22/08/2014 – El Pais
The majority of large developers that escaped the unforgiving financial crisis are trapped in vagueness which prevents them from confirming the recovery peeping into the real estate market. They no longer owe the terrific €35 billion of 2008, but they still have a €20 billion debt, crippling them from resuming their activities.
After the first five years of the recession, marked by many refinancing agreements, all the measures turned out to be insufficient as the firms still had no capacity of paying the debts. In 2013, the dinamics changed.
Only Catalonian Fergo Aisa has not survived the tough process, liquidated fast and quietly.
The undisputable master in staying afloat is Colonial. In May this year, the company enlarged its capital with a €1.263 million amount and gained such promintent investors as Juan Miguel Villar Mir (the president of OHL) and the Sovereign Wealth Fund of Qatar. Furthermore, the realtor shed the troublesome assets and earned €559 million in the first half of the ongoing year.
The business was faring so well, that Colonial decided to take part in the bidding for a 62% stake of Realia put up for sale by FCC and Bankia. Colonial has taken everyone aback by outbidding sure-bet Fortress and King Street with its €650 million offer submitted exclusively for a real estate affiliate of Realia.
However, before the best bidder acquires the branch, it must meet several requirements, like selling 9 shopping malls of Realia. Then, the real negotiations on buying 20 offices in Madrid, the Fira tower in Barcelona and the Kansas City business center in Seville will commence.
At present, after selling the stake at SIIC de Paris for €1.51 million, the real estate assets of Realia represent a value of €830 million, whereas the developer activity and the land together barely cross €520 million.
Sacyr also successfully overcame the black days of the recession, although finally it sold its arm Vallehermoso, allowing the firm to redeem a €1.2 billion indebtness.
Principally, the company had to deal with too many plots, a very common problem among property managers, such as Reyal Urbis, Martinsa-Fadesa or Metrovacesa.
When the crisis came around, banks realized they had lent nearly €15o billion to developers for purchase of 200 million square meters of land in total. As the borrowers progressively failed to pay-off their debt, six years later, the entites owned over 100 million square meters of land.
Apart from banks, the magnitude landed in balance sheets of Spain‘s ‘bad bank’ (Sareb) or was sold to investment funds with up to 60% discount. The remaining 95 square meters stay in hands of the property managers who hurry to sell them out to pay the debts.
Other companies like Martinsa-Fadesa, Reyal Urbis and Renta Corporación found themselves at the risk of being auctioned. The two first still struggle to crawl out of the insolvency process, whereas the last had managed to do so but was then hit by an unexpected €10 million debt owed to the Tax Office.
Original article: El País (by Juan Carlos Martínez)
Translation: AURA REE