Sabadell Revises Down its Price Expectations for the Sale of its Property Developer SDin

21 May 2019 – Cinco Días

Banco Sabadell put its property development arm Solvia Desarrollos Inmobiliarios (Sdin) up for sale several months ago. Initially, the bank was expecting to receive proceeds of around €1 billion for the company, its employees and land. However, in light of the current climate, it is now revising down its expectations.

Investment funds are starting to face problems when it comes to generating returns from their investments in land and property what with many of the large property developers, such as Neinor Homes, slashing their short-term forecasts, the political uncertainty following the recent general election and the general nervousness that the current boom cycle is coming to an end.

As a result, the bank chaired by Josep Oliu (pictured above) is now hoping to receive binding offers amounting to around €900 million, which would considerably reduce the entity’s expected gains from the sale. Nevertheless, SDin owns around 300 prime plots and 130 promotions under development, whose combined valuation amounts to €1.3 billion, according Savills Aguirre Newman.

For the time being, Sabadell has four offers on the table from investment funds, including from Cerberus and Oaktree. The fund Kronos is also still in the running although it is less likely to prove victorious.

Sabadell had initially planned to close this operation by the end of June, but may now wait a little longer.

Original story: Cinco Días (by Ángeles Gonzalo Alconada)

Translation/Summary: Carmel Drake

Adif Sells Plot in Madrid for 80% More than its Original Asking Price

2 January 2018 – El Confidencial

It has been, without a doubt, the clearest example of the overheating in the prices of buildable land in Madrid. Adif has just concluded the auction of several plots in Dehesa Vieja, San Sebastián de los Reyes, which it launched at the beginning of October. The asking price was set at €9 million and in the end, the state-owned firm has obtained proceeds amounting to €16.3 million, in other words, 80% more than initially expected.

The plots, which have a buildable surface area of 10,500 m2, sparked interest amongst much of the property development sector, given that they are located in one of the most sought-after and rapidly growing areas of the Community of Madrid. Up to 13 property developers participated in the first auction held on 3 October, including some of the industry stalwarts.

From Gestilar to Amenábar Promociones, and including the renewed Acciona Inmobiliaria and Pryconsa. Other participants also included Monthisa, Aelca, the listed firm Neinor Homes, Procisa and Solvia. And one cooperative: SS de los Reyes Sociedad Cooperativa, owned by the Asentis group, which after going head to head with the real estate company owned by the Entrecanales family over the last month, has ended up acquiring the sought-after plot. And the reality is that, after a couple of years on the back burner, cooperatives have returned to the market with a bang and are showing that they are capable of competing, economically speaking, in spaces where traditional property developers cannot or do not want to operate.

Adif’s auction is a clear example. SS de los Reyes Sociedad Cooperativa has won the bid with an offer of €16.3 million, compared to the figure of just over €16 million that Acciona Inmobiliaria was willing to pay and which represents a land (impact) price of €1,550/m2. Just too high, in the eyes of many of the interested parties who threw in the towel along the way and who marked a top price of around €1,200/m2.

To give us an idea, the price paid by the cooperative (…) means that the future homes that are going to be constructed on the site will have to be sold for around €2,400/m2, or around €2,900/m2 if the aforementioned offer had been presented by a property developer, since it would have to include its margin to sell the homes and ensure it did not make a loss (…).

“It is important to consider that the homes planned for the site are large, measuring between 130 m2 and 140 m2 and that if we exceed prices of €400,000 for a three-bedroom home, then no matter how much prices rise by, middle-class families start to have limitations in terms of financing, and, therefore,  problems when it comes to buying such homes”, according to sources at one of the property developers that participated in the bid.

And it is not the only land operation to have raised the alarm. For months now, the market has been seeing sales of buildable plots of land at prices that were unthinkable just a couple of years ago. Recently, the Mutualidad de la Policía (Mupol) managed to sell three plots of buildable urban land – in other words, ready to build on – for around €2,250/m2 to another cooperative manager, Gesvieco, which has placed between €40 million and €42 million on the table for the plots that span 5,500 m2. The traditional and conservative property developers such as Pryconsa and Vía Célere were not willing to pay that price (…).

To give us an idea, 24 months ago, according to data from Foro Consultores, buyers were paying €800/m2 for buildable land. In other words, in two years, land prices have doubled. This (impact) price means that the price of homes for end users has increased from around €2,300/m2 to €3,100/m2.

Operación Calderón, the next major operation

Nevertheless, if there is an operation that can break all records, it is the one involving the plots that Atlético de Madrid owns next to the Vicente Calderón Stadium. The club is asking around €200 million for that package of land, in other words, around €3,500/m2, which would give rise to homes with prices of €6,000/m2, well above the price for the area, which ranges between €3,000/m2 and €4,000/m2 (…). The interested parties have already submitted their binding offers, now the club just needs to choose the best suitor.

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

Bain Submits Highest Bid For Liberbank’s Real Estate

10 October 2017 – Expansión

One of the main elements of the strategic plan launched by Liberbank to rebuild its financial health is entering the home stretch. The bank has now received offers from all three of the suitors who have reached the final phase of the sale of the portfolio of real estate assets worth €800 million. And, according to financial sources, the bid from the US fund Bain is the highest. But, Bain is not alone. KKR and Blackstone have also submitted binding offers, however, the cheque that the former is willing to sign is larger than those of the others, add the same sources.

Nevertheless, that does not mean that Bain is going to win Liberbank’s open bid. In the final evaluation of the offers, the perimeter that each bid defines (the portfolio primarily comprises homes, but also includes some land) will weigh as heavily as the financing that is going to be used and the tax implications. All of this could mean that the quality of the bids varies significantly, as well as the impact that one or another may have for the results of Liberbank.

In addition, market sources point out that from the date that the offers were submitted until the date exclusive negotiations begin with one of the candidates, last minute movements may arise that tip the balance one way or another.

All of this despite the fact that the calendar proposed by Liberbank does not allow for much time for the bids to be revised or for the processes to be delayed. The objective of the bank is to announce the principle of an agreement with one of the three funds that have submitted offers “imminently”, according to financial sources. And they consider that this is possible because all three of the proposals are sufficiently adequate to reach an agreement.

Capital increase

Liberbank’s intention is to announce the sale of the real estate portfolio before or during its upcoming capital increase, through which it hopes to raise €500 million from its shareholders. It plans to use the funds raised to improve the coverage levels for its non-performing assets, increasing them to almost 50% (still slightly below the average in the sector, which stands at 52%), as well as to strengthen its capital.

Liberbank’s wish is that its shareholders will participate in the capital increase safe in the knowledge that the bank has released €800 million in toxic assets, which will no longer weigh down on its balance sheet. The General Shareholders’ Meeting was due to approve the capital increase on Monday (yesterday) and the objective is that the operation will last 15 days, starting as soon as the legal processes allow.

Liberbank’s main shareholders have committed to participating in the capital increase, which means that Oceanwood, Aivilo Spain and Corporación Masaveu (owners of 12.6%, 7.4% and 5% of the share capital, respectively) will maintain their respective stakes.

The capital increase is the most important element of Liberbank’s plan to convince the markets of its financial solvency, but it is not the only one. The transfer of the real estate portfolio plays an important role, as did the sale of its real estate subsidiary, Mihabitans, to Haya Real Estate for €85 million. That company, which is owned by the fund Cerberus, has taken over the exclusive management of the foreclosed assets of Liberbank and its subsidiaries for a period of seven years.

Original story: Expansión (by Inés Abril)

Translation: Carmel Drake

Liberbank Engages Alantra To Sell 9,000 Assets Worth €1,200M

11 September 2017 – Eje Prime

Liberbank has created Project Invictus to offload its investment in one go. The company has engaged Alantra to sell a package containing more than 9,000 assets, above all residential properties. This portfolio is worth around €1,200 million and includes assets located in Madrid, the Community of Valencia, Castilla-La Mancha and Andalucía.

49% of the assets for sale are homes, but the portfolio also includes land and offices. This operation was launched at the end of July and has been baptised by Alantra as Project Invictus, according to Expansión.

Over the coming weeks, interested parties will hold meetings with the bank’s management team and binding offers are expected to be submitted to Alantra before the end of the first half of September. Liberbank had planned to close this sale before the month of October, but those time frames may have changed after the announcement of the capital increase.

Original story: Eje Prime

Translation: Carmel Drake

Santander Considers Selling 51% Of Popular’s RE To A Single Fund

20 July 2017 – Expansión

The process initiated by Banco Santander at the end of June to find partners willing to take on some of Popular’s portfolio of foreclosed assets and doubtful real estate debts (with a gross value of €30,000 million) is moving ahead and the entity’s preferred options are starting to emerge (…).

According to sources familiar with proceedings, one of the options that Santander is considering is the sale of 51% of this real estate business to a single buyer.

The same sources explain that the sale of a majority stake to an investment fund would allow the Cantabrian bank to deconsolidate all of the non-performing real estate risk from its balance sheet, as it would be left with a minority stake. Santander has engaged Morgan Stanley as the advisor bank for the process and has appointed independent director Pedro Pablo Villasante to supervise the entity.

Sources in the market indicate that interested parties include some of the funds specialising in these assets, such as Apollo, Blackstone and Lone Star. They add, nevertheless, that the definitive format through which these firms will enter into the operation has not been defined yet since any deal is still in a very preliminary phase.

Non-binding offers

Sources at Banco Santander acknowledge that this possible deconsolidation of the real estate business, through its sale to a partner, is just one of the options being considered. However, they maintain that the definitive decision as to whether the entity will choose a single buyer or more than one buyer has not been taken yet and is not even close to being taken.

According to sources close to the bank, the operation is still in the “attracting interest and receiving non-binding offers” phase. This period will continue until at least after the presentation of the results corresponding to the first half of the year, which is planned for Friday 28 July.

The period during which the various funds may submit their non-binding offers is expected to remain open until that same date, at least. Market sources are confident that other major investors will also express their interest, including Cerberus, Goldman Sachs, KKR, Kennedy Wilson and Värde Partners. The next phase will see the receipt of the binding offers

Following the resolution of Popular and its acquisition for €1, Santander revealed its plan to reduce its non-performing real estate assets by 50% within 18 months. The segregation of the property portfolios into a single vehicle could reduce that period even further (…).

Santander’s proposed plan may also include an additional agreement with the buyer fund to acquire 51% of the servicer Aliseda. That subsidiary, which is responsible for managing all of the real estate assets proceeding from Popular, is currently controlled in its entirety by Santander, after the entity chaired by Ana Botín repurchased the 51% stake held by Kennedy Wilson and Värde Partners on 30 June (…).

Popular’s real estate portfolio, which is located primarily in Andalucía, the Comunidad Valenciana and Cataluña, includes around €17,000 million in foreclosed properties and another €13,000 million in doubtful property developer loans. These assets include, for example, more than 25,800 homes (which are being marketed by Aliseda) and office complexes (…).

Original story: Expansión (by Nicolás M. Sarriés)

Translation: Carmel Drake

Wanda Accelerates Timetable For Edificio España Sale

29 June 2016 – Expansión

Wanda wants to get its homework done before it goes on holiday and so has decided to accelerate the sales process for Edificio España. Following a recent visit to Spain by representatives of the Chinese group, Wanda has called on the interested parties to submit binding offers for the iconic Madrilenian property. Candidates have until tomorrow to present their final proposals.

The business conglomerate led by Wang Jianlin, which acquired Edificio España from Banco Santander in June 2014 for €265 million, engaged the real estate consultancy firm JLL to manage the sale of the property a year and a half after its acquisition. The possible buyers include the Chinese group Fosun, the Philippine group Emperador, the Hong-Kong based firm Platinum Estates and the Spanish RE manager Domo. Sources at JLL declined to make any comments about the process.

During their stay in Spain, the representatives of the Chinese group met with some of the candidates and revealed certain information about the property, located in Madrid’s Plaza de España, as well as about the company Renville Invest, which is the immediate owner of the building.

In addition, although the positions adopted by the Town Hall and Wanda, regarding the approach to the renovation of the property, seem irreconcilable, the Chinese group is still in contact with Manuela Carmena’s urban planning team, according to sources at the Town Hall. Specifically, the councillor responsible for the Sustainable Urban Development department, José Manuel Calvo, met with Wanda’s representatives on 14 June to discuss the project for remodelling Edificio España.

The main obstacle in the negotiations between the municipal team and the Wanda group lies in the Town Hall’s demand to preserve the façade of the property, as required by law, a position opposed by Wanda, which had been hoping to demolish the building and reconstruct it.

Original story: Expansión (by R. Arroyo)

Translation: Carmel Drake

TH Real Estate Offers €450M For Diagonal Mar

14 June 2016 – Expansión

The owner of the shopping centre Diagonal Mar, the British fund Northwood, has received a binding offer amounting to €450 million from TH Real Estate. This amount almost triples the €160 million that Northwood paid for the Barcelona-based shopping centre in 2013.

It is not the only offer that has been presented, given that TH Real Estate’s proposal was accompanied by two others from funds whose name has not been revealed. The sale of the asset is being brokered by the consultancy firm CBRE, which has declined to comment on the deal, along with TH Real Estate.

Diagonal Mar is the largest shopping centre in Cataluña, with a surface area of 87,500 sqm. Nevertheless, not all of the property is up for sale, given that 27,000 sqm are owned by Alcampo (which will hold onto its space).

Northwood acquired the centre at the worst time of the crisis, in 2013, from the Irish bad bank, which means that it could end up generating capital gains of €290 million in less than three years.

The investor

TH Real Estate is owned by the financial services provider TIAA. The origin of the company dates back to the London-based real estate manager, Henderson Real Estate, which was absorbed by the US group TIAA in 2014 to create TH Real Estate, which is also headquartered in the USA.

TH Real Estate manages real estate assets all over the world, covering 26,800 sqm, for around 50 investment funds and other operating mandates.

As well as TIAA’s assets in the USA, this platform integrates properties worth €83,900 million in total, which makes it one of the largest property managers in the world.

In Spain, TH Real Estate owns several shopping centres, including Islazul, in Madrid, measuring 90,000 sqm; Nervión in Sevilla, measuring 25,000 sqm; and Bulevar Getafe in Madrid, measuring 27,150 sqm. It also owns an industrial park in Alovera (Guadalajara) measuring 42,000 sqm.

The company has been present in Spain since 2007 and its Madrilenian headquarters is headed up by Manuel Martín. In recent years, as well as investments in operating assets, TH Real Estate has also undertaken co-investment projects, such as in the case of the Viladecans outlet (in Barcelona), where it joined forces with Neinver.

Original story: Expansión (by Marisa Anglés)

Translation: Carmel Drake

Project Lane: Bankia Negotiates Sale Of €400M Secured Portfolio

13 June 2016 – Expansión

Project Big Bang paralysed the Spanish financial sector in 2015. At the time, Bankia tried to sell all of its foreclosed assets in a single transaction, including: 38,500 homes, 2,600 plots of land and 5,000 commercial premises, worth €4,800 million. A large number of funds were interested in the sale, but only Cerberus and Oaktree expressed their intention to submit binding offers. The prices and conditions did not match with Bankia’s expections and so it decided to suspend the operation at the end of the year. (…).

With all of those roadblocks, Bankia decided that it would maximise the value of its foreclosed assets by keeping them on the balance sheet and selling them off through the retail channel and in smaller portfolios, such as the case of Project Lane, see below. Even so, sources in the sector expect to see fresh attempts to sell large portfolios of foreclosed assets over the next few months and years, something that more than one entity has planned for 2016. To this end, the markets must improve further and provisions should be adjusted even more to the prices being offered by the funds. The Bank of Spain’s new accounting circular, which comes into force in October, is expected to help in this sense and to accelerate the divestment of the banks’ problem assets.

Project Lane

Now, Bankia is negotiating the sale of a portfolio of homes with three international funds, in an operation known as Project Lane. The entity is being advised by KPMG and is looking to transfer around 2,500 homes worth c. €400 million, according to financial sources.

The operation is in a very advanced phase, with binding offers due to be submitted next week. Bankia and its advisor have selected three funds, which according to the same sources, do not include Cerberus.

Initially, the US fund was the favourite buyer for the operation, on the basis that it knows the assets better than anyone else through Haya Real Estate, the former Bankia Habitat, which manages homes and real estate loans from Bankia. In fact, Cerberus was the fund that was closest to acquiring Big Bang, with an offer of around €2,100 million.

The portfolio of assets on sale as part of Project Lane primarily comprises homes, but also includes industrial and commercial assets, to a lesser extent. It is the largest sale of foreclosed assets that any of the banks have put on the market so far in 2016. Only Cajamar has explored this option in recent months, with Project Omeya – around €72 million -, as it waits to see what will happen during the second half of the year. The 2,500 homes on sale represent around 6% of the total haul that Bankia has on its balance sheet. The entity sold 9,200 properties through its branch network and Haya Real Estate last year. The aim is to try and repeat those figures in 2016.

Since the new management team, led by José Ignacio Goirigolzarri (pictured above), took over at Bankia, the nationalised group has been one of the most active in the sale of portfolios. Last year, it sold more than 80 batches of problem assets, which allowed it to decrease its doubtful debt balance from €20,000 million in 2013 to €12,500 million by March 2016. It has managed to do this thanks to higher provisions.

Original story: Expansión (by J. Zuloaga and S. Arancibia)

Translation: Carmel Drake

Villar Mir Guarantees Torre Espacio’s Buyer Rent Of €26M

3 July 2015 – Cinco Días

Inmobiliaria Espacio, which forms part of the Grupo Villar Mir, wants to generate the maximum amount from the sale of the iconic Torre Espacio, one of the four skyscrapers constructed on Real Madrid’s former Ciudad Deportiva. To this end, it is willing to guarantee 100% of the building’s rental income, and pay the difference if the new owner does not reach the maximum occupancy rate.

According to sources close to the operation, Villar Mir has put a figure on the table of €26.4 million per year. This means that the purchaser will receive the same monthly rent, regardless of the occupancy rate of the building.

Torre Espacio, which has 57 floors and is 230m high, has a total leasable area of 60,142m2, as well as 1,173 parking spaces. The building currently has an occupancy rate of 85%. Companies in the Grupo Villar Mir occupy 55% of the leasable area and the corporation, which is controlled and chaired by Juan Miguel Villar Mir, will continue to rent offices in the skyscraper. The other tenants include four embassies: Canada, UK, Australia and the Netherlands.

The real estate company has offered to guarantee rental income of €35 per m2 per month, which represents an annual rent of €25.2 million. In addition, the rental cost of the parking spaces amounts to another €1 million, which takes total annual rent to €26.4 million. Inmobiliaria Espacio would retain control of the rental management of the property and of finding tenants. Nevertheless, it is likely that some investors will waive their right to the guarantee, as they will prefer to take care of the management side themselves.

With this commitment, the real estate company thinks that it will come close to the €600 million asking price for the sale of the tower. That would represent an annual yield of 4.40%, but that is rather low, according to market sources; if interest rates rise over the next few months, the viability of the tower’s financing may be put at risk.

Villar Mir has set a minimum asking price of €500 million, which represents a valuation of around €8,500/m2. The market considers that price to be high, since Pontegadea, the family office owned by Amancio Ortega, paid around €5,000/m2 for its acquisition of Torre Picasso, and the March family paid around €7,500/m2 for Ahorro Corporación’s headquarters in Castellana, 89.

On the plus side, Villar Mir’s real estate group may benefit from increased liquidity in the market and the interest shown by international funds in the recovery of the country. Even so, analysts do not expect that many candidates will have the capacity to invest €500 million or €600 million in an asset that is not in Azca, the prime business district in Madrid. (…).

‘Due diligence’

The group chaired by Villar Mir has launched an accelerated process for the sale of the building. Anyone wishing to becoming the new owner must submit non-binding offers by next Tuesday. The real estate company expects to choose the best offer during the course of the week.

Then, the candidate with the best offer will begin the due diligence process, which will last for three weeks, until 29 July – all of the experts in the market consider this timeframe to be tight. The binding offer will be made by 29 July and the transaction will be closed during the first week of August.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake