Tag: appreciation

Blackstone Buys Lar’s Logistics Portfolio for €120M

18 July 2018 – Expansión

Blackstone has purchased the Socimi Lar España’s logistics portfolio, comprising five warehouses and a plot of land for development, for €119.7 million. That sum represents an appreciation of 83% with respect to the purchase price of €65.6 million.

Specifically, four of the warehouses acquired are located in Alovera (Guadalajara), one is located on the Juan Carlos I Industrial Park in Almussafes (Valencia), whilst the land to be developed for logistics use is located in Cheste (Valencia).

The five logistics warehouses span a combined surface area of 162,000 m2 and have an occupancy rate of 100% – all of them have stable rental contracts. Meanwhile, the surface area in Cheste spans 182,000 m2.

The warehouses in Alovera were acquired between August 2014 and May 2015 and the property in Almussafes was purchased in May 2015. The advisors to Lar España on the operation have been CBRE, Pérez Llorca and Hill International.

Asset rotation

This operation forms part of the asset rotation process that the company launched last year. Specifically, the Socimi’s first divestment came in September 2017, with the sale of an office building in Arturo Soria, and since then, it has carried out two other sales.

Together, the divestments carried out by Lar España to date amount to €265 million, more than half the €470 million in divestments forecast in the business plan to 2021.

The President of Lar España, José Luis del Valle, said that the company’s plan involves selling those assets that are not strategic to focus on the retail portfolio.

In addition to the asset sales, the company’s business plan involves investing €220 million in shopping centres and retail parks. Within the context of that plan, Lar purchased the Rivas Futura shopping centre for €62 million and the Abadía shopping arcade for €14 million.

In parallel, the Socimi plans to invest €247 million in commercial developments and €49 million to improve its retail assets.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Mapfre Sold Non-Strategic Properties for €130M in 2017

1 March 2018 – Expansión

In 2017, Mapfre focused the management of its properties on the sale of non-strategic assets for a total of €130 million, of which €124.5 million corresponded to assets located mainly in Spain. That activity generated a profit of €65 million for the insurance company.

The entity sold the building it had occupied on the Madrilenian street Calle Luchana (pictured above) for €72 million, plus two plots of land in Palma de Mallorca for €22.5 million and other smaller assets for €30 million in total.

At the end of 2017, the market value of Mapfre’s real estate investments amounted to €2.9 billion, with latent gains of €750 million. That figure would offset a decrease in the price of its properties amounting to approximately 26.28% of the market value of the portfolio.

Of that total, €1.0 billion relates to properties that the insurance company uses in its normal activity, whilst the remainder, €1.3 billion comprise group investments.

Mapfre’s real estate portfolio accounts for 4.4% of the insurance company’s total investments, which amount to €49.6 billion.

Its government-backed fixed-income securities account for most of its portfolio (55%) at €27.4 billion, although they have reduced their weighting by 2.3 percentage points, given that previously they accounted for 57.3%. Corporate fixed-income securities accounted for 19% of the total, at €9.6 billion, compared to 20.2% a year earlier.

Insurance companies are natural investors in these types of assets, but in light of the decrease in interest rates, most entities are reducing the weight of their investments in those portfolios and increasing their presence in others that may offer higher returns, although also higher risk.

Equities are the caption that is growing the most within Mapfre’s portfolio, up by 44.2% in one year to reach €2.4 billion. Their weight amounted to 4.8% at the end of 2017, compared with 3.4% a year earlier.

Spanish fixed-income assets, both public and corporate, amounted to €18.2 billion at the end of last year, almost half the total amount, which reached €37.0 billion. The United States of America, with €3.7 billion and Brazil, with €3.4 billion, were placed in second and third position in that ranking.

Original story: Expansión (by E. del Pozo)

Translation: Carmel Drake

The Value of Lar España’s Asset Portfolio Rises by 29% to €1.5bn

25 January 2018 – Eje Prime

Lar España said goodbye to 2017 with more valuable assets in its portfolio. The Socimi has reported that its property portfolio experienced a 29% increase in value last year, up to €1.538 billion. According to the Socimi, that figure is higher than the sum of the prices at which it purchased its properties (€1.196 billion).

The company specified that the valuation of its real estate portfolio has been prepared by Cushman&Wakefield and JLL Valoraciones, according to Europa Press. This increase in the value of its portfolio is due to the various efforts undertaken in respect of its assets and the investments made during the course of the last twelve months.

As Lar España itself explained, between 2016 and 2017, it invested €74 million in improvements to assets in its portfolio, split between shopping centres (€20 million), office buildings (€11 million) and developments (€43 million).

Moreover, according to the Socimi, from the point of view of management, several actions have been undertaken. Specifically, the company highlights the purchase of properties for numerous rental rotation operations. In total, those types of operations account for 22% of the surface area occupied by the Socimi’s assets to date.

Original story: Eje Prime

Translation: Carmel Drake

Non-Ibex Property Developers Also Shine: Quabit, Insur & Montebalito

5 January 2018 – El Confidencial

The real estate sector is starting to show green shoots and that is being reflected in the Spanish stock exchange. In 2017 alone, 19 companies made their debuts on the Alternative Investment Market, taking the total number to 47. Beyond the five large Socimis (Merlin, Colonial, Hispania, Axiare and Lar), there are alternative real estate companies that have experienced positive growth and that represent good investment options.

Quabit Inmobiliaria could summarise its 2017 in two ideas: financial support from large firms and capital increases. And, at the end of December, the company closed a capital increase amounting to €29 million, most of which (77%) was subscribed by Cobas Asset Management (Francisco Paramés’ management firm) and Kairos Investment. In total, it saw its share price rise by 16% during 2017 and experts believe that its share price will reach €2.40.

“In addition to the push that it has been given by the fact that large funds are including its stock within their portfolios, the listed company owns a significant number of properties as it heads into 2018. Moreover, its debt has decreased, and so it can afford to invest more. In addition, another positive factor is the performance of house prices, above all in Barcelona and Madrid, where it has its greatest presence”, explains an analyst at XTB Manuel Pinto.

Another real estate firm to watch is Montebalito, which saw its share price rise by 43% in 2017. “In general, we expected more from this stock. Nevertheless, it managed to close the year with a gain, thanks to the sale of a property in Berlin for €10 million, a deal that allowed it to clean up its balance sheet”, said Pinto.

Nevertheless, its performance could have been greater if it had not been for the depreciation of the currencies in Brazil, the Dominican Republic and Colombia, countries where the listed firm owns a significant number of assets.

All of this data is being supported by the boom in the real estate sector, which has managed to increase in value by more than 360% since 2012, according to the latest report from ‘Bolsas y Mercados Españoles’ (BME). “All of Spain’s real estate companies are very healthy, mortgages are rising, the sector is cyclical…In general, all indicators are still positive for these companies to continue growing during 2018”, says an analyst at Orey iTrade Roberto Berzal.

Moreover, Inmobiliaria del Sur has also joined the party, given that it managed to increase its share price by 35% (in 2017). “This company is improving its turnover and income, above all in the construction sector. Nevertheless, results from the last quarter mean that we are being cautious with the stock and waiting for its performance over the medium term”.

Original story: El Confidencial (by C. Alba)

Translation: Carmel Drake

Bank of Spain: Rental Yields Soar to 9.8%

7 December 2017 – Expansión

According to the Bank of Spain, buy-to-let homes yield a return from rental income of 4.2% p.a. If to that figure, we add the appreciation in value of the underlying property, the total return amounts to almost 10%, on average. That figure is similar to those recorded during the real estate boom.

Buying a home to put it up for rent offers a much higher return than those generated by other financial assets, such as debt and deposits. Moreover, house prices are still much lower than they were ten years ago and still have the potential to rise. These factors, combined with the gradual recovery in employment and the enormous demand for rental properties, have created a very fertile scenario for investors, both for individuals as well as for Socimis and funds. For this reason, the major indicator of the residential sector is no longer just price – although that is important – but instead yield.

Homes now generate an average annual return of 9.8%, according to the Bank of Spain, which takes into account not only the rental yield but also the appreciation in the property value over 12 months. In other words, the yield is now 1.6 percentage points higher than it was a year ago, to bring it in line with the figures seen at the end of 2007, at the peak of the real estate boom.

This rise in returns is due to the increase in house prices and the rental boom. Increasingly more buyers are opting to acquire homes as a business, in the hope that those properties appreciate in value and generate more than 4% in the rental market (the average is 4.2%).

According to the latest study from Fotocasa – which Expansión revealed last Saturday – 24% of the people who have participated in the residential property market in the last year are investors. That figure exceeds 30% in the large cities, above all in Valencia (44%), Barcelona (36%) and Madrid (35%), according to data from Tecnocasa and the Universitat Pompeu Fabra.

“Now is a good time to buy to let, both for the long-term as well as for second home properties, given that both formulae are generating returns that, in the current context of low interest rates, cannot be found in any financial products or on the stock market”, says Beatriz Toribio, Head of Research at Fotocasa (…).

What’s more, the appearance of new real estate business models has spurred profits along in the large cities, in such a way that 20% of investors now use their homes as tourist rental properties. That high percentage is due to the new short-term let platforms, such as Airbnb, which allow them to obtain even higher returns than from the traditional rental market.

Nevertheless, 65% of investors still prefer the stability of having a long-term tenant. The remaining 15% buy homes not to put them up for rent, but rather to wait for them to appreciate in value and to sell them at a profit.

Market leaders

Madrid and Barcelona are spearheading this new property fever. In the Spanish capital, buying a home to let it out generates a gross annual return of 11.8% (from rental income and capital gains); that figure amounts to no less than 23.1% in the Catalan capital, almost twice as much (…).

The central areas of Madrid and Barcelona are experiencing a genuine profitability boom. In the Catalan capital, the Sants-Montjuic district stands out, with a gross annual return of no less than 32.9% (5.3 points from rental income and 27.6 due to price rises). It is followed by Eixample (26.8%), Gràcia (25.9%), Sant Martí (25.6%), Horta-Guinardó (24.9%) and Nou Barris (21%, although the latter is the most profitable district excluding price rises: 6.6%), which all exceed 20%. The centre (Ciutat Vella) generates 19% and the exclusive district of Sarrià-Sant Gervasi yields 13.2%

In Madrid, the Centro district comes close to 20% (19.7%); it is followed by Salamanca (19.2%) and Chamberí (18.8%) (…).

Something similar is happening along the coast. The highest returns in the beach areas are located in the Balearic Islands, Barcelona, Las Palmas, Huelva and Almería, where rental yields exceed 5.5%, and overall yields exceed 10% if we include the capital gains. The high combined return along the Malaga coast (17.9%) is particularly noteworthy.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Socimi Bay Hotels & Resort’s Profits Rose By 87% In H1 To €102M

31 October 2017 – Alimarket

Bay Hotels & Resorts, the hotel Socimi created by Hispania and Grupo Barceló, has presented its results for the first half of 2017, which reveal that the Socimi increased its profits by 87% during the period to €102 million, with respect to June 2016. In turn, its revenues from the rental of hotels and shopping centres rose by 26.5% to €38 million. On the investment side, Bay spent €18.8 million to improve and reposition its portfolio during the first six months of 2017. The bulk of that investment was spent on the renovation of the Balearic hotel ‘Barceló Paradise Portinatx’ – acquired by Hispania for €11 million this year – and the Canary Island hotels ‘Barceló Teguise’ and ‘Occidental Jandía Mar’, amounting to €7.6 million, €3.6 million and €775,000, respectively.

Bay’s recent operations include the purchase of all of the shares in Armadores de Puerto Rico for €6.2 million on 28 June 2017. That entity owns land in Lanzarote, on which Bay plans to construct a luxury hotel with 225 rooms. Its plots are located adjacent to the ‘Occidental Lanzarote Playa’ (372 rooms) and ‘Occidental Lanzarote Mar’ (436 rooms) complexes, which Bay Hotels also owns. The objective of the Socimi is to create a luxury mega-complex in this tourist area, with 1,033 rooms in total. That same month, the Socimi also completed its purchase of the Balearic hotel ‘Fergus Tobago’ in Palmanova (Mallorca) for €20.5 million, and the Benidorm hotel ‘Selomar’ for €16 million. Looking ahead to future investments, the group held real estate investment commitments amounting to €19.4 million as at 30 June 2017.

Meanwhile, on 1 June 2017, Bay signed a liquidity contract with the entity GVC Gaesco Beka, S.V., with the aim of favouring the liquidity of its transactions and the uniformity of its share price. Overall, the Socimi held 406,450 own shares as at 30 June 2017, with a total value amounting to €2.15 million. At the end of the first half of the year, Hispania recorded a gross asset value of €931 million, which resulted in the recognition of a €73 million gain for asset appreciation in the income statement (…).

Following the various corporate operations, Hispania and Grupo Barcelona own 76% and 24% of the Socimi, respectively. The representative shares in Bay Hotels & Leisure Socimi have been trading on the Alternative Investment Market since 24 July 2017.

Original story: Alimarket

Translation: Carmel Drake

Fitch Warns Of RE Bubble In The Centres Of Spain’s Large Cities

25 October 2017 – El Mundo

The ratings agency Fitch is warning that a real estate bubble is now visible in the centre of Spain’s large cities, although it does not anticipate a widespread bubble in house prices across the country as a whole in the short term, due to the high volume of stock that still needs to be absorbed and the restrictions facing people wanting to access a home.

Those were the findings of analysis performed for the Housing Sector in Spain report published by the entity, which explains that bubbles involving these types of localised assets are now very evident: the strong demand and limited supply of housing in the country’s main cities are leading to extreme price increases that are becoming increasingly “unsustainable”.

According to the agency, in the central neighbourhoods of Madrid and Barcelona alone, prices have recorded an annual increase of between 15% and 35%.

For Fitch, this demand is being influenced by quantitative easing, purchases by foreigners and investment decisions, given that investors are looking to benefit from the appreciation in asset prices and rental yields. Nevertheless, the agency forecasts that these “ingredients” will not influence the overall real estate market in the short term.

Similarly, the ratings agency asserts that it is “highly unlikely” that the problems in the real estate market are correlated with the economic recovery in general and it forecasts that the average discounts being applied to sell foreclosed homes are going to continue to be very high and stable over the next few years.

This situation will continue for as long as the banking sector continues to have an excess stock of housing and for as long as buyers insist on significant discounts to acquire foreclosed homes, said the ratings agency.

According to data from the company, the discount on the sale of foreclosed homes is still “high”, up to 60% on average, compared to the initial valuation, whilst discounts can range from between 50% to 75%.

In this sense, the dispersion of the discounts on the sale of foreclosed properties is decreasing. In fact, the gap between the range of discounts decreased to 25 percentage points at the end of 2016 from 35 percentage points during the period comprising 2010 and 2011. Nevertheless, it says that this reduction is not widespread.

Problems accessing housing

On the other hand, Fitch explains that access to housing will continue to be complicated because the velocity of the house price index is exceeding wage variations.

In this way, the families’ capacity to save is increasingly reduced, also due to the labour market that favours temporary contracts over permanent ones, which makes it hard for would-be buyers to save enough to make the initial down payment of 20% necessary to buy a home.

The report also underlines that access to housing over the long-term may be limited by the gradual elimination of monetary stimuli in the market and the likely scenario of higher interest rates.

Original story: El Mundo

Translation: Carmel Drake

VBARE Iberian Properties Approves €10.4M Capital Increase

6 June 2017 – Press Release

At a meeting held yesterday (5 June 2017), the Board of Directors of VBARE Iberian Properties Socimi (VBARE) approved an increase in the company’s ordinary share capital amounting to €3,941,505.00, through the issue of a maximum of 788,301 ordinary shares. The new shares will be issued for a nominal value of €5.00 plus an issue premium of €8.00 per share, which results in an issue figure of €13.00 per share. In the event that the capital increase is fully subscribed, it will amount to €10,247,913.00 in total, in other words, €3,941,505.00 corresponding to share capital and €6,306,408.00 corresponding to the issue premium.

VBARE, which was created with a clear mission for growth, has achieved an average cumulative appreciation in value on the amount invested of 57% (which represents an average discount of 36% on the investment made), which, at the end of the first quarter of 2017, amounted to €15.9 million.

The aforementioned capital increase has been undertaken in response to demand from several investors, with a view to continuing growth, through the acquisition of a series of identified assets that fit with the company’s strategy.

About VBARE Iberian Properties Socimi (VBARE)

VBARE is a real estate investment vehicle specialising in the acquisition and management of residential assets for rental under the special regime afforded to Listed Real Estate Investment Companies (Socimis). The company has been listed on the MAB since 23 December 2016.

VBARE was constituted in March 2015, with the aim of generating a high return for its shareholders through the implementation of a value-added strategy and of benefitting from existing opportunities in the Spanish residential market, which has been showing clear signs of recovery.

For the time being, VBARE owns a portfolio of 182 homes. To date, the company has been analysing assets worth more than €500 million and it is constantly on the look out for new business opportunities that fit the scope of its investment policy.

Original story: Press Release

Translation: Carmel Drake

Lar España’s Profits Doubled In 2016 To €91.4M

2 March 2017 – El Economista

Lar España generated a net profit of €91.4 million in 2016, more than double (+110%) the amount it recorded a year earlier, thanks to the purchase of new assets and an increase in the occupancy rate of its real estate portfolio, according to a statement made by the Socimi, which specialises in shopping centres.

The company chaired by José Luis del Valle (pictured above) saw its revenues soar by 69% last year, when it recorded rental income amounting to €60.2 million.

At the end of 2016, the company’s portfolio of assets was worth €1,275 million, which represents an appreciation of 16%, and of 13.5% in the case of its shopping centres.

At its next general shareholders’ meeting, Lar España will propose the distribution of a dividend amounting to €0.33 per share, which will represent a 65% increase in shareholder remuneration.

Original story: El Economista 

Translation: Carmel Drake

Soros Will Inject €37M Into Hispania’s €231M Capital Increase

12 May 2016 – El Economista

Hispania has resolved to launch a capital increase amounting to €230.7 million, with the aim of raising funds to allow it to continue investing in the purchase of new real estate assets, according to reports by the Socimi.

The company’s largest shareholder, George Soros, has already expressed his attention of participating in the operation, in line with the 16% stake that he holds in the firm. That means he will inject another €37 million into the business.

By virtue of the increase, Hispania will issue 25.8 million new shares at €7.95 per share, a price that represents a 37.5% discount with respect to the closing price on the stock market on Wednesday (€12.74).

The company expects that the increase will be completed by 9 June, when the new shares should start trading. The operation will begin within the next few days, just as soon as Spain’s National Securities Market Commission (CNMV) gives the green light to the information brochure.

This is the second capital increase that Hispania has launched within the last year, following the accelerated capital increase that it completed in April 2015, through which it raised €337 million.

In this case, the Socimi is resorting to its existing shareholders once again, given that “it has already committed all of its investment capacity” and because it has already identified investment opportunities amounting to €1,500 million and is in “advanced negotiations” to complete the purchase of new real estate assets amounting to around €200 million.

In this way, the company chaired by Rafael Miranda expects to continue increasing its asset portfolio, which comprises hotels, offices and residential properties, worth €1,425 million at the end of 2015, up by 14.8% on the purchase price.

Original story: El Economista

Translation: Carmel Drake