Villar Mir Seeks Partners to Develop Inmobiliaria Espacio’s Land Portfolio

23 April 2019 – Idealista

The Villar Mir Group is looking for partners to inject capital into the development of the land owned by its subsidiary Inmobiliaria Espacio. The firm is going to put a portfolio of assets worth between €250 million and €300 million on the market. Its aim is to continue as the minority shareholder of the developments or to carry out the development of each promotion.

The plots of land are located all over Spain, including in Madrid (Valdebebas, Pozuelo de Alarcón and Alcorcón), Murcia, La Línea de la Concepción and Algeciras (Cádiz), Marbella (Málaga), San Juan (Alicante), Almería, Mallorca and Valencia. At the end of 2017, the plots were worth €256.9 million.

Original story: Idealista 

Translation/Summary: Carmel Drake

Arcano Sells 2 Buildings in L’Hospitalet de Llobregat to a Family Office for €40M

17 January 2019 – Eje Prime

Arcano is divesting two of its assets. The real estate fund Asoref has sold two buildings in Plaza de Europa, in the Barcelona municipality of L’Hospitalet de Llobregat to a family office for €40 million, according to Expansión.

In the case of the first asset, located at numbers 22 and 24 Plaza de Europa, it is an office building spanning 7,3000 m2, which was acquired by Arcano two years ago and which has been completely renovated and repositioned. The offices, distributed over four above-ground floors, have an occupancy rate of 100%. The tenants of the property include companies such as Aide, Zurich and Vanity Fair.

In the case of the second building, located at number 10 Plaza de Europa, it is a project that is still under construction. The building work is expected to be finished this year at which point the building will have a gross leasable area (GLA) of 5,000 m2.

The two buildings were acquired with Arcano’s first real estate investment fund, which was launched in the summer of 2015 and which had €100 million of capital. Currently, the company is in the process of raising capital for its second fund, Arcano Value Added II. The investment vehicle will amount to between €150 million and €200 million, and €70 million has already been committed.

Original story: Eje Prime

Translation: Carmel Drake

On the Hunt for Capital: Socimi Quonia Considers Issuing Bonds to Finance its Growth

11 July 2018 – Eje Prime

Quonia does not want to put any limits on its capacity for indebtedness. The company is considering carrying out a corporate bond issue to increase its financing options and, whereby, continue with its development plan, according to explanations provided by the company’s CEO, Eduard Mercader, speaking to Eje Prime. Through this move, Quonia would also open itself up to institutional investors.

The fact that Socimis must dedicate at least 80% of their profits to dividends “limits their capacity to accumulate debt”, explains Mercader. In this way, the main option for these types of companies when they are looking to grow is primarily through capital increases. However, the company’s executive is looking for “alternative formulae”, to apply “in the short term”.

Mercader’s decision to resort to bonds is also a consequence of the difficulties faced when completing capital increases with investors outside of Europe, such as in this case. Quonia was created in 2014 by the Mexican investors Divo Milán and Ana Saucedo and investors from that country currently contribute the majority of its resources.

Quonia has just completed a €3 million capital increase, although the company had approved the possibility of raising up to €26.5 million. Before the end of the year, the company will obtain another €1 million through the capitalisation of investor loans.

Although the resources forecast by the Socimi were greater, Mercader says that the final amount does not limit the company’s development plan. “We adapt ourselves to the capital that we receive”, says the executive, and adds that Quonia “is continuously raising funds”.

After its launch with the purchase of an asset in Barcelona, Quonia has been attracting different investors from Mexico, Europe and the USA. In July 2014, the company adopted the Socimi regime and in July 2016, it made its debut on the Alternative Investment Market (MAB) where it is currently listed.

“We are very much a real estate Socimi, we do not have a financial profile at all”, explains Mercader – “we buy assets with a lot of potential”. The company’s portfolio currently comprises seven assets, located in Barcelona, Lagreo and Sevilla, of a residential, hotel and commercial nature. The valuation of the company’s portfolio in October 2017 amounted to €85 million, with a gross value of €57 million.

The company is currently finalising the sale of one of its properties. Specifically, the building located at number 166 Calle Balmes in Barcelona. It is an eight-storey residential property, with commercial premises on the ground floor, constructed in 1930 in the rationalist style. Both this property and the one at number 45 on the same street are being used as residences for students.

Quonia, whose average investments range between €10 million and €13 million, is on the lookout for opportunities in Spain to continue growing its portfolio. With Barcelona and Madrid always in its sights, the company is branching out to new destinations for its new investments in cities such as Málaga and Sevilla, as well as País Vasco, where it is analysing several operations. Palma is another city where it is considering investing (…).

Original story: Eje Prime (by P. Riaño and J. Izquierdo)

Translation: Carmel Drake

The Hotel Ritz in Madrid Closes its Doors for a €99M Refurb

27 February 2018 – Invertia

Following the purchase of the Ritz hotel in 2015 for more than USD 148 million (€120.7 million), its current owners, Mandarin Oriental and the Saudi group Olayan, announced that they would subject the property to an extensive renovation to significantly improve its facilities and services.

The investment by Mandarin Oriental, which administers the hotel under a long-term management agreement, quantifies its stake in the renovation at USD 60.5 million (€49 million), which is going to be financed through an appropriate combination of capital and debt.

Whilst the hotel is closed, its staff will participate in training programs and/or will be sent on temporary assignments at other Mandarin Oriental establishments, in preparation for the grand reopening.

Following the remodelling, in which the Spanish architect Rafael de La Hoz is participating, along with the French designers Gilles & Boissier, the hotel will have 106 rooms and 47 suites and Mandarin Oriental will be added to its current name ‘the Ritz’.

The intention of the owners is to improve the facilities and services at the hotel but to conserve its essence, which is defined by the “Belle Epoque” style of the original building.

Sources at the Hotel Ritz have informed Efe that the construction work will involve the remodelling of the dome and the installation of a swimming pool, amongst other aspects.

The same sources have said that the furniture and objects of value at the hotel will be stored in warehouses in Madrid and that a decision will be taken in the future as to whether some of them will be sold directly or through auction.

The hotel, located in the so-called “Golden Art Triangle” of Madrid, has hosted members of royalty, politicians, magnates and celebrities since its inauguration in 1910.

Original story: Invertia

Translation: Carmel Drake

Madrid’s Town Hall Approves the Master Housing Plan for SE of the Capital

29 January 2018 – Inmodiario

The Governing Body of the Town Hall of Madrid has approved the Master Plan that defines and organises the actions that the Town Hall of Madrid is going to launch to execute the Strategy for the Development of the Southeast of the capital (EDSE). The Master Plan covers the districts of San Blas-Canillejas, Vicálvaro and Villa de Vallecas and aims to adjust the urban growth strategy of the General Plan of 1997, whereby ensuring its feasibility and coherence, and making it compatible with a sustainable, balanced, social and environmentally responsible regional model.

Los Cerros, Los Ahijones, Los Berrocales, Valdecarros, la Nueva Centralidad del Este and el Ensanche de San Fernando were spaces planned by the General Plan of 1997 to develop 4,400 hectares, building more than 105,000 homes and 6.5 million m2 of space for economic activity.

The Master Plan that has just been approved proposes a redefinition of that Plan, which adjusts the public use, the residential use – it proposes half the number of the homes, down from 105,000 to 53,000 – and the economic activity use.

The objectives of the new plan include improving the urban quality of the Los Ahijones and Los Berrocales neighbourhoods in terms of public spaces, commercial activity, the location of facilities, and the necessary public transport networks, introducing modifications in their detailed planning.

It also requires a strengthening of the management conditions and guarantees from the Compensation Boards that build the 38,000 homes and develop 1.9 million m2 of space for economic activities.

Moreover, new areas of management will need to be defined with smaller territorial dimensions, inside the M-45, that continue the existing city, corresponding to the new areas of Valdecarros-La Gavia and Los Cerros Norte-San Fernando with almost 530 hectares and capacity for 14,500 homes. And to strengthen the network of free spaces with two large green spaces around the Cerro de Almodóvar and the connection of the La Gavia park with the Manzanares River.

The new Master Plan also proposes the creation of a 1,850-hectare land reserve on the remaining land in Los Cerros, Valdecarros and the Nueva Centralidad del Este, whose planning and execution will be defined and scheduled depending on future needs (…). That land has capacity for approximately 45,000 homes and 2 million m2 of buildable space for economic activity (…).

Finally, the plan stresses the need to carry out two programs of land development, in accordance with the real demand for residential housing and economic activity: the first, forecast for the years 2022-2030 will allow the construction of 27,700 homes and 1.3 million m2 of buildable space for economic activities; the second program, which will run between 2031-2039, will involve the construction of 26,000 homes and 1.2 million m2 of buildable space for economic activities.

Original story: Inmodiario

Translation: Carmel Drake

Spain’s Banks Take Advantage of The Expansive RE Cycle to Sell Properties

21 January 2018 – Efe Empresas

According to Joaquín Robles, analyst at XTB, speaking in an interview with Efe, the banks have waited “for several years for a recovery in house prices” to reduce their exposure to property.

The good health that the real estate sector is currently enjoying is reflected in a study from BBVA Research, which shows that new home prices are expected to rise by 4.9% in 2018. The banking institutions have also decided to reduce their real estate weight due to the changes that have been introduced to international and Spanish accounting legislation.

The new regulations require entities to increase their provisions using own funds to strengthen their capital ratios, with the aim of being more solvent in the event of another possible market crash in the future.

These modifications “will translate into an increase in provisions of 13% on average for the large European banks”, said Robles.

Real estate sales is a correct strategy for the banks

The sale of real estate assets is “a correct strategy from the point of view of banking management”, says the Partner responsible for the Financial Sector at KPMG in EMA and the Head Partner of KPMG Abogados, Javier Uría.

In fact, “the divestment of real estate assets that is happening will result in the strengthening of the sector”, he added.

Spanish banks have reduced their real estate assets in a greater proportion than other European banks, as a result of the effects of the economic crisis and the evolution of the economy.

One example of that is BBVA, which decided to reduce its exposure to property to a minimum, with the sale in November of its Spanish real estate arm to the investment fund Cerberus for €4 billion.

That operation was “hugely important” for BBVA, since it reduced its exposure “to an activity that is unrelated to its core business”, according to comments made at the time by the CEO of the entity, Carlos Torres Vila.

Uría said that Sareb has made an important contribution to this process.

That company, also known as the “bad bank”, was created with the objective of reducing the risks of the financial institutions and orderly liquidating the problem real estate assets within a maximum period of 15 years.

Sareb received almost 200,000 assets worth €50.781 billion, of which 80% were financial assets and 20% were real estate assets.

The income statements of the banking entities will be affected by their real estate divestments in a positive way, since they will result in lower requirements in terms of capital and provisions, as well as in a “reduction in the costs associated with the ownership of these types of assets”, concluded Uría.

Original story: Efe Empresas (by Javier Melguizo)

Translation: Carmel Drake

 

Madrid Gets Ready for the Opening of 2,000 Luxury Hotel Rooms

7 January 2018 – Expansión

The hotel market in Madrid is enjoying a happy time. After years as the ugly ducking of Europe’s capitals, with barely any major luxury brands operating in the city, 2,000 luxury rooms are scheduled to open in the city centre over the next two years. “Spain had a very moderate number of five-star hotels in comparison with other global capital cities. Nevertheless, the Town Hall of Madrid implemented a strategic plan for tourism, which boosted the image of the city as a global destination and that attracted international companies, which are taking the city to their own tourist clients”, says Javier García-Mateo, Partner in Financial Advisory at Deloitte.

“The existing luxury hotel stock comprises around 5,000 rooms and over the next few years, another 2,000 rooms will be added, of which 1,000 will be new and the rest will be in renovated properties”, adds Félix Villaverde, Manager at Deloitte Financial Advisory.

The first hotel already opened over Christmas: the US hotel chain Hyatt Hotels has returned to Madrid, specifically, to the heart of the city with the opening of Centric Gran Vía Madrid, a five-star establishment with 159 rooms – including 16 suites (…). With an investment of €30 million, Hyatt has returned to Madrid, after leaving the management of another five-star hotel in the capital in 2009: the Villamagna.

During the first quarter of 2018, another five-star establishment is expected to open. In this case, it will be the chain VP in Plaza de España. It will contain 214 rooms, spread over 17 storeys, following an investment of €90 million (…).

Projects on the lookout for a brand

Some of the other new projects planned for this year in the luxury hotel market in Madrid have not yet been defined. They involve plans for the former Hotel Velázquez and the property owned by the fund KKH in Plaza de las Descalzas.

Last May, the Salazar family sold the Gran Hotel Velázquez for around €60 million. Now, the new owner, the real estate group Didra, is looking for a hotel partner to operate the renovated property. In the case of KKH’s property in Madrid, the negotiations are more advanced. The former headquarters of the Monte de Piedad de Madrid is being renovated to open a five-star hotel and a dozen brands have expressed their interest in operating it. The Park Hyatt, The Peninsula and Saint Regis, from the Starwood group, are the favourites in the running, according to sources in the sector (…).

In addition to these projects that still need to be defined, in 2019, several luxury establishments are due to open, including, the first Four Seasons Hotel in Spain, which will open in the Canalejas complex with more than 200 rooms.

Moreover, a four-star, but nevertheless high-profile, hotel is being created by the Mallorcan chain RIU, which will restore Edificio España, in disuse for a decade, to open a modern urban hotel with 650 rooms.

Meanwhile, Marriott Starwood, the largest hotel chain in the world, has teamed up with the Indian investor Harry Mohiani to open a five-star hotel in the former Hotel Asturias, in the same square as the Four Seasons (Canalejas). That property will have 160 rooms (…).

Prices

The opening of these new luxury hotels will have an impact on room rates, which already saw a significant increase in this niche last year.

“Revenue per room (RevPar) in the five-star segment in Madrid has grown by 6.4% p.a. in recent years, almost four times more than the average in other European centres, due not only to the increase in rates but also the better performance in terms of occupancy rates”, say sources at Deloitte.

“The arrival of new luxury operators in Madrid will drive up the price of five-star hotels in the city. In fact, after carrying out comprehensive renovations, we have already seen examples of hotels that have increased their rates by 50%. The most exclusive hotels will charge €750 per night during certain periods of the year”, they add.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Santander & Blackstone Launch Spain’s Largest Financing Deal Since the Crisis: €7bn

2 January 2018 – El Confidencial

The largest real estate operation in Europe is going to also bring with it the largest financing deal the sector has seen in recent times. The sale of €30 billion in Banco Popular assets that Banco Santander agreed with Blackstone last summer is going to mark another milestone in January when the two partners plan to close a mega-loan amounting to €7 billion.

This debt will be assumed by the joint venture created ad hoc to buy the portfolio of assets. It promises to be backed not only by Spanish entities but also by large international investment banks and funds that invest in debt, some of which may include entities owned by Blackstone. According to sources familiar with the operation, the net value of the assets amounts to around €10 billion.

To finance that property portfolio, the liability structure of the new company (the assets and liabilities of which will be equal by definition) will consist of 30% capital and 70% debt. Given that Blackstone is going to control 51% of the share capital and Santander 49%, each shareholder will have to contribute around €1.5 billion to the vehicle (the former will have to contribute slightly more given its slightly larger stake), whilst the remainder of the joint venture’s balance sheet will comprise the aforementioned €7 billion in debt that is expected to be signed this month.

The fact that the joint venture is going to have such a high percentage of debt allows the return on capital to increase: the lower that is, the greater the return with the same profits. That is what is called leverage and it is normal for it to be even higher in vehicles of this kind. By way of example, Sareb (the semi-public bad bank that absorbed the properties of the rescued savings banks) comprises 90% debt and just 10% capital.

Santander deconsolidates Popular’s real estate

After increasing the provisions against this portfolio to 63% in the case of foreclosed assets and to 75% in the case of the loans, the net valuation of all of the toxic real estate that the new company will own amounts to €9.7 billion. To that figure, we have to add the final valuation of Aliseda, the former real estate manager of Banco Popular, which also formed part of the operation. Almost half of the assets sold are land (€12.6 billion gross), followed by residential (€8 billion), retail (€2.1 billion), industrial warehouses (€1.5 billion) and hotels (€0.8 billion), as well as €4.9 billion split between offices, garages and other types of real estate assets.

This company was created because Santander wanted to remove (deconsolidate) Popular’s real estate from its balance sheet after it purchased the entity in June. It could have sold it in its entirety, but it chose to create a vehicle in which the majority was held by another shareholder – Blackstone, which fought off Lone Star and Apollo to win the auction and pay €5.1 billion – and retain a 49% stake. In this way, it will be able to obtain additional profits if the recovery continues in the real estate market and the company sells the assets for more than their current value. For the time being, it will have to inject the aforementioned share capital, amounting to €1.5 billion.

