Arcano Buys C&A Store In Madrid From Redevco For €12M

26 October 2017 – Eje Prime

Arcano’s real estate arm is continuing to grow. In its fight to become one of the leading players in the Spanish real estate business, the company has recently purchased a retail store in the centre of Madrid from Redevco for €12 million, according to sources at the group.

The establishment, which is currently occupied by the international fashion retail group C&A, has a retail surface area of more than 3,400 m2. The asset is located at number 202 on Calle Bravo Murillo. According to sources in the sector, the operation has been brokered by the real estate consultancy CBRE. The property will be added to the group’s portfolio of assets, which comprises buildings in Madrid, Barcelona, Costa del Sol and Portugal.

Until now, the asset was owned by Redevco, a company specialising in the investment and management of commercial properties. The group manages a portfolio of more than 400 assets located in the main commercial areas of Germany, Austria, Belgium, Spain, France, Hungary, Luxembourg, The Netherlands, Portugal, United Kingdom and Switzerland (…).

Arcano, which recently moved its Madrid offices to number 29 Calle Ortega y Gasset, was founded in 2003 and employs almost 140 people with offices in Barcelona, Madrid and New York. Since its creation, Arcano has become one of the leading independent firms in the Spanish financial sector (…).

Original story: Eje Prime (by C. Pareja)

Translation: Carmel Drake

Interview With Arcano Bosses: Álvaro De Remedios & Jaime Carvajal

19 September 2017 – Expansión

Interview with Álvaro de Remedios (pictured above, left) and Jaime Carvajal (pictured above, right), President and CEO of Arcano / The executives are committed to backing the Spanish economy and do not believe that Cataluña will break the rule of law.

In 2003, after a lifetime as an investment banker, Álvaro de Remedios (Madrid, 1968) decided to found Arcano and he was soon joined by Jaime Carvajal (Madrid, 1964). Both shared the vision of accompanying their clients throughout the transaction process and of placing the knowledge of senior executives at their disposal. Fourteen years later, Arcano has 15 partners, a workforce of more than 140 people, offices in Madrid, Barcelona and New York, and it has added the management of alternative assets and real estate advice to its core investment banking business.

Q: The boutique advisors have completed quite a few high-profile operations in recent months.

Jaime Carvajal: It is a world that is growing. The bankers at boutique firms have a lot of experience and the teams are more senior than in the large investment banks, in general. But sometimes, it is good to have both profiles involved in an operation. For this reason, Jefferies makes so much sense for us.

– What fruits are being born from the alliance with Jefferies?

Álvaro de Remedios: We are Jefferies’ partners in Spain. We benefit from its status as a global bank with an international presence and a great sectoral specialisation, and they benefit from our local presence and closeness to the market. Apart from the fact that we have business cards with different logos on them, we act as a single firm. We signed the alliance more than two years ago. The first year was spent understanding each other’s businesses, and during this second year, we have participated in several operations together (…).

Q: Do you expect to see an upturn in corporate operations?

Á.R: Yes, we think so, although that could just be our perception and not the view shared by the sector. We have closed around 30 advisory operations in the last 18 months. We are all very busy.

Q: Are the prices of operations rising due to the high degree of liquidity?

Á.R: There is a lot of liquidity and prices are clearly rising, but there is one key element that is different to before the crisis and that is the fact that financings are much more prudent than before. Prices are higher, but they are not off the scale, and financing is more conservative because investors are being cautious. The scars from the crisis are still there and that is a lesson.

Q: Are investors willing to earn less in this environment?

J.C: The very low interest rates have forced a change in expectations and has resulted in the arrival of new investors, such as infrastructure and pension funds, which are willing to forgo profitability in exchange for assuming lower risk. That is what is driving up prices.

Q: Is the real estate market at its peak in Spain?

Á.R: We are not betting on a rise in interest rates or an increase in prices; we bet on our own added value: we buy a building, we do it up and that is how we generate returns. Our expectation is that prices are not going to grow by much more in the real estate market, but, with our strategy, we are still generating returns (…).

Q: Is the economic outlook bright?

J.C: At Arcano, we started to back the Spanish economy in 2012 and we continue to do so. There are no significant risks threatening the economy: the banking system is robust and the problem of Popular has been resolved. The only clear problem is the inevitable increase in interest rates, but that is not going to happen in the short term, at least in Europe (…).

Original story: Expansión (by S. Arancibia, I. Abril and A. Stumpf.)

