Martinsa Fadesa Puts 300 RE Assets Up For Auction

6 February 2017 – Expansión

The bankruptcy administrators of Martinsa Fadesa are getting ready to initiate successive notarial auctions of various real estate assets owned by the firm, as well as of several of the companies in the Group that have filed for liquidation.

These auctions will be carried out through the auction portal of the Official State Gazette (BOE), according to information provided by the current managers.

To this end, the administrators of the company will publish information sheets about the assets to be auctioned, with the aim of providing as much information as possible to users about the assets in question.

According to sources close to the process, the liquidation of Martinsa Fadesa may be completed in 2017 once the creditors have been returned “the present value” of the assets that they financed.

The jewels in Martinsa Fadesa’s crown included a group of buildings and plots of land in Paris, as well as assets located in Poland and Morocco.

The liquidation of the company, which was one of the largest real estate companies in the country during the boom years, involved the sale of assets at discounts of around 30% on their respective book values.

It also included the auctioning off of assets and the assignation of unsold assets to creditors so that they could choose whether to carry out “daciónes en pago” or sell the assets in return for cash.

The liquidation process, which was agreed in March 2015, was structured into three phases.

The first phase included the company’s most liquid assets, particularly those located in Madrid and Barcelona and along the coast.

During the second phase, the bankruptcy administrators put mortgaged assets on the market, whose revenues were used to repay those mortgages.

The third phase was orientated towards the repayment of debt lent by the ordinary creditors with assets not sold during the first phase. Once completed, the other assets were assigned to the creditors that so desired them through a notarial procedure.

The real estate company’s liquidation process began before the summer of 2015, after the ruling was issued by the judge in Mercantil Court number 1 in La Coruña.

And, even through on 11 March 2011, an agreement was approved for Martinsa to repay debt amounting to €7,200 million over a 10 year period, without any discounts, the company’s breaches and liquidity shortages forced it to file for liquidation.

Original story: Expansión 

Translation: Carmel Drake

New Tax Rules Increase IBI Charge In 11 Provincial Capitals From 2017

5 December 2016 – Expansión

Property owners in some of Spain’s largest cities will start the new year with a tax blow. The Royal Decree that was approved by the Council of Ministers on Friday and published in the BOE on Saturday contains…a measure that will significantly increase the Tax on Real Estate Assets (IBI) in hundreds of towns, including in eleven provincial capitals, specifically: Valencia, Alicante, Badajoz, Cádiz, Córdoba, Teruel, Granada, Jaén, Huelva, Tarragona and Huesca.

This tax will accrue from 1 January 2017 and will depend on the cadastral values, given that they form the taxable base for the IBI calculation. The Tax Authorities have approved updates to these values in 2,452 towns, i.e. in almost one third of the towns in Spain.

The Town Halls set the cadastral values on the basis of value proposals performed by the Catastro. However, all of the property values (homes, garages, premises, offices, hotels, etc) affected by proposals made prior to 2004 will be revised upwards, with coefficients ranging from 1.03 to 1.08, according to the Royal Decree from the Tax Authorities.

For example, in Córdoba, whose valuations were last reviewed in 1995, the update will be 1.06. Thus, if a home had a cadastral value of €100,000 in 2016, it will have a cadastral value of €106,000 in 2017. The IBI payments will increase without the need to raise the tax rate. In Valencia, whose valuations were last reviewed in 1998, the coefficient will be 1.04.

Most of the towns that requested the review, which seeks to reflect property values to 50% of their market price, did so to increase their coefficients and, ultimately, to increase the IBI raised without changing the tax rate . Many of the affected towns have not reviewed their values since the real estate boom, or even earlier. In fact, numerous town halls have not updated their valuations since the 1980s.

The valuations last performed between 2005 and 2011 will be updated with a coefficient of less than one, of between 0.87 and 0.92. They include four provincial capitals: Almería, Santander, Lleida and Ávila.

The reason for the measure

(…) For the avoidance of doubt, the Royal Decree explains that the measure “is necessary given that it contributes to strengthening municipal financing, tax consolidation and budgetary stability for local entities”. In other words, it is a necessary measure to balance the deficit. (…).

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Chamartín Inmobiliaria Files For Bankruptcy With €535M Debt

5 January 2016 – Expansión

The company continues to hold powers to administer and operate its assets, but is now subject to the intervention of the bankruptcy administrators.

Chamartín Inmobiliaria has filed for voluntary bankruptcy, according to a statement published yesterday in the Official State Gazette (‘Boletín Oficial del Estado’ or BOE). The company’s liabilities amount to €535 million. The group’s main shareholders are the Cutillas family (Carlos Javier Cutillas is pictured above), with a 39% stake, and the fund Morgan Stanley, with a 16% stake.

The company has filed for bankruptcy because Law 10/2008 will not be renewed this year. The Law previously allowed companies to not update the value of their real estate assets, even when those values fell significantly below market value. The Law, approved by the Government led by José Luis Rodríguez Zapatero, has allowed many real estate companies to artificially survive in recent years, despite the suspension of their businesses and repayment of their debts.

From now on, creditors must inform the appointed bankruptcy administrator about the existence of any debts in the manner prescribed by the Law. They have one month from today (5 January) to formalise their notifications.

The company, which formed part of the real estate ‘lobby’ known as the G-14 during the first few years of the crisis, was included in the list of overdue debtors that the Tax Authorities published on 23 December (2015), with a debt amounting to €20.5 million.

In Spain, the company’s activity has mainly focused on its residential business in Madrid and therefore has been affected by the crisis that has hit the sector. Outside of Spain, Chamartín Inmobiliaria also has operations in Portugal and Germany.

In Portugal, it managed to refinance €1,000 million of its debt in April 2013, which it had taken out with several of the country’s financial institutions. In this way, the company became the first real estate company to refinance all of its debt in Portugal in one go.

Prior to that, Chamartín purchased the Portuguese company Amorim Inmobiliaria in 2006, under its expansion plan framework, which involved opening another thirty new shopping centres in countries across Europe over five years.

Nevertheless, “the adverse economic developments and the financial crisis in the banking sector forced the company to abandon that strategy in 2009 and to begin to study the refinancing of its debt”, said the company.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake

New European Setback For Spanish Mortgage Law

14 May 2015 – Cinco Días

The European court considers that the legal period granted to challenge evictions (under Spanish legislation) was illegal.

The ruling is just one of half a dozen negative sentences from the EU regarding mortgages.

The European Justice system has again called into question Spain’s legislation regarding mortgages. A ruling published yesterday by Maciej Spunzar, the attorney general of the European Union’s Court of Justice, considers that (the legislation) “is not reasonable” and that the period and way in which the mortgage reform permitted those affected by evictions to oppose foreclosure on the basis of the application of abusive clauses, contravenes EU regulations.

That possibility, to paralyse eviction proceedings arguing that they are based on an illegal clause, did not exist in Spain and was one of the pillars of the mortgage reform that the Government supported in 2013 when adapting Spanish legislation to EU law.

That is what the European Court demanded in a key ruling, which preceded another preliminary sentence similar to the one published yesterday. These are the basis of the final judgements that, in 80% of cases, the institution issues with the same findings a few months later.

That mortgage reform, which came into effect on 15 May 2013, established that any new people affected by an eviction would have a period of 10 days to oppose it from the date of notification.

However, for mortgage foreclosure processes already underway, the regulation established a transitory provision, which obliged all interested parties to oppose the measure within a period of one month following the publication of the law in the Official State Gazette (BOE), i.e. no later than 15 June 2013.

According to the letter issued by the Court of Justice yesterday, the problem is that the EU directive on abusive clauses “precludes any national provision, like this one in Spain”.

Although it considers the period of one month to be sufficient, “what causes problems is precisely the fact that the period started from the day after the publication of Law 1/2013 in the BOE, when the parties involved in the foreclosure processes had not been notified”, detailed the document.

The European ruling responds to a question raised by the Judge of First Instance nº4 in Martorell, involving two people subject to a mortgage foreclosure by BBVA, who logged their opposition to the eviction on 17 June 2013, i.e. two days after the period expired. The affected parties complain that the aforementioned limit violated their EU rights.

The fact that they were given one month without being notified directly “made it impossible or too difficult to exercise the rights granted to consumers” and generated “a high degree of legal uncertainty, unadmissible in the field of consumer protection”, argued the attorney general of the European Court.

“The period was not sufficient to (allow affected parties to) prepare and lodge an effective appeal”, insists the general attorney, underlining the importance of procedures in which consumers risk losing their properties in an irreversible way.

A definitive decision in this sense would have consequences for the “hundreds of thousands (of people)” affected by the foreclosure procedures resulting from the approval of the mortgage reform. The Court considers that they should have been notified about the period, as well as about the options that they had to oppose (the decision).

Original story: Cinco Días (by J.P.C.)

Translation: Carmel Drake

Romana Resigns As Chairwoman Of Sareb And Is Replaced By Echegoyen

27 January 2015 – Expansión

The Chairwoman of Sareb (the so-called ‘bad bank’), Belén Romana, voluntarily resigned from her post on Monday and the number two at the company, Jaime Echegoyen, the current CEO, has taken over as the Chairman of the entity.

Echegoyen was appointed on Monday by unanimous vote at an extraordinary meeting of the Board of Directors.

The Board considers that Echegoyen “is the right person to lead Sareb through this new phase, given his capacity for leadership, his experience and his professional and human qualities”.

Meanwhile, the body said that it regrets the personal decision taken by Belén Romana and highlighted the excellent job she has done as the head of the company. “Without her dedication, vision and leadership, it is hard to imagine how a few simple paragraphs in the BOE would have been transformed into the robust business reality that Sareb has become today”, it said.

The company recalls that in the two years since its creation, Sareb has fulfilled the initial objectives that the Chairwoman set out and has contributed “significantly” to the restructuring of the financial sector, the reactivation of the real estate market and the change in perceptions of international investors about the Spanish economy.

“Sareb has evolved from being a project agreed with the international authorities in the context of the clean-up of the banking sector, to become a fully operational company, which has generated turnover of almost €9,000 million during the period”, it added.

Furthermore, since Romana has been in office, Sareb has sold nearly 24,000 properties and has repaid 11% of its initial debt. “All of this has resulted in a saving of €7,400 million for taxpayers”, highlights the note.

New phase

Sareb will now be led by Echegoyen and “will collaborate with professional service-minded managing agents that have a strong alignment with the company’s interests. All of this will allow it to take full advantage of the incipient recovery in the Spanish real estate sector”, the company explained in a statement.

The new Chairman also thanked the board for the confidence it has placed in him: “I am fully committed to the new responsibilities I am taking on and am convinced that Sareb will continue to fulfil its mandate, as it has been doing to date”, he said.

Echegoyen, who has extensive experience in the financial sector, was appointed CEO of Sareb in February 2014. Under his leadership, the company has adopted a new organisational structure and has chosen new operators to manage its portfolio over the next few years. Before joining Sareb, he was CEO of Bankinter and Head of Barclays in Spain and Portugal.

Original story: Expansión

Translation: Carmel Drake