Tightened Lending Standards Put Drag on New Developments

8 November 2019 – Developers are complaining of a lack of financing in the sector due to tightened lending standards and the high cost of alternative financing. Spain’s banks are looking to reduce their exposure to the real estate market, at a time when many of them still have extensive amounts of NPLs and REO on their balance sheets. At the same time, alternative financing vehicles often have interest rates reaching up to 10%, making many potential developments economically unviable.

A conference on financing and alternative investment in the real estate sector, organised by the IE Real Estate Club and the Urbanitae real estate investment platform, saw market sources discuss the problems facing the sector.

Developers argued that banks should provide more financing to that they can build the 150,000 homes a year the country requires. Currently, sources say that banks will only extend financing to only the largest developers who can 30% to 40% of the financing using equity. Smaller firms with less access to capital are often unable to get 100% for new developments.

Original Story: Expansión – Carlos Lospitao

Adaptation/Translation: Richard D. K. Turner

The Student Hotel Raises €90-Million in Financing for New Investments

14 October 2019 The Netherlands-based student hotel group The Student Hotel (TSH) announced that it had obtained €90-million in bank financing Santander, Sabadell and HSBC. TSH will use the funds to build two new hotels in Madrid and Barcelona as well as to refinance its existing debts in Spain. The investments are part of a €2-billion investment strategy that the group plans to implement over the next five years in Europe.

TSH is currently working on three projects in Spain: Madrid La Imprenta (340 rooms), Barcelona Provençals (300 rooms) and the TSH San Sebastian (328 rooms).

Original Story: Hosteltur

Adaptation/Translation: Richard D. K. Turner

Árima Finances Acquisition of Sonae Spain’s Headquarters

9 July 2019 – Richard D. K. Turner

Árima Real Estate has signed long-term financing agreements with CaixaBank and BBVA for a total amount of 63.8 million euros, using the funds to finalise its acquisition of Sonae Spain’s headquarters in Madrid. The socimi reported that the financing arrangements have flexible conditions and competitive interest rates.

The asset that Árima acquired is in the region of ​​Avenida de América-Torrelaguna in Madrid. The building has a gross leasable area (GLA) of ​​6,759 square meters, along with 110 parking spaces.

Árima’s total investments since its stock market debut six months ago have now reached 173 million euros. The socimi currently has more than 61,000 square meters of GLA. Of that, 89.3% corresponds to office buildings and the remaining 10.7% is in the logistics segment, all in Madrid.

Original Story: El Economista / Europa Press

Bankia’s Return to Financing Developers: €180 Million in First Semester 2018

20 August 2018

In the year to June, the Spanish bank signed ten financing operations, nine lines of guarantees, as well as seven comfort letters, worth fifty million euros, on its return to the development business after the European Commission.

Bankia has returned to the development business in a big way. The Spanish bank financed real estate projects in the amount of 180 million euros in the first half of the year in its return to the sector, after freeing itself of the restrictions imposed by Brussels five years ago as a condition for receiving lines of capital that saved the institution from bankruptcy.

From January to June, the institution signed ten financing operations, nine lines of guarantees, and seven comfort letters worth almost 50 million euros, as reported by the company on Monday.

In its return to the real estate business, Bankia created a development management team at the end of last year, in line with its plan to loan 400 million euros per year to the sector and capture a market share of 8% by 2020.

Bankia’s re-appearance in the area of developer loans began with a loan to the Basque group Amenabar, one of the country’s most promising developers, for the construction of 150 homes in Las Rozas (Madrid).

Alberto Manrique, director of ​​Bankia’s development team, this line of business is “one of the bank’s levers” in a new phase of growth that began this year.

Original Story: EjePrime

Translation: Richard Turner

 

Quabit Acquires Land from Sankar in Exchange for 4.55% of its Own Shares

3 August 2018 – El Español

Félix Abánades, President and largest shareholder of the listed real estate company Quabit, is continuing to immerse himself in a quagmire of capital increases that he has been promoting in order to raise funds to use to purchase land, on which to build almost 8,000 homes between now and 2022. His ambitious objective is to invoice almost €2 billion, generate a cash flow of almost €500 million and distribute €90 million in dividends.

Land in exchange for shares

Basically, these increases have been of a non-monetary nature, with the purchase of land in exchange for shares in Quabit. A much cheaper route than the two lines of credit amounting to €100 million that the firm signed with the fund Avenue between December 2016 and December 2017.

Those loans carry a clear risk, given that the principal, on which interest of between 12% and 16% is charged, must be repaid within a maximum term of 4 years following the drawdown date.

Repayment commitment

In light of the probability that the principal will not be returned on time, Avenue forced Quabit to issue warrants, an abusive right over the shares in favour of the fund that, in the worst case, would see it take ownership of 8.56% of the property developer.

For the time being, with Quabit trading at €1.77, at the close of business on Thursday, that option would be ruled out, given that the subscription prices agreed with Avenue for the execution of those rights over the shares range between €3.07 and €3.75.

Six capital increases in one fell swoop

It is for that reason that, in light of this negative outlook, Abánades carried out six capital increases in one fell swoop last November, for a combined total of €41.8 million, with the issue of shares at a price of €2, with a nominal value of €0.50 and a premium of €1.50.

All of those increases were of a non-monetary nature, in which Abánades captured estates from the Basque property developer Ondabide in Mijas (Málaga) and plots in Guadalajara contributed by Rayet, Abánades’s own company. The other four capital increases were placed by the President of Quabit with the Malaga-based property developer, Sankar Real Estate.

Agreement with Sankar

Quabit’s agreement with Sankar, for the subscription of those four increases, was aimed at obtaining plots in the Malagan municipalities of Mijas, Marbella and Estepona and in the Menorcan town of Mercadal, some in the form of proindivisos for 30% of the surface area.

The total operation will allow Sankar to acquire 4.55% of Quabit’s share capital, once the four increases have been fully subscribed. A package of 6.78 million shares, valued initially at an issue price of €13.56 million.

For the time being, Sankar has subscribed to two of these increases. With the public deed of the capital increase of the latter, relating to estates on the island of Menorca, the Malaga-based property developer has been obliged to report to Spain’s National Securities and Exchange Commission (CNMV) its stake as a reference shareholder of Quabit, given that it now owns 3% of the shares. Specifically, its stake amounts to 3.31%.

Losses of 12%

A package of 4.93 million shares that have accumulated losses of 12% compared with the €2 price for which they were issued, taking as a reference Quabit’s COB trading price on Thursday, €1.77.

The consequence of these non-monetary increases is affecting the personal stake of Félix Abánades, the President of Quabit, who has seen his position in the company decrease from 24% just a few months ago to the current level of 21.4%. He is trying to maintain the rate with the acquisition of financial instruments that, in the future, may yield another 1% of share capital.

Original story: El Español (by Juan Carlos Martínez)

Translation: Carmel Drake

Spain’s Largest Banks Compete to Grant Property Developer Loans in Benidorm & Dénia

26 November 2017 – El Confidencial

The appearance of new housing developments in areas of high demand, as well as those targeting a premium public, has opened a battle between the large Spanish banks to position themselves as lenders once again. CaixaBank, Santander, Sabadell and BBVA have gone from recoiling at the mere sight of real estate projects unrelated to their own portfolios and stocks, to fighting it out with each other to grant loans to private property developers for certain initiatives linked to luxury and super-luxury projects.

That is what El Confidencial has been able to confirm with financial sources from two of the most powerful property developers that have fired the starting gun on the Alicante Costa Blanca, namely, the Delfin Tower in Benidorm and Amare in Dénia. The former is a 22-storey luxury skyscraper, measuring 100 m tall, on one of a handful of beachfront plots in the well-known mecca of Spanish tourism. It boasts location, high quality, architectural design and environmental sustainability. So much so that the prices of its apartments range from €700,000 to €1.56 million.

The money to carry out this project will not come from international entities or investors. CaixaBank, Sabadell and BBVA have taken a step forward and entered the final round in the process to negotiate the financing. The process is being led by independent consultants and the entity led by Jordi Gual (CaixaBank) is leading the race in an operation that will exceed €30 million.

The same level of competition, or more, and with the same players, has happened in the case of the Amare development in Dénia. The real estate project is backed by a company called AB Living, owned by the founder of SHA Wellness Clinic, Alfredo Bataller (…).

The businessman, originally from Argentina, who has lived in Altea since 1989, is known together with his wife, Graciela Pineda, for his hotel activity, but he has also launched himself into luxury real estate development. He manages properties on the Costa Blanca, is building an events space in the heart of Madrid’s Salamanca neighbourhood (SHA Loft) and has just put on the market the largest luxury beachfront development in Dénia, where very few free undeveloped plots remain. The residential project comprises 68 homes with terraces, infinity pools and more than 5,000 m2 of gardens, plus swimming pools, a children’s club, gym and events room. Prices per apartment range between €350,000 and €500,000.

Bateller purchased the plot several years ago. The project is being marketed by Olivares Consultores and has already been granted the corresponding licences by the Town Hall of Dénia, and so the construction work could start shortly. With almost 30% of the properties reserved, AB Living has started negotiations to obtain the bank financing it needs to carry out the construction work. And it has no shortage of offers. According to market sources, CaixaBank, Santander, Sabadell and Bankinter have all entered the bidding and are fighting to grant Amare’s property developer loan. That operation will amount to around €25 million.

According to sources in the sector, the premium nature of these kinds of developments allows them to demand additional guarantees from their buyers in the pre-sales contracts (…). And with those conditions, the financial entities are drooling over the prospect of becoming the lender to enable the execution of the building work. Moreover, their loans may subsequently be subrogated to the individual homeowners, normally wealthy people and families, who automatically become clients (…). The bank financing will cover around 60%-70% of the cost of the building work. The property developer contributes its own funds and the pre-sales contracts.

Original story: El Confidencial (by Víctor Romero)

Translation: Carmel Drake

Axiare’s Profits Rose By 156% In Q1 2017 To €13.1M

12 May 2017 – Expansión

The listed real estate investment company (Socimi) Axiare Patrimonio recorded a net profit of €13.1 million during the first quarter of 2017, up by 156% compared to the same period last year, according to a statement filed yesterday by the company with the CNMV.

Revenues from gross rental income grew by 36%, to €13.4 million. In comparable terms, rentals grew by 4.9%.

So far this year, the Socimi has signed new lease contracts covering a surface area of 93,400 m2: 16,200 m2 relating to offices and 77,200 m2 to logistics facilities, which represents a new record.

At the end of the first quarter, the occupancy rate of Axiare’s portfolio amounted to 92.6%.

During the first quarter, Axiare signed new lease contracts for offices covering a surface area of 4,485m2, which also represents a new record.

In the logistics segment, it signed two new contracts, covering a surface area of 26,165 m2, whereby increasing the occupancy rate of the segment to 97%. Moreover, lease contracts were renegotiated for 23,456 m2 of space.

Since the end of the first quarter, Axiare has signed lease contracts for offices and logistics facilities spanning more than 63,000 m2.

So far this year, Axiare has invested €157.9 million on the purchase of four properties, to take its real estate portfolio to a record figure of more than €1,500 million.

Offices

75% of Axiare’s portfolio comprises offices, whilst 16% corresponds to logistics assets and 9% to other assets, primarily retail parks.

In addition to the €93 million raised in March through a capital increase, Axiare has obtained bank financing amounting to €119 million, whereby benefitting from the current low-interest rate environment.

According to the Socimi, with these funds, the company plans to continue with its policy of investing in real estate assets with strong potential for generating value.

Original story: Expansión

Translation: Carmel Drake

German Fund ‘Freo’ Plans To Invest €120M In Spain

3 November 2015 – Expansión

The German fund, Freo Group, plans to invest €120 million in the Spanish real estate market over the next year. To this end, it has opened a subsidiary in Spain, headquartered in Barcelona, and today, it will open an office in Madrid.

Freo Group is a private capital fund manager that also has its own investment vehicle. Founded in Frankfurt twenty years ago, the group has offices in Europe’s major cities and is currently expanding its operations into the USA. The group focuses on the investment, development and management of real estate assets.

The change in the cycle in Spain’s economy has encouraged the group to invest here now and it has hired Daniel Mayans (pictured above, right), the former Asset Management Director at GE Capital Real Estate in Spain, as the CEO of the Spanish subsidiary.

The management team of the Spanish subsidiary will focus on buying office buildings in Madrid and Barcelona, although they do not rule out the acquisition of shops and other retail premises. “Between 40% and 60% of our purchases will be financed through bank debt”, said Daniel Mayans. The period between the purchase and subsequent sale of these assets will be between five and six years.

Original story: Expansión (by Marisa Anglés)

Translation: Carmel Drake

New Investment Formula: Buy-To-Let Cooperatives

5 March 2015 – Expansión

Investing in the Spanish real estate sector has been not only an option, but almost an obligation for large investors in recent years, both Spanish and international. But, what about small savers? Do they have any options left to fall back on?

Away from the real estate companies that are listed on the stock market, there is an investment proposal that involves buying homes to let them out. Nevertheless, this model has not been operated on a professional basis in the past. Now, the Spanish company Alquiler Seguro, which specialises in the management of rental contracts for both tenants and landlords, has decided to launch a cooperative project involving homes intended for rental, which are designed precisely for that purpose from the outset. “Last year, we realised that our most frequent transactions involved clients who were owners of some properties and at the same time, tenants of others”, explains Gustavo Rossi, Chairman of Alquiler Seguro. “A change is happening in the market, whereby young people, who are accessing housing through the rental market, are becoming good savers whilst also being tenants”, adds Antonio Carroza, CEO of the company.

The executives of Alquiler Seguro propose that these tenants use their savings to purchase homes, for an average price of €120,000, which offer investment returns after 18-24 months (the time taken to construct the properties). “These are homes that are designed to be rented out; they are expected to generate returns of between 3.5% and 6% and achieve an investment return within ten years”, says Carroza.

Currently, the company has two developments underway, both located in Madrid, in the neighbourhoods of Carabanchel and López de Hoyos. “We have chosen areas where there is demand from tenants and prices (of the properties) are affordable”.

Both developments offer financial support. “Our model is 50% equity and 50% bank financing. Entities are willing to subsidise some of the land purchase since the properties have (already) been sold to the cooperative members”.

“In the case of these two projects, each investor has acquired one home, but the goal is to move towards a model that does not involve horizontal divisions, but rather one in which many investors buy the whole development. We already have several plots of land in our portfolio that we intend to develop in this way”, says Rossi.

It is not the only buy-to-let investment project that the company is working on. “We are also evaluating the possibility of creating a Socimi, where investors contribute assets instead of capital but, at the moment, that is not a profitable model, due to the expenses associated with municipal gains”.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake

Melia Will Make Gains Of €35m From Its Partnership With Starwood Capital

27 February 2015 – Cinco Días

The transaction amounts to €176 million.

Melia and Starwood Capital are going to create a joint venture for the purchase and operation of seven of the hotel chain’s establishments. The fund and the hotel chain will take an 80% and a 20% stake, respectively, in the new company, in a deal worth €176 million. The partnership has been made public in the same week that Barceló and Hispania announced the creation of the first Socimi in Spain dedicated exclusively to the vacational hotel sector, which will acquire up to 16 of the Mallorcan chain’s hotels.

The transaction will (also) serve to relaunch the Sol brand. In this way, the seven acquired hotels will be remodelled, which will require an investment of €30 million. Four of the establishments are located in the Balearic Islands, another two in the Canary Islands and one on the Costa del Sol.

Melia will operate the seven hotels for the next 15 years. According to the Relevant Fact submitted to the CNMV, the hotel transfer is pending the agreement of bank financing. Both sides hope to have the process completed by May.

The transaction will generate gains of €35 million for Melia and forms part of the company’s debt reduction program through the rotation of assets. The CEO of Melia, Gabriel Escarrer, said in January that the company expected to spend around €100 million on the rotation of assets this year.

Original story: Cinco Días

Translation: Carmel Drake