AXA Negotiates with ACS to Build 2 Office Blocks on Paseo de la Dirección in Madrid

29 May 2019 – Eje Prime

The insurance company AXA is holding negotiations with the construction company ACS to build two office buildings on plots that it owns on Paseo de la Dirección in Madrid.

The towers would be similar in height to the residential skyscrapers that Stoneweg is planning to build on the same street. They would include restaurants and shops, which would serve to regenerate activity in the Tetuán neighbourhood.

Original story: Eje Prime 

Translation/Summary: Carmel Drake

Stoneweg Finalises the Sale of a Tower Containing 300 Rental Homes for €130M

20 May 2019 – Eje Prime

Stoneweg is joining the rental home development market. The fund is going to build a 300-home tower block on the land that it purchased from Dragados, the subsidiary of ACS, on Paseo de la Dirección in Madrid. The operation will amount to €130 million.

The company is holding advanced negotiations with the manager Ares and the US group Greystar, which specialises in student halls, regarding the development. Ares had been the favourite to acquire the tower but now Greystar is gaining ground.

Ares is on a mission to buy up rental homes. In the last few months, the company has agreed to buy 500 rental homes from Aedas Homes, 121 homes from Metrovacesa and 223 homes from Momentum.

Stoneweg purchased the plots from Dragados with the aim of building two residential blocks containing 600 homes in total. The first block will be handed over as a turnkey operation containing rental homes, whilst the second will contain homes with asking prices of €4,500/m2.

Original story: Eje Prime 

Translation/Summary: Carmel Drake

Dragados is Asking for c. €180M for 88,000 m2 Buildable Plot in Tetuán (Madrid)

6 August 2018 – El Confidencial

A new and powerful land operation is taking shape in the centre of the Spanish capital. The star is Dragados, one of the heavyweights in the construction sector in Spain. The subsidiary of ACS has been trying to sell several plots, which together span a buildable surface area of just over 80,000 m2, on Paseo de la Dirección in the Tetuán district in the north of Madrid and just 2 km from the Cuatro Torres, for almost a year. And this area has just received the green light from the Town Hall of Madrid, which approved a Partial Plan on Tuesday that will undoubtedly favour land transactions since it means the urban planning risk has disappeared.

According to the sources consulted, the plots have been on the market for a year, but the high price expectations of Dragados – which amount to around €180 million – have prevented the sale from being closed, until now. Large property developers, investment funds and family offices have all expressed their interest. The construction company is being advised by Colliers International, which declined to comment on the deal.

On the table is a real gem, given that the plots are all finalist, in other words, ready to be built on. Such assets are in very short supply inside the M-30. Specifically, the site comprises two plots for the construction of private housing and two other plots for the construction of social housing properties (VPPL) and mixed-use assets (offices and tertiary).

For the former, which have a buildability of around 40,000 m2, Dragados is asking for around €2,500/m2 (…), in other words, around €100 million, which would make it one of the largest land operations in the capital in recent months. “That price would mean selling the future homes at prices of around €5,000/m2, which is way above current market prices in the area”, say the same sources. House prices in the area amount to around €2,400/m2 – €3,000/m2, depending on the types of homes.

For the plots to be used for social housing and offices – which also have a buildability of approximately 40,000 0m2 – the vendor’s price expectations amount to around €80 million. Despite the boom in the capital, these figures exceed the prices that the potentially interested parties are willing to pay.

Ten years in the making

With the approval this Tuesday from the Town Hall of the new planning order for the area, it seems that finally, and after more than a decade, work is going to begin on this ambitious urban remodelling project. It will involve the construction of around 2,000 new homes, most of which will be protected in some way (VPPB and VPPL), including two rehousing buildings and several 25-storey towers. To put that into context, the Cuatro Torres have between 45 and 58 floors (…).

Historically, Paseo de la Dirección has been a downtrodden area in the north of Madrid with numerous substandard homes that would benefit greatly from the definitive launch of Madrid Nuevo Norte – formerly Operación Chamartín – just 2km away. What’s more, the site is very close to the capital’s financial district par excellence, Azca, as well as to Plaza Castilla, the hub for much of Madrid’s land transport network (…).

Original story: El Confidencial (by E. Sanz & R. Ugalde)

Translation: Carmel Drake

Gran Roque Capital Buys 3 Residential Plots Near The Calderón

16 October 2017 – El Confidencial

The Venezuelan Capriles family has closed another real estate operation in Madrid. Gran Roque Capital, the company controlled by Miguel Ángel Capriles and his cousin Áxel Daniel Capriles, has purchased three plots of buildable land from Prosegur just 500m from the site of the future Operación Mahou-Calderón. The Capriles family has paid around €25 million for this land, which does not require any kind of urban planning modifications, given that it is assigned for residential use according to the General Urban Planning Plan (PGOUM) for Madrid dated 1997, according to sources in the market.

The acquired land comprises three plots (measuring 592 m2, 593 m2 and 3,542 m2, respectively) spanning a combined surface area of 4,723 m2 and a buildable surface area of almost 8,800 m2. Two of the plots (the smaller ones) are vacant, but the largest one is currently occupied by a building that Gran Roque will have to demolish before it can build the new homes on the site. The land purchase operation has been advised by Knight Frank, which, nevertheless, declined to comment on the transaction.

The new residential project (…) will involve the construction of around 80 homes of different kinds, which will be sold for between €5,500/m2 and €6,000/m2, according to sources at Gran Roque, although, they emphasise that the project is still at a very embryonic phase. According to data from Idealista, the price of second-hand homes in the area stands at around €3,300/m2, however, some properties are currently on the market for between €4,000/m2 and €5,000/m2, whereby exceeding the peaks of 2007 (€3,980/m2 in the district of Arganzuela).

This operation represents an about-turn in Gran Roque’s investment strategy in the Spanish capital, where to date, it has opted for plots in prime locations and for projects involving super luxury homes. Its most recent project is in El Viso, opposite the bunker that constitutes the residence of the President of ACS, Florentino Pérez.

500m from the Calderón

This transaction is particularly important in the market given that the price paid for the land, around €2,900/m2, and the prices at which the future homes will be sold, will undoubtedly serve as a benchmark for the future sale of land in the so-called Operación Mahou-Calderón (…).

Experts in the sector consider that a price of between €1,500/m2 and €2,000/m2 would be appropriate for the area (…).

New build homes close to the Vicente Calderon are in short supply. One of the few projects underway is being led by Neinor Homes, which is constructing a 72-home residential project: Riverside homes, for €3,500/m2, a price significantly lower than the properties that Gran Roque is planning to build. Like most of the new builds currently being constructed in the capital, these homes are being targeted at middle and middle/upper-class buyers. Of the 51 homes that will comprise the future 20-storey tower, which will be 72 m tall, 49 units have already been sold.

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

FT: Spain’s Construction Sector Rises From The Ashes

28 September 2017 – Financial Times

When Juan Velayos left his job at the accountancy firm PwC to become chief executive of Spanish housebuilder Neinor Homes two years ago, some people thought he was crazy.

Construction companies in Spain once built more residential homes every year than the rest of western Europe combined, fuelled by cheap debt. But a 35% slump in prices after the 2007 financial crisis left much of the sector bankrupt.

Spain still has half a million new unsold homes, many in surreal empty cities that have become monuments to a speculative property bubble that brought down the country’s banking sector and the wider economy.

“The markets at the time were sceptical about the opportunity [in Spanish house building],” says Mr Velayos. “They were sceptical about the momentum for residential. They were surprised we were buying land so aggressively.”

But Neinor, created by US private equity group Lone Star in 2014, has become a success story, one of the country’s first residential homebuilders able to rise out of the ashes of the ruined sector and build again.

Six months ago Neinor Homes became the first to float on the Madrid stock exchange, with Lone Star selling 60% of the company, which was valued at €1.3bn. Its share price has risen by 13% since then.

“We knew there was an opportunity because the Spanish economy was growing again and for nearly a decade there had been practically no new residential homes built,” says Mr Velayos.

Neinor served as a catalyst for the whole sector, with others entering the market. Companies such as Aedas, Vía Célere, Aelca and Metrovacesa are also building, giving the sector depth for investors.

“Residential construction activity in Spain is finally back,” says Adolfo Ramirez-Escudero, chief executive of the Spanish arm of real estate service firm CBRE. “The demand is there and companies are building again.”

Many of these companies are also now considering initial public offerings. Two people with knowledge of the deal say that Aedas is considering a listing this year. Aedas declined to comment.

This comes as the wider Spanish property market seems to have turned a corner. House prices fell by 35.2% from 2007 to 2015, according to property site Idealista, but are up by 3% this year and rose by 2% last year.

Analysts say this is set to continue as Spain’s economy continues to grow at about 3% a year — one of the strongest in the eurozone.

“The scarcity of new housing in some places and the impulse of demand, supported by employment growth, point to new price increases,” says Jorge Sicilia, the chief economist of BBVA, the Spanish banking group.

Investment into Spain’s property market has come in stages, starting with international funds run by Goldman Sachs, Cerberus Capital Management and Blackstone, which bought bad loans and apartment portfolios as early as 2013.

This was followed by the creation of real estate investment trusts — known in Spain as Socimi — which shortly afterwards started looking at the commercial property and rental markets.

Four big Spanish Socimis — Axiare, Merlin Properties, Hispania and Lar España — are already up and running. Combined profits for the four groups in the first quarter of 2017 were up 50% from the same period last year.

But the return of the residential building sector on top of commercial suggests that the market is maturing and returning to normal after a decade of crisis that saw big players such as Reyal Urbis and Martinsa Fadesa file for bankruptcy.

“In commercial and residential property, everyone has the same thesis,” says Fernando Ramirez, head of investor relations at Merlin. “Spain is recovering and property is still cheap.”

The return of Spanish construction is good for the wider Spanish economy, particularly job creation. The construction sector once employed more than 2.5m people, compared with just 1m after the crash.

A rise in house prices is also positive for the banking sector, which has benefited from the influx of institutional money that has pushed up the prices of their portfolios of distressed property assets and provided a market to sell.

However, the story is not all positive.

Spain’s biggest listed construction groups such as ACS or Ferrovial are unlikely to benefit from higher property prices, as they are focused on large infrastructure projects, which are still in short supply as the government holds back on spending.

The recovery is also concentrated in big cities such as Madrid, Barcelona and Valencia, as well as the tourist hotspots such as Málaga and the Balearic Islands. In much of more rural Spain, the recovery has not happened.

This is partly due to the overhang of half a million unsold new houses in parts of Spain. “In Madrid and Barcelona, there is nowhere near enough houses and demand is outstripping supply,” says Fernando Encinar, the chief executive of Idealista.

“If you drive 40km from Madrid through to Valdeluz there are still thousands of empty properties and that market is a long way from recovering,” he says.

Mr Velayos adds that while the market is coming back, the country is a long way from the pre-financial crisis boom — adding that the frothy exuberance of those years is unlikely to return.

In effect, the market is developing on a different model from before the financial crisis, with building financed by equity rather than debt. “The days where the builder and the buyer were both 100% debt financed are long gone,” he says.

Original story: Financial Times

ACS & Sacyr To Build Homes For Quabit In Madrid & Barcelona

31 May 2017 – El Mundo

Quabit Inmobiliaria has engaged Dragados (ACS) and Sacyr to build two new housing estates that it is developing in Madrid and Barcelona, respectively. The two projects will involve a total investment of €28.2 million, which will be financed by CaixaBank, according to a statement made by the company.

The large construction firms are starting to undertake residential projects for third parties once again. In this case, the new homes form part of the growth plan that Quabit is working on, with the aim of completing 4,000 homes in 2021.

Specifically, Dragados, the construction subsidiary of ACS, will be responsible for building a luxury housing development that Quabit is promoting in the Madrilenian town of Boadilla del Monte.

The project involves building 12 homes, with a useful surface area of 450 m2 each. All of the homes will have six bedrooms, a plot of land measuring 1,000 m2 and an individual heated pool. The development will require an investment of €11.1 million, of which €5.7 million corresponds to the cost of construction, and 75% of the properties are already sold. The houses are expected to be completed by September 2018.

Two blocks of flats in Barcelona

Meanwhile, in the Catalan capital, specifically, in Sant Feliu de Llobregat, Quabit has engaged Sacyr to build two 7-storey housing blocks, in a single complex, with swimming pools and green spaces.

Specifically, the development, which will require an investment of €17 million, will contain 63 apartments of between two and four bedrooms, of which 75% have already been pre-sold. They are expected to be completed in October 2018. (…).

Original story: El Mundo

Translation: Carmel Drake

Ferrovial, FCC, Acciona & ACS Are Building Houses Again

25 May 2017 – El Confidencial

A decade after they sold or wrote off their real estate arms, the country’s largest construction companies are now returning to the residential property development sector. Ferrovial, ACS, Acciona and FCC have regained their appetite for property and although they have different paces and strategies in mind, they have all definitively decided to revive their real estate divisions.

In the case of the group chaired by Rafael del Pino, which sold Ferrovial Inmobiliaria to Habitat for €2,200 million at the end of 2006, it will lay the first stone of this new strategic phase in Valdebebas. It owns plot 128A there, in what is one of the most important urban planning developments in the north of Madrid, and it plans to build between 200 and 300 homes on the site.

And that is just the tip of the iceberg, given that as the group’s CEO, Íñigo Meirás, acknowledged to this newspaper, the firm “is willing to become a property developer once again”. (…).

This strategy, combined with the gradual recovery in the real estate sector, has allowed residential construction work to account for 5% of the group’s total building portfolio, having closed last year at €442 million, up by 31.7% YoY. The group aspires to increase those numbers, by resuming its property development activity, which has caused it to analyse land operations in different areas to the north of Madrid.

FCC Real Estate also wants to make a similar move. The division, led for the last year and a half by Xavier Fainé Garriga, has decided to start developing half a million m2 of land that it owns in the Madrilenian town of Tres Cantos. The company has owned the plots for years, and its construction division will also participate in their development, along with the real estate subsidiary Realia, which will collaborate on the marketing side. (…).

Meanwhile, Acciona has a more ambitious plan, after it tried, two years ago, to divest its real estate arm, by listing it on the stock market or selling a stake in it to a fund – it has now ended up deciding to return to development. That was recognised by the firm’s Corporate Development Director, Juan Muro Lara, in March, when he announced the launch of 16 housing developments: 13 in Spain and the rest in Mexico and Poland.

In parallel, the group is finalising the transfer of its rental properties to Merlin, in a deal disclosed by El Confidencial in October, which will see the former’s exit from the real estate business. It also wants to push ahead with the sale of its hotels and office buildings through individual operations.

In the case of ACS, the firm is carrying out its strategy in the development segment through Cogesa, the historical subsidiary of the group, which stands out because it is the owner of the group’s two main corporate headquarters, the office buildings located in Las Tablas and on Avenida Pío XII in Madrid, and for owning sizeable land portfolios in areas such as Montecarmelo, Arroyo Fresno, Las Tablas, Carabanchel and Ensanche de Vallecas.

The turning point for this subsidiary, which is led by the brother of Florentino Pérez, Enrique, came two years ago, when it carried out a capital increase amounting to €44 million and then acquired one of the last plots of residential land in Montecarmelo for €2,200/m2. That figure turned the operation into one of the most onerous since the burst of the bubble, but is now seen in a very different light. (…).

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Bankia & Apollo Go To Court Re Sale Of Finanmadrid

3 October 2016 – Expansión

Both entities are waiting for the discrepancies that arose from the sale of Finanmadrid to be resolved. The sale was completed in 2013 for €1.6 million

Fracciona Financiera Holding, the subsidiary of Apollo, filed the first lawsuit, in which it claimed €8.5 million from Bankia due to discrepancies in the sale and purchase contract based on the determination of the sales price for Finanmadrid.

The contract included clauses that have an impact on the basis of the evolution of various parameters. These conditions have been common in multiple sales operations closed in the financial sector since the outbreak of the crisis. The asset protection schemes (EPA), which cover the buyers of former savings banks, are the most visible example of these types of operations.

Bankia has responded to the lawsuit filed by Apollo, with its own claim for €6.4 million.

Finanmadrid, which used to specialise in offering consumer credit through retailers and car dealerships, has now been integrated into Avant Tarjetas, a subsidiary of Evo Banco, controlled by Apollo. Previously, it was integrated into Fracciona Financiera Holding. In the company’s accounts from last year, the audit report explains that “in the opinion of the company’s legal advisors, an unfavourable outcome from the lawsuit (with Bankia) is remote, nevertheless, the shareholder (Apollo) would financially support any contingency that may arise in the event that no provision has been recognised”.

Before the integration, Finanmadrid reduced its share capital by €2.24 million to absorb losses and so it was left at €2.79 million.

Apollo’s claim against Bankia forms part of a broad range of claims against the entity chaired by José Ignacio Goirigolzarri. In total, the bank faces claims amounting to €390 million, not including the claims relating to its debut on the stock market and the sale of its preference shares.

Claims

The largest claim, amounting to €165 million, is one presented by ING Belgium, BBVA, Santander and Catalunya Banc against Bankia, ACS and Sacyr. (…).

The construction group Rayet also claims €78.2 million from Bankia for what it considers are accounting irregularities and for differences in the valuation of plots of land linked to the debut of Astroc on the stock market in 2006, an operation piloted by the former Caja Madrid.

The bank has 305 legal proceedings open relating to derivatives with claims amounting to €38.8 million.

Original story: Expansión (by E. del Pozo)

Translation: Carmel Drake

Iberostar Refinances Its Debt & Releases Guarantees

11 December 2015 – Expansión

New financing conditions / The hotel group owned by the Fluxà family is restructuring its debt and postponing its repayments until 2021. Its profits remained stable in 2014.

Iberostar is refinancing its debt for the second time in less than three years. In April this year, the hotel group controlled by the Fluxà family restructured the majority of its financial liabilities, according to the 2014 annual accounts of the parent company, Iberostar Hoteles and Apartamentos, filed with the Mercantile Registry. At the end of last year, the group’s short and long-term debt amounted to more than €400 million – most of which was held with financial institutions – and the liabilities between the group’s companies amounted to €533 million.

The agreement establishes a new timetable, which runs until 2021 – three extra years – and reduces the guarantees provided by Iberostar. Under the previous refinancing agreement, completed in 2012 and amounting to €768 million, the hotel chain offered a personal guarantee against the obligations of a €285 million loan, as well as mortgage guarantees over Spanish assets and the pledge of its 5% stake in ACS.

Percentage in ACS

The Fluxà family is the shareholder of the construction group that has been chaired by Florentino Pérez since 2006, when Iberstar sold its tourism division to Carlyle and Vista Capital for around €900 million to focus on the hotel sector. The private equity companies created Orizonia – which no longer exists as it filed for bankruptcy in April 2013 – and the Fluxà family invested almost all of the resources obtained on the purchase of ACS.

Iberostar paid €46.82 for each share – €826 million in total. Yesterday, ACS closed trading with a share price of €28.49, representing an increase of 2.76% during the session. In 2012, Iberostar was forced to recognise an impairment on its shareholding amounting to €147.12 million, which meant that the company recorded losses that year. At the end of 2014, the company recognised its shareholding in ACS at €36.41 per share and set its recoverable value at €40 per share. Despite this difference, Iberostar has not reversed the impairment recorded in previous years.

Iberostar is represented on the board of ACS by Sabina Fluxà, the Executive Co-Vice-President and CEO of the hotel chain, and it received dividends amounting to €20.34 million on its shareholding.

In 2014, the parent company’s turnover amounted to €43.47 million, down by 6.36%. The operating result decreased by 76.4% to €7.97 million, due to a reduction in other operating income and an impairment for the transfer of tangible assets and financial instruments. Iberostar expects to improve that figure this year, by maintaining stable turnover and cutting down its expenses. Nevertheless, the net result remained stable – at around €15.7 million – due to the positive effect of the lower tax charge on its profits.

As a whole, Iberostar and its subsidiaries invoiced €1,435 million in 2014, up by 29.6%, to place it in fourth position by turnover, surpassed only by Grupo Barceló – which also includes its tourism business – , RUI and Meliá.

Dividends

In 2014, the parent company allocated its profits to offset its negative results from previous years, but it distributed €55.7 million in dividends distributed against reserves. Moreover, it repaid debt amounting to €18.78 million owing to the Tax Authorities for Corporation Tax for the years 2007 and 2008.

Meanwhile, Iberostar has the option to purchase an additional 29.15% stake in Royal Cupido, in which it already holds a 29.5% shareholding, for €44.54 million. Pontegadea, the investment arm of Amancio Ortega, controls 45.5% of Royal, which owns five hotels in Spain and earned €3.43 million in 2014.

Original story: Expansión (by Yovanna Blanco)

Translation: Carmel Drake

ACS Gains €702 Million & Trims Debt by 14% in 2013

28/02/2014 – Expansion

ACS rediscovered the path of profits after having stopped the investment flow in Iberdola last year. The construction company gained €702 million in contrast to €1.928 million loss in 2012. Vast part of the income stems from international activity that added 86.3% to overall revenues of the company and from gains received for Iberdola´s product valuation.

The firm chaired by Florentino Pérez has not escaped unscathed when the electrical power reform hit. ACS preliminarily calculated the  cost to be borne over its wind and solar energy plants and established it at €199 million. The company´s profit fell by 0.3% and settled down on €580 million.

Hochtief, ACS´s German branch, contributed with €91 million. (…).

ACS´s turnover decreased by 0.1% to €38.373 million, while Ebidta was set at €3.002 million, 2.8% less than a year before. Spain constitutes 14% of all sales.

At the end of 2013, the company´s net indebtness was equal to €4.235  million (14.5% less than in 2012). (…). Throughout 2013, ACS issued bonds for €1.100 million.

Considering each business area separately, the construction division reduced its revenues by 0.4% and earned €29.559 million. International activity compensated the 23% domestic losses. Out of the €47.563 million portfolio of ACS, 93% of it is found abroad. (…).

In turn, the industrial area contributed with €7.067 million, while the environment advanced by 5.3% and generated €1.781 million. (…) The company was worth €26.6 per share yesterday (-0.6%).

 

Original article: Expansión (C. Morán)

Translation: AURA REE