Azora Acquires HQ of the Former Cortefiel Group for €28.3M

24 January 2019 – Eje Prime

Another operation has been closed in the office market in Madrid. The Socimi GMP, controlled by the Montoro family and the sovereign fund of Singapore, has sold the building located at number 51 Calle Llano Castellano to Azora. The price of the operation amounted to €28.3 million.

The property now controlled by Azora, the real estate manager founded by Concha Osácar and Fernando Gumuzio, is occupied in its entirety by Tendam, previously known as the Cortefiel Group and owner of the fashion chains Cortefiel, Women’secret, Springfield and Pedro del Hierro.

The rental contract for the building, which has a gross leasable area of 23,108 m2 and 145 parking spaces, is due to expire in 2023.

The building was constructed in 1990 and had been controlled 100% by GMP since 2015. Until then, the property was in the hands of the real estate division of General Electric through the company Renta Gestión Fuencarral.

Its new owner, Azora, specialises in the investment and management of real estate assets for third parties and has a portfolio comprising more than €4.5 billion in assets. The company was the promoter of Hispania, the first Socimi to be constituted, which made its debut on the stock market in Spain in 2014.

Azora was considering its own stock market debut, but in the end, it suspended that process last year. Azora and Hispania ended their agreement last year, after Blackstone’s successful takeover of the Socimi.

Since then, the company has focused on the residential rental market through the creation of a joint venture with CBRE Global Investment and Madison to reach a portfolio of 10,000 homes over the coming years.

Azora manages the real estate portfolios of funds and wealthy investors, such as George Soros, CBRE Global Investors, Goldman Sachs, Axa Investment Management and Bank of Montreal, amongst others (…).

Original story: Eje Prime (by P. Riaño and I. P. Gestal)

Translation: Carmel Drake

Hotels Suffer from the First Decrease in Overnight Stays since 2012

24 January 2019 – Expansión

The record number of tourists registered in 2018 has not removed the bitter taste from the mouths of Spanish hoteliers, who are starting to suffer from symptoms that the sector is worn out. In 2018, Spanish hotels recorded the first decrease in the number of overnight stays in six years. A moderate decrease, of –0.1%, according to data from INE, but one that has not been seen since 2012, when Spain was in the midst of the financial crisis.

Spain is receiving more tourists than ever, and they are increasing their spending year on year, but they are also gradually reducing their average stay, and some of the demand is opting for alternative destinations, such as Turkey, which are competing on price, which is eroding the margins of many hotels at home (…).

According to data from Exceltur, Spain lost 21 million overnight stays in 2018, due to a decrease in the average stay. The boom in low-cost airlines, amongst other factors in the sector, has favoured the democratisation of tourism. Increasingly more people are travelling, but they are doing so for shorter periods. Whilst in 2008, the average stay was 9.4 days, it is now 7.4 days.

That change can be observed most easily amongst overseas tourists, who account for 65.8% of overnight stays and who decreased the number of nights spent in Spain by -0.4%, whereas domestic tourists increased their overnight stays by +0.4%.

The change in trend is being observed primarily in the traditional beach and sun markets, and in the most important months for the sector, in the height of the summer. In the Canary Islands, the primary destination for international tourists, accounting for almost one third of all overnight stays, visits by foreigners decreased by 3.6%(…).

According to explanations provided recently by the Head of Research at Exceltur, Óscar Perelli, these decreases reflect “the recovery of competitor countries”. Hotels, especially those on the beach, are being affected by competition in terms of prices from countries such as Turkey, Egypt and Tunisia. Those markets have recovered around 12 million tourists in recent years and they are still 20% below the levels they reached before their own crises (…).

Travellers from the United Kingdom and Germany account for 46% of all of the overnight stays made by non-resident visitors, and yet, there was a -0.9% decrease last year in the case of British tourists.

As a result, many hotels are trying to compete through promotional packages and cost reduction policies, and so prices barely increased in 2018. The Index of Hotel Prices from INE reflects a 1.5% increase in hotel tariffs, barely three decimal points above inflation for the year, making it the lowest rise in prices since 2013.

In terms of tourists who increased their hotel stays by the most, those who have to travel long distances, including visitors from the US (6.1%) are also the travellers who spend the most (€113 per tourist per day, compared with €98/tourist/day for those visiting from traditional markets), and so representatives in the sector recommend focusing promotional strategies to attract tourists from those countries.

Original story: Expansión (by Inma Benedito)

Translation: Carmel Drake

Fotocasa: Second-Hand House Prices Record Their Highest Increase Since 2006

24 January 2019 – Expansión

Second-hand housing is continuing to spearhead growth in the residential market. Not only because it accounts for more than 80% of all house sale operations, but also because it is the segment where prices are increasing by the most.

The price of second-hand homes rose by 7.8% at the end of 2018, recording the highest increase in 13 years, since 2006, before the crisis, according to data published yesterday by Fotocasa. Taking into account the fact that the online portfolio started monitoring house prices in 2006, it is the largest annual increase in the historical series. Although the prices of second-hand homes have not stopped growing in month-on-month terms for 27 months – more than two years – in 2018, they rose at a rate never before seen.

The awakening of latent demand, investor appetite and the profitability of rental properties in the context of low interest rates explain why interest has returned to property purchases, with the consequent impact on prices”, explained Beatriz Toribio, Head of Research at Fotocasa.

Despite the increases, the average house price stands at €1,869/m2, the level last seen in 2013, when the residential sector had not yet started to recover. House prices peaked in April 2007, when the price per square metre reached €2,952/m2, 36.7% higher than it is now (…).

Even though prices are still well below their historic maximums, the evolution of the market varies by area. Although the increases were widespread across almost the whole country in 2018, Toribio explains that “the intensity of the increases is very different, and there are even areas where slight decreases were registered”. Madrid is the province where prices increased by the most, specifically, by 19.5%, followed by Las Palmas (13.8%), Santa Cruz de Tenerife (12%), Alicante (11.3%), Barcelona (10.5%) and the Balearic Islands (10.4%).

The Spanish market continues to grow at various speeds, with large cities driving prices and sales. Guipúzcoa, Barcelona and Madrid are the most expensive provinces in Spain, with prices per square metre of more than €2,880/m2.

By contrast, the provinces that are suffering from depopulation and ageing demographics are recording significant price decreases (…). Toledo is not only the province that has recorded the largest decrease in prices since the peak (-55%), it is also the cheapest, with prices of €948/m2. It is followed by Ciudad Real, where second-hand homes are going for €990/m2.

Original story: Expansión (by I. Benedito)

Translation: Carmel Drake

Fiatc Invests €86M in Nursing Homes for the Elderly

24 January 2019 – Expansión

Fiatc is redoubling its commitment to the nursing home business. The Catalan insurance mutual fund, which currently manages three of its own centres in the province of Barcelona, announced an ambitious investment plan yesterday, through which it plans to reach 1,236 residential places and 305 day centre places, as well as 56 serviced apartments, and a global workforce of 600 people within the next five to six years.

This represents significant growth, given that Fiatc’s existing three centres – located in Mollet del Vallès, Sant Cugat del Vallès and Cornellà de Llobregat – contain 460 beds, 105 day centre places and 32 serviced apartments, with a combined workforce of 247 people.

The company chaired by Joan Castells, undertakes this business through its former subsidiary Inverfiatc – which exited the stock market in 2016 – and operates under the Fiatc Residencias brand.

The insurance group calculates that its new projects for the elderly will require a global investment of €86.3 million between now and 2025 (…).

Original story: Expansión (by J.O.)

Translation: Carmel Drake

Starwood Capital Finalises the Purchase of an Office Portfolio for €125M

24 January 2019 – Expansión

The fund Starwood Capital is seeking to strengthen its presence in Spain with the purchase of a portfolio of offices in Madrid and Barcelona. Specifically, Starwood is finalising the purchase of an office complex in Madrid, comprising four buildings, and another one in Barcelona from the Socimi Autonomy for €125 million, according to explanations from market sources speaking to Expansión.

In the case of Madrid, the four office blocks are located in the north of the city, inside the Omega business park, in the Arroyo de la Vega area. They span a combined surface area of 33,458 m2 and have 940 parking spaces.

The Omega Business Park, which is home to the headquarters of companies such as Samsung, BP and Allianz, is located next to the airport of Madrid and has become one of the most established areas in the north of the capital.

Besides the offices in Madrid, the operation also includes a new build property in the 22@ district of Barcelona, with a surface area of 12,596 m2.

The building in Barcelona comprises two towers connected by a common entrance hall, with twelve and four floors, respectively. The building also contains commercial premises and 216 parking spaces.

The building on Calle Pallars is occupied by tenants such as Regus, General Electric and Ticketmaster. The operation has been advised by the real estate consultancy CBRE, on the vendor side, and by Drago Capital, which has advised the buyer and which will manage the properties (…).

Original story: Expansión (by R. Arroyo)

Translation: Carmel Drake

Iberostar will Add 1,500 Rooms to its Portfolio in 2019

24 January 2019 – Expansión

Grupo Iberostar is continuing with its expansion plans and intends to add seven new hotels to its portfolio this year, containing 1,500 rooms in five countries. The new establishments will open in Palma de Mallorca and Madrid, in Spain; in Monastir and Sousse, in Tunisia, where the Spanish hotel chain already has a presence; as well as in Istanbul (Turkey), Rome (Italy) and Lagos (Portugal), where the group will make its debut.

The company, which opened 13 establishments last year, explained that 2019 is going to be “key” for the consolidation of the projects it has underway in Los Cabos and Litibú (Mexico) and for others, which are more advanced, in destinations such as Montenegro, Aruba, Albania and Cuba.

The chain, which is owned by the Fluxá family, owned 96 hotels around the world containing 31,720 rooms at the end of 2018. In Spain, the company owned 35 hotels and 9,888 rooms at the end of last year.

In terms of operational data, Iberostar closed 2018 with revenues of €2.659 billion, which represented an increase of 9% YoY, and it created around 4,000 jobs (…).

Original story: Expansión (by R.A.)

Translation: Carmel Drake

New Urban Planning Law Permits Legalisation of 350,000 Illegal Homes in Valencia

18 January 2019 – Valencia Plaza

Last Wednesday, the plenary of Les Corts approved a modification to the law governing ‘Territorial Planning, Urban Development and the Landscape’ in the Community of Valencia, better known as Lotup (‘la ley sobre Ordenación del Territorio, Urbanismo y Paisaje’), with votes in favour from the PSPV, Compromís and Podem. It is an update to legislation that, amongst many other issues, will allow the situation of around 350,000 homes constructed illegally right across the region to be legalised, according to figures published by the Generalitat Valenciana itself.

It is a controversial but necessary state of affairs, in the opinion of the Executive, which is supported by three political parties and which defends the need to give some order to a scenario inherited from previous legislatures through this initiative, as reported in Thursday’s edition of La Razón in Valencia.

When asked about the details, sources at the Housing Department explained to Valencia Plaza that these “homes, which were constructed on the margin of administrative approvals on non-developable land”, are characterised by the fact that “they lack certain basic urban services, in particular, sewerage systems”.

“After these buildings had been constructed, the passage of time since their construction gave rise to the expiry of the period for the Administration to act against them. And the legislation is lacking in terms of its ability to respond to this reality (…)”, they indicate.

According to their warnings in this regard, “the existence of these homes has an effect on the environment: the clear deterioration of the landscape that they generate and the dumping of wastewater into the subsoil without any controls or treatment, which is affecting the underground aquifers, the elimination of plant species (…) and the fragmentation of habitats”.

Individual processes for homes built prior to 2015

As a result, they highlight that “beyond safety, health and public aesthetics considerations”, the buildings and land “on any kind of land and whoever the owner”, must be conserved and maintained”, in accordance with the environment in which they are located and in accordance with the rules established by the urban planning legislation for them”.

For this reason, the reform of the law allows these residences to be legalised, although it limits itself “to buildings completed before the entry into force of Lotup (in 2015) (…)”.

According to the Housing Department, the legalisation of these homes “could be performed on an individual basis”, and they may be eligible for it “in all cases regardless of whether or not they have a file open”. Of course, provided they fulfil the requirements stipulated for it.

Solution to the ghost PAIs

Beyond that question, the update to Lotup seeks to provide a solution to the ghost PAIs. The reform reflects that in the case of urban planning projects that have been started but which have been suspended and which may have some viability, Town Halls have the option of dividing the sectors into smaller execution units so as to carry them out, step by step, and it extends the term to 10 years.

For those PAIs that are “anti-economic”, and which may be reversible, an inverse Reparcelation may be applied to return the plots to the previous legal situation and, therefore, remove the burdens on owners (…).

Original story: Valencia Plaza (by Dani Valero)

Translation: Carmel Drake

Merlin Finalises its First Major Property Sale & Negotiates with Apollo, Amongst Others

22 January 2019 – Voz Pópuli

Merlin Properties has been negotiating the sale of a portfolio of assets with Apollo for several months and it looks like the operation is beginning to take shape. Project Juno comprises assets in secondary locations, which the Socimi does not classify as core, according to financial sources consulted by this newspaper.

The portfolio includes assets such as Miniparc, in La Moraleja; Európolis, in Las Rozas; a building on Calle Josefa Valcárcel and another one on Ronda de Poniente. The portfolio has a market value well below €300 million, given that it comprises assets that are not located in the financial centre of Madrid.

In parallel, the Socimi has created Project Jupiter, a better quality portfolio than Juno, but “very dry”, worth around €300 million.

In that portfolio, Merlin has included the Trianon business park, on Vía de los Poblados; another business park in Las Tablas on Calle Federico Mompou; another building located in Campo de las Naciones; the Elipse building (Manoteras) and the Ulises building, in Arturo Soria.

Merlin Properties is also looking to create a third portfolio following the sale of those two portfolios and whereby unify it with the assets that it does not manage to sell. The Socimi has decided not to award a mandate for these portfolios in order to market them with the greatest discretion possible.

Merlin’s plan

Merlin Properties wants to increase the presence that it has in the office market in Lisbon and acquire other buildings to add to the six properties that it already owns in the Portuguese capital.

The commitment of the Socimi led by Ismael Clemente to the Portuguese market forms part of the slight rethink in the structure of the assets owned by the group.

Currently, office buildings account for 46% of the company’s assets, followed by commercial properties, which represent 40%, and logistics assets, which represent 14%. But given the pull of the logistics market right now (…), Merlin expects to increase the weight of its logistics division to 20%.

At the time of its IPO, four years ago, Merlin reported that logistics assets would account for 15% of its total portfolio.

Original story: Voz Pópuli (by David Cabrera)

Translation: Carmel Drake

Lennar Corporation Sells 30 Homes for €14M

22 January 2019 – Eje Prime

Lennar Corporation is continuing to squeeze its Socimi. Since October, Al Breck has sold thirty assets from its portfolio for €14 million. The operations have generated an accounting profit of approximately €5.8 million, according to a statement filed yesterday with the Alternative Investment Market (MAB).

This series of sales follows that of another 41 assets that the Socimi divested between June and October, whose volume amounted to €26 million and which generated a profit of €10.5 million.

The bulk of the divestments have been homes, together with storerooms and parking spaces. The plan forms part of the MAB entry strategy, which the company established when it made its debut. Then, the real estate firm owned around 639 rental homes, all located in the centre of Madrid. The Socimi formed its asset portfolio through a purchase operation from Segurfondo Investion in December 2014.

Original story: Eje Prime 

Translation: Carmel Drake

Blackstone Considers Buying Neinver from the Losantos Family for €500M

23 January 2019 – El Confidencial

Neinver, a property developer and operator of shopping centres, specialising in outlets – focused on offering discounted products – is up for sale and the US fund Blackstone is one of the buyers that is evaluating the operation. The Losantos family is asking around €500 million for the company, which has become one of the major operators in the shopping centre sector in Europe, and which would fit well into Blackstone’s portfolio given the stable rents generated by its properties and land, according to explanations provided by sources in the real estate sector.

Spokespersons from Neinver consulted about the negotiations indicated that “they decline to comment on rumours” regarding the sale operation, one of the largest underway in the sector in Spain this year from a corporate perspective.

Nevertheless, other financial sources have assured that the Losantos family has entrusted the sale of the company to Credit Suisse, which has drawn up a sales book that it has been promoting since the end of the year and which is being considered by several funds.

Blackstone is the favourite because it has already acquired assets from Neinver. In November last year, the property developer placed a package of industrial warehouses and logistics assets with Blackstone for €290 million. Therefore, this fund, the largest overseas investor in the Spanish real estate sector, is an old acquaintance of the Losantos family.

Neinver is chaired by José María Losantos del Campo. It is the largest operator of outlet centres in Spain and Poland, where it operates under two own brands: The Style Outlets and Factory. It has developed some of its assets in association with the fund TH Real Estate. In total, it has promoted and managed 16 outlet centres, and six shopping centres and retail parks (…). It has a presence in seven countries, including France, Italy, Germany, Portugal and the Czech Republic.

Neinver in numbers

Neinver recorded revenues of €93.6 million in 2017, according to the consolidated accounts filed with the Mercantile Registry. That figure represented an increase of 27% compared with the previous year.

Nevertheless, the strong performance in terms of sales was not reflected in its profits. Neinver is selling more but earning less. In 2017, its net consolidated profit amounted to €4.7 million, a third of the €16.1 million that it earned in 2016. The decrease in profitability was due in large part to the projects underway and its indebtedness.

According to the group’s consolidated accounts, the gross debt at the end of last year amounted to €466.3 million, €30 million more than during the previous year, “due to debts stemming from the new companies incorporated into the Neptune joint venture”. Neptune is the joint venture owned by Neinver and TH Real Estate.

Valuations

The €500 million asking price is without the debt. The book value of the company’s assets amounts to €913 million, according to Neinver’s own accounts. The main appeal of the company is the revenue stream stemming from the rental of its assets (…).

Original story: El Confidencial (by Marcos Lamelas)

Translation: Carmel Drake