Translation: Carmel Drake

Slim Commissions Sale Of Torre Realia In Barcelona For €140M

7 June 2017 – El Confidencial

(…). Torre Realia BCN is the jewel in the crown of FCC’s subsidiary in Cataluña and, moreover, it is located in a thriving area which has been witness to some of the most interesting real estate operations of recent times: Plaza Europa, the new business district within the Catalan capital’s area of influence.

With this cover letter, the group controlled by Carlos Slim has decided to put the skyscraper on the market and has engaged JLL and BNP Paribas to find a buyer, according to several sources close to the operation.

A spokesman for Realia refused to confirm the operation, which has reportedly been orchestrated directly by Gerardo Kuri Kauffman, one of the right-hand men of the Mexican magnate in Spain and the CEO of the real estate company.

The decision to sell this genuine trophy asset comes just after the real estate company signed a new syndicated loan amounting to €582 million, aimed at refinancing the €678 million debt that expired in April and which threatened the viability of the group.

To finish sorting out the financial situation, the company was also planning to sell the Los Cubos building in Madrid, an operation that never ended up being closed due to Slim’s high price expectations.

New business district

Realia is hoping to obtain €140 million for this sought-after property, which measures 112 m tall, over 24 storeys, with a gross leasable area of 31,960 m2 and 399 parking spaces. It is aware of the growing interest that exists amongst the large real estate companies to establish themselves in the new business district.

The skyscraper is, precisely, one of the most iconic buildings in this thriving area and is the image that identifies the zone. The property houses the headquarters of KPMG in Barcelona and has seen its value rise in recent months, thanks to the wave of operations that have taken place in this enclave and the growing number of large corporations that are moving their headquarters to this new financial district, in L’Hospitalet de Llobregat.

The main player in two of the operations that are transforming the area is the Puig family, one of the most important corporate sagas in Cataluña, which has completed a double whammy, by teaming up with Colonial to promote a 14,000 m2 tower in Plaza Europa 46-48, which is right opposite Grupo Puig’s headquarters, a building that it has just purchased from BBVA for around €60 million.

Arcano has also been active in the area with its acquisition of an office building located at Plaza Europa 22-24 for €13 million. That property has a gross leasable area of 7,335 m2, plus another 452 m2 of storerooms, 83 of its own parking spaces and 164 administrative concession parking spaces, which it plans to completely remodel after the summer.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Housing: Which Provinces Offer The Most Attractive Returns?

23 May 2017 – Expansión

Madrid, Barcelona, the Costa del Sol and the Balearic Islands clearly stand out as the most attractive areas.

The Spanish real estate market is enjoying a sweet moment once again. The average price of a home in the country rose by 2% in April with respect to the same month a year ago, which means that so far in 2017, prices have risen by 5% with respect to December 2016, which saw the third consecutive annual rise.

And the outlook for the future is more than promising: Samuel Población, National Director of Residential and Land at CBRE, explains that on average in Spain, price increases of between 4% and 5% are expected, and those percentages will be more marked in Madrid and Barcelona, where increases of around 10% are predicted.

In the case of yields, the panorama is similar. The net return on a rental home (the rate that includes the increase in the price of a home over 12 months as well as the return from renting it out during the same period) now amounts to 8.8% in Spain. On average, rentals in Spain generate returns of between 4.5% and 6% (excluding the impact of capital appreciation), according to Ignacio de la Torre, Partner and Co-Head of the Capital Markets team (at Arcano).

However, the figures reveal that the real estate market is not experiencing a similar boom across the whole of Spain. The best areas for investing in housing are Madrid, Barcelona and their respective suburbs, as well as Málaga and the Costa del Sol, the Balearic Islands and Alicante. Valencia, influenced by the latter, is also recovering and in Valladolid, Zaragoza and A Coruña, we are starting to see signs of improvement, according to José Luis Ruiz Bartolomé, Managing Partner at Chamberí AM.

In Madrid and Barcelona, house prices are rising due to an increase in demand in the context of limited supply, given that the construction of new housing is still a long way below the levels that the country can absorb. 60,000 homes are currently being constructed in Spain, compared to the 150,000 that the economy is capable of digesting.

Typical buyer profiles

The profile of a typical buyer in the city is a family with children and a stable income. They are looking for a home with between three and four bedrooms, measuring between 110 m2 and 140 m2. In the case of investors, they tend to buy properties with 2-3 bedrooms, according to Población. On the other hand, the average tenant is a young person, without children, who does not take out a mortgage either due to a lack of stable employment or because of the effect of the rental culture that is starting to spread amongst the new generations.

Jesús Martí, real estate analyst at Invermax, added that buyers, and above all renters, are increasingly focused on the proximity of their future home to their place of work when it comes to deciding where to live.

The profile of a typical buyer on the coast is a foreign investor. Ignacio de la Torre, Chief Economist at Arcano, says that 15% of the total market for house sales in Spain involve buyers from overseas and that percentage increases to 30% in the case of Málaga.

When it comes to choosing a property for investment, the experts advise buyers to not get carried away by apparent bargains. It could be that the sales price of a property seems cheap, but in that case, it will probably also be hard to generate stable rental income from it.

It is worth considering that just one month’s delay in the payment of rent by a tenant can significantly harm the profitability objectives of a property.

Original story: Expansión (by R. Martínez)

Translation: Carmel Drake

Arcano To Raise €125M For Its Second RE Fund

19 May 2017 – El Economista

Arcano is preparing to launch its second real estate fund following the success of its first vehicle, through which it managed to raise €80 million to acquire assets in Spain.

In this case, the objectives of the firm are more ambitious – it hopes to raise between €100 million and €125 million, according to Eduardo Fernández-Cuesta, Partner at the management company.

“Arcano’s platform was essential when it came to obtaining capital for the first fund”, explained the Director, who said that the process was complicated, given that it was the first time that it had operated in that field, but that it was supported by the firm and its own experience with other kinds of assets, such as private equity and European corporate debt (where it already manages assets worth more than €3,000 million).

Since Arcano Spanish Opportunity Real Estate Fund launched its operations “€60 million has been invested or committed to date, and by the end of the year, we expect to have disbursed the remaining €20 million (from the first fund)”, said Fernández-Cuesta.

Just like in the case of the first fund, the new vehicle will focus on value-added operations, “given that it is a niche in the market that we think we can do it better, focusing on operations of between €10 million and €15 million”.

The firm, which seeks “a net return of 15 percent” operates mainly through off-market transactions with private owners, as well as with financial institutions.

“We will likely begin raising capital (for the second fund) from September onwards, but it will depend on how the investments that we have left to close in the first fund are going at that point”, said the Director.

With the first fund, Arcano invests in value-added operations in all types of properties, with a clear focus on residential assets in Spain’s main cities and along the Costa del Sol, without forgetting other assets including office buildings, logistics assets, retail premises and shopping centres, provided they are opportunities that generate value within the fund’s investment philosophy.

“In this way, Arcano covers a gap in the real estate sector in Spain by concentrating on value-added and medium-sized operations (between €5 million and €25 million in equity) with a clear local focus”, explained the firm.

Original story: El Economista

Translation: Carmel Drake

Socimi Optimum III Will Debut On Stock Market On 16 May

11 May 2017 – Expansión

A new listed real estate investment company (Socimi) will debut on the Spanish stock market next week. The company in question is Optimum III, specialising in value-added residential assets (i.e. those requiring active management to maximise their value).

The company will debut on the MAB with a reference value of €10 per share, taking the total valuation of the company to €54.03 million. The bell will ring on 16 May.

The new Socimi is the thirty-third to debut on the MAB (four others are listed on the main stock market). Its portfolio comprises six buildings, five in Barcelona and one in Madrid, all acquired within the last three months. The properties include Diagonal 333, in Barcelona, purchased in January for €12.8 million; and General Moscardó 7, in Madrid, bought in February for €14.86 million.

The Socimi’s most recent purchase involved the building on Juan de Garay 5-7, in Barcelona, which it acquired for €1.7 million on 13 April.

The company is managed by BMB, as disclosed by Expansión. That company, which is headquartered in Barcelona, has accumulated eight funds since it was founded in 2006. The firm led by Josep Borrel also manages another Socimi that is already listed on the stock market, Optimum Real Estate.

Optimum III’s main shareholder is the American investment fund Bluemountain, which owns 83.287% of its share capital. The firm Itzarri EPSV holds another 9.2541% stake, whilst another 15 shareholders own less than 5% each.

The new Socimi has set itself an investment period of 12 months, beginning on 1 March, and the aim of liquidating its assets no later than the seven years after its debut on the stock market.

Its investment target comprises value-added assets, ranging between €2 million and €20 million per property, with an average price of around €2,500/m2. Including construction work, the investment undertaken by Optimum Re Spain will reach a total of €80 million between own funds and debt.

Arcano Valores has been the placer and registered advisor to Optimum III, which will trade under the code YOVA, whilst BNP Paribas is acting as the liquidity provider.

Original story: Expansión (by Rocío Ruiz and José Orihuel)

Translation: Carmel Drake

Experts Rule Out Risk Of RE Bubble In The Short Term

10 May 2017 – El Confidencial

The fact that the Spanish real estate market is enjoying happier times is more than clear. And all of the players in the sector are aware of the fact: property developers, consultants, construction companies…Nevertheless, the “overheating” that some say is threatening certain segments of the market, is falling well short of a full-blown real estate bubble, for the time being at least. At least that is according to the speakers who participated in the “Real Estate Investment Opportunities” day organised by El Confidencial and Colonial.

Real Estate Market Forum

Indeed, Juan José Brugera, President of Colonial – which is currently evaluating its transformation into a Socimi – stated that the market is “a long way from a bubble. What we are seeing is the launch of projects”. In this sense, he pointed to the German market by way of example. “It is very stable. (…) What you have to do is take a risk and invest. With this stability in terms of value, your investment will be rewarded”.

In his opinion, “a bubble is something else. It is an excessive value, but, one of the characteristics of the European property sector is that financing is very tight in terms of size and type. I don’t see a bubble, what I see is a more professional management of the assets, where the ability to generate value is what will determine prices, provided the markets are not affected by global circumstances”.

The CEO of the consultancy firm JLL in Spain, Enrique Losantos, also rules out the risk of a bubble. “Given current prices, you could be forgiven for thinking that the market is overheating, but the fact is, there is still a long way to go, especially for those investors who know how to extract value from the portfolios of assets that are coming onto the market and which should be invested in and managed to adapt them to the demands of the current market. These players will be able to obtain returns, even in the double digits (…)”.

Who will control the large rental stock?

Meanwhile, Ignacio de la Torre, Chief Economist at Arcano, said that “there is not a bubble at the moment, but if we continue at this rate, there will be one”, especially in the residential market. He highlighted the significant interest that certain assets have sparked in Spain, such as, for example, rental homes, especially amongst institutional investors. “When everything was clogged up, it seemed like Spain was going to go bankrupt, but then investors with large risk appetites entered the market to inject liquidity and the economy started to work again. Now, those hedge funds are starting to recycle the assets they bought and as the market for rental homes increases, so institutional investors are entering the segment, which is what is happening in other countries too. In the future, insurance companies and pension funds are expected to become the owners of the large stock of rental housing in Spain. (…).

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

Arcano’s RE Fund Acquires 2 Assets For c. €20M

27 March 2017 – Observatorio Inmobiliario

On Tuesday (21 March), Arcano’s real estate fund, the Arcano Spanish Opportunity Real Estate Fund (ASOREF), announced the acquisition of two new assets for almost €20 million. The assets acquired comprise an office building in Barcelona’s Plaza Europa (number 22-24) and a residential building on Calle Divino Pastor, 5 in Madrid.

Following these operations, the fund has now invested 50% of its capital; it plans to complete the rest of its investments this year.

The office building on Plaza Europa, 22-24 in Barcelona (pictured above) involved an investment of around €13 million. The asset is located in one of the fastest growing areas of the city for high-quality office space. The property currently has an occupancy rate of 84% and a gross leasable area of 7,334 m2, along with 83 parking spaces and storerooms covering 452 m2. It also has 164 parking spaces as an administrative concession.

Now that Arcano has acquired the property, its objective, as part of its added-value strategy for this fund, is to invest in its refurbishment and update, to increase the value and appeal of the building. “Our strategy will involve repositioning the property through the active management of it. From our point of view, Plaza Europa is the natural area of consolidation for the office market in Barcelona – it is going to undergo significant changes over the next few years”, said Pablo Gómez-Almansa, Investment Director at ASOREF.

The asset acquired in Madrid, on Calle Divino Pastor, 5, for a price of just over €6 million, is for the construction of 28 new homes with 1 and 2 bedrooms, a commercial space and 88 parking spaces. It is an 810 m2 plot of land with a constructed residential surface area of 2,371 m2. The plot is located in the Malasaña neighbourhood, in the Centro district of the city of Madrid, between Calles Fuencarral and San Bernardo. The building is very well located and in a strategic area between Calles Princesa, Gran Vía, Fuencarral and Carranza. It will benefit from the lack of land and shortage of new residential developments in the area.

In the words of Eduardo Fernández-Cuesta, Head Partner at ASOREF, “the two acquisitions announced today underline Arcano’s commitment to forming a diversified portfolio and adding value to its properties, through renovation, new builds and better positioning of its buildings in the market, to increase the supply of high-quality assets”.

Original story: Observatorio Inmobiliario

Translation: Carmel Drake

CaixaBank Sells €700M In Debt & Foreclosed Hotels To Apollo

29 December 2016 – El Confidencial

CaixaBank is going to close 2016 with a healthier balance sheet, thanks to the latest divestment operation that it is about to sign. According to financial sources, the banking institution led by Gonzalo Gortázar (pictured above), has reached an agreement with Apollo Global Management to sell €700 million in foreclosed assets linked to the hotel sector. The US fund is hereby going to acquire 20 four- and five-star holiday establishments that the bank has been holding in its portfolio following non-payments by customers.

The transaction, which has been dubbed Project Sun, is just awaiting the finishing touches from CaixaBank and Apollo, the opportunistic fund that purchased 84% of Banco Santander’s real estate company – Altamira – for €664 million and all of Evo Banco, which previously belonged to the former Novacaixagalicia for €80 million, amongst other things. Nevertheless, the agreement between the bank headquartered in Barcelona and the NYC-based firm is limited to two thirds of the portfolio that was initially put up for sale.

The Spanish financial institution, which has been advised by Alantra, had valued Project Sun at around €1,000 million, on the basis that it contained, on the one hand, unpaid loads secured by 112 hotels; and, on the other hand, 32 establishments that the bank had foreclosed due to non-payment. According to the internal documentation from the sales notebook, in total, 11,000 rooms were put up for sale, the largest hotel portfolio of the year. But at the last minute, the entity has decided to get rid of debt amounting to only around €350 million and 20 hotels worth a similar figure, which means that 12 properties have been left out of the agreement with Apollo Global Management.

The reason is that the offers that it received for these other holiday establishments were well below their respective book values, and so they have chosen to not sell them now so as to sell them for a bad price. Most of the hotels and loans are located in Andalucía (37), Cataluña (22) and the Canary Islands (19). Besides Apollo, which has been advised by Arcano and by Gustavo Gabardo, former Director General of NH Hoteles, CaixaBank had also received interest for this portfolio from other so-called vulture funds, such as Starwood, Cerberus, Oaktree and Bank of America, which had already acquired assets from Bankia, Santander, Sareb and Sabadell.

With this transaction, CaixaBank is going to close the year with €2,400 million less in terms of overdue debt, having already completed the sale of other non-performing loan portfolios. On 30 November, it got rid of the portfolio known as “Far”, which it sold for €700 million to Lindorff and D. E. Shaw. In July, it did the same with another package of unpaid credits for €900 million (Project Carlit), which it sold to Goldman Sachs and D. E. Shaw. (…).

This is the eleventh operation of its kind that CaixaBank has completed since it started to try to remove toxic loans from its balance sheet. (…). Over the last two years, it has managed to get rid of non-performing loans amounting to almost €6,000 million, a strategy that has allowed it to reduce its default rate from almost 12% at the height of the financial crisis to just 8.7%.

Original story: El Confidencial (by Agustín Marco)

Translation: Carmel Drake

Aguirre Newman Sells Portfolio Of Retail Premises For €40M

19 October 2016 – El Confidencial

Less than six months after putting its portfolio of retail premises up for sale, Aguirre Newman has reached an agreement to sell the jewel in the crown: the 14 assets that it owns in Madrid.

According to several sources familiar with the deal, the real estate consultancy has reached an agreement with a Madrilenian family office to close the sale for almost €40 million. With this move, the buyer will acquire a portfolio of assets located, above all, on the Spanish capital’s main high streets.

This lot forms part of the Zaphir real estate fund, which engaged Arcano to organise a formal sales process of 32 retail premises located in several provincial capitals, for a total amount of €80 million.

Nevertheless, during the negotiations and thanks to the attractive offer received for the Madrilenian assets on their own, Aguirre Newman has decided to sell these assets in one lot and to divest the other assets in smaller separate operations.

The portfolio of retail premises in Madrid has an average historical occupancy rate of almost 90% and enjoys a diversified profile of tenants, ranging from giants such as Zara Home, Vips, Trussardi, Cortefiel and Punt Roma to popular corner shops (typically run by Chinese families).

Madrid accounts for 56% of the rental income from this portfolio thanks to the fact that it contains high quality premises such as the store located at number 82 on the sought-after Calle Serrano, which is houses to a Trussardi shop.

Zaphir’s divestments

The sale of these retail premises forms part of Zaphir’s divestment process. The fund also reached an agreement with Neinver and Colony at the beginning of this year to sell them some logistics assets for €87 million.

The recovery in consumption has reawakened investors’ appetite for high street premises, as we saw in 2015, when they invested more than €1,200 million in retail premises, significantly exceeding the historical investment volume in the segment.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake