Lar Purchases An Office Building In Madrid For €12.7 Million

24/12/2014 – Expansión

The REIT, Lar Spain Real Estate, has closed the sale with the company, Bernal Brothers Pareja, of an office building located in the center of Madrid, on Calle de Eloy Gonzalo, number 27, for a total of €12.73 million.

Built in the 1960s’, the building boasts 6,232 square meters of gross leasable area (GLA) across nine stories, as indicated by Grupo Lar’s listed real estate investment company to Spain’s National Securities Market Commision (CNMV).

The first seven floors, which are currently being used as offices, can be converted for residential use, while the entire ground floor and basement, which represent 23% of the total leasable area with 715 square meters per floor, are leased exclusively as commercial premises.

Currently, the building — just one kilometer away from the Paseo de la Castellana and within the M-30 — has an occupancy rate exceeding 95%.

As pointed out by the director of the company, Miguel Pereda, the acquisition of the building is a strategic investment opportunity for Lar Spain Real Estate, as the property has a large potential for improvement in terms of management as well as overall revenue and capital value.

With this operation, the REIT has invested €330.900 million of the €400 million it raised in the IPO, of which 176.8 million were allocated to five malls; 90.9 million to four office buildings in Madrid; 44.9 million to eight logistics warehouses in Guadalajara; and 18.3 million to three medium-sized shopping centers in Madrid and Cantabria.

Original article: Expansión (by EFE)

Translation: Aura REE

Harbert Buys The Habaneras Shopping Center From Unibail

24/12/2014 – Expansión

Spain’s real estate sector has been buzzing with activity over the past few months, and it’s going to continue up to the very last days of the year with the close of a major sales transaction. As seen with the vast majority of operations in 2014, the purchaser of the property is a foreign fund; in this case, the American group, Harbert Management Corporation, has closed the acquisition of Habaneras shopping center in Torrevieja (Alicante).

Promoted by Metrovacesa, the shopping mall boasts 64,000 square meters and more than 24,000 meters of retail space. Unibail bought the mall, which is located next to Maquinista in Barcelona, from Metrovacesa for €423 million in 2008.

Last year, the property in Alicante received 3.7 million visitors, according to the Spanish Association of Shopping Centers.

Harbert has shelled out €65 million for the property, according to industry sources. The fund, managed by Knight Frank, has created a REIT.

Unibail is one of the largest owners and managers of shopping centers in Europe and Spain. The company boasts 14 shopping centers in Spain, including Splau in Barcelona; Bonaire in Valencia; and La Vaguada in Madrid. At the end of 2011, it invested €185 million when it bought the shopping center, Splau, in Barcelona, from Acciona, making it one of the largest operations in the sector that year.

The company, which is listed on the Paris and Amsterdam stock exchange, is currently in the midst of an asset turnover in Spain.

Habaneras is not the first center to be sold by Unibail this year. The Franco-Dutch company sold Albacenter shopping mall to Lar España for €28.4 million.

New Projects

The real estate company is not only selling, but also investing in projects, such as the expansion of La Maquinista in Barcelona, and the construction of a new shopping center in Mallorca, whose total investment exceeds €255 million.

Also, Unibail is currently one of the third finalists in the bid for the Madrid shopping center, Plenilunio, for which it is willing to pay around €330 million.

Original article: Expansión (by Rocío Ruiz)

Translation: Aura REE

Bank Of Spain Claims Housing Prices Have Hit Rock Bottom After Falling 36% Since 2007

24/12/2014 – El Confidencial

The growth profile of the Spanish economy is beginning to shift. The construction sector, which collapsed after the bursting of the credit bubble between 2007 and 2008, may soon see some light. That, at least, is what the Bank of Spain estimated in its Economic Bulletin in December, which firmly states that price adjustments will come to an end in 2014.

In the words of the central bank, the indicators relating to investment in construction “point to the culmination of their price adjustment this year, after six years of recession”. During these years, construction has reduced its weight in GDP at just over 50% compared to data from 2006, when the last peak of the series was reached.

As a result, the real estate market will finally see the light again, to the extent that, according to the Bank of Spain, the decline in housing prices “may have hit rock bottom in 2014, after two consecutive quarters of small increases that would have placed their compound annual growth rate (CAGR) in the third quarter at 3%.” This means that the housing prices have fallen no less than 36% from their peak in the third quarter of 2007.

The Central Bank affirms, as a positive factor, that transfers of houses “have tended to stabilize,” according to official statistics, at an average level of around 30,000 transactions per month in the period of January to October, which is slightly higher than in 2013, “but still at very low levels,” according to the bank.

The Bank of Spain, however, does not think the problem is over just yet, and believes the recovery will be weak. “The outlook for this sector shows signs of a very moderate recovery, in which uncertainties remain,” as shown in its quarterly report on the Spanish economy. The sector’s recovery, in any case, is predicted to have been decisively influenced by developments in disposable income of households. And in particular, it is estimated that since the fourth quarter of this year, household spending has grown in terms of consumption, in which quarterly growth rate could be placed at 0.6%, and also in terms of residential investment, in which “a small increase may be seen, after the positive rate that appeared in the third quarter (for the first time since 2007).”

The greater buoyancy of household spending stems from growth in employment, which may have exerted a favorable effect on disposable income and confidence, as well as improved financial conditions. Interest rates on loans for housing purchases fell 29 basis points between June and October (according to the latest available data), up to 3%, while the cost of consumer credit and loans for other purposes remained virtually unchanged at 7.2%.

Nevertheless, the inflation rate is predicted to remain negative in the coming months, which reveals the weakness of this increased consumption. Moreover, the Bank of Spain reveals that forecasts show inflation to be decreasing, estimated both for this entire year (with an estimated decline in the GDP deflator of 0.4%) and for 2015 (with an estimated increase of 0.4%). That is to say that the deflation has begun in the year 2014.

The growth in consumption is partly associated with the fact that credit institutions “have continued to gradually transfer a decrease in its sources of funding to the cost of bank loans to businesses and families.” The Bank of Spain, in particular, noted “some increase” in new credit operations for the private sector, in which the rate of decline in corporate and household debt is diminishing, more sharply in the case of families.” According to the report, “All this helps to stabilize the financial position of firms and households and is favorable for spending and investment decisions within the private sector.”

Other factors that influence the recomposition of disposable income of households have to do with the depreciation of the exchange rate of the euro as well as the current “significantly reduced” oil prices.

Original article: El Confidencial (by Carlos Sánchez)

Translation by: Aura REE

Renta Corporación In A Joint Venture With Kennedy Wilson

24/12/2014 – El Mundo

Renta Corporación has signed an agreement with Kennedy Wilson Real Estate Europe to create a joint venture with the aim of investing in residential buildings in Spain; the company has notified the National Securities Market Commission (CNMV).

Renta Corporación will have a 10% stake in the joint venture and assume the role of an operations manager. It has also signed the first transaction of purchase and conversion of an office building into luxury homes, located at Calle Santísima Trinidad, number 5, in Madrid, with a planned investment of over €10 million.

The two partners plan to start marketing these new homes in the third quarter of 2015.

Renta Corporación successfully carried out a growth capital operation through which SAREB became a shareholder of the realtor with a 4.9% stake.

With this operation, approved at a shareholders’ meeting in early November 2014, the company has let creditor banks take part in its capital structure; these creditor banks have opted to swap their debt for shares of the company that recently overcame an insolvency proceeding.

Specifically, SAREB has acquired shares representing a 4.9% stake, while ING and Banco Popular – 3% each, and Banco Caixa Geral – 2%.

The start of trading of the new shares is to take place just a little over a month after October 30, 2014, the date on which Renta Corporación resumed its trading after winning the bid in which it had been involved in since March 2013.

Original article: El Mundo (by Europa Press)

Translation: Aura REE

Sareb Gets Rid Of And Sells Portfolios Valued At About €850 Million

24/12/2014 – Expansión

Madrid, Dec 23 (EFECOM) – Sareb, the company responsible for outputting many of the toxic assets of the Spanish banking sector, advances its divestment process and has allocated portfolios worth €847 million in the last period of the year.

The company has mainly allocated loan portfolios to large foreign investors that are backed by hotels, residential properties and homes, in addition to closing transfers of other rental properties and office buildings.

In a statement, the CEO of SAREB, Jaime Echegoyen, explained that the diversity of operations are a reflection of the wide range of the company’s portfolio and type of assets.

Amongst the transactions closed in the latter part of the year is the “Agatha” portfolio, which was partly allocated to a consortium led by investment fund, Hayfin, and partly to the investment firm, DE Shaw.

Hyfin has acquired 38 non-performing loans with a nominal value of €194 million secured by 29 buildings of rental housing, located mainly in Madrid, while DE Shaw has acquired 10 rental housing developments also located in Madrid and valued at €65 million.

Furthermore, the real estate company, commonly known as the ‘bad bank’, has recently allocated the “Olivia” portfolio to the investment fund, Hayfin, which is made up of seven non-performing loans with a nominal value at €140 million.

In this case, the loans are secured by a collateral of residential and commercial locations in the province of Valencia.

Alongside these operations, the statement said, Sareb is in the process of completing the project called “Kaplan,” with which it intends to year end get rid of loans to SME’s promoters with a nominal value of 234 million and guaranteed for the most part residential assets and land.

In addition, these operations have also been sold in the last few days to foreign lending investors at a nominal value of €133 million, which were part of the “Meridian” portfolio, secured by 26 tourist establishments in Spain, which amount to more than 2,700 rooms in operation.

The properties are located in six regions of Spain, although the majority are situated in the provinces of Valencia, Barcelona, Alicante, Almeria and Cadiz.

In parallel to these four transactions, Sareb recalls that it has recently closed the sale to funds managed by Blackstone of four office buildings in Madrid, located in the northern part of the city, leased with an average occupancy of over 90%.

It is only in this last operation that the company has finally gotten rid of nearly 40,000 square meters of office space for more than €81 million. EFECOM

Original article: Expansión

Translation: Aura REE

The “Brick” Returns To GDP

24/12/2014 – El Mundo

The construction sector generates new growth after six years of decline. The “strength” of consumption and investment boosts the economy by 0.6% this year, the largest quarterly increase in the crisis.

Yesterday, the Bank of Spain affirmed the economic upturn of the national economy in its December economic bulletin, confirming that Gross Domestic Product (GDP) will grow by 0.6% in the fourth quarter –the biggest rise since the start of the crisis–, and the year will close with an increase of 1.4%. To achieve renewed economic stability, Spain will rely on the same factors as prior to the crisis: the “strength of private domestic demand” and construction, marking the end of its cutbacks “after six years of contraction.”

Thus, Spain will return to the economic model that allowed significant increases in GDP in the late 1990’s and beginning of the new millenium; years of success that came to an abrupt end when the crisis hit. It is true, as pointed out by the Bank of Spain, that the outlook for the construction sector “shows, in any case, signs of very moderate recovery, not yet free from uncertainties”; however, “the indicators relating to investment point to the end” of a process that has caused the weight of this sector in GDP to fall by more than 50% compared to 2006.

Also, within the labor market, the institution notes that, “In terms of monthly rates, the construction sector will see a notable rise in the rate of job creation.” Furthermore, the document states that “A slight increase is observed in approvals for new residential construction projects.”

As for domestic demand, the institution led by Luis María Linde emphasizes its “strength,” while asserting that it has maintained the “dynamism” thanks in part to “the positive growth in confidence and employment.” The Bank also adds that “household spending has increased in the fourth quarter, both in terms of consumption and in residential investment, which may have experienced a small increase.”

The positive performance in domestic demand stems from the fall in external demand that, during the worst years of the crisis, was one of the few pieces of positive news. In fact, the Bank of Spain said that, “If the forecasts are confirmed, the foreign sector will have contributed negatively to GDP in 2014,” something that had not happened since 2007, i.e., since before the economic turmoil began to be noticeable in Spain.

This dataset comes to agree with the many economists and analysts who in recent months have ensured that the Government has missed a great opportunity to change and modernize the national economic model. In addition, one of the “fundamental bases” of recovery, warns the Bank of Spain, is wage moderation. Therefore, “the return procedures — based on generalized wage increases that extend uniformly to all sectors and companies — would be a step back that could disrupt the recovery of competitiveness of the Spanish economy.”

The December economic bulletin also addresses the decline in the inflation rate, “which has intensified in the fourth quarter, beyond what was expected a few months ago, as a derivation of the acceleration of falling oil prices in the final stretch of the year.” This has led the Bank of Spain to correct its forecast for oil prices, which in July stood above 107 USD for the next year and has now lowered to 68 USD.

To maintain moderation of crude oil, the CPI will continue “in negative territory during the early part of 2015” and the current deflationary rather than disinflationary context will continue, because the organization does not relate at any time this phenomenon with the Spanish economy. It does, however, relate it to the Eurozone, where this circumstance could push the European Central Bank (ECB) to take further unconventional measures in the form of purchases of government debt.

Finally, in terms of employment, the Bank of Spain notes that “employment has increased in 2014 to a rate close to 1%”, although it points out improvement “has focused on temporary employment.”

Original article: El Mundo

Translation by: Aura REE

Liberbank returns €124 Million To Frob

24/12/2014 – El Mundo

Liberbank has retired in advance the issued contingent convertible bonds (CoCo’s) of €124 million purchased by the FROB within a plan to recapitalize the company, through which it has returned the aid. With this, the company has a blue-chip capital ratio of 13.5%, far exceeding the minimum requirement of 8%.

Original article: El Mundo

Translation: Aura REE

Mortgage Resurrection Continues In October: Up 18%

24/12/2014 – Cinco Dias

The signing of new mortgages for home purchase rose 18% in October, for the fifth consecutive month in comparison to last year; although the increase was lower than in the previous month, which was 29.8%.

According to provisional data published today by the National Institute of Statistics (INE), last October, 17,687 new mortgages were signed to buy homes, compared to 19,323 signed in the previous month, marking a monthly drop of 8.5%

Also, the total cost of these loans stood at around €1.766 billion in October, nearly 15% up from last year and 15.2% less from the previous month.

Meanwhile, the average amount of mortgages went back down to 100,000 EUR and stood at 99,866 EUR in late October, which is 7.4% less than in the previous month and 2.6% less than in the same month in 2013, according to the INE.

92.8% of the mortgages signed in October use a variable interest rate, compared to 7.2% that use a fixed rate. The euribor is the most common reference in constituting variable interest rate mortgages, specifically in 89.7% of new contracts.

The average interest rate at the beginning of the mortgage for the total number of properties is 3.78%, while the average time is 21 years. The average interest rate, at the beginning, for the mortgages on residential property is 3.6 percentage points, 14.1% lower than in October 2013.

Original article: Cinco Dias

Translation by: Aura REE

‘The Bad Bank’ Sells Real Estate Assets Worth €847 Million

24/12/2014 – Yahoo Finanzas

MADRID (Reuters) – The so-called ‘bad bank’ in Spain said on Tuesday that in the end of 2014 it had allocated several real estate properties in the wholesale market worth €847 million.

SAREB did not disclose how much of these amounts would be quantified as gross revenues for the company – constituted in 2012 in return for European aid of €41.3 billion granted to Spain-, because it is not dealing with selling prices, a spokeswoman acknowledged.

The growth of SAREB’s income statement is under scrutiny of international investors after the president of the institution itself, Belén Romana, said earlier this year that the company had to revise its initial business plan — which envisages an annual average return of 14 percent throughout SAREB’s 15 years in operation — after completion of the due diligence of nearly €50 billion in assets.

In June 2014, SAREB closed with revenues totalling at €1.7 billion.

Financial sources recently told Reuters that SAREB could return to incur losses for the second consecutive year in 2014, likely having to make bad-debt provision for a part of its assets held in its book balance to meet market prices, causing further damage in its capital base.

Among the transactions closed in the latter part of the year are four portfolios of real estate loans that were sold for a nominal amount of €701 million, which included the ‘Agatha portfolio’ as well as a subsection of 10 property developments valued at €65 million.

In addition to these four transactions, SAREB recently closed the sale of four office buildings in Madrid to funds managed by Blackstone at a cost of more than €81 million.

Original article: Yahoo Finanzas (by Reuters)

Translation: Aura REE

Bankia Buys Its IT Hub For €130 Million

24/12/2014 – Expansión

BUILDING IN THE ROZAS / The public bank will keep the building that houses its data center, a property that London & Regional fund had also made a bid for.

Not all real estate is in exile. Bankia has purchased an office building located in Las Rozas (Madrid), where the public bank holds its IT services, for €130 million. The property belonged to the Swedish group, Seb Group, which Caja Madrid had acquired back in 2010 for €108 million through one of its funds.

At the time, the Madrid-based company, one of Bankia’s seven founding savings banks, came out with a capital gain of about €48 million and agreed to remain as a tenant for thirty years through a sale & leaseback agreement. Moreover, the company reserved the right of first offer throughout the lease period if transmitted by the owner.

The building, which boasts an area of 43,700 square meters spread over six floors, began to house Bankia’s IT and computer-based services, once the seven savings banks were integrated.

Seb put the property on the market a few months ago in order to take advantage of investor appetite for office buildings in Spain. The asset aroused the interest of many investors, such as the British fund, London & Regional Properties, which had already bought Vodafone’s Madrid headquarters from Solvia, Sabadell’s real estate division. Seb was hoping to get a price close to €110 million.

However, Bankia decided to exercise its right of first offer and has bought the property for about €130 million, according to EXPANSION’s sources with insider knowledge on the transaction.

No need for capital.

Bankia jumped on the window of opportunity that opened when the owner decided to divest. The financial institution, under the chairmanship of Mr. Goirigolzarri, considered the purchase a good move as it was no longer restrained by the capital requirements that Caja Madrid had when it sold its IT offices in 2010. Today, four years later, and without these solvency problems, Bankia has bought the property at an attractive price, and in turn, will save in future rent and also complete a transaction which bears financial returns, explained the same sources.

Constructed in 1991, the former Office Building and Computer Center of Caja Madrid is the work of Jerónimo Junquera and Estanislao Pérez Pita, who won the prize of Architecture of the Community of Madrid and 2nd National Architecture Award.

Seb has recently sold off other assets in Spain, as have several other logistics platforms purchased by Blackstone.

Original article: Expansión (by Gemma Martínez)

Translation: Aura REE