Property Developers are Building 18,000+ Homes in Andalucía

18 March 2019 – ABC Sevilla

The real estate market in Andalucía is booming, and in a good way. According to the latest figures from the Ministry of Development, 12,363 permits were granted in 2017 for the construction of new homes, compared with the record before the burst of the bubble of 156,483 in 2006. Construction activity is responding to real demand in the market and is featuring some new players that are planning to build thousands of new homes in the region over the next three years.

Two markets

The investors, which include international funds and local property developers alike, differentiate between two markets – the eastern (Málaga) and the western (Sevilla) – the former accounts for 70% of new developments.

Aedas Homes currently leads the regional ranking by number of homes planned and investments forecast in the autonomous region. The property developer controlled by the US fund Castlelake plans to invest almost €1.3 billion in the region in the construction of 5,150 homes, primarily in the provinces of Málaga (2,600 homes) and Sevilla (1,800).

It is followed by Neinor Homes, which owns a portfolio of 29 plots for the construction of 3,628 homes; Metrovacesa, which has 2,300 homes in its Andalucían portfolio at various stages of completion; and Vía Célere, controlled by another US fund Värde, which is building 1,975 homes across 21 developments.

Meanwhile, ASG Homes has buildable land in Andalucía for the construction of 1,700 homes; Habitat Inmobiliaria, owned by the US investment fund Bain Capital, is working on the construction of 15 developments containing 1,621 homes; and the Sevillan property developer Insur is working on 17 residential developments comprising 1,136 homes at various stages of completion.

Finally, Q21 Real Estate, the property developer created from the alliance of the US fund Baupost and the owners of the former Pinar group, is also constructing almost 500 homes in the region, bringing the total number of homes under construction to more than 18,000.

Original story: ABC Sevilla (by Encarna Freire)

Translation: Carmel Drake

Apollo Engages Goldmans to Sell Altamira for c. €600M

8 October 2018 – Eje Prime

Apollo is getting down to work to divest Altamira and, to this end, has engaged Goldman Sachs to execute the mandate. The US fund renewed its contract with the investment bank and has now distributed the sales document for the servicer to potentially interested parties for an amount that ranges between €500 million and €600 million.

The real estate asset and loan manager, Altamira, is primarily owned by Apollo, which holds 85% of its share capital, whilst the remaining 15% stake is in the hands of Santander. The intention of the fund is to officially launch the sale over the coming weeks and to close the operation during the first quarter of 2019, according to reports from Expansión.

Just over a year ago, Altamira’s portfolio was valued at close to €1 billion, but the amount has varied depending on the assets under management at any given moment. At the end of 2017, the package of assets that the company had under management amounted to €50 billion.

Similarly, the principal value of the servicer is the long-term contract that it has with Santander, as well as the contract for the management of assets owned by Sareb. Potential buyers of Altamira include funds such as Deutsche Bank, Bain Capital, Kennedy Wilson, Baupost and Castlelake.

Original story: Eje Prime

Translation: Carmel Drake

Bain and Cerberus Vying to Take Over Hercesa

27 April 2018

The company, which has more than forty years of experience in the sector, has already attracted the interest of the two investment funds, which would take over a business structure that has a presence in all market sectors.

A long time player in the Spanish real estate market has put itself up for sale. The Hercesa Inmobiliaria group, which has more than forty years of experience in the sector and which has a presence in all market sectors, has received offers for the company starting at 150 million euros. Up to five investment funds have already expressed an interest in the compan. Bain and Cerberus are considered the two principal contenders, industry sources told EjePrime.

The group, of which the Cercadillo family is the majority shareholder, set a deadline for the submission of applications that ended today. That will be followed by analyses of the company, due diligence and negotiations. The company commissioned KPMG for its valuation prospectus. The group declined to comment on the sale.

Hercesa’s real estate activity is primarily focused on the residential sector, although it also has industrial, tertiary and management assets in its portfolio. Also, the company has had a presence outside of Spain since 2004, having carried out projects in Portugal, Romania, Bulgaria, the Czech Republic, Poland, Morocco, Ecuador, Mexico and Panama.

