Commercial Real Estate Investment Takes Off in 2019

9 July 2019 – Richard D. K. Turner

Commercial real estate investment in the office sector in the first six months of 2019 has already exceeded last year’s total by 13%. Sales totalled €2.595 billion in the first semester, compared to €2.3 billion in all in 2018, according to a study by BNP Paribas. In turn, the sector accounted for 52% of total real estate investment during that same period this year. In particular, sales in the two largest cities in Spain, Madrid and Barcelona, have boosted the market.

Investments in the residential market reached €470 million during the first semester of this year, accounting for 17% of the total. The hotel sector brought in another 12% of investments, while the logistics sector accounted for 18% and the retail sector nearly 14%.

Original Story: Economía Digital

BNP Paribas Buys Agbar’s HQ in Barcelona for €60M

8 January 2019 – Expansión

The real estate arm of BNP Paribas has acquired the headquarters of the Agbar group located in Barcelona for more than €60 million. The building forms part of the office complex known as Distrito 38 and until now was owned by the US bank Goldman Sachs, which purchased it as part of a batch of assets in 2015 for €355 million.

It was one of the last operations to be closed in 2018 in Barcelona but it has not been published until now. The building used to be managed by Patrimony, the real estate firm founded by Jordi Tremoleda, and the previous owner was advised by Savills Aguirre Newman during the sale.

The property was designed by the Japanese architect Arata Isozaki and has a surface area of more than 16,200 m2. It was first occupied by Agbar in 2015, when that firm moved from Torre Agbar, the iconic building designed by Jean Nouvel, to this office complex located on Paseo de la Zona Franca in Barcelona, in search of a more functional building. In theory, the water management company said that it was going to be a temporary home whilst a new corporate headquarters was constructed, but for the time being, there is no information that a new transfer is being planned.

Agbar left Jean Nouvel’s tower after having agreed its sale with the fund manager Emin Capital, but that operation was not executed in the end and the Socimi Merlin Properties ended up acquiring the building at the beginning of 2017 for €142 million.

Despite being a recently constructed building, Agbar’s current headquarters has already changed owner several times. The office complex was designed by the real estate company Habitat, when that property developer was still owned by the Figueras family. The office development was then acquired by Caja Madrid and, in 2015, by which point it was in the hands of Bankia, it was sold to Goldman Sachs. Sources close to the US investment giant said yesterday that in just three years the bank has achieved a very profitable operation.

According to provisional data, as we wait for the final operations closed in 2018 to be published, Barcelona recorded a good year in terms of real estate investment, albeit below 2017. The consultancy firm CBRE estimates that the outlay on buildings could have amounted to €1.973 billion, compared with €2.177 billion the previous year. A large part of these operations (46%) correspond to the office sector, which accounted for investment of €906 million, compared with €757 million in 2017. According to the same report, 68% of the purchasers that invested in Barcelona were foreigners. And of the domestic investors, half were Socimis.

Original story: Expansión (by Marisa Anglés)

Translation: Carmel Drake

Stoneweg Buys Plot to Build Luxury Apartments for €130M

13 December 2018 – Idealista

The real estate market has broken a new record in Madrid: the Spanish-Swiss fund Stoneweg has purchased a residential plot from Dragados for €130 million, the most expensive operation in the history of the capital, according to Idealista News. The plot, located on Paseo de la Dirección, 246, spans 40,000 m2 and two luxury residential towers are going to be built on the site, which will be sold for €6,000/m2.

The project, which is going to be constructed by Dragados, comprises two towers that will have 700 homes in total, and which will go on sale for around €6,000/m2. The land will also be home to two tertiary-use towers, destined for offices, which do not have an operator yet. The operation has been advised by the firm Colliers.

According to sources consulted by Idealista News, these two towers will change the skyline of Madrid and will open the door to a change in the physiognomy of the Tetuán district. The property developer is whereby continuing to take advantage of the real estate cycle and, specifically, of the good times that the luxury residential business is experiencing, which is attracting attention from local and international buyers alike.

Over the coming weeks, Stoneweg is going to open a selection process to choose a company to take care of the sale of the 700 luxury homes. Candidates are expected to include CBRE, Savills-Aguirre Newman, BNP and Colliers (…).

Original story: Idealista (by Custodio Pareja, P. Martínez-Almeida & Ana P. Alarcos)

Translation: Carmel Drake

BNP Paribas: Property Sales by Banks Amounted to €73.5bn in 9 Months to September

30 October 2018 – Eje Prime

Financial institutions are continuing to put their real estate on the market. The sale of portfolios of real estate assets by banks is expected to amount to €16.5 billion between October and December, according to the latest report published by BNP Paribas Real Estate.

The entity’s latest report reflects that sales amounting to €73.5 billion were made during the nine months to September. “The pressure that the European Central Bank is exerting on the financial entities to ensure that they do not speculate with the assets they hold on their balance sheets is generating a wave of sales of large portfolios of residential assets”, said David Alonso, Director of Research at BNP Paribas España, according to reports from Cinco Días.

The largest operations undertaken so far this year relate to Banco Santander, with the sale of Project Quasar to the investment fund Blackstone for €30 billion; the sale by the bank BBVA of Project Marina to Cerberus for €13 billion; and the sale by CaixaBank to LoneStar of 80% of its real estate business for €12.8 billion.

Despite the eye-wateringly large figures highlighted in the report, the funds acquiring the properties tend to obtain an average discount of 65% and so the final prices are considerably lower than the nominal value in each case. “The main buyers are opportunistic investment funds and when it comes to completing their purchases, they typically demand discounts of between 50% and 80% of the asset value”, explained Alonso.

The arrival of new players with an appetite for the Spanish real estate market, such as the Socimis, investment funds and joint ventures, has boosted the purchase of several debt portfolios from bank entities in recent years. “They are agents that were not present six years ago; with these purchases, they have helped the banks to significantly reduce the property on their balance sheets, and they have also increased the control over loans to property developers and the management of residential buildings for profit”, said Alonso.

Original story: Eje Prime

Translation: Carmel Drake

Hispania Signs €340M Financing Agreement with BNP Paribas

26 September 2018 – Hosteltur

Hispania Activos Inmobiliarios has signed an agreement with BNP Paribas to open a financing line amounting to €340 million to finance and/or refinance its debt, according to a statement filed by the Socimi today with Spain’s National Securities and Markets Commission (CNMV).

In the relevant fact, the company reports that on 25 September 2018, it signed the aforementioned agreement with the entity “under market terms, amounting to €340,000,000, to finance and/or refinance debt held by the group’s entities upon their maturity, plus commissions, costs and expenses”.

This new financing arrangement will expire on 16 February 2020, although it may be extended twice by the company for one year each time.

Hispania recorded a net profit of €71.9 million during the first half of this year, 55% less than during the same period in 2017 when it earned €161.4 million. That decrease was basically due to the recognition of a provision for the fees to be paid to Azora, the former manager of the group. As Hosteltur reported, the relationship between the two entities was terminated on Monday, with Concha Osácar and Fernando Gumuzio, the owners of Azora, leaving the Board of Directors of the Socimi.

Blackstone, the new owner of Hispania, has paid €224 million to the manager by way of compensation for the early termination of Hispania’s asset management contract, which covered its hotels, offices and residential buildings. The indemnity amount was calculated on the basis of the manager’s base fees (€33.6 million) and success fees (€190.8 million), according to the terms specified in the “Termination Letter”, following the success of the takeover bid launched by the US fund for 100% of the Socimi.

Nevertheless, in terms of the results during the first half of the year, Hispania’s operating profit grew by almost 16%, to €57.1 million, whilst its revenues amounted to €85.3 million, which represents an increase of 9.8%.

Revenues from rental income amounted to €80.9 million, up by 14%. Of that amount, €67.9 million corresponded to hotels, €11.3 million to office buildings and €1.7 million to homes.

At the end of the first half of the year, the gross value of Hispania’s assets amounted to €2.818 billion, which represents an increase of 60.8% with respect to their acquisition price and of 43.3% compared to the total investment.

Original story: Hosteltur

Translation: Carmel Drake

BNP Paribas: Spain’s Hall of Residence Market Will Grow by 4% in 2019

16 July 2018 – Eje Prime

(…). With 1,148 accommodation centres for university students located all over the country, split between halls of residences (963) and residential colleges (185), the domestic market comprised 93,500 beds at the end of 2017. Nevertheless, that supply “is small compared with current demand”, explains BNP Paribas Real Estate in a report to which Eje Prime has had access. For this reason, the international consultancy firm forecasts that this alternative market will grow by 4% in Spain in 2019.

In recent years, the sub-sector has recorded some major operations involving the sale of both assets and companies. The most important deal came at the end of 2017, when AXA Real Assets and CBRE Global Investment Partners invested almost €400 million in the purchase of the entire portfolio of Resa, the vehicle specialising in student halls previously owned by Lazora. Following the operation, the manager Greystar became the king of the halls in Spain with 37 assets under ownership (four of which were being developed). In total, more than 9,000 beds changed hands.

Resa’s sale is nothing more than a consequence of the current investor appetite, primarily from international funds, many of which specialise in this sector. In 2017 alone, fourteen student halls opened their doors, adding 2,149 new beds to the sector. Moreover, since this is a very fragmented market with many owners, we are seeing the purchase of large bundles of beds, which the new players arriving in Spain are using to initiate their expansion plans.

Such is the case of Corestate, an investment fund headquartered in Luxembourg, which purchased a former residence, containing 260 rooms and 302 beds, in Madrid in 2016 to renovate the building and give it its personal stamp. With support from Villar Mir, the company disbursed €40 million on that project. A year earlier, the Dutch company The Student Hotel paid the same amount for two halls of residence in Barcelona (Melon District Marina and Melon District Poblesec) containing 600 rooms in total.

Those operations led by international funds show the influence that foreign capital has and, above all, is going to have, in the student hall sector. A large part of this interest in the domestic market stems from Erasmus. Spain is the most sought-after country by university students, ahead of Germany, the United Kingdom and France. Two years ago, 45,813 young people arrived in the country, including Erasmus and international students on secondments, and all of them needed to find a bed for the year.

Geographical dispersion

Another one of the major attractions of the student hall market in Spain is its geographical dispersion. It is not only Madrid and Barcelona that are attractive: Málaga, Valencia, Sevilla, Salamanca and Granada are all cities with a large influx of students, many of them international, arriving every year.

Madrid is the city with the largest supply of rooms for students, with 21,159 beds in 198 centres at the end of 2017. That figure accounts for 23% of the total stock on the market in Spain (…). Cataluña was ranked in second place (…) with 170 centres and 14,177 beds, accounting for 14% of the stock. It was followed by Castilla y León (where Salamanca plays an important role) and Andalucía, with shares of 14% and 12%, respectively (…).

Activity is spreading to the north too. Just last week, the fund WP Carey paid €10 million to buy an office building in San Sebastián from Solvia, which it is going to convert into a hall of residence for students (…).

Original story: Eje Prime (by Jabier Izquierdo)

Translation: Carmel Drake

CaixaBank Repurchases 51% of Servihabitat from TPG for €176M

8 June 2018 – Expansión

The financial institution, which until now owned 49% of the real estate firm, is going to restore control of 100% of the firm four years after it sold the majority stake to TPG.

CaixaBank has announced an agreement with the fund TPG to repurchase 51% of the real estate manager Servihabitat for €176.5 million. With this operation, which will return full control over the real estate subsidiary to the financial institution, CaixaBank wants to enjoy “greater flexibility and efficiency in the management and marketing” of its real estate assets “as well as a reduction in its costs”.

The operation, which still needs to be approved by the competition authorities, will have a negative impact of around 15 basis points on CaixaBank’s first level capital ratio (CET1 fully loaded) and of around €200 million on the bank’s income statement this year.

Nevertheless, the entity chaired by Jordi Gual expects the impact to be positive over the next few years, amounting to around €45 million per year.

The financial institution sold 51% of Servihabitat to TPG in 2013, in an operation that valued the real estate subsidiary at €370 million and which generated a gross gain of €255 million for CaixaBank, which retained control of the remaining 49%.

The agreement between CaixaBank and TPG included a clause whereby Servihabitat would manage La Caixa’s real estate assets for a decade. Less than five years after that agreement was announced, CaixaBank has decided to recover 100% of the share capital of its real estate servicer.

In January, Iheb Nafaa was appointed as the CEO of Servihabitat to replace Julián Cabanillas, who had been linked to the firm for two decades, and who had served as the most senior executive for the last twelve years.

Nafaa is an Engineer in Statistics, Econometrics and Finance from the École Nationale de la Statistique et de l’Administration Économique in París (France) and has extensive experience as a director of companies such as BNP Paribas, GE Capital and Gescobro.

Original story: Expansión (by J. Díaz)

Translation: Carmel Drake

Sonae Considers Listing its Retail & RE Service Divisiones

22 May 2018 – Eje Prime

Sonae is considering launching its retail business on the stock market. The Portuguese company has engaged the banks Barclays, BNP Paribas and Deutsche Bank to explore the leap onto the stock market of its divisions Sonae MC, which is dedicated to food retail, and Sonae RP, the arm dedicated to the group’s real estate services. The fashion and sports division, owners of brands such as Zippy, Losan and Salsa, amongst others, would be left out of the operation.

The group explains in a statement that it is evaluating the potential entry onto the stock market of some of its retail business portfolio, in which it would retain a majority stake. The purpose of this move is to create value for shareholders and ensure stability in the growth of its business.

Sonae carved out its fashion and sports business from the rest of the group in 2016, after purchasing Salsa and Losan. That division, which is called Sports&Fashion, includes the fashion and sports equipment chain Sport Zone; the children’s clothing chain Zippy; the ladies’ fashion label Mo; the outdoor chain Berg; the Spanish chain Losan (…) and the Portuguese firm Salsa, which specialises in denim.

As a whole, the Sonae group closed 2017 with turnover of €5.6 billion, up by 6.9% compared to the previous year. The Sports&Fashion division of the Portuguese retailer saw its revenues rise by 11.7% in 2017 to €589 million, nevertheless, Sonae MC continues to generate the bulk of the business, with sales of €3.9 billion in 2017.

Original story: Eje Prime

Translation: Carmel Drake

MGS Acquires 6,700m2 of Buildable Land in Sant Cugat del Vallés (Barcelona)

 8 May 2018 – Eje Prime

MGS has secured a plot of land in a prime area of Barcelona. The insurance company has purchased a plot with a buildable surface area of 6,700 m2 in Sant Cugat del Vallés. The acquisition of this asset (…) forms part of the company’s real estate investment plan.

The company, which specialises in the supply of insurance products, has been increasing its activity in the real estate sector in recent months, where it is undertaking purchases to increase its portfolio. This operation has been advised by BNP Paribas.

The National Director of the Land Department at the consultancy firm, Araceli Burgos, highlighted that this operation, involving land that may be used for alternative investments, “shows that this market is reaching the same level of maturity that has already been achieved in the rest of Europe”.

Original story: Eje Prime 

Translation: Carmel Drake

BNP Paribas: Logistics Leasing Rose by 48% in Cataluña in Q1

20 April 2018 – Eje Prime

The leasing of logistics space in Cataluña rebounded by 48% during the first quarter of 2018 with respect to the same period a year earlier, to amount to 185,890 m2, according to a report compiled by the Research Department at BNP Paribas Real Estate. The leasing figure is 40% higher than the quarterly average for the last three years, during a period of consolidation in the Catalan logistics market.

A large proportion of the surface area leased during the first quarter of the year saw the pre-rental of warehouses under construction and turnkey projects. In this sense, operations involving surface areas ranging from 7,000 m2 to 50,000 m2 stood out in particular.

Rental prices continued to rise and prime rents increased by 3%, to reach €6.5/m2/month. The good pace of logistics leasing indicates that the upward trend will continue over the next few quarters. In terms of average rents in the local, regional and national logistics corridors, the same behaviour is being observed in terms of rising prices and a decrease in shortages, with growth of 5% in annual terms, to reach €4.7/m2/month.

On the other hand, the availability rate of logistics space in Cataluña continued to fall to reach 2.8%, at the same time as construction activity was increasing due to demand for rental properties. The development of turnkey projects means that the available surface area has not been affected, remaining at very low levels.

Original story: Eje Prime 

Translation: Carmel Drake