018

19 February 2019 – Expansión

CaixaBank Hotels & Tourism granted loans amounting to €2.186 billion to the Spanish hotel sector in 2018, a figure that represents an increase of 46% with respect to the previous year. Moreover, 2,800 operations were carried out, up by 8% compared to 2017. The Balearic Islands and Cataluña are the autonomous regions that received the most loans.

Original story: Expansión

Translation: Carmel Drake

Haya to Sell €188M in Secured Loans from Sareb

19 February 2019 – Expansión

Yesterday, Haya Real Estate put up for sale a package of non-performing loans (NPLs) with real estate guarantees, owned by Sareb, worth €188 million. The portfolio, baptised Project Marconi, comprises loans with an average value of €5.7 million, which are backed by around 1,445 properties.

Original story: Expansión

Translation: Carmel Drake

Savills: House Sales will Exceed 500,000 Again in 2019

19 February 2019 – Voz Pópuli

For the first time since 2008, more than half a million homes were sold in Spain last year, and the good performance is expected to be replicated in 2019 with forecasts that between 500,000 and 600,000 homes will be sold.

The deceleration of the Spanish economy – which will move from growing at a rate of 2.5% in 2018 to around 2% this year – is not expected to prevent the residential sector from consolidating its growth, although the maximum levels recorded in 2007, when 775,300 operations were signed in the country, is not going to be repeated.

“We do not think that we will return to those figures. Staying at the sales levels seen over the last two years, of close to 550,000 units sold, will be an excellent result”, explained Arturo Díaz, Executive Director of the residential market at the consultancy firm Savills Aguirre Newman, speaking to Voz Pópuli.

He considers that this rate of growth is reasonable if we take into account the rate of household creation in the country, the levels of purchases for investment and the purchases for holiday homes (…).

The real estate consultancy CBRE agrees with this outlook (…). In fact, the firm is more ambitious with its forecasts as it expects 625,000 house sale operations to be closed in 2019, due to an increase in demand (…).

The growth profile

The main real estate consultancy firms all agree that there will be an increase in new build sales in 2019, in parallel to a slight decrease in the sales of second-hand homes, and so the gap between the two will begin to close.

Moreover, they confirmed that a change has taken place in terms of the profile of house buyers in Spain, with large international investors playing an increasingly greater role.

“Whilst a decade ago, demand for residential assets was dominated by domestic private families (individuals), nowadays, the market is characterised by investment vehicles, institutional funds and insurance companies – owned by foreign capital in many cases – the most active players in this segment”, said Lola Martínez Brioso, Head of Research at CBRE.

House prices in Spain rose by 8.2% in 2018, according to the Real Estate Statistics Registry from the College of Registrars, which means that they are still well below the peaks reached during the construction boom. In 2019, the sector expects the price rises to moderate (to around 4-5%) (…).

Although the price rises will be more moderate overall, there will be important differences by area (…). By region, the experts forecast that the large cities and their metropolitan areas will continue to lead the charge in terms of house price rises, specifically, Barcelona, Madrid, Málaga and the major municipalities in those areas.

Díaz also adds that “other large cities such as Valencia and Sevilla are starting to show a high level of activity”, along with certain holiday markets, “such as the Costa del Sol, Costa Blanca and Costa de la Luz, where the recovery in domestic demand, together with the appeal that those regions have for international buyers, is generating a high volume of purchasing activity”.

Original story: Voz Pópuli (by Alejandra Olcese)

Translation: Carmel Drake