Regional Government of Andalucía Fines BBVA €1.62m

20 January 2015 – Inmodiario

A €60,000 fine for each one of the 27 protected homes not offered up to the municipal registry offices.

In Andalucía, banks and the Sareb are still being fined for not providing their empty subsidised homes to the municipal registry offices.

The partial suspension of the eviction law a year ago by the Constitutional Court following the presentation of the appeal by the central Government, has not impeded the processing of claims in any way, which are ending with the imposition of million-euro fines, which are all being appealed by the affected entities.

Now, it is BBVA’s turn. Its total fine amounts to €1.62m; €60,000 for each one of the 27 accredited homes that were not offered up to the respective Town Halls to be made available to citizens affected by evictions.

The apartments are located in the provinces of Granada (seven), Cádiz (six), Almería (five), Huelva (five), Málaga (two) and Sevilla (two).

According to the Ministry, these homes have not been offered up to the municipal registry offices, which establish the selection mechanisms for the foreclosure of properties under public protection and set the socio-economic requirements for access to them under the principles of equality, openness and accountability.

The fine levied on BBVA follows those levied on two other financial institutions for the same reason: Banco Popular was fined €5.82m for 87 homes and Sabadell was fined €120,000 for two homes. In addition, the Ministry is still investigating potential fines against five other financial institutions, for a total of €3.48m: Building Center (€1.56m for 26 homes), Unión de Créditos Inmobiliarios (€780,000 for 13 homes), Banco Santander (€660,000 for 11 homes), Servihabitat (€360,000 for 6 homes) and Anida Operaciones Singulares (€120,000 for 2 homes).

Furthermore, the Ministry of Development has fined Sareb (the entity known as the bad bank) €120,000 for obstructing the Government’s measures to ensure the social function of its subsidised homes. And it is investigating another case against Sareb amounting to €11.7m for the breach of article 20m, after it allegedly failed to place 98 homes at the disposal of municipal registry offices.

The law that contains the measures to ensure the social function of housing was not challenged by the central Government in its entirety but some precepts were appealed, such as the power to fine financial institutions for leaving homes empty for more than six months and the authority to temporarily expropriate the use of homes to avoid the eviction of families at risk of exclusion.

Original story: Inmodiario

Translation: Carmel Drake

Popular Earns €1,500m From Property Sales In 2014

19 January 2015 – El Economista

Banco Popular earned around €1,500 million from the sale of property in 2014, which represents a two-fold increase on the amount recorded in 2013 (€774 million), according to estimated figures released by the entity. In 2015, the bank expects to sell properties amounting to approximately €2,000 million, an increase of 33%.

Since the end of 2013, when the entity led by Ángel Ron sold the management of its real estate business to Värde Partners and Kennedy Wilson, the rate of sales has skyrocketed.

In fact, it reached a record high in the third quarter of 2014 despite seasonality, with sales of €391 million, compared with €240 million in the same period in 2013, an increase of 63%. Real estate arrears during this period amounted to 57.4%.

Between July and September, 80% of the properties sold were acquired by foreign customers and the remaining 20% were bought by domestic clients. By type of product, 55% of sales corresponded to finished properties and the remaining 45% related to land.

POPULAR (POP.MC) closed the first nine months of the year with cumulative sales of €989 million, equivalent to the sale of 5,148 units. Sources at the entity have explained to Europe Press that the majority of the bank’s properties are located in Andalucía (31%), Valencia (15.7%), Cataluña (12.2%) and Galicia (12.1%).

The CFO of Banco Popular, Francisco Sancha, revealed these sales forecasts during his speech at the “Spain Investor Day” forum, where he outlined the key aspects of the entity’s strategy and defended the profitability of its business model.

AGREEMENT WITH VÄRDE PARTNERS AND KENNEDY WILSON

In November 2013, Popular sold the management of its property business to Värde Partners and Kennedy Wilson for €800 million. This portfolio included loans relating to development and construction, as well as foreclosed real estate assets.

This transaction has allowed the bank to maximise the management of its real estate business and focus on the core activities that underpin its business model, namely, retail banking, and banking for SMEs and households.

Original story: El Economista

Translation: Carmel Drake

Bank Reduces Development Risk To Levels Seen A Decade Ago

02/01/2015 – Expansión

LATEST DATA FROM BANK OF SPAIN / The sector lowers its credit portfolio for real estate development to 156.2 billion, levels not seen since 2004. The balance has fallen 52% from a record 325 billion in 2009.

The Spanish banking sector is leaving financial restructuring behind, having reduced its development risk by half, which has been a major point of weakness throughout the crisis. The sector’s credit balance declined to 156.2 billion in September, according to the latest data published by the Bank of Spain. Thus, financial institutions have placed their stock in the levels seen a decade ago, in 2004, when the housing bubble began to rise.

With this, the bank has cut 52% exposure to real estate development from its June 2009 record, when it was at 325 billion euros.

Factors

Reducing direct exposure to developers is due to several factors. Some of them reflect the fact that risk has not been eliminated in the strict sense, but that balance sheets have been transformed or moved from banks to other economic agents.

In this regard, one of the elements that explains this reduced exposure is the creation of SAREB, also known as the ‘bad bank.’ The financial institutions with public aid transferred a net development loans (with already reduced provisions) of almost 35 billion euros between 2012 and 2013. This risk has stopped pressuring state-backed groups, but has been assumed by the shareholders of the bad bank.That is, by taxpayers, through the Restructuring Fund (Frob), with a share of 45%, and healthy banks: Santander (17%); CaixaBank (12%); Sabadell (7%) and Popular (6%), mainly.

As important or more than this factor are the allocation of assets and debt swaps for property. The bank began to systematically implement this strategy at the beginning of the crisis, in order to ease the financial burden on developers and give the sector some breathing room. Currently, gross property portfolio of banks totaled at 84.5 billion, up 12.6% from 75 billion a year ago.

The transfer of loans to bad debts (considered irrecoverable and given at 100%) and sales, still emerging, of developer credit portfolios to vulture funds have also contributed to lowering stock. In October, for example, Bankia sold a loans portfolio to real estate companies with a nominal value of 335 million euros to the Anglo-Saxon hedge fund, Chenavari. Sabadell, CaixaBank and BMN are also discussing developer sales credit, which is scheduled to be closed soon.

Looking ahead, analysts believe that the activity of the real estate sector and the continuing process of risk reduction of banks will be slow. Experts from International Financial Analyst (AFI) predict that the total portfolio of developer and constructor loans, which in September totaled at 205 billion (156.2 billion in loans to developers and 48.8 billion more to constructors), will amount to 198 billion at the end of 2014. In 2015, the number should be reduced to 187 billion (with a quarterly decrease of 5.8%), and in 2016, it may even reach 179 billion euros (-4.3%).

Profitability

The institutions and investment firms agree that development risk is no longer a source of uncertainty for the Spanish financial system. The arrears of these companies, with dubious loans of around 58.5 billion, is 37%. This exposure, however, is properly covered by the financial reform and restructuring of the real estate sector, which has placed the average coverage levels at around 50%. For the next year, AFI experts estimate that the default rate will remain at 34.3%, decreasing to 30.8% by the end of 2016. However, this exposure remains a major disadvantage in terms of profitability, which is the main challenge being faced by Spain’s financial system. Although not by disturbing amounts, institutions assume that they will have to keep making provisions to cover the deterioration of their real estate portfolios. For its high default rate, this risk also entails significant capital consumption as well as an increase in expenditures for the operational costs of maintaining their enormous portfolios.

Original article: Expansión (by M. Martínez)

Translation: Aura REE

 

Banco Popular Rescues San José Realtor And Takes Over

02/01/2015 – ABC

The San José Real estate group has been saved by the bell

Saved by the bell. The San Jose Group has found a white knight to save it from the dire straits of bankruptcy, as the ABC reported yesterday. Banco Popular and its partner, the Värde Partners fund, will take control over the realtor of the new holding company, after managing to swap its debt for equity stocks of the division which was completely unprofitable.

As the newspaper was informed, according to the announcement to be made today by the company, headed by Jacinto Rey, to the National Securities Market Commission (CNMV), the conditions of the previous syndicated loan are breached and they must start all over again from scratch, leading to a new company with new owners in its real estate division.

Thus, the new agreement reached between the directors of Grupo San José and the creditor banks is divided into three parts: Firstly, the creation of a new holding company — Grupo Empresarial San José, under the leadership of the current president Jacinto Rey, which will assume a debt of 100 million euros; secondly, this holding will also own the construction company, with a debt amounting to 250 million; and thirdly, the so-called “unsustainable” debt (in financial terms) — over 1.2 billion — will remain in the real estate company. This debt originates from San José’s takeover bid from 2007 for the Valladolid-based realtor Parquesol, which is what Banco Popular, the Värde Partners and Marathon Asset Management funds will capitalize on.

The real estate division will thus become property of the creditor banks. 80% of it will be controlled by Popular, Värde and the Marathon fund. Banco Popular and Värde are going to integrate it into their real estate joint venture, where the former holds 49%, and the latter, 51%. The remaining 20% will be split among the rest of the creditors – JP Morgan, Deutsche Bank and SAREB.

The agreement reached with its main creditors–Banco Popular and Värde–will boost the financial viability of the new business group, which will resume its traditional activities as a construction company but with a very limited amount of debt in order to continue with its expansion plan, especially towards Latin America.

Up until yesterday, San Jose had debt of over 1.6 billion. Its major creditor from the beginning was Banco Popular, with a debt amounting to 476 million (a figure that includes the part coming from Banco Pastor, which was acquired by Popular). Currently, Värde Partners, a partner headed by Angel Ron (its real estate and cards division) has become its largest creditor over recent months, holding claims to 52% of the total liabilities from the banking syndicate, i.e. 868 million.

The fund has been steadily doing away with most of the debt piled up by the company from the financial institutions that have been trying to get rid of it — Santander, BBVA, Sabadell, Barclays and Abanca. Bank of America has been the intermediary. Yesterday, Grupo San José rose 11.59% on the stock exchange, as the new agreement was coming.

Original article: ABC

Translation: Aura REE

Merlin Refinances Debt With €940 Million Loan

31/12/2014 – Expansión

Merlin Properties, one of the new realtors that have been listed as a REIT, announced yesterday that its subsidiary Tree Real Estate Investments (with a portfolio of 880 bank branches and five buildings leased long-term to BBVA) has signed a 10-year loan for 940 million euros with a syndicate comprised of CaixaBank, Santander, BNP Paribas, Credit Agricole, Banco Popular and Société Générale, among others.

The loan is secured by the asset portfolio of the subsidiary itself. The company will allocate part of the funds to repay existing debt of 828 million that is to mature in 2017 and interest rates ranging from 2.5% and 7.75% on top of the Euribor.

Lower cost

The new loan comes as an addition to the funding for 70 million euros based on an asset portfolio located around Madrid’s A-1 highway, signed in October. The Merlin leverage ratio will stand at 39%, with gross financial liabilities of 1.01 billion euros. The average maturity of debt will be 9.1 years, with an average cost of Euribor plus 1.76%. Part of the existing hedges will be held until maturity of the debt, so the cost of financing will be approximately 4% until 2017, compared to more than 6% today. The cost will go even further down, below 3%, afterwards. Merlin will go on working on the financing of two other assets from its portfolio, worth over 150 million euros, as part of its borrowing strategy, with up to 50% leverage.

Original article: Expansión

Translation: Aura REE

Habitat Presents First Major New Agreement With A Debt Relief Of 85%

30/12/2014 – La Vanguardia

The company will pay back banks in three months and suppliers within a year and a half. The new repayment plan, which has already received considerable support, is a reality check.

Promociones Habitat was a protagonist in the largest receivership case in history of Catalonia of December 2008, with a debt of more than 2.8 billion euros. It presented a proposal to amend the agreement with creditors last week in the courts of Barcelona, which the judge approved in April 2010. This is the first major amended agreement proposal reaching the courts in Spain – an option which the government introduced with the last reform of the bankruptcy law in order to allow the continual existence of companies that agreed to a payment plan at the beginning of the crisis that they can no longer afford.

In the case of Habitat, there had already been breaches. A few weeks ago, the Royal Bank of Scotland filed a lawsuit against the company and asked the judge to order its liquidation. This legal action will not succeed because it came about when Habitat was about to present its new agreement proposal, which had already been accepted by the bank and SAREB — its top creditor — of more than 60% of its debt. Javier Castrodeza, from Cuatrecasas, has represented the banks throughout negotiations and Raimon Tagliavini, from Uriah, has defended the interests of Habitat.

The new agreement is, above all, realistic. There are no other options left, as there is almost nothing to distribute and the few assets remaining are not enough to cover the 1.2 billion euros still outstanding. This is the reason why Habitat has proposed to the banks an 85% relief of the initial debt within a repayment plan in which the remaining 15% due will include payables that have already been accumulated over the past four years.

The resulting amount shall be paid out in the form of land; the bank will also cover all legal and transaction costs as well as corresponding tax liabilities. The entire shareholder loan (400 million) will be forgiven. Deloitte and Valuation Society have estimated Habitat’s assets that creditors will be allocated by lottery. The process will consist of a repayment within three months after the new agreement is approved by the judge.

Unsecured creditors will also have to undergo a debt relief of 85%, but will be paid in cash: 20%, in three months; a further 30% in November 2015, and 50% in June 2016. Now, once the agreement is submitted, its processing will turn into a process which SAREB, Santander, BBVA and Popular — whose debt exceeds 50% of the liabilities — have already approved.

Predictably, the new Habitat agreement will put an end to the real estate company’s judicial history, preventing liquidation in legal terms,though not in practice. In 2008, the company fell victim to the ambition of its owner, Bruno Figueras, after the purchase of Ferrovial Real Estate for 2.2 billion euros in the eve of the crisis, back in December 2006. The burst of the bubble led the company to enter into an agreement with its creditors for the first time, which the subsequent Great Recession prevented it from complying with.

Original article: La Vanguardia (by Lalo Agustina)

Translation: Aura REE

Villar Mir Raises €268 Million Funding For Canalejas Project

29/12/2014 – Cinco Dias

The Villar Mir and OHL Group closed Canalejas Project financing by signing a credit agreement for a maximum amount of EUR 268 million, making it the largest financing operation granted to a real estate development project in Spain over recent years.

Specifically, funding has been signed-on for a period of 10 years – 3 years of construction and 7 of exploitation, according to the company.

This transaction involves a group of Spanish and foreign financial institutions: Banco Santander, CaixaBank, Banco Popular Español, which have acted as mandated lead arrangers in addition to Bankinter, Unicaja Banco, MoraBanc Group, Inmomutua Madrileña and Generali Insurance and Reinsurance.

The Canalejas complex, developed by the Grupo Villar Mir, in a landmark location in Madrid will employ about 4,800 workers and reach an annual sales volume of nearly €200 million.

The project, which seeks to promote urban renewal of the iconic area in downtown Madrid also entails the opening of the first hotel of the Canadian luxury chain Four Seasons in Spain.

The 5-star luxury hotel will have an area of 26,000 sq. m, 215 rooms, banquets and meeting halls, 2 restaurants, a spa, gym as well as an indoor swimming pool. It will also feature between 28 and 30 residences for sale, spread over a total area of 6,000 sq. m.

Canalejas will also feature a shopping mall of 16,000 sq. m. over 3 storeys and an underground parking lot. All this will be complemented with an underground bus station on Calle Sevilla and refurbishment of the existing parking lot, which will be carried out by the City.

The purpose of this complex is to rehabilitate the historic downtown of Madrid and make use of 7 contiguous properties located on Calle Alcalá, Calle Sevilla, Plaza de Canalejas and Carrera de San Jerónimo. Having remained unoccupied for 10 years and some of them dating back to 1887, the properties were sold to Villar Mir Group from Banco Santander in a €215-million transaction.

Since they were acquired in December 2012, restoration work on various protected structures have been carried out as well as interior demolition and facade cladding works.

With respect to protected structures, there are over 130 listed elements of carpentry, locksmith’s works, stonework and stained glass windows. They will be restored and relocated in the future project to be fully operational in 2017.

The Canalejas project involves an important job creation feature. In the construction phase, from 2013 to 2017, 600 direct and 1,200 indirect jobs will be generated. The operational phase is expected to create over 3,000 direct or indirect jobs – 1,200 in the hotel and 1,800 in the shopping center.

Original article: Cinco Dias (by EFE)

Translation: Aura REE