Although the small print of the conditions associated with this financing still needs to be confirmed, the deal underlines the growing business that is currently being seen in terms of real estate loans and debt funds. In the last month alone, Metrovacesa has closed a loan for €275 million and Testa has raised €800 million with the bonus of not having to mortgage any of its buildings.

Original story: El Confidencial (by E. Segovia & R. Ugalde)

Translation: Carmel Drake

Renta Corporación’s Socimi Will Soon Own Almost 1,000 Homes

26 October 2017 – Expansión

€170 million / The vehicle has acquired three buildings already and is currently finalising the acquisition of another three, all in the Madrid area.

Renta Corporación’s Socimi, created in April together with the Dutch pension fund APG, has already invested €75 million in the purchase of residential buildings and is preparing to spend another €95 million on three operations that it plans to close within the next month, in the areas of Aravaca, Vallecas and Alcorcón (Madrid). In total, in just over six months, the entity will have purchased six buildings, all in the Madrid area, containing 986 homes and with an occupancy rate of 90%.

The aim of the Socimi, which has been baptised with the temporary name Rembrandt and which will be renamed over the next few months, is to acquire residential buildings located primarily in Madrid and Barcelona, but, occasionally, in other Spanish cities. “All of the operations have been closed in Madrid so far, but that is down to chance, not design”, said the CEO of Renta Corporación, David Vila, yesterday, who assured the market that “(its choice of investment location to date) has nothing to do with the political conflict”, but rather with the smaller size of the market in Barcelona and the greater complexity involved in finding assets for sale.

The Socimi, in which APG owns a 97% stake and Renta Corporación holds the remaining 3% stake, is managed by the latter. The vehicle has committed capital of €130 million and plans to undertake acquisitions in the short term amounting to €250 million. Within two years, when the Socimi plans to make its stock market debut, it expects to have invested more than €1,000 million in properties.

The assets that it has already acquired include a complex of 156 homes in Aravaca (Madrid). The Socimi spent €50 million on the asset, which had an occupancy rate of 51%, with the intention of placing it at full capacity over the next few months.

The other two operations undertaken by Rembrandt correspond to two residential complexes in Navalcarnero and Rivas-Vaciamadrid, involving 335 rental homes, where it has spent €25 million in total.

Original story: Expansión (by Marisa Anglés)

Translation: Carmel Drake

Quabit Buys 8 Plots Of Land For €52M

25 September 2017 – Quabit

Quabit Inmobiliaria is stepping on its investment plan accelerator, redoubling its strategic commitment to the Costa del Sol with the completion of nine operations involving residential land in Málaga, and opening a new area of growth in the Balearic market.

Specifically, the company chaired by Félix Abánades has closed 8 operations involving buildable land amounting to €52 million, with a buildable surface area of 123,000 m2 to construct between 720 and 740 homes.

Quabit is going to finance 70% of the purchase with financial support from funds advised by the investment firm Avenue Capital Group, and the remaining 30%, with shares in the company, through one or more non-monetary capital increases.

“For the second time” – explains the Chairman Félix Abánades – “Quabit is using this formula to secure new land, given that at the same time as barely diluting the shareholders’ stakes and helping to grow and strengthen the company, it allows us to consolidate our real estate assets and collaborate in the reinvigoration of the sector”.

Malaga and Costa del Sol: 178,500 m2 of buildable land for 1,600 homes.

Quabit has also just closed a new portfolio of 7 buildable residential plots of land, the majority of which are located in Malaga capital, with a combined investment of €31.3 million, and a buildability of 48,000 m2 for the construction of 450 homes.

That large operation comes just a week after another involving land in Mijas for the construction of 674 homes and is in addition to the purchases made by Quabit in Málaga capital and the Costa del Sol during the first half of the year.

Overall, Quabit has 178,500 m2 of buildable land in total in the province of Málaga for the construction of more than 1,600 homes.

Moreover, the company is already marketing Phases 1 and 2 of another promotion of 100 homes on the Casares Golf course and is preparing to launch 2 developments in Málaga capital later this month, in the Puerto de la Torre area.

New land in the Balearic Islands

The company has completed another operation amounting to €21 million in the Balearic Islands to build a tourist and residential development with a buildability of almost 75,000 m2.

Visibility of the Business Plan for 2017-2021

The execution of Quabit’s Business Plan is continