Tag: appraisal value

Moody’s: The Average LTV on Residential Mortgages Amounted to 64.6% in Q1 2019

30 May 2019 – El Diario

According to the latest data from INE, more and more people are taking out a mortgage to buy a home in Spain. 30,716 mortgage contracts were signed in March, up by 15.8% YoY.

Many buyers are attracted by rising house prices (investment growth), which the ratings agency Moody’s considers is something “positive”. However, with personal savings rates in freefall, banks are having to lend more than ever to enable families to afford their homes.

Specifically, the percentage that the loan granted represents over the appraisal value of the property (LTV) amounted to 66.5% in Q4 2018, its highest figure ever. That figure moderated slightly to 64.6% in Q1 2019 but many families are now asking to borrow 65%-70% of the value of their homes, which means a greater risk for banks and a higher probability of defaulted payments.

According to Moody’s, whilst a portfolio with an average LTV of more than 80% has a default rate of more than 6%, a portfolio with an average LTV of less than 60% has a default rate of 1%.

Nevertheless, although some banks are now lending mortgages with LTVs of 100% in certain cases, the percentage of loans with LTVs of more than 80% is lower than it was before the crisis. Such mortgages currently account for 13.1% of the total compared with 17% in 2006.

Moreover, according to Moody’s, mortgage borrowers are better off today than they were at the outbreak of the crisis as they are in a better position to afford interest rate rises and other changes in the market thanks to the strict criteria that the financial entities have applied when granting loans in recent years.

Original story: El Diario (by Marina Estévez Torreblanca)

Translation/Summary: Carmel Drake

Green Oak Sells a Batch of 5 Assets in Madrid for €74M

21 January 2019 – Eje Prime

Green Oak is divesting assets in Spain. The US fund manager specialising in real estate has disposed of a batch of five office buildings in Madrid, for which it has received €74.3 million in total, almost €9 million more than the appraisal value of the properties. The five assets formed part of the portfolio of Gore Spain Holdings, the Socimi owned by Green Oak, which has been listed on the Alternative Investment Market (MAB) since January 2017.

Last Thursday, Green Oak formalised the sale of 100% of the company Inversiones Pukaki, through which it controlled four office buildings in the Avalon Business Park. Barings acquired those properties for €57.8 million in total, although the valuation of the buildings amounted to €47.2 million as at December 2017.

Green Oak had owned the four buildings in Avalon, a complex located at number 65 Calle Santa Leonor, since July 2015. The buildings sold to Barings (which owns 100% of the park following the operation) have surface areas of 3,671 m2, 5,077 m2, 6,304 m2 and 6,119 m2, respectively, amounting to 21,172 m2 in total.

GreenOak purchased this batch of assets from Banco Santander for around €40 million. According to data provided by Green Oak, the valuation of the properties was revised at €47 million on 31 December 2017, on the basis of an appraisal compiled by CBRE.

The US fund manager has divested another asset, also included in the portfolio of Gore Spain Holdings. On Friday, the company signed the sale of the company Inversiones Malvinas, through which it controlled another office building, located in Alcobendas.

The company has divested the property located at number 7 Avenida Bruselas of the Madrilenian municipality for €16.5 million. The valuation of that asset amounted to €18.26 million as at 31 December 2017, based on an appraisal also performed by CBRE.

That asset has a gross leasable area of 6,361 m2 spread over six floors. The building, constructed in 2002, also has three underground floors for parking and is home to five tenants (…).

Original story: Eje Prime (by P. Riaño)

Translation: Carmel Drake

Land at the Former San Jorge Paper Mill is being Advertised for 20 Times Less than the PAI’s Initial Appraisal Value

13 November 2018 – Levante EMV

“Second-hand urban land with a surface area of 10,893 m2 and a buildability of 5,514 m2. Located on the outskirts of Xàtiva, in a quiet area”. That advert has been circulating for months on several real estate websites for  a portion of the land where the historical San Jorge Paper Mill used to be located – a dismantled factory complex and a symbol of the former industrial splendour of the city and, until the middle of the 20th century, one of the most important emporiums in the country.

With the crisis, the plot for sale, which is residential in nature, became part of the portfolio of Banco Sabadell’s real estate division, although a promotion is marketing it for just €65,600: equivalent to €8/m2. The amount has decreased by 47% since the asset was transferred. After its reclassification 13 years ago, the plots were appraised at a price twenty times higher, at €170/m2, a figure that is closer to the current market average. A few metres away, on the industrial estate, commercial and industrial use plots half the size are being sold for €1.5 million.

The different buildings that used to make up the San Jorge Paper Mill occupy two urban plots that, according to the cadastral records, span 65,000 m2. The largest, measuring 54,000 m2, was seized and adjudicated by the court in 2017 to Sareb, the bad bank created to absorb the toxic real estate assets. The property no longer appears in the entity’s public catalogue in Xàtiva.

At the height of the real estate boom, a company administered by a former colleague of Alfonso Rus in the PP, condemned for fraud, managed to persuade the department run by the now imprisoned Rafael Blasco to reclassify 73,000 m2 of land in the factory complex from industrial to residential for the construction of 310 homes. That operation revalued the land by €10 million: Caixa Catalunya appraised the land at €12.4 million and signed a mortgage loan amounting to €6.1 million with the property developer of the PAI, which had previously purchased the land for just €2.4 million.

In the process of being protected

The municipal government of Xàtiva has definitively buried the failed urban planning progress during this legislature. Nevertheless, for the time being,  the Town Hall’s plans do not include the option of following in the footsteps of the former convent of Santa Clara and acquiring the land of the paper mill, founded in 1932 by Gregorio Molina. Municipal sources emphasise that the land of the former industrial company is still considered to be for “undeveloped low-density residential” use, although there is no intention to develop any project on the site for now.

The Paper Mill, which is in the process of being declared an Asset of Local Importance and of having its protection status expanded, is home to the largest brick chimney in the Community of Valencia, as well as a mill and a light factory. Its warehouses, gadgets and other components of industrial heritage were going to be demolished by the property developer of the former PAI. The land for sale also served as a paintball battlefield a few years ago (…).

Original story: Levante EMV (by S. Gómez)

Translation: Carmel Drake

Blackstone Negotiates Sale of the Ilunion Portfolio with Zurich for c. €100M

13 November 2018 – Cinco Días

The real estate giant Blackstone is pushing ahead with several divestments from its recently acquired Socimi Hispania. The US fund is negotiating with the insurance company Zurich regarding the sale of a portfolio of office buildings, which are occupied by Ilunion as a tenant, according to confirmation from sources in the real estate sector. The price of the operation will exceed €100 million.

Blackstone acquired Hispania through a takeover launched in the spring, which valued the Socimi at almost €2 billion. The US fund completed the operation because it was primarily interested in the company’s hotel assets, given that it owned 13,100 rooms across 46 hotels, the largest owner in the country in that segment. The US giant wants to create a hotel platform in Spain and, in fact, has already ceded the management of those establishments to its company HI Partners, the manager of other hotels purchased from Sabadell.

In total, Hispania’s portfolio has a gross asset value (GAV) of €2.811 billion. The most residual part, Hispania’s housing, is already being managed by another company owned by the fund, Fidere. And for the office component, the strategy is to divest the assets.

When Blackstone acquired Hispania, it broke off an agreement that the Socimi had with the British fund Tristan Capital Partners to divest the entire office portfolio for more than €500 million. That was the second time that the sale had been thwarted, previously Swiss Life was the buyer, in that case at the end of the summer in 2017, when the uncertainty surrounding the Catalan sovereignty process meant that the conditions of the insurance company were more demanding.

By contrast, the strategy now is to put this portfolio up for sale in a piecemeal fashion. The most advanced process relates to four properties in Madrid, which are all occupied by Ilunion, the holding company of the ONCE, as the tenant.

The largest property is the Torre 30 Building, appraised at €50 million at the end of 2017. Located next to the M-30 by the junction with the A-2, it was constructed in 1968, renovated in 2006 and has a surface area of 11,417 m2.

The sale also includes the Mizar Building, a property next to Torre 30, where in addition to Ilunion, Eysa and Paramount also have their headquarters, according to Hispania’s public documents, and which is worth €27.4 million. They are joined by the Pechuán building in Plaza Sagrado Corazón de Jesús next to Príncipe de Vergara, worth €19 million. Finally, the portfolio contains a property on Calle Comandante Azcárraga in the Pio XII area, worth €10.1 million.

Those four buildings had a combined appraisal value of €106.5 million as at 31 December 2017. Their current value is unknown but it is expected to be higher given that in May, Hispania revalued its assets upwards by 5.7% on average.

The rest of the office portfolio is not officially up for sale, but given that they are not strategic assets for Blackstone, the expectation is that it will receive offers for them, as a group or in different sub-portfolios.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

VBare’s Revenues & EBIT Rise by 28% & 46%, Respectively, in the 9 Month to September

2 November 2018 – Eje Prime

VBare Iberian Properties saw its net result for the first nine months of the year decrease YoY. The Socimi recorded a profit of €1.84 million to September, down by 15.6% compared to the same period in 2017, according to a statement filed by the company with the Alternative Investment Market (MAB).

Similarly, the company recorded gross revenues from rental income of €1 million between January and September, exceeding the turnover obtained during the same period last year by 28%. Meanwhile, its EBIT was 46% higher at €611,000.

Currently, VBare’s portfolio has an appraisal value of €35.1 million. So far this year, the company has acquired 37 homes and two commercial premises in the towns of Móstoles, Málaga and Madrid for €3.7 million. The Socimi also undertook a capital increase in June amounting to €3.2 million.

At the beginning of October, the company also completed its largest investment to date in a single asset. That involved the purchase, for €10.5 million, of a residential property located in Madrid. The building purchase, which has a surface area of 3,285 m2, was financed by the company through a mortgage loan amounting to €5.25 million and own funds.

VBare is a real estate investment vehicle specialising in the acquisition and management of residential assets for their rental. The company was constituted in March 2015 with the aim of generating high returns for its shareholders through the implementation of a value-added strategy and benefitting from the existing opportunities in the Spanish residential market.

Original story: Eje Prime 

Translation: Carmel Drake

Ministry of Finance Prepares an IBI Hike that will Affect 1,200 Town Halls in 2019

1 October 2018 – El Independiente

The Ministry of Finance has already prepared the list of town halls that will review the cadastral values of their urban properties in 2019. That list includes almost 1,200 town halls, equivalent to 15% of the total. That is according to an Order published in the Official State Gazette (BOE) on Saturday, which also reveals that the update coefficients will be established in next year’s Budget Law, which the Government has not presented yet.

Therefore, despite not having published its annual accounts yet and with the threat that, once they are published, it may have to adopt a more restrictive public deficit path, thanks to the situation it inherited from the previous PP Government, the ministry led by María Jesús Montero has published the mandatory order proposed in the Law to apply possible cadastral value rises that will impact the amount raised by Town Halls through taxes such as the Property Tax (also known as the ‘Impuesto sobre Bienes Inmuebles’ or IBI).

The town halls affected include Badalona (Barcelona), Cádiz, Santander, Guadalajara, Avilés (Asturias), Granada, Huesca, Lorca (Murcia), Coslada (Madrid), Las Rozas (Madrid) and Valencia.

The State’s annual accounts for 2019 are incognito and so it remains to be seen how this review of cadastral values is going to be instrumented.

Moreover, by virtue of the coefficient that is applied, the cadastral value of any given home may increase or decrease. The reason is that the coefficients are established on the basis of the year of entry into force of the last presentation of municipal values, which is basically the document that contains the criteria that are used to carry out the most recent valuations in the region.

Currently, the price per metre squared of private homes amounts to €1,587.9, the highest value since the second quarter of 2012, according to data from the Ministry of Development, which bases its figures on appraisal values.

From this perspective, in general terms, homes valued since that date will have increased in value, whilst those valued between 2008 and 2012, will have decreased. On the basis of the years of entry into force of the values, around one third of the municipalities included on this list belong to the latter group.

A decrease in the number of reviews

The cadastral value of a home is the reference value on which taxes are paid on it at a municipal level for purpose of the Property Tax (IBI), which is one of the main sources of financing for Town Halls.

In this way, unless town halls decide to introduce changes in the tax, bonuses or exemptions, increases in the cadastral value of properties typically mean a heavier burden on the pockets of citizens and, in parallel, more revenues for the town halls.

In order to carry out this review, the interested town halls must make a request each year to apply the coefficients that they establish. To do that, three requirements must be fulfilled: at least five years must have passed since the entry into force of the cadastral values resulting from the previous valuation; there must be substantial differences between the market value and those that serve as the basis for determining the cadastral values; and the town hall must file its request by 31 May.

Having fulfilled those criteria, 1,200 town halls have requested a cadastral review next year, which represents a 14% decrease compared to the number recorded last year. Moreover, that figure equals almost half the number recorded in 2007, when up to a third of all town halls, around 2,500, proceeded to apply new coefficients (…).

Original story: El Independiente (by David García-Maroto)

Translation: Carmel Drake

Amancio Ortega’s RE Business is Worth Almost €9bn

23 July 2018 – El Mundo

Amancio Ortega is continuing to expand the perimeter of his real estate empire. Pontegadea, the investment arm of the Inditex creator, grew by 2.8% at the end of 2017, to reach almost €9 billion (€8.759 billion) and that, despite the fact that its profits decreased by 13%, to €1.475 billion due to donations made to his foundation.

Pontegadea groups together both Amancio Ortega’s stake in Inditex as well as his real estate investments. According to the accounts filed with the Mercantile Registry of La Coruña, the company closed 2017 with a net profit attributed to the parent company of €1.475 billion, 13% less than a year earlier, due to donations amounting to €350 million made to the Amancio Ortega Foundation, a large proportion of which are devoted to the fight against cancer.

Specifically, the Foundation donated €320 million to the purchase of state-of-the-art cancer equipment, which is going to be installed in public hospitals across all of the autonomous regions.

At the end of last year, the assets of the Pontegadea group were worth €29.028 billion, its net equity amounted to €21.006 billion and its business volume reached €25.721 billion.

In addition to Torre Cepsa, which it purchased for €490 million and the building at Gran Vía 32, Ortega owns several other office buildings in Madrid such as Torre Picasso and the Castellana 79 building, which houses the largest Zara store in the world.

The Zara property portfolio

Meanwhile, Pontegadea Inmobiliaria recorded revenues (primarily due to rental income) of €385 million, up by 13.6% compared to a year earlier, and the fair value of its portfolio of assets, set by an appraiser, was €8.759 billion, up by 2.8% compared to a year earlier.

51% of the real estate revenues come from European markets, 46% from America and the remaining 3% from Asia, according to the annual accounts, which reflect that Pontegadea’s real estate investments amounted to €629 million in 2017 and at the end of the year, they amounted to €6.913 billion: €1.688 billion in Spain and the remaining €5.225 billion overseas.

Of the investments outside of Spain, €2.681 billion correspond to investments in America, €2.191 billion to Europe (excluding Spain) and €353 million to Asia.

Pontegadea Inversiones, the parent company of the Pontegadea group is chaired by Amancio Ortega and its first Vice-President is his wife, Flora Pérez.

In addition, the company’s directors include José Arnau, who is also a director of Inditex, and Roberto Cibeira, in turn, the CEO of Pontegadea Inmobiliaria.

The Inditex group, owner of fashion chains such as Zara and Massimo Dutti, recorded a net profit of €3.368 billion in the last financial year (which closed in January), up by 6.7% compared to a year earlier, and its sales amounted to €25.336 billion, up by 8.7%.

Original story: El Mundo 

Translation: Carmel Drake

ST: Madrid & Barcelona Sell 93% of their New Housing Stock in Just 2 Years

18 May 2018 – El País

In the cities of Madrid and Barcelona, the two main real estate markets in Spain, there are just 4,114 homes in new developments available for sale (9,920 in both provinces), the bulk of which have been put on the market within the last two years. Moreover, there are no longer many finished homes on offer, like during the years of the crisis, but rather mostly developments under construction or units that have not even been started yet, which are being offered off-plan and whose prices have risen by so much since 2016 that the supply of homes for less than €150,000 is currently insignificant.

Given the shortage of construction projects, the supply of new homes may be exhausted within eight months in the case of the Madrid region (nine in the capital) and within just under 14 months in the Catalan province (12 months in the municipal area), something that is going to accelerate the price rises seen in recent months, according to ST (Sociedad de Tasación), which has compiled a census on the developments that are currently up for sale.

Over the last two years, both real estate markets have done an about turn and not only due to the increase in prices. In the Community of Madrid, 93.7% of the stock of new homes has been exhausted since 2016, according to Sociedad de Tasación. The appraisal company registers a current supply of 6,319 homes, which represents an increase of 15.8% with respect to 2016. This calculation includes 346 homes that were already up for sale in 2016 and which have not been sold, plus 5,973 new units.

The rate of absorption in Madrid capital has been more marked, where more than 97% of the homes put up for sale over the last two years have been sold, in such a way that now there are 3,067 homes on the market (3,007 of which are new units), 42.1% with respect to 2016. 98% of this supply comprises properties that have been put on the market over the last two years.

In this new real estate cycle, the supply of finished properties has lost weight over the total, with such homes now accounting for just 7.5% of the total stock in the Community of Madrid, compared with 58.1% in 2014. 60.5% of the supply registered now corresponds to homes that have not been started yet and 32% to homes under construction. Specifically, the current supply of finished homes has decreased by 75.8% with respect to the census in 2016 and the volume of properties under construction has grown by 54%, whilst the supply of homes not yet started has risen by 75.1% (…).

In the province of Barcelona, 89.6% of the stock has been absorbed in just two years. In addition to the 289 homes that are still on the market from 2016, 3,312 new units have been identified, bringing the total current supply to 3,601 homes, 28.9% more than in 2016. And in the Catalan capital, 93.4% of the supply that has come onto the market over the last two years has been sold and today the current supply amounts to 1,047 homes. 93.2% comprise homes that have been put up for sale within the last two years.

Here too there has also been an increase in the weight of homes under construction (50.9%), at the expense of the supply of finished homes, which account for 12.4% of the total stock in the metropolitan area, compared with the 29.9% that they represented in 2016. Specifically, the current supply of finished homes has decreased by 53.6% with respect to the 2016 census, and the supply of homes under construction has grown by 65.7%, whilst the volume of homes not yet started has increased by 54.8% (…).

Larger and more expensive homes

Another feature of the new real estate cycle is that the homes for sale are larger and also more expensive than they were two years ago. In the Madrid region, homes with surface areas of between 100 m2 and 150 m2 are gaining weight, and now represent 62.2% of the total, compared with 45.8% in 2016. By contrast, homes measuring less than 100 m2 are losing weight, down from 36.1% in 2016 to 22.1%.

In terms of prices, there are increasingly fewer homes that cost less than €150,000, which have gone from accounting for 25.6% of the supply to just 15.2% in the Madrid region and from 13.6% to 9.7% in the Spanish capital. By contrast, the proportion of homes costing between €150,000 and €300,000 has increased, according to ST.

In the Barcelona metropolitan area, homes costing less than €150,000 have gone from accounting for 15.9% of the total supply to just 4.8%. And in the city itself, the appraisal company has not been able to identify any units on the market for less than €150,000. What’s more, homes costing more than €500,000 have grown from representing 24% of the total in 2016 to 39% in 2018.

Original story: El País (by Sandra López Letón)

Translation: Carmel Drake

AEV: Spain’s Appraisal Companies Invoiced €283.8M in 2017, Up By 17% YoY

18 April 2018 – Eje Prime

Appraisal companies are thriving in Spain. According to the latest data from the Spanish Association of Value Analysis (AEV), the turnover of the 23 associated appraisal companies during 2017 amounted to €283.8 million,  up by 17.1% compared to the previous year. This upward trend is experiencing an acceleration that almost doubles the turnover growth rate recorded between 2015 and 2016 (9.2%).

Moreover, this ascending inertia is observed in the great majority of the data analysed. The number of real estate appraisals performed increased by 18% to reach 1.25 million appraisals, corresponding to a total appraised value of €389.5 billion. The 650,000 appraisals that were issued for the purpose of mortgage guarantees stand out, in particular, since they represent 24% more than the number carried out during the previous year, according to data from the association.

The number of appraisals conducted without visiting the interior of the property grew substantially, by 67% to be precise, as did the number of appraisals performed online, although at a more moderate rate (by 15%).

In terms of the regional distribution of house appraisals by autonomous community, Murcia recorded the highest growth with respect to 2016, up by 38%. It was followed by Valencia (36%), Cantabria (31%), the Balearic Islands (25%) and Cataluña (25%).

Original story: Eje Prime

Translation: Carmel Drake

Blackstone & Santander Finalise the Transfer of Popular’s Portfolio

22 March 2018 – Eje Prime

Blackstone and Santander are signing their agreement. Sources close to the operation have explained that the two groups are on the verge of sealing the deal that will see Blackstone take control of 51% of the share capital of the new company that is going to be created with the €30 billion in real estate assets from Popular. The new entity is going to be known as Quasar.

The US fund is also going to be responsible for managing the new company and its CEO is going to be Eduard Mendiluce, who is also the most senior executive at Anticipa, the other large real estate company that the fund owns in Spain, according to Expansión. Santander will own the remaining 49% of the shares in Quasar.

The new Project Quasar Investments has agreed to take out a syndicated loan for €7.3 billion from a group led by Morgan Stanley and Deutsche Bank. Blackstone itself is participating in the loan, through one of its subsidiaries, which will see it contribute €1 billion or 14% of the financing.

In parallel, the fund and Santander are going to contribute €3 billion in share capital to the company, which will amount to more than €10 billion. It is worth remembering that Popular’s non-performing loans were appraised at €10 billion, the book value at which they have been registered on the bank’s balance sheet after the clean-up carried out by Santander.

Original story: Eje Prime

Translation: Carmel Drake