Government & Podemos Agree to Allow Town Halls to Regulate Rental Prices

11 October 2018 – Eje Prime

The Government has said yes to public control of the rental market in Spain. The Executive led by Pedro Sánchez (below left) has agreed to the regulation of rental prices by Town Halls, according to explanations provided in a Budget agreement reached on Thursday by the PSOE and Unidos Podemos. The measure is established provided its application is “temporary and exceptional” and is carried out only in those urban areas where there has previously been an “abusive increase” in rents.

Rent has formed the focus of the new Government’s action plan in terms of housing. In parallel to the regulation of prices, the Executive has announced that it will advocate the extension of the minimum term of lease contracts from three years to five, and, in those cases where the owner is a legal entity, the lengthening of the commitment between landlords and tenants to seven years. Moreover, the tacit renewal of contracts will be increased from one year to three, provided the intention to not renew the agreement is communicated by either of the two parties at least six months before it is due to terminate.

In addition, the PSOE and Unidos Podemos have agreed that damage deposits (fianzas) to enter rental flats will be capped at a maximum of two months and that the signing of bank guarantees will no longer be demandable by landlords. In the event that an owner wants to recover his home before the term agreed with the tenant, then that scenario must be formally explained in the contract in force.

More funding for the development of rental housing

The agreement, which will now have to be approved by Congress, includes a measure that supports the development of public housing. In the event that it receives the green light from the chamber, the Government will increase the housing budget for next year to €630 million. In 2020, it will increase that pot further still to €700 million and in 2021, to €1 billion. According to the text, in ten years, Spain will invest between 1% and 1.5% of its Gross Domestic Product (GDP) in public housing.

One of the objectives of the public housing plan is “to avoid “homes” from being sold to vulture funds or sold for a profit”, so as to ensure that “particularly vulnerable people” have the possibility of accessing a rental home.

Original story: Eje Prime

Translation: Carmel Drake

CNMV Approves Colonial’s Takeover of Axiare

28 December 2017 – Eje Prime

Colonial is getting closer to the finishing line in its race to create a real estate giant. Today, Spain’s National Securities and Exchange Commission (CNMV) approved the takeover bid launched by the real estate group for the Socimi Axiare on 13 November 2017; given its size, the potential deal has had the sector on tenterhooks for the last month and a half.

The market supervisor has valued the operation to purchase the 71% of the share capital in the Madrid-based company that Colonial does not control yet at €1.033 billion. If the transaction goes ahead, the Socimi will sell non-strategic assets worth around €300 million, as Eje Prime revealed.

Through this merger, the Socimi led by Pere Viñolas, one of the real estate sector’s stars this year, is seeking to generate a giant with almost €10 billion in assets, which would threaten the position of leadership in the market currently held by Merlin.

According to the details of the takeover offer accepted by the CNMV, Colonial will pay €18.36 for each one of Axiare’s 56.30 million shares. In theory, the real estate company offered the firm led by Luis López de Herrera-Oria a payment of €18.50 per share, to which the Socimi responded by calling the operation “hostile”. Nevertheless, the distribution of Axiare’s dividend has led to a reduction in that final offer, after Colonial warned the Socimi that this fact would change the conditions of the takeover bid.

Following the approval of the stock exchange supervisor, and with CaixaBank’s bank guarantee at the ready, the period will open on Friday (29 December) for Axiare’s shareholders to take a stance, as well as for the issue of a report about the operation by the target Socimi’s Board of Directors. This period to accept the takeover bid will run from 29 December until 29 January, both inclusive. Colonial needs the support of 21.21% of the shareholders, in addition to the 28.7% stake that it already controls, which would allow the company led by Viñolas to exceed the 50% threshold in terms of its stake in the rival company.

Original story: Eje Prime

Translation: Carmel Drake

Slim Submits His Takeover Bid For Realia With A €257M Aval

29 February 2016 – Expansión

On Friday, the businessman Carlos Slim took another step forward in the process to acquire Realia through his holding company Inversora Carso, by requesting authorisation from Spain’s National Securities Market Commission (CNMV) to launch a takeover bid for 100% of the company.

Slim, who currently owns a 30.3% stake in Realia, announced his commitment to submit a bank guarantee within the next seven days, issued by CaixaBank for €257 million, to cover all of the payment obligations that may result from the offer.

The Mexican magnate announced his intention to launch a takeover of Realia at the end of January, at a price of €0.80 per share, which values the company at €369 million. Slim plans to clean up its debt and turn it into a company with “a stable level of recurring revenues, in line with its level of indebtedness”. FCC – the largest shareholder of Realia, with a 36.9% stake – is not expected participate in the takeover bid.

With respect to the shareholder loan acquired from Sareb in 2015, Inversora Carso said that, in the event that the option to capitalise the convertible tranche of that loan was exercised, then a maximum number of 14,077,669 new shares could be subscribed, whereby increasing the company’s stake in Realia’s share capital by up to 2.96%.

A return to profits

Realia, which published its accounts on Friday, managed to reverse its losses in 2015 to generate profits of €17.2 million, compared with a loss of €77.5 million the previous year, thanks to the revaluation of its asset portfolio and a decrease in financial expenses resulting from a reduction in its debt balance.

The real estate company generated total revenues of €94.93 million in 2015, down by 17.7%, due to a decrease in the sale of properties and land, meanwhile the property business remained stable.

According to the financial plan, Realia reduced its gross financial bank debt by €457 million in 2015, to €1,254million, i.e. by 26.7% compared with the previous year.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake