Category: NPL & REO

Ministry of Development Announces Governmental Plan to Unify Real Estate Market

The secretary of Infrastructure Department announced that a new plan drawn by the Government, establishing cooperation between the State, all autonomous communities and regional entities, will guarantee unity of the real estate market and town planning.

The measures have been set up in order to facilitate operators related to housing, city planning and land “to work in a more productive and efficient market, with less expenses and more benefits for common good” tells the Ministry. (…).

Last Friday, a conference has taken place that involved participation of the Spanish Federation of Municipalities and Provinces (briefly called FEMP in Spain). At the meeting, a conclusion was made that “cohesion of the market is essential for Spanish economy competitiveness”.

According to the secretary, Rafael Cátala, once the new regulation into force, (…) in the second quarter of the year, steps will be taken to create new workplaces. (…).

 
 
Original article: La Información (Europa Press)
Translation: AURA REE

House Sales Jump by 60% in January & Price Rises by 9%

According to statistics provided by the General Council of Notaries, in January number of house purchases rose by 59.2%, whereas prices increased by 8.9%. The appreciation results from real estate market normalization due to removing fiscal benefits on house purchase at the beginning of 2013.

In January, the notaries entered into registry 23.368 transactions, that is by 59.2% more in comparison to 2012 but in terms of series adjusted seasonally, the rise is equal to 55.9%.

When it comes to type of housing, the sales of flats showed the highest appreciation in year-on-year terms (+55%), whilst the sales of single-family house purchase climbed by almost 80%.

Similarly, pre-owned house sales went up by 48.5% to 15.085 transactions, whereas new houses reached 2.717 operations that doubles the number of the units acquired a year before (+109%).

In case of flats, their price increased by 12.1% to 1.421 €/sqm and in regard to single-family homes the average price was set at 1.038 €/sqm, by 2.7% more than in January 2012.

Talking about mortgages, the statistics show that they also benefit from the improvement within the sector, in spite of the persisting fall in mortgage signing.

Loans reduced by 6%

Thus, the number of new mortgages signed in January represents 16.721 contracts (a 6% fall in year-on-year terms). The correction slightly goes up in reference to seasonal series (+6.2%). Average amount lent showes €122.449 that improves the performance by 8.2%.

Mortgages granted for property purchase reached 54% on year-on-year basis to 8.561 contracts, due to an increase in mortgage granting for house acquisition (+58.5%), while for the rest of properties it was of 19.9%. Continuing on topic of homes, average amount set at €113.966 euros (6% more). In turn, mortgages on construction went up by 36.8% to 224 new contracts for mean quote of €284.448 (-18.8%).

Finally, percentage of property purchases financed by a mortgage represented 33.3%. Moreover, average amount was equal to 73.9% of total value, more than in the previous months.

Original article: Expansión (Europa Press)

Translation: AURA REE

Pimco Seeks Real Opportunities in Spain

Pimco, the largest fixed income manager in the world, is exploring Spanish market in search of both credit portfolios and other assets, including property. The company operates on behalf of equity fund Bravo that awaits any real estate investment opportunity. “We believe that the prices have reached the rock bottom level and although the housing stock is still in excess, we reckon the prices will stabilize in 2015 and 2o16. ” That is why Pimco pursues at strenghtening ties with Sareb.

Except for Spain, where Pimco invested into a Socimi of Grupo Lar that became listed few days ago, the company sees great potential in peripheral countries and in Germany. (…).

“Debt constitutes considerable part in all our portfolios and, in fact, we attended a Treasury bill tender last week.” says Nicola Mai, company´s manager who also points out support at debt issues of the Madrid´s Community, Galicia, Aragon and Castilla-La Mancha . (…).

Additionally, Pimco makes great profits from subordinated debt and preferred stock of BBVA, Bankia or Sabadell, while it does not show much interest in senior debt, nor in Spanish corporative debt (…).

Mai notices that “Spanish financial system is already improving and the stress test by Oliver Wyman was quite strict.” (…). Despite that, the executive does not foresee credit granting to firms and families before 2015. (…).

 
 
Original article: Expansión (Ana Antón)
Translation: AURA REE

Lone Star, Blackstone & Apollo Compete for Eurohypo

Sale of Eurohypo in Spain is taking shape. Lazard, an investment bank, coordinates the sale of the largest credit portfolio in Europe, valued at €4.500 million and widely known as the Octopus Project. In the upcoming days, the company will announce who will take part in the final bidding.

Among the sure finalists there are allies of Lone Star and JPMorgan, Apollo and Santander, and Blackstone and Deutsche Bank. According to sources with knowledge of the process, by now the largest amount has been proposed by the first pair.

Once the finalists chosen, an exhaustive revision of all assets will be run and it is said that their price might exceed €2.000 million.

Quality portfolio

Among the items put up for auction there are debt of Bami, Martinsa-Fadesa, Testa, Inmobiliaria Chamartín, big shopping malls like Zielo de Pozuelo, H2O and a Ritz hotel in Madrid. (…).

Right now, the most determined investor seems to be Lone Star.  The U.S. fund was among the first to arrive to Spain but has not closed any significant transaction yet. (…) At the bidding, the company will go hand in hand with JPMorgan.

In turn, Blackstone has been only buying subsidized houses in Madrid by now. (…) The fund formed alliance with Deutsche Bank.

The third serious player is Apollo. The U.S. fund has already acquired Evo Banco and Altamira (apart from other Spanish assets) and now is seeking good quality assets at bargain prices, supported by Santander.

 
 
Original article: Expansión (Jorge Zuloaga)
Translation: AURA REE

Sareb to Focus on Land Management This Year

Sareb begins new phase stated in its 2014 strategy: intensive asset sales in terms of intergrated business planning. César Barrasa, Portfolio executive for the bad bank, boasts of the achievements of Sareb during the first year of the company´s lifespan referring to it as a “success story”.

Sales

“Fourteen months ago, there were only 4 people managing €38.000 million in assets transferred from the Group 1. During this period, we have sold out assets from 49 out of 50 provinces and we have redeemed €1.000 million senior debt and €1.200 million of interests.”

At the end of 2013, Sareb gains were equal to €3.800 million. “95% of 9.000 sold assets were houses, showing an 83% turnover.”

The target of the company, that has just received the due diligence results from Clifford Chance and CBRE for 2014, is to “manage credits more efficiently and develop land”. (…).

“When it comes to real estate, we have minimum amount of supply and planning permissions. There is a housing stock of 580.000 units with decrease in transactions if compared to 2012. Purchase by foreigners is gaining ground.” (…).

 
For more information about Spanish bad bank, visit our SAREB section.
 
Original article: Expansión (R. R.)
Translation: AURA REE

"Housing Market Has Already Hit the Bottom". Vía Célere to Create 600 Workplaces

Chief executive of real estate company Vía Célere, Juan Antonio Gómez-Pintado, describes the year 2013 as “full of changes and promises”. Last year, the firm earned €37.3 million from sales, out of which 94% corresponded to Spanish market, with net gains of €5 million and €210 million in assets. (…).

In total, between 2012 and 2013 Vía Célere sold 754 dwellings.

Apart from Spain, the developer company has got offices in Brazil, Bulgaria and indirectly operates in Romania. “You cannot think that if you know Spanish market, you know all other as well. Thus, you must be flexible and adapt fast.” (…).

Gómez-Pintado shows positive approach to 2014: “We have reached the rock bottom level and the sector will revive this year”. That is why, the businessman bought land in new neighbourhood Valdebebas, being presently under construction in the northeast of the capital. “(…) We are planning to hand over our two biggest housing developments in Spain and two other in Brazil, creating about 600 work places. This year, we will start 540 houses in Madrid only.” (…).

 
 
Original article: Expansión (Rocío Ruiz)
Translation: AURA REE

Azora Pushes Hispania Towards Flotation

Hispania, Azora´s investment trust, shortened demand prospecting period and signed an underwriting contract that will permit it to become listed.

Next step will be having a suscribtion application confirmed, public deed executed, closing an increase in share capital, signing up at the Mercantile Registry and awarding assets. Once all accomplished, this Friday new asset negotitations will be run.

Four days later, on Tuesday, the offer will be liquidated and on April 13th the “green shoe” option for coordinating entites that have been previously granted 5 million shares will expire.

Initial offer size is fixed at 50 million shares issued for €10 each that altogether raises the starting company value to €500 million. Hispania´s ticker will be HIS.

The release is calling attention of illustrous international investors, such as Paulson, Moore Capital, APG, Cohen & Steers and Canepa.

 
 
Original article: Cinco Días (Cotizalia)
Translation: AURA REE

Madrid, Favourite Destination of RE Investors

Madrid and entire real estate sector have been calling attention of investors for last year, mainly as a result of creation of Sareb, price adjustment or banks´property and credit portfolio sales.

(…) CB Richards Ellis, one of the greatest real estate consultant firm in the world, assures that Madrid will be the number two in terms of investment target this year (inalterably, London remains the number one). Also, the respondents´opinion proves that Spanish real estate market is the third most popular in the European Union, just after the British and the German ones. Barcelona scores very well and ranks at 10th place among all European cities.

Yesterday, the U.S. consultant firm published an annual report on investment in Europe. A year ago, Madrid was the 9th in the ranking and the Spanish market took place behind the Polish one. The CB Richard Ellis´s report was based on a survey conducted between January 27th and February 6th on 387 representatives of funds, companies and banks specialized in RE investment. (…).

“Vast majority of the investors is planning to spend more money in 2014 than they did in 2013 (up to 20% more, as one third claims). The most remarkable change that occured since the last poll is the growth of interest in the Spanish market (by 19%).” Last year, this market received €5.000 million investment, that more than doubled the amount from 2012.

Contagious effect

Miguel Fuster, director of Private Investors & Middle Market in CBRE, says that interest encouraged among investors fueled economy improvement, however there are factors that have not entered the stage yet, like large-scope financing. “Not only vulture funds wish to invest in Spanish market”. (…).

The country risk “we observed last year reduced significantly, although high unemployment rate continues to be a great obstacle”. Fuster has also pointed out the investor´s interest in other Spanish cities, like Valencia, Malaga, Seville or Palma de Majorca.

The U.K.´s intention to leave the EU

(…) The survey´s respondents agree that the decision of David Cameron negotiating currently with Brussels the possible leave of the United Kingdom from the European Union would undermine the investor´s willingness to buy British property. (…) In 2013, almost half of all purchases on territory of the Great Britain were conducted by or on behalf of foreign investors.

 
Original article: Cinco Días (Alberto Ortín Ramón)
Translation: AURA REE

New Hotel Construction Halted in Canary Islands

In the Canary Islands, construction of new hotels on plots qualified as tourist ground has been halted. The Constitutional Court of Spain has launched a trial on constitutional challenge brought about by the Council of Ministers against the tourist law in the Canaries´Archipelago that allowed construction of 5-star hotels excusively.

The Spanish Government reckons that “this is a market shutdown” that “restricts freedom of enterprise”. Therefore it invoked to the Article 161.2 of the local Constitution that empowers the Government to “take legal measures against decisions or provisions of the Autonomous Communities of Spain”. From that moment on, the law remains suspended. (…).

According to Enrique Hernández Bento from the Governmental Industry Department, Spain sought setting free hotel construction “from one to five stars”, while the Constitutional Court was taking decisions on lawfulness of five-star hotel construction limitation on new tourist grounds. (…) The more that “over 200.000 hotel places could be renovated and improved within the Canary Islands”. (…).

Demand for 4-star hotels is high, especially on the Tenerife island. The prohibition of hotel construction below five-star luxury rating is being defended by intention to “level out the competition in the Archipelago”. (…).

Local Council does not give up though and next week it will propose a rule that each island could specify its “touristic product” (5-star, 4-star hotels or other) (…).

Last year, around 10.6 million tourists visted the Canary Islands. In reference to the 2012 performance, tourism made 29.6% of the Canaries´GDP and created more than 34% of all work places. Moreover, this sector allowed shedding 30% of tax indebtedness of the Islands.

 
 
Original article: El País (Txema Santana)
Translation: AURA REE

Delinquency on Mortgages Soars Up

One of the peculiarities found before in the Spanish REO market was the resistence to delinquency of mortgages but this wall has fallen as well. Seven years of recession can damage everything, or almost everything. (…).

Between 2012 and 2013, entities listed within the Ibex 35 (stock benchmark for Madrid´s exchange market – translator´s note): Santander, BBVA, CaixaBank, Bankia, Banco Popular, Sabadell and Bankinter, advanced from having €17.204 million in unpaid mortgages with property as a collateral to €24.539 million. The numbers point at a 42% increase. To contrast, in 2008 the delinquency rate was equal to 0.5% and remained at 2.4% till the end of 2010. In 2012, the rate showed 4.5% and in December 2013 it went up to 6.5% record high (if credit outstanding included, it would be of 10%). (…).

In reference to the latest data published by the Bank of Spain, overall delinquency in the sector has grown up to 5.36%. The aforementioned banks granted €377.225 million for property purchase, out of which 13% was left unpaid.

Experts share an opinion that the main culprit for the negative numbers is the prolonged, dramatic unemployment. According to latest official data, 2.13 million people assigned as jobless do not receive any kind of aid. Moreover, almost 700.000 households lack any sort of income. These facts make the delinquency unstoppable and fuel eviction frequency (…). Most of the troubled mortgages were granted in 2008 and 2009, just before the recession emerged. (…).

Serious situation concerning the property market in Spain has been already covered by Ireland. There, delinquency rate reached 18.4% (…). But what will happen with Spain? As Itziar Sola from AFI (International Finance Analysts´Bank) assures, by December this year the number of unpaid mortgages will have grown to 35.900 million (4.000 million more than the Bank of Spain data).

The sudden upsurge could be also explained by impact of a regulation introduced in 2013 that deepened the seven banks´mortgage default. In Santander, the rate increased by shocking 152%, in BBVA by 61%, Sabadell by 51% thanks to the CAM´s portfolio content, Bankia represents €6.830 million with delinquency of 8.8%. CaixaBank registered rise by 55%, whilst Popular only 7% and Bankinter has even smaller, a 2.7% rate. (…) Experts agree that Sareb´s activity is very important in dealing with toxic mortgages.

Original article: El País (Íñigo de Barrón/Miguel Jiménez)
Translation: AURA REE