In the residential market, the holding also owns the manager Hi! Real Estate. Created in 2014, it is the base of the group, which in its forty years of experience has delivered more than 21,000 homes and, at present, is selling 2,600 properties in developments distributed between the Community of Madrid, Malaga, Valladolid and Guadalajara, where its headquarters are located.

However, one of the company’s assets that may of the greatest interest for the funds who want to develop in Spain is their portfolio of land mortgaged with banks. Hercesa has land holdings throughout the Spanish Levant, Andalusia, Madrid and Guadalajara.

In addition to the manager, the group has a developer, Hi! Projects, as well as with the construction company Hi! Works and Services. The last known audit of the group, from 2016, shows revenues of 63.6 million euros and assets of €132 million. Also, the prospectus prepared by KPMG highlights a financial debt of fifty million euros, much of it related to the land mortgaged with banks, with which it has recently reached agreements for the creation of developments on the lands, due to the rebound of construction in the residential sector.

As EjePrime has learned, the company’s intention with this valuation prospectus is to sell the company by taking advantage of the upward cycle that the sector is experiencing and from which the investment funds want to take advantage. It would be, therefore, a new corporate operation in which, just as happened with Via Célere, which received an injection of funds from Värde, the future buyer could keep the current management team.

There have been other such agreements, such as the purchase of Aelca, also by Värde and Cerberus’ acquisition of Inmoglaciar. Also, Bain recently paid 220 million euros for Habitat and Baupost entered the prime residential sector with its purchase of Levitt, through Q21.

Original Story: EjePrime – J. Izquierdo

Translation: Richard Turner

 

Q21 Real Estate & Baupost Buy Luxury Property Developer Levitt

1 March 2018 – Eje Prime

A new corporate operation has been closed in the Spanish real estate sector. Q21 Real Estate, a company created by the former Grupo Pinar and the US fund Baupost, has acquired the luxury property developer Levitt. Following the purchase, the group will consolidate its position as one of the reference players in the luxury residential market in Madrid, as well as in the northeast and northwest of the Community of Madrid.

With this purchase, Q21 is going to increase its existing portfolio, comprising more than 1,700 homes, with 145,000 m2 of residential buildability in the northeast and northwest areas of the region, and with more than 75,000 m2 of buildable surface area in the tertiary sector. Levitt is going to provide the buying company with a contribution of land and housing under development in prime areas of Madrid.

According to the latest information available in the Mercantile Registry, Levitt-Bosch Aymerich had net assets worth €162 million at the end of 2016. The company recorded turnover of €61 million last year.

Besides Baupost, some of the other US investment funds that are very active in Spain also submitted bids for Levitt, such as Lone Star, Värde and Castlelake; they all expressed their interest in the property developer in recent months.

Levitt, founded in 1929 to construct luxury homes in New York, arrived in Spain in 1971 at the hand of José María Bosch Aymerich. In 1973, the company completed its first development, the Monteclaro urbanisation, on the outskirts of Madrid. Since then, it has constructed various high-standing developments in Madrid and Barcelona, as well as several office developments.

Original story: Eje Prime

Translation: Carmel Drake

Grupo Pinar & Baupost Agree Purchase of Levitt & Create New Property Developer Giant

19 February 2018 – El Confidencial

The most coveted property developer of recent times may change hands within the next few days. Levitt is holding advanced talks with Q21 Real Estate, a company created by the joining of forces between the former Grupo Pinar and the US fund Baupost, to close its sale this week and, in any case, before the end of February, according to several sources familiar with the operation.

The agreement will put an end to almost two years of to-ing and fro-ing with different interested parties in acquiring the property developer, a reference player in the market for premium homes, and will also create a new giant in the sector within the convulsive Spanish residential market.

As El Confidencial revealed, it was in 2016 when Levitt first started to listen to offers as a formula for dealing with its problem of generational succession, following the death of the group’s founder and alma mater, José María Bosch Aymerich, without any direct descendants.

Owner of one of the best land portfolios in Madrid, with land in locations such as Alcobendas, Las Rozas, Pozuelo and Boadilla del Monte, Levitt has proved tempting over the past two years for giants such as Goldman Sachs, Apollo, Värde and even the fund Baupost itself, which was on the verge of acquiring the property developer last year.

But on the home straight, those negotiations were called off due to differences over price, as well as over the continuity of the project and Levitt’s team. After closing that door, the fund found another window open through Q21, the property developer that has placed a better offer on the table than the one put forward by the US fund, and one that ensures the survival of Levitt.

Who is Q21?

Constituted in July 2014, Q21 Real Estate has a brand that is still new and a workforce of just 17 employees – both features have facilitated its agreement with Levitt, with which it shares its vision of high-quality developments.

Currently, Q21 has nine developments underway, mostly in the Community of Madrid (Boadilla del Monte, Valdebebas, Getafe and Mostoles), but also in Málaga and Valencia. Altogether, the firm is working on 1,500 homes.

With assets worth €6.3 million and net equity of €3.58 million in 2016 (the last year for which audited figures are available), Q21 generated revenues of €5.27 million, an operating profit of €3.5 million and a profit of €2.76 million.

Its numbers are well below those recorded by Levitt, whose turnover amounted to €62 million and net profit €6.3 million. Moreover, Levitt owns a portfolio worth €200 million, its brand is recognised in the market and its history spans almost fifty years in Spain after it arrived in 1971 to introduce the US residential urbanisation model.

Original story: El Confidencial (by R. Ugalde)

Translation: Carmel Drake

No Buildable Land Left in ‘Sevilla Este’ After Fund Shopping Spree

16 January 2018 – Sevilla ABC

The supply of land in Sevilla Este has almost run out. And that milestone represents more than just a symbolic fact. It is a clear sign that a new cycle of real estate expansion is underway, characterised by significant interest from property developers in neighbourhoods and towns on the outskirts of Sevilla. It also provides evidence of the shortage of buildable land that exists in the municipality of the provincial capital, which has caused the few plots of buildable land that have come onto the market to spark a great deal of interest amongst investors.

Whilst the property sector started its rebirth in certain parts of the city centre in 2015, interest in other areas of the city has been increasing significantly over the last two years to meet the new demand that is being generated by the growth of the economy. The result of this trend is that in just three months, almost all of the residential plots in the Sevilla Este area have been sold.

“With just a few exceptions, everything that was on the market has now been purchased”, along with plots that still need to be developed for public and social services, explains Juan Aguilera, Manager at Gaesco, speaking to ABC.

And this investor boom in that area of the city is due to the fact that “Sevilla is running out of buildable land for new developments, since vital infrastructures such as the SE-35 ring-road have not been built, which is the main artery that ought to be boosting all of the new areas of metropolitan expansion”, says Aguilera (…).

Q21’s investment

The most recent large land operation in Sevilla Este was carried out by Q21 Real Estate, the property developer that emerged from the merger between the US investment fund Baupost and the Spanish company Grupo Pinar (one of the most recognised firms in the former property sector). That company has acquired a plot measuring 5,400 m2 at the end of Avenida Emilio Lemos, opposite the Aleste Plaza shopping centre, where it will build around 164 homes. The company is currently processing the permits it requires to start the building work and, once it has received the green light, will complete the construction of the properties within a period of 26 months. The plot that Q21 has acquired belonged to another company in the sector that filed for bankruptcy.

That purchase operation took place at the same time as two other large investments in Sevilla Este, also made by companies that are partly owned by large investment funds. One of them was led by Vía Célere, in which Värde Partners owns a majority stake; it acquired a plot for the construction of 1,700 homes that had belonged to BBVA. And in parallel, the fund Activum purchased plots for the construction of more than 1,000 homes (…).

In Aguilera’s opinion, the interest from these investment funds in Sevilla Este has arisen because several factors have converged. “There is significant built-up demand in Sevilla from families who chose to rent during the crisis and who are now interested in buying a home, plus the years of recovery are now creating new families who can also afford to buy one of these new homes”. This demand, combined with the shortage of buildable land in Sevilla, is what has caused the interest in Sevilla Este to soar, which is exactly what already happened with Hacienda Rosario (which used to belong to Gabriel Rojas and which was acquired by Aedas Homes).

Interest in Entrenúcleos

In these circumstances, Aguilera considers that future real estate investments will not be made directly in Sevilla, but rather in the some of the population nuclei of the metropolitan area, especially in Dos Hermanos (which has made the effort to develop an area like Entrenúcleos).

Aguilera thinks that, unfortunately, time has proved him right. “If we had done our homework, we would now be enjoying a great period for the reactivation of large residential projects: demand and the economy are growing, financing is available at very reasonable prices…but none of the areas that require the SE-35, like Higuerón Norte, Buen Aire, San Nicolás Oeste and Villanueva del Pìtamo, have the infrastructure they need to capitalise on this new construction boom” (…).

Original story: Sevilla ABC (by Luis Montoto)

Translation: Carmel Drake

Aedas, Neinor & Aelca Start Building New Homes in Valencia

4 November 2017 – El Confidencial

(…) A sign that a new wave is coming to the real estate sector can be seen in the Nou Campanar neighbourhood of Valencia, one of the city’s areas of expansion, which was left frozen in time by the burst of the real estate bubble. For many years, an enormous plot of land measuring 12,000 m2 was a symbol of the indulgences of one of the leaders of the Valencian real estate sector, Juan Armiñana. He used to build his spectacular ‘fallero’ monument that won the Fallas competition year after year on that site (…)

Nevertheless, Arminñana, like many other local property developers, went bankrupt. And although he has now timidly returned to the sector, almost all of his assets ended up in the hands of the financial institutions. The large plot of land described above ended up on Sareb’s balance sheet, as collateral for a portfolio of loans. In turn, the bad bank sold those loans to the US investment fund Castlelake. Meanwhile, Aedas Homes, a listed property developer created by that fund, attended the Valencian real estate fair Urbe on Friday. There, it presented its plans for the city for the next two years, revealing that its star development is going to be located on the same iconic plot that used to be owned by Armiñana.

Aedas is one of the property developers of the day. It has arrived in Valencia as demand for new build properties is heating up, in parallel to the economic recovery. Since April, the firm has put almost 300 new homes on the market in Campanar, Quatre Carreres and Dénia, with the intention of putting the cranes to work early next year and handing over the homes in a couple of years. In turn, Aedas holds a portfolio of land and it is continuing to explore acquisitions, whenever the prices fall within acceptable ranges. (…).

Two of Aedas’s rivals, Neinor and Aelca, have also started to make a controlled landing in the Valencian market. The listed company led by Juan Velayos plans to build 500 homes per year in the Community of Valencia, which it considers its third largest market after Madrid and Barcelona. (…). The real estate company in which Lone Star holds stake has just purchased a plot of land for 200 homes in the neighbourhood of Benicalp and it already owns plots for another 450 homes in the neighbourhood of Malilla.

But, the player that has launched itself into the market without any qualms is Aelca. Although traditionally it has been very focused on Madrid, Barcelona and Málaga, the property developer founded by Javier Gómez and José Juan Martín has now launched developments to build up to 1,200 homes in Valencia. Its immediate projects, which are already being marketed, are located in the neighbourhoods of Patraix and Nou Campanar, and they will be joined by another residential building in the Cabecera Park area and another in Dénia. In Alicante, on the Playa de San Juan, Aelca is also working on its first project on the Levante Coast, Residencial Arenas, a residential complex executed in collaboration with Sabadell (…).

Aedas, Neinor and Aelca are the new kids on the block. But there are other players who have been in the market for a long time. Sareb is one of them. Until a few months ago, it was focusing on divesting its land and second-hand homes. The Community of Valencia is the second most active region in terms of sales for the bad bank behind Madrid, with 488 properties and €150 million of land sold since 2013, according to the entity’s CEO, Jaime Echegoyen. Now, Sareb has rolled up its sleeves and is trying to generate some value from the projects that are underway and unfinished from the banking portfolio that it received – more than €6.4 billion in properties and loans secured by real estate assets.

The bad bank has signed agreements with local property developers and construction companies to develop some of the assets that have not ended up in the hands of investment funds (…).

Another very active agent is CBRE Richard Ellis. It has sold more than 3,000 homes in recent years and has another 400 new build homes on the market in Valencia. These properties have been launched by funds and property developers such as Iberdrola Inmobiliaria, which has built a 58 home luxury residential building in Ruzafa and Q21 Real Estate, owned by the US fund Baupost, which has a presence in the so-called PAI of Quatre Carreres (…).

The volumes of off-plan sales are unprecedented in recent years. Developments that have been on the market for just six months are already reaching pre-sales ratios of 40% or 50% in Valencia and along the coast. These percentages mean that property developers are able to secure financing and improve the trust deposited in them by financial institutions (…).

Foreign property developers are also joining the activity being undertaken by the local players that survived the economic crisis. For example, Ficsa, the real estate brand of the Noguera family, has four developments underway in Valencia and its metropolitan area, with reservation rates of 50%. In addition, Parvasal, which has projects in Patriax and on Avenida Giorgeta (Patraix Plaça and Sosa Edificio) is in a similar position.

Metrovacesa, Grupo Lar, White Real Estate and IHomes also all have developments underway (…), which will be ready in 2019 (…).

Original story: El Confidencial (by Víctor Romero)

Translation: Carmel Drake

The New Kings Of The Residential Market

17 November 2016 – Expansión

The crisis in the real estate sector not only led to the disappearance of some of the historical giants, such as Martinsa Fadesa, Reyal Urbis and Nozar, it has also resulted in a structural change in the residential landscape, with the emergence of new players, including several international investment funds, which have revived the market by injecting their capital. (…).

“Traditionally, the residential sector has been a very polarised market, with lots of local developers playing key roles. Nevertheless, the residential business model has changed following the crisis. In 2014, we began to see new players emerging in the form of partnerships between local property developers and international investment funds, with the funds providing the capital and the developers the local knowledge and ability to manage the market”, explains Ernesto Tarazona, Partner-Director of Residential and Land at Knight Frank.

Meanwhile, the National Director of Residential at CBRE, Samuel Población, explains that the partnerships created by the international funds and local developers bring together the local developers’ capacity to manage and know the local market, and the funds’ capacity to invest and provide solvency levels (…). “Grupo Lar and Pimco; Renta Corporación and Kennedy Wilson; Momentum Real Estate and HMC; Aquila Capital and Inmoglacier; Mina Inmobiliaria and Eurostone; Aelca and Värde; and Q21 Real Estate and Baupost, are just some of the partnerships that have been formed in recent months”, he says.

In this way, we are seeing “the professionalisation of the sector with institutional money that wants to enter this market”, says Borja Ortega, Director of Capital Markets at JLL. (…).

Enrique Isla, Partner at King & Wood Mallesons (KWM), explains that, in addition, some of the funds have burst into the market by purchasing real estate companies in order to access their portfolios of land as well as their management teams. “That was the case with Lone Star’s purchase from Kutxabank of its real estate subsidiary Neinor; and Värde’s acquisition of Sanjosé’s real estate subsidiary to create Dospuntos; it also explains Castlelake’s interest in Aedas, the property developer that has emerged from the ashes of Vallehermoso”, he adds.

Isla thinks that the investment funds see great potential for growth and profitability in the residential sector, given the improvement in the Spanish economy and employment, as well as the favourable financing conditions.

In this sense, Población points out that the new developments in Spain will have to respond to the depletion in the stock of new housing that we are seeing. “Given the high number of housing permits granted in 2015, we expect between 60,000 and 65,000 new homes to be ready in 2016”. (…).

In addition to the funds, Spain’s banks, through their servicers – companies created during the crisis to streamline the administration and sale of portfolios of properties and loans by financial institutions – are becoming increasingly involved in property development.

In this sense, Anida, one of the few large platforms that is still completely owned by its parent company, BBVA, has just signed an agreement with Inveravante, a holding company owned by Manuel Jove. During the first phase, the new company, in which Jove holds a 70% stake and BBVA the remaining 30% stake, will develop 850 homes in Málaga, Madrid and Las Palmas.

The experts think that other movements of this kind may well take place in the real estate market, given that many of the banks are still major land owners.

Meanwhile, Sareb is continuing to be a major player in the residential market, with its stock of almost 100,000 units as at June last year.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

GreenOak Purchases Las Mercedes Business Park For €140M

24 June 2016 – Expansión

The US fund GreenOak Real Estate has purchased the Las Mercedes business park in Madrid from Standard Life Investments for around €140 million, according to sources close to the deal.

In 2004, Standard Life Investments invested around €150 million in the construction of the business park, located on the outskirts of Madrid next to the A-2 motorway. The business park, located on Calle Campezo 1, opposite Madrid Barajas airport, is just a few metres away from the Plenilunio shopping centre – measuring 70,000 sqm – owned by Klepierre.

Covering 78,500 sqm, the business complex comprises nine office buildings and a private garden. Constructed on a plot of land measuring four hectares, the complex includes a common area with two cafeterias, a restaurant, a supermarket, a courier service and a gym. The business park is served by public transport and a shuttle bus, which connects it with Madrid. In addition, the business park has parking spaces with capacity for 1,652 vehicles.

The Las Mercedes business park is currently occupied by tenants such as Altran, Applus, la Agencia Española de Medicamentos y Reguladora and Xerox. Clifford Chance, Jones Lang LaSalle (JLL) and Gleeds have advised the buyers, whilst Gomez-Acebo &Pombo and CBRE have advised the sellers.

GreenOak, which opened its office in Madrid in 2015, has been very active in Spain. Last year, it acquired the Sevilla Factory shopping centre and a building on the Madrilenian Calle Fuencarral. In addition, in 2014, it joined forces with Baupost and Lar to purchase seven properties located in Madrid, Málaga, Barcelona, Burgos and Alicante.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

GreenOak Buys ‘Sevilla Factory’ Shopping Centre For €15M

10 July 2015 – Expansión

The French-Dutch group Unibail Rodamco, one of the largest shopping centre owners in Europe, has closed the sale of one of its assets in Spain: the Sevilla Factory.

According to the Spanish Association of Shopping Centres, the property, which opened in the year 2000, has a constructed surface area of 20,000 m2, of which almost 16,000 m2 comprises retail space, and is spread across one floor. In addition, the shopping centre has 1,200 parking spaces.

The new owner of the centre is the fund GreenOak. That fund closed one of the largest shopping centre transactions in Spain last year, together with Baupost and the Spanish real estate company Lar, when it acquired seven properties in Madrid, Málaga, Barcelona, Burgos and Alicante. It paid €160 million to Vastned for those properties. According to real estate sources, the fund will now spend €15 million on Sevilla Factory.

Knight Frank has advised Unibail and Deloitte’s RE team has advised GreenOak. Both have declined to comment on the deal.

Background

Through this transaction, Unibail Rodamco continues with its plans to divest its shopping centres in Spain that have lower footfalls. Sevilla Factory receives an average of 1.9 million visitors per year.

To this end, in recent months, the company has sold several shopping centres and has been preparing new deals. In December, Unibail sold the Habaneras shopping centre in Alicante to the US fund Harber for €65 million. Whilst a few months earlier, it sold Albacenter to the Socimi Lar España for €28.4 million.

Now, the French-Dutch real estate company is considering selling Equinoccio in Majadahonda (Madrid) and Barnasud in Barcelona. Unibail Rodamco is also the owner of other shopping centres in Spain, such as La Vaguada and Parquesur in Madrid and Splau in Barcelona.

Meanwhile, GreenOak is one of the funds that is backing Spain most heavily at the moment. Since its creation in 2010, it has invested around $2,500 million. Now it is focused on four key markets: USA, Japan, England and Spain.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake