Grupo Lar Invests €11.5 Million In A Shopping Center

23/12/2014 – Expansión

Lar España Real Estate Socimi, listed real estate investment company of Grupo Lar, has acquired a hypermarket and two locations in the Albacenter Shopping Center in Albacete, for €11.5 million, said the company yesterday to the Spanish Securities & Exchange Commission (CNMV).

The shopping mall was acquired by Lar in July 2014, thereby strengthening the company’s position as a market leader.

Assets acquired by the company, Joparny, have a gross leasable area of 12,486 square meters and currently have tenants such as Eroski, Primark and Orchestra, reports Europa Press.

Investments

With this operation, the REIT (Real Estate Investment Trust) which is managed by Grupo Lar, has already invested €318.1 million of the €400 million raised in the IPO, of which €176.8 million were allocated to five shopping centers in the Basque Country, Palencia, Albacete, Barcelona and Alicante; €78.1 million to three office buildings in Madrid; €44.9 million to eight logistic warehouses in Guadalajara; and €18.3 million to three medium-sized shopping centers in Madrid and Cantabria.

The REIT, which debuted on the stock exchange on March 5, acquired €1.4 million through September, with a negative EBITDA of €524,000 due to operating costs for its implementation and acquisition of assets.

Original article: Expansión

Translation: Aura REE

Renta Corporación Raises Capital Making SAREB Shareholder

23/12/2014 – Expansión

Renta Corporación has completed its growth capital investment move, turning SAREB into a shareholder of the real estate company with a 4.9% stake, by beginning to trade securities issued by the company as part of the operation on Monday.

The real estate company has started negotiations over the 5.6 million new shares for capital increase last week, after obtaining the required authorization from the National Securities Market Commission (CNMV).

Through this very operation, approved on a shareholders’ meeting in the beginning of November this year, Renta Corporación has welcomed its capital structure creditor banks that have opted for a debt-equity swap with shares of the company, which recently overcame a state of insolvency.

In particular, SAREB has acquired shares representing 4.9% of its capital, while ING and Banco Popular – 3% each, and Banco Caixa Geral – 2%.

Trading these new shares takes place just over a month after October 30th this year, when Renta Corporación regained its listing on the stock exchange after finally overcoming insolvency proceedings that it had been subjected to since March, 2013 .

Original article: Expansión (by Marcos Lamelas)

Translation: Aura REE

Martinsa Fadesa Offers Banks 70% Of The Company

23/12/2014 – Cinco Días

Martinsa Fadesa has offered its creditor banks to swap much of the €3.5-billion debt, currently guaranteed by stock of the real estate company; thus, financial institutions would come to control a 70% stake in the company.

The remaining 30% of the realtor’s equity would remain in the hands of its president and current top stockholder, Fernando Martín, and his partner, Antonio Martín, according to sources from the company cited by Europa Press.

The debt-equity swap would be a major proposal of the plan that Martinsa Fadesa has revealed this Monday to its fourteen bank creditors in order to obtain debt refinancing before December 31st and avoid liquidation.

The real estate firm, which overcame the biggest insolvency proceeding in history back in 2011, offers its lenders to swap another 34% of the debt with a transfer of real estate assets.

According to a source of Europe Press from Martinsa, the banks have required further details on some of the terms of the proposal. The realtor expects to provide those details tomorrow, on Tuesday, in order to continue negotiating in its quest for an agreement.

Original article: Cinco Días

Translation: Aura REE

Foreclosures On Homes Of Primary Residence Up 13,5%

23/12/2014 – Cinco Días

24.240 mortgage foreclosures over the third quarter

Between June and September, the number of homes of main residence foreclosed due to unpaid mortgage has gone up to 6,787 – 13.5% more than over the same period in 2013 but 29.4% less than in the previous quarter.

According to research published today by the National Statistics Institute (INE), looking at initiated foreclosures and new entries in the property registers, these foreclosures have increased by 10.5% up to 23,240, although they fell by 29.5%, when compared to the period from April-June in 2014.

Most of them, 22,135, were urban properties – 9.8% more than last year’s but 29.4% less than the previous quarter’s, while the remaining 1,105 were rural properties – 25.4% more than in 2013, although 30.4% less than between April and June this year.

13,741 or 59.1% of the total of urban properties were residential housing units, which translates into an increase of 11.7%, compared to 2013, but this is 28.3% less than in the previous quarter.

A total of 8,870 or 29.2% of them were owned by private owners (up 14.7%), while 4,961 or 21.3% by businesses (up 6.8% ), and 8.6% by private individuals.

Mortgage foreclosure is a measure which orders a mortgage-holder defaulting on their obligations to sell the real estate property, but judicial proceedings may lead to several outcomes of a foreclosure process and not all initiated foreclosures end with the release or eviction of the homeowners.

The spokesperson of the Spanish Banking Association (AEB) commented on the matter before Efe, pointing out that this is, to a large degree, due to the fact that banks have helped more than half a million families refinance their mortgage loans in order to adjust them to their current ability to pay.

Overall, the INE states that in the case of evicted private property owners, 77.3% were from their main residence address (up 13.5%), while another 1,993 were not (up 18.9%). Taking as a frame of reference the number of family dwellings in Spain during the third quarter (18,355,700), foreclosure proceedings were initiated over 0.0037% of them.

The real estate webpage, Pisos.com, has expressed its concern as in most of those cases the value of the property is lower than that of mortgage (i.e. having negative equity), which prevents it from being sold to pay off the debt, although it also points out that, though upturns are forecasted in the short run, particularly for housing bought before 2008, ‘’prospects are weakening” and figures will start declining in the medium term.

In terms of their condition, 16.4% were new homes and 83.6 % used ones, representing a decrease of 6.2% in the former and an increase of 16 % in the latter.

However, on a quarterly rate, these figures were lower 17.7 % and 30%, respectively.

19.2% of initiated foreclosures on homes corresponded to mortgages signed in 2007, while 17.2% – in 2006, and 12.5% – in 2005.

It was mortgages signed during the 2005-2008 period that mustered the highest number registered in a third quarter, amounting to 60.7%

From within urban properties, 3.6% more were evicted from other types of properties such as stores, garages, storage rooms, offices or warehouses, thus reaching 7,631 as well as 37.9% more from plots of land, more specifically, 1,033.

By autonomous regions, the highest number of mortgage proceedings were registered in Andalucia with 5,771; Catalonia with 4,066; and Comunidad Valenciana with 3,652; in contrast, the lowest were Navarra with 89; Cantabria with 151; and Asturias with 292. Andalucia was on the top of the list of evictions with 3,223, followed by Catalonia – 2,856, and Communidad Valencia – 2,241, while Navarra was the region which registered the fewest – 64, as well as Cantabria – 69, and the Basque Country – 84.

The INE highlights that 0.18% of all mortgages signed between 2003 and 2013 underwent foreclosure proceedings during the third quarter of 2014.

Original article: Cinco Días

Translation: Aura REE

The CNMV Permits Hispania´s €157 Million Takeover Bid of Realia

23/12/2014 – Expansión

Spain’s National Securities Market Commision (CNMV) has begun processing the public takeover bid that Hispania has proposed for the 100% takeover of Realia, a real estate company that is currently controlled by FCC and Bankia.

The REIT (Real Estate Investment Trust), owned by George Soros, has raised its offer at a price of €0.49 per share, bringing the amount of the transaction to €157.7 million. Nevertheless, the price is 20% less than the approximately €0.600 at which Realia currently trades.

The market watchdog has agreed to accept the bid application, but reminds the company that this admissibility “does not constitute a decision on the authorization of the takeover bid or any of its terms.” As indicated, this authorization will occur “in accordance with the terms and condition” under the law.

Last week, Hispania sent the application to the CNMV for authorization of the tender offer, as well as the prospectus of the operation and a guarantee for the full amount of the transaction issued by Santander and CaixaBank .

Hispania formally submitted its offer on the same terms and conditions announced late last November, and after reaching an agreement with the three funds currently listed as major creditors of Realia.

With this agreement, the REIT has already secured one of the two aspects that were conditions of the offer. The second requires the bid to achieve an acceptance of at least 55% of the real estate company’s capital.

Make it to the list of REITs

Hispania’s plans for Realia after the public takeover bid include converting the company into a listed REIT, which will continue to trade on the stock market and securing the position of the firm, owned by Soros, as a leading shareholder with a stake of up to 58% of its capital.

The new REIT, Realia, will focus on the management of its assets and proceed to sell the land and housing business that it still owns.

Realia is the subject of a possible takeover bid just one year after both the company and its two leading partners handed the sale over to Goldman Sachs. FCC and Bankia control 36.8% and 24.9% of its capital, respectively.

Original article: Expansión (by Europapress)

Translation: Aura REE

Cerberus Fund Buys SAREB Hotel Loans For €200 Million

23/12/2014 – Preferente.com

Debt portfolio with 25 hotels as underlying assets

Cerberus has reached an agreement with SAREB to buy a portfolio of loans secured by the 25 hotels whose total worth amounts to about €200 million. The sale of the Meridian Project was one of the most interesting deals of the bad bank.

As El Confidential reminds, José María Aznar Botella – son of former President Aznar and the Mayor of Madrid, Ana Botella – is one of the partners of the purchasing fund, which apparently has decided to increase Spanish presence in its top management in order to qualify for major real estate transactions in Spain.

This summer, Cerberus bought the nationwide real estate division of Sotogrande for over €200 million from NH Hotels. In the hotel loans market, another recent and important transaction was the sale of a €400-million package of loans with 27 hotels as underlying assets to Starwood Capital and Sankaty by Bankia.

Original article: Preferente.com

Translation: Aura REE

Banco Sabadell Sells Its Receivables Management Business To Lindorff For €162 Million

23/12/2014 – Expansión

Sabadell has closed the sale of its unpaid debt management and collection business to Lindorff Spain for €162 million, a deal that will generate a gross gain for Sabadell of the same amount.

In a note to the Spanish National Securities Market Commission (CNMV), Sabadell has stated that, after obtaining the necessary authorizations, it has signed as of today a purchase agreement with the firm.

On July 28 this year, Sabadell announced this transaction, which is also supplemented by an agreement with a provision regarding a service of bad debts collection and management for an initial period of ten years.

Lindorff Group, a business group dedicated to collection management, currently has 3.500 employees in the eleven countries where it operates, among which are Norway, Finland , Sweden, Denmark, Russia, Germany and Spain.

Original article: Expansión (by EFE)

Translation: Aura REE

UBS Estimates Housing Prices Could Fall Another 8% In 2015

22/12/2014 – Bolsamanía

The sector’s size has shrunk from 12% to 4% of GDP

Housing price may not have reached rock bottom yet. According to a study commissioned by the Swiss bank UBS, the price adjustment in the housing market for 2015 may vary between 5% and 8%. The report states that the improvement will be “weak and unequal,” although it is detecting signs of recovery in the real estate market.

Housing market recovery – slight, slow and unequal

UBS considers the housing market recovery ‘‘slight, slow and unequal’’. In its report on the Spanish economy, cited by Idealista, the bank mentions that issued home building permits totalled less than 34,000, compared to 865,000 back in 2006.

It also points out that the number of dwellings currently being built had plummeted down to 37,000 units  back in 2013. It also highlights almost two million jobs have been lost in the sector and its relative importance has gone from making up 12.5% of GDP down to only 4% at present.

DIFFERING STATISTICS

UBS also points out the discrepancies between official public figures and estimates of private financial institutions. While official authorities speak of a 30% fall, the rest move it up to 40%.

Furthermore, the Swiss bank estimates the price adjustment process will go on throughout 2015. Moreover, it highlights that on average a price decline between 1% and 3% nationwide over the next period will turn up in data from real estate agents. The decline will be higher in official statistics which calculate that the average housing price decrease in Spain will fluctuate between 5% and 8% over the next year.

Original article: Bolsamanía 

Translation by Aura REE

Martinsa And Reyal Face Liquidation With €7.5 Billion In Debt

22/12/2014 – Expansión

FUTURE / These two real estate companies are on the brink of extinction as they have not yet reached an agreement with their creditors to restructure their balance sheets. In January, the extension of the legal provision allowing them to not record their assets’ losses in value will end.

Descubra Or

Once giants in the Spanish economy and now on the brink of disappearing — this is the bitter road that Martinsa Fadesa and Reyal Urbis have been on over the last eight years. The future does not look so bright for the two largest real estate companies of the last decade, as they have not yet reached an agreement with their banks to clean up their accounts.

The two real estate companies’ financial debt totals at more than €7.5 billion; liabilities that stem from the financing obtained throughout the real estate bubble and that the companies have been bearing over the last couple of years in their balance sheets.

The most extreme case is that of Reyal Urbis. The real estate company filed for bankruptcy in February 2013 and has not yet reached an agreement concerning its financial situation. With a debt of €3.978 billion, according to the bankruptcy report, in addition to a net worth gap of €2.878 billion, Rafael Santamaría’s company only has assets worth €1.474 billion. After four refinancing attempts, the banks have chosen to agree with the realtor to sell off some of its assets in order to obtain liquidity. Without these properties, which used to generate the little income it has now, Reyal Urbis looks headed towards an orderly liquidation process.

No agreement

Although it seems as though Reyal’s future will be decided next year, Martinsa Fadesa’s future will be known shortly. The realtor has been negotiating new payment conditions with its creditor bank for the past eight months, after failing to cope with the first debt reimbursement in December 2013 that was set forth in the agreement resulting from the bankruptcy proceedings in 2011.

The real estate company, which owes €3.5 billion to its banks in addition to the liabilities of commercial creditors and the tax agency, only sees one viable option: to receive relief on 80% of its debt and pay off the rest with its assets or shares, especially those of its foreign subsidiaries. The bank would accept a significant debt relief in exchange for Fernando Martin, president and leading shareholder of the group, ceding some degree of control over the management of the company.

These entities, which are awaiting a new proposal from Fernando Martín, firmly rejected the company’s last request for refinancing on favorable conditions. Since there is no agreement as of yet, the creditors are already preparing for liquidation of the company.

Another real estate company that finds itself in trouble is Nozar. In the case of the Nozaleda family’s real estate company, which filed for bankruptcy in 2009, the financial institutions are in opposition and have not yet come to an agreement. While Iberia Investments Limited, Hypothekenbank Frankfurt, Sabadell and Bankia have backed a proposal which includes a debt relief of up to 50%; BBVA, Santander, Popular and CaixaBank have opposed it. The bankruptcy trustees do not support this plan either.

After having approved the agreement in September, the judge must respond to the appeal. In this case, an agreement between the creditors and the Nozaleda family does not seem possible, thereby placing the final decision in the hands of judicial authorities.

Negotiations between these three real estate companies and their creditors took place just a few weeks prior to expiry of the extension of the Royal Decree-Act 10/2008, which allows companies to avoid dissolving due to the losses generated by depreciation of assets. In the last extension, granted earlier this year, Spanish Government officials warned that this was the last time the law could be extended and called on troubled companies to sort out their situation within 12 months. Now, even amongst industry insiders, it is understood that a further extension would be meaningless, having had six years to solve their financial problems. Without further extension, Reyal Urbis and Martinsa Fadesa will file for liquidation, so the next days seem vital for their future.

Original article: Expansión (by Rocío Ruiz)

Supreme Court Revolutionizes Real Estate Industry By Justifying Rent Reductions Due To The Economic Crisis

22/12/2014 – El Confidencial

Court Rules In Favor of Accor Hotel Chain

The Supreme Court has ruled on a delicate issue. Last Thursday, the highest judicial body ruled in favor of a rent reduction under the clausula rebus sic stantibus (Latin for ‘things-thus- standing’ clause). The Civil Chamber has considered a legal doctrine which states that: “The clauses in contracts are set forth given the existing circumstances at the time of the conclusion of the contract. Any fundamental change in those circumstances may allow for amendment of the clauses.”

The particular case that has led to the Supreme Court’s decision affects the Spanish subsidiary of Accor Hotels, represented by the law firm, Ashurst. The Supreme Court has accepted the luxury hotel brand’s request for a rent reduction in a contract that was in force. The appeal was brought against an earlier ruling of the Provincial Court of Valencia that had denied them application of clausula rebus sic stantibus in a rental agreement for a hotel situated in Valencia.

According to the ruling, the rent agreed-upon in the contract is to be reduced by 29% and the landlord (who, prior to litigation, refused to renegotiate the contract) is to be obligated to return 29% of the rent paid from the date on which the lawsuit was filed. The Supreme Court justified the flexible interpretation of the legal doctrine by taking into account that a contract may be amended if exceptional or unforeseen circumstances arise after signing the contract; this applies to circumstances that may drastically change the economic basis of the contract, thereby making it onerous to enforce compliance.

As stated in writing, “…hereby proceeds the amendment of the contract, dated February 25th, 1999, regarding the rental agreement of Hotel Ibis [the brand under which Accor operates], in order to reduce the annual rent by 29% with respect to the rent agreed-upon at the time the lawsuit was filed.” In addition, it specifies that, “The rent reduction shall apply from the filing of the application for this lawsuit until the beginning of the fiscal year 2015, with the consequent return of rent charged in excess throughout the course of these proceedings.”

To date, this classic legal doctrine has only been applied under very exceptional circumstances. In this case, the Supreme Court understands, after partially accepting the demands of the appeal, that the economic crisis experienced over recent years is a factor that the interested parties could have never foreseen at the time in which the contract was signed, and that this factor may fundamentally change the circumstances related to the obligations set in the agreement. The Supreme Court also acknowledges as a valid argument the 50% rent and hotel rating reduction (down to 4 stars) which another hotel chain, Eurostars, managed to obtain from its landlord.

According to the legal team led by Oscar Franco and Juan Racionero, from the department of Litigation and Arbitration at Ashurst, we can expect the Supreme Court to uphold this criterion in future cases, which could greatly impact hotel companies, shopping malls, and businesses from other sectors entering into important real estate agreements in order to exercise their economic activities. “The implications of this legal precedent are very relevant for the hotel and real estate sectors, since they were particularly affected by the economic crisis.”

Original article: El Confidencial (by Carlos Hernanz)

Translation: Aura REE