Blackstone Launches Large Sale of Buildable Land After Acquiring Aliseda

6 September 2018 – El Confidencial

It was just a matter of time. Aliseda, the servicer of Banco Popular, now controlled by Blackstone (51%) and Santander (49%), is starting the school year by looking for buyers for 270 residential plots and work in progress developments, with a total buildability of more than 2 million m2, distributed throughout Spain.

It is the most important land sale currently underway in Spain and, unlike what is happening in other areas of the market, it will not involve a block sale of assets, but rather possible interested parties may acquire each plot individually, which will allow for the entry of local property developers into a market that has been dominated until now by large property developers and investment funds.

The assets are located in 43 Spanish provinces. They consist of 231 plots in total, mainly buildable plots or plots under development, and 39 projects in progress. Many of the sites are located in Galicia, Levante, Costa del Sol and the Canary Islands; the latter market has been especially active in recent months.

“Unlike other sales processes, the operation that Aliseda is now putting on the market allows investors the possibility of submitting an offer for any of the plots independently, which means that they can structure the perimeter that best suits their needs and investment criteria. In this way, both local property developers, as well as institutional investors will have the opportunity to participate under equal conditions”, says Adolfo Blázquez, Director of Land at Aliseda.

Local developers and national developers looking to grow in volume and build large developments may bid for the plots, as may institutional investors looking to buy large blocks of buildable land – a scarce and very sought-after asset, especially in the hottest markets of Madrid, Barcelona and the islands.

Meanwhile, Samuel Población, National Director of residential and land at CBRE, the exclusive consultancy firm selected to launch the sales process, says that “the shortage of buildable land in the Spanish market has become one of the great barriers for property developers. Thus, the activation of residential land sale processes, such as this operation by Aliseda, places prime raw material on the market, which will gradually start to satisfy the high demand that currently exists”.

The process began on 7 September, with access being granted to information about the assets, and will go on until December with the closure of selected bids.

In March, the US fund and Banco Santander created Proyecto Quasar Investments, the holding company that groups together the real estate portfolio of Banco Popular and the marketing platform Aliseda. Blackstone controls the majority of the capital in the new company and also takes care of its management, led by Eduard Mendiluce, the CEO of the company. Mendiluce is also the most senior executive of Anticipa, the other large real estate firm that the fund owns in Spain and the former head of Catalunya Caixa Inmobiliaria.

Original story: El Confidencial

Translation: Carmel Drake

Lería-Luksic, the Chilean Magnates Arriving in Spain’s Wealthiest Municipality

11 August 2018

“Wealthy Chileans.” That was the answer much of the real estate sector gave when El Confidencial was investigating the identity the people who just became the third largest landowners in the Pozuelo Oeste Distribution Area (ARPO), in Pozuelo de Alarcón, the wealthiest municipality in Spain.

The buyers are the executives Óscar Lería Chateau and Paola Luksic Fontbona, the couple who have just acquired 40,000 square meters of land, 8% of the total area, from La Caixa for 30 million euros. The couple plan on developing 396 homes on the land, according to sources in the sector. The transaction was executed through Paola Luksic’s family office Wildsur and Óscar Lería’s Osim, the Chilean newspaper ‘La Tercera’ confirmed.

ARPO is the largest urban development area in the municipality of Madrid, which has been in force for more than a decade, amounting to more than six million square meters. The construction of a total of 5,500 homes is planned for the area, of which 2,900 will have some type of protection. Sources consulted by El Confidencial noted that Luksic is likely to have signed an agreement with a local partner to build the homes houses, “possibly one of the landowners in the area,” as he had done before in other projects in which he was involved.

At the beginning of June, this newspaper reported on three operations in that area. Santander, Iberdrola and Servihabitat had sold or were about to sell their holdings in Pozuelo. Twin Peaks Capital was the first to snap up property, purchasing land controlled by the bank run by Ana Patricia Botín. Oaktree took over land from the power company and has allied itself with Banco Sabadell for the development. Only the identity of the buyers’ of La Caixa’s land had still to be revealed. Though he is known to value his privacy, Oscar Lería himself then made the transaction public, in which he partnered with the A&G Group.

Lería is married to Paola Luksic, daughter of Iris Balbina Fontbona (daughter of the Catalan Luis Fontbona Buxallen, who emigrated to Chile at the beginning of the last century) and stepsister of the Chilean magnate Andrónico Luksic, who control much of the business inherited from the Croatian billionaire Andrónico Luksic Abaroa (1926-2005). The Luksic family is one of the richest in the Andean country and, through Aeris Invest, one of its investment vehicles, recently demanded from Santander payment of the 113.02 million it had invested in 145.14 million shares of Popular in May 2017, one month before its resolution. Furthermore, the Chilean family’s fund threatened the Single Resolution Board (SRB for its acronym in English) with additional lawsuits should it not publish the valuation report 2 on Popular, since it considers that the 3 is irrelevant and “does not correspond to the real situation of the entity at the time of the resolution.”

The most expensive municipality in Spain

As Lería explained to the Chilean newspaper, the group set its eyes on the richest municipality in Spain three years ago, although they have been present in the country for years, especially on the Costa del Sol. After the end of the crisis, when investors were still avoiding the country, other large Latin American investors began landing in Madrid in search of opportunities. At that time, the Lukisc family again looked carefully at the Spanish market, where they plan to invest about 480 million euros.

“The family has been investing intermittently in Spain, but I decided to go and stay for the next 40 years. To create something that will last,” Óscar Lería declared to La Tercera, a newspaper that noted that the family had arrived in Andalusia in 2012 to “resuscitate a project” that had “died.” This project was the Lagoon Alcazaba, the first development with a crystalline lagoon in Europe. With 60 million euros, they also invested in half a dozen retail stores on Madrid’s Serrano street.

ARPO, the major urban development area in Madrid, is under the developers’ spotlight. Vía Célere bought in a year ago; iKasa has had land there for years, and Metrovacesa, which owns more than 46,000 square meters with a market value of 25 million euros, as shown in its IPO prospectus, are some of the principal property owners in the region. They are joined by Pryconsa, with long-term holdings in the area, and the newcomers Twin Peaks and Oaktree.

Four months ago, the city council of the district of Madrid finally approved the Partial Plan for the development. The procedure triggered the first real estate transactions and had caused the developers to begin taking positions before the final approval of the reparcelling and urbanisation plan takes place, the last procedure needed before the first homes can begin to be built. Also, fifteen days ago the project for a rainwater collector for Pozuelo, which will have to supply water to the new homes, was also definitively approved.

With an approximate cost of about 40 million euros, the Pozuelo de Alarcón city hall will contribute 20% of the amount, and the rest will be invested by the private landowners. ARPO, for example, corresponds to 52%, Eje Pinar 11% and Huerta Grande 7% – there are 16 urban sectors in Pozuelo. “This approval opens the way to launch public tenders for the works, with execution possibly beginning at the start of 2019. Also, it will also permit the execution of the urbanisation works in the rest of the sectors and make Pozuelo’s 2002 PGOU a reality”, the Board of Compensation for the region noted. “The collector is now a reality thanks, to a large extent, to ARPO’s new management team – the manager is the architect José Luis Oñate, while Pryconsa holds the presidency of Arpo and Ikasa has the vice-presidency – and the city hall’s technical-political team, which has demonstrated a true desire to move things ahead.”

The same sources assured El Confidencial that in a few months, construction for the collector would be tendered and the approval of the project of urbanisation and reparcelling of the Arpo is foreseen for the end of the year. “The plan is to combine construction on the collector with the urbanization, for which the approval of the Hydrographic Confederation of the Tagus will be needed and, subsequently, to be able to combine the urbanization works with the construction of the houses, for which the City Council of Madrid’s authorisation will be needed.”

Of all these urban procedures will depend, to a large extent, on the price that developers will be willing to pay for the land and, consequently, the final price of future homes will depend on a location with high demand and a very limited supply of new construction.

According to sources, the residual land value is at present around the 1.000 euros per square meter, well below the 1,600-1,800 euros currently paid in Valdebebas. “There are still urban procedures ahead, the land is not yet ready for construction, hence the price differential,” the same sources explained. At those prices, future homes could go on sale starting at 2,250 euros per square meter.

“Taking into account the price that is being paid for the land, the venture would already be profitable for the developers. That does not mean that, if the urbanization proceeds without complications, the prices might not be higher, considering the high level of demand in Pozuelo by people with elevated purchasing power who have been displaced to Majadahonda, Las Rozas and Boadilla del Monte in the absence of new builds,” says a real estate expert at El Confidencial.

The Madrid municipality was not oblivious to the crisis. From its high of 2007, when the square meter reached 3,807 euros, the price of new housing fell by 38% to 2,360 euros, just below the 40% nationwide, according to data from the appraiser Tinsa. However, in two and a half years, prices have increased by around 20%, largely due to the enormous shortage of product in the area and the elevated demand.

According to data from Foro Consultores, the average price of multi-family homes in Pozuelo de Alarcón hovers, on average, at 3,500 euros per square meter, with the average per house going for 610,000 euros, without garage or storage. Single-family homes average roughly 900,000 euros and 3,000 euros per square meter. However, as pointed out by this company, what characterises this municipality is that, depending on the location, you can find affordable housing in apartment buildings, while prices in better areas easily surpass one million euros, both for flats and single-family homes.

Venezuelans, Argentines, Chileans…

Since 2014, when the real estate market hit bottom in Spain, numerous Latin American investors have put money into Spanish property. The biggest Venezuelan investors have been the most active, especially in the neighbourhood of Salamanca, where, for four years they have rehabilitated many buildings to place on the luxury market.

The entrepreneurs Miguel Ángel Capriles and Axel Daniel Capriles, relatives of the Venezuelan opposition leader Henrique Capriles, bought, through Gran Roque Capital, more than a dozen properties in the most exclusive neighbourhoods of Madrid, totalling more than a hundred luxury homes. Barquillo Doce, Serrano Anguita, Pablo Aranda, Lagasca 38, Fernando VI and their latest project, Españoleto 19. However, the Capriles has also extended their investments to “more modest” projects. For example, they bought land in the vicinity of the Vicente Calderón stadium from Prosegur, while they are the financial partners of Grupo Ibosa in the purchase of ready-to-build land north of Madrid. The Venezuelan family Pizzorni, through Italinmuebles, is also behind several luxury projects in the capital such as Alfonso X and Montalbán 11.

On the other hand, the Argentines Jorge Pepa – brother of Juan Pepa, former head of Lone Star in Spain and architect of Neinor’s IPO – and Francis Btesh, manage through their company 1810 Capital, investments by the Argentine-Israelis Zev and Sergio Gustavo Marynberg. The firm’s purchases include properties at Santa Isabel 21, Tirso de Molina and Barceló. All of them are being converted into luxury homes.

Among the Mexicans, the best known and most active investor has undoubtedly been Carlos Slim (FCC, Realia …), while the less known Mexican investor Moisés El-Mann Arazi has also carried out operations in Spain, and is behind the purchase 253 branches leased to Banco Sabadell from Moor Park Capital Partners for €290 million.

After the fiasco at Banco Popular, the Luksic family will bet on the Spanish property market, where it plans to invest a total of 480 million euros

The Chilean family Luksic, the main shareholders in the mining company Antofagasta, Banco de Chile and the Compañía de Cervecerías Unidas (CCU), took a 3% stake in Banco Popular last year, valued at more than 2.9 billion euros. Óscar Lería and Paola Luksic’s plans for Spain, after their family’s failed investment in the financial institution, are limited to the Spanish property market, where they expect to invest a total of 480 million euros, Lería revealed to La Tercera. In the short term, they will invest 200 million euros, focusing on Seville and the Balearic Islands, especially Ibiza.

In fact, the couple signed an agreement with Mediterranean Capital Management, a firm based in Barcelona, to search for land. The two groups are going to begin developing a project in Mallorca in the next few months, near the Marivent Royal Palace, resulting in about twenty luxury flats costing between 1.3 and 1.5 million euros, according to the Chilean newspaper.

Pozuelo is Óscar Lería Chateau’s most recent investment. Through the Osler company, he has been making important real estate investments in Spain since 2012, during the middle of the property crisis, working with local investors. He currently has several second-residence projects in Marbella, between Estepona and Puerto Banús.

Original Story: El Confidencial – E. Sanz / Ó. Giménez

Translation: Richard Turner

Santander Puts €6bn in Real Estate Assets Up For Sale

30 June 2018 – Cinco Días

Spain’s banks have put their foot down on the accelerator to end the property hangover once and for all. And there is no letup. On Thursday, CaixaBank announced that it had reached an agreement with Lone Star to sell it 80% of its problem assets, including its real estate platform Servihabitat, worth €7 billion altogether, which means that the fund will disburse around €5.6 billion for the property of the Catalan entity (based on the valuation as at October 2017).

This operation caused CaixaBank’s share price to soar on Friday, rising by almost 7%, and closing trading with an increase of 3.32%, to reach a value of €3.706 per share.

Sabadell also saw its share price soar on the stock market after closing the sale of a portfolio of non-performing loans worth €900 million to the Norwegian fund Axactor. That was Project Galerna, the smallest portfolio of the four containing foreclosed assets and non-performing loans that the bank has put up for sale, and whose deadline for the presentation of binding offers ended last Wednesday.

The bank’s objective is to close the sale of the four portfolios in a competitive process with a value of €10.8 billion over the next two weeks, before it presents its results for the first half of the year. Despite that, the Catalan bank will not be able to deconsolidate from its balance sheet more than €5 billion, equivalent to the largest portfolio comprising problem assets proceeding from the bank itself.

The other portfolios, whose contents came from CAM, cannot be removed from its balance sheet until the Deposit Guarantee Fund (FGD) reaches an agreement with the banks and Brussels so that the losses that these sales generate are not included in the public deficit. The stumbling block with these portfolios is that they are backed by an Asset Protection Scheme (EPA), in which the FGD initially assumes 80% of the losses generated by the operation, and Sabadell the remaining 20%, although the channel being considered to resolve this problem leaves those percentages to one side.

The market, on the news of the sale of the Galerna portfolio and the existence of seven offers in total for the purchase of almost all of the entity’s property, reacted with a rise of 4.7%. Although by close of trading the increase had dropped to just 1.74%, the third largest of the selective, to finish with a share price of €1.4355.

Santander has joined these operations, by placing up for sale foreclosed assets worth €6 billion, almost all of the property still held by Santander España. A spokesperson for the bank declined to comment on the operation.

The advisor on the sell-side is Crédit Suisse.

This macro-sale is the second largest operation that the group chaired by Ana Botín (pictured above) has ever undertaken and could be its last, given that this final disposal will allow the group to get rid of almost all of its real estate.

Indeed, Santander starred in the first macro-operation involving the sale of real estate assets one year ago. Last summer, it surprised the market with the sale in a single operation of all of the property proceeding from Banco Popular, around €30 billion, to Blackstone, with whom it created a company in which the US fund holds a 51% stake and the bank chaired by Ana Botín owns the remaining 49%.

That operation put pressure on the rest of the sector, which started to replicate the formula. The second to repeat the formula, in fact, was BBVA, with the sale of €13 billion to Cerberus.

Sareb is also now sounding out the market regarding the sale of gross assets worth around €30 billion (around €13 billion net). Nevertheless, the bad bank must wait for the green light from the Government to be able to carry out that operation, given that Sareb is an institution that depends on the Executive. It was created to unblock the former savings banks that received aid for their property, which is why it will try to maximise the value of any operation that is undertaken in order to return the public aid.

Original story: Cinco Días (by Ángeles Gonzalo Alconada)

Translation: Carmel Drake

Quonia Acquires Building in Sevilla for €5.6M

18 June 2018 – Eje Prime

Quonia is gaining ground in the south of Spain. The Catalan Socimi has taken positions in Sevilla, where it already owns some assets, with the purchase of a building on Calle Antonio Salado. The acquisition price amounted to €5.6 million and includes the property and adjacent units at numbers 2, 6 and 12 Calle San Antonio, according to a statement filed by the company with the MAB.

In total, the operation involves a surface area of 3,541 m2, taking into account the property and the adjacent units. The building is currently vacant and is awaiting refurbishment, in which Quonia plans to invest €3.2 million before leasing it out.

The Socimi has financed the acquisition through a combination of own funds and debt. Quobia has obtained a mortgage loan from Banco Popular amounting to €4 million, with monthly repayments over a ten-year term and a capital repayment of 30% at the end of that period.

In February, Quonia obtained another loan from Banco Popular, in that case amounting to €1.5 million, to renovate the building that it owns at number 4 Calle San Vicente. That property has a surface area of 3,500 m2.

Led by Eduard Mercader since October last year, the Socimi has set itself the objective of liquidating its portfolio by 2025, whilst it continues to search for assets to keep buying. Quonia, whose assets are concentrated in Barcelona, completed a €26.5 million capital increase in January.

Original story: Eje Prime

Translation: Carmel Drake

Grupo Hotusa Buys Hotel Eurostars Gran Valencia from Atitlán

15 June 2018 – Expansión

Grupo Hotusa is continuing to increase its portfolio of assets under ownership. The corporation chaired by Amancio López Seijas has purchased the Hotel Eurostars Gran Valencia, which the company has been managing through its hotel chain Eurostars.

The investment firm Atitlán – led by Aritza Rodero and Roberto Centeno, son-in-law of the owner of Mercadona, Juan Roig – was the owner of 66% of the hotel, according to explanations from market sources speaking to Expansión.

The hotel, located in the upper part of Torre Ademuz, has 110 rooms and a 4-star rating. Specifically, the Eurostars Gran Valencia occupies the upper floors of the building located on Avenida de las Cortes in Valencia, between the Palacio de Congresos and the future Nou Mestalla stadium.

Horwath HTL has advised the sales process, which began last year and which has been delayed for months due to the complexity involved.

Other purchases

In addition to the Hotel Eurostars, the building houses two hotels owned by Ilunion, which used to be managed by Accor, as well as a gym and a parking lot.

With this operation, Grupo Hotusa is taking another step in the framework of its expansion and purchasing plan, which extends both nationally and internationally. In this way, in May, Hotusa purchased Hotel Barceló Thalasso, located in Estepona (Málaga) from Sabadell and in March, it acquired the hotels Eurostars Gran Hotel La Toja and Eurostar Isla de la Toja in O Grove, Pontevedra, from Banco Popular.

The hotel consortium created in Barcelona in 1977 closed last year with a turnover of €1.24 billion, up by 15%.

The Eurostars Hotels chain, created by Grupo Hotusa in 2005, has around 100 establishments in large Spanish capitals and other international destinations such as New York, Paris, Berlin, Rome, Naples and Venice. Moreover, the group owns more than 50 hotels through its Exe Hotels chain.

Meanwhile, Atitlán is continuing with the divestment of its hotel properties with this operation. In this vein, a few months ago, it sold a portfolio of six establishments to Atom, the Socimi promoted by Bankinter (…).

Original story: Expansión (by R. Arroyo & A. C. Álvarez)

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

Irea: “Mistakes Are Still Being Made But We Are A Long Way From A Bubble”

22 February 2018 – El Economista

The real estate sector is booming and the euphoria that is being experienced, especially in the residential segment, is leading to a genuine war in the purchase of land. That is according to Mikel Echavarren (pictured below), CEO of Irea, who says that the first mistakes are starting to be made.

The Director, who has participated in significant operations in the sector, such as Bain’s purchase of Habitat, and who has acted as a financial advisor to Blackstone in its acquisition of Banco Popular, believes that the next alliances will be harder to forge, but, even so, expects to see greater consolidation in the sector.

Q: How is the fabric of the real estate business evolving?

A: The residential development sector is giving rise to eye-catching activities in the market, such as stock market debuts and corporate acquisitions. On the one hand, we have the upper part of the sector, with large companies and on the other hand, we have the vast majority of real estate companies, which are lifting up their heads, maximising everything they can with the few resources they have. They have more money now than they did in 2013 and they have resolved almost all of their debt problems (…). They are all taking their first steps with something that did not exist before the crisis: money from funds for specific projects. And that is causing companies to revive and, as always happens, the markets that are recovering first are the Costa del Sol, Madrid, Barcelona, Málaga, Sevilla and Bilbao. But there are still some markets that have not recovered at all.

Q: Do you need to be big to survive in this sector?

A: Being big in the residential sector means that you can access the land purchases that the majority of companies don’t have the capacity to afford. It does not mean you have to be listed, but being large allows you to access faster and cheaper financing, and with that, you can rotate your portfolio much more. Meanwhile, smaller property developers have to hand over developments that they started three years ago to be able to afford to invest in land now (…).

Q: So, whoever can afford to buy land is guaranteed success?

Yes. Whoever has funds today to buy land in good locations is going to emerge victorious. That is one of the reasons why being large makes sense. Land is a scarce asset and since no new plots are coming onto the market due to the active or passive inoperativeness of the Administration, and because there is no capacity to finance the development of new land, prices are going to soar. Developable land prices have decreased by a lot (since their pre-crisis peaks), by between 60% and 80%, and I am certain that they will rise by between 200% and 300% (…).

Q: This situation means that the greatest fights are now over the purchase of land…

A: Yes, punches are already being thrown in this fight and we are entering a time in which mistakes are being made because people are buying land that is too expensive. But given that they are making those mistakes with their own funds, we are not facing a bubble scenario (…).

Q: With Neinor Homes, Aedas and Metrovacesa now listed, do you think we are going to see a boom in the number of property developers going public?

A: Going public is a consequence of the fact that there are funds behind the real estate companies that are looking to obtain returns. Nowadays, there are so many players wanting to invest in property developers in Spain, because, in theory, their performance is going to be very highly correlated with the recovery of the Spanish economy, that with few listed firms and so much capital, the value of them is increasing and it does not make sense for a property developer’s share price to exceed the value of its assets. I think that in two years time, we will see half a dozen companies listed on the stock market, but no more. There are not going to be that many because it is hard for a property developer to be strong, and to have good and geographically diversified plots. There have been some clear examples that are not going to be replicated, such as in the case of Vía Célere, which is a really good company that was sold because it did not have anyone to take over, but it is hard for many more operations like that to arise. Funds that already participate in a property developer do so because they are sure that they are going to go public. But we can expect to see acquisitions, purchases that seem like mergers (…).

Q: One of the major social problems in this country is the difficulty that young people face when affording to buy their first home. Moreover, they are now also struggling in the rental market…

A: It is a big problem and it reflects a structural change, not a circumstantial change. There is a huge proportion of the population who cannot and will never be able to buy a home in their lifetime, and then there is a percentage of people who do not want to buy a home, who prefer to travel or buy a good car, or simply have more flexibility (…). What is happening is that there is an unstoppable process to expel people from their homes who traditionally lived in rental properties in the centre of cities. That has happened in all of the major cities in Europe and it is going to happen here too. The centre is reserved for people with more money and for tourist rentals (…).

Q: In your view, which operations and businesses do you think still offer good opportunities for investors in Spain?

A: Large investors still have the possibility of creating residential development platforms with good managers and to debut them on the stock market or sell them to another party. I also see options in the sector for alternative financing. If everyone wants to buy land and the banks don’t want to finance land purchases, then there is a niche to lend (expensively) to whoever wants to buy. I also see opportunities in the market for land purchases; for example buying land to develop it or to carry out the final management procedures and then sell it on (…).

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake

Barings Completes €23M Capital Increase & Prepares Socimi Debut

28 February 2018 – Eje Prime

Barings is not wasting any time in Spain and is taking advantage of the good health of the country to generate profits from its investments. The British fund has just carried out a €23.1 million capital increase for its Spanish subsidiary Barings Core Spain, which, according to market sources, it is preparing to convert into a Socimi and debut on the Alternative Investment Market (MAB) within the next few months.

Specifically, the company has increased its share capital to finance the purchase of new assets and to meet the company’s financing needs. Following this increase, which was published in the Official Gazette of the Mercantile Registry (Borme), the company’s resulting subscribed share capital amounts to €47.1 million.

Now, after a very active year in terms of acquisitions in the Spanish market, the group has decided to transform its company and turn it into a Socimi. Although the company is in the middle of carrying out that process, it does not yet have a final date for the completion of the transformation. The group is also working in parallel to prepare the future Socimi to start to trade on the alternative stock market.

In this way, all of the assets that form part of the Barings portfolio would move across to be managed by its Socimi. They include the recently acquired Berceo shopping centre, in Logroño (…).

Also in 2017, the British company backed commercial assets with the purchase of a prime retail outlet in Spain. Barings acquired the store at number 64 Calle Velázquez in Madrid. With a retail surface area of 1,638 m2, the establishment is currently occupied by Banco Popular.

In terms of logistics assets, last year, Barings also took responsibility for fattening up its property portfolio with those kinds of products. In April, the group purchased a logistics asset in Madrid from GLL Real Estate Partners for €35 million. The warehouse has a surface area of 56,000 m2 and is leased to Ceva (…).

Before the end of 2017, Barings also completed another purchase. In December, the international manager acquired two assets in Majadahonda (Madrid) for €17.6 million, owned until then by López-Real, and occupied by the Eroski supermarket chain. The fund purchased a storeroom and gas station, spanning a total surface area of 10,900 m2.

Last year, Barings also strengthened its management team in Spain. The fund announced that, as part of the on-going expansion of its European offer, it had appointed Carlos de Oya as Director of Asset Management in the Spanish market. Barings has one office in Spain, located at number 38 Calle Serrano, in Madrid.

Barings Real Estate Advisers is one of the largest diversified real estate investment managers in the world. The group is an active investor in private and listed markets, in both equities and debt, and provides fundamental, value-added and opportunistic investment and advisory services to institutional and other qualifying investors around the world. The group manages an asset portfolio worth €271 billion.

Original story: Eje Prime (by Custodio Pareja)

Translation: Carmel Drake

Large Funds Get Involved in Popular’s Criminal Lawsuit

31 January 2018 – Expansión

The large funds Pimco, Anchorage, Algebris and Cairn are participating in the criminal case that the Spanish High Court is investigating against the former directors of Popular.

These funds, which lost almost €850 million following the resolution of the bank, have appealed the resolution decision taken by the Single Resolution Board (JUR) before the European Court of Justice and the resolution of the Frob before the Spanish High Court. Specifically, Anchorage, Algebris and Ronit have appealed to the European Court of Justice and Pimco, Anchorage, Algebris, Ronit and Cairn have appealed to the Spanish High Court.

On 4 October 2017, judge Fernando Andreu admitted for processing the first lawsuits against the former directors of Popular and PwC. Most of them are focused on the capital increase made in 2016 and against Ángel Ron and his Board for improper management, falsification of documents and misappropriation. Lawsuits have also been filed against Emilio Saracho and the management of the most recent executive team.

The debtholders are being represented in Spain by Andersen Tax & Legal and SLJ Abogados and in the EU by Quinn Emanuel.

Richard East, Managing Partner at Quinn Emanuel, explains: “The plaintiffs filed serious accusations that the Spanish High Court has agreed to investigate. The funds want to be informed and to collaborate in this investigation to determine the existence of falsehoods in the process”.

Original story: Expansión (by Mercedes Serraller)

Translation: Carmel Drake

Experts: Foreign Investors will Continue to Back the Spanish RE Sector in 2018

11 January 2018 – Expansión

The experts believe that the residential sector is going to be the main protagonist of 2018, in terms of both development and investment. The banks are expected to continue their balance sheet clean-ups with more portfolio sales.

The real estate sector is expected to continue to constitute a mainstay of the Spanish economy in 2018 thanks to the growth of residential property development and the commitment from international investors to Spanish property as a safe haven for their investments, according to the experts consulted by Expansión.

For Adolfo Ramírez-Escudero, President of CBRE España, property developers will be some of the most dynamic investors in 2018. “Last year, they underwent an expansionary cycle and, through specialisation and the sophistication of their product, they will continue to increase their prominence in the sector”, he explains.

The CEO of JLL España, Enrique Losantos, forecasts that 2018 will maintain the positive rhythm of recent years and that figures will remain in line with 2017, with a total investment volume of around €13 billion. Losantos also expects that portfolio operations, which were the major stars of 2017, thanks to the sale of assets by Banco Popular and BBVA, will continue to strengthen their position in 2018 (…).

Rents

For Santiago Aguirre, President of the Board of Directors of Savills Aguirre Newman, “we are entering a year of consolidation in terms of the upward cycle that we have been immersed in since 2014. Several segments, such as offices and logistics, have reached maximum leasing levels, nevertheless, we still see potential for rents to reach the maximum levels seen in the previous cycle”.

In terms of investment in tertiary assets, Oriol Barrachina, CEO at Cushman & Wakefield, explains that there is a perception that there will be more liquidity than product, despite caution being erred in light of the local and international uncertainty. “The main difference with respect to the last two years is that one group of buyers, the Socimis, are now also going to be selling assets. For years, they have purchased lots of assets and after generating value from them, they are going to put them up for sale, a fact that will also help to bridge the gap between supply and demand”, adds Barrachina.

Sandra Daza, Director General at Gesvalt, thinks that this year those investors who entered the cycle during the opportunistic period, between 2013 and 2015, will be replaced by long-term investors, such as insurance companies and pension funds.

In terms of trends, Mikel Echavarren, CEO at Irea, considers that residential development will continue to generate news this year, both in terms of land transactions, as well as price rises and the recovery of secondary markets (…).

Humphrey White, Director General at Knight Frank, highlights that Spain is currently at the beginning of an expansion period, with forecast demand of between 120,000 and 150,000 new homes per year, even though it closed 2017 with just 47,500 new home transactions (…).

No sign of a bubble

White considers that the growth in the sector in Spain rests on “some very firm foundations in terms of the law of supply and demand, whereby moving firmly away from a possible real estate bubble”.

For Gonzalo Gallego, Partner in Financial Advisory at Deloitte, buildable land will be one of the major challenges in the property development sector.

In terms of the rental market, Ramírez-Escudero explains that in 2018, we will see “quite a lot” of activity in the market from institutional investors backing rental homes. Over the last decade, the number of rental homes has increased significantly to reach 22.5%. Nevertheless, Spain still has major potential given that the average in the EU is 33% (…).

Javier López-Torres, Partner in Real Estate at KPMG, agrees. He considers that the rental segment will continue to gain weight due to the difficulties involved in accessing credit, mobility and cultural change (…).

Asset types

By sector, Thierry Bougeard, Director General at BNP Paribas Real Estate, says that demand for office space will continue its strong performance (seen in 2017), above all in Madrid, where leasing volumes are expected to increase to around 600,000 m2.

Meanwhile, in the logistics market, e-commerce will continue to be the main motor of demand, whilst in retail, many owners are betting on improving the quality of their centres, boosting leisure areas and the quality of them, with the aim of encouraging customers to stay longer, he explains.

The experts also agree in highlighting the high level of interest expected in alternative real estate assets, such as student halls and nursing homes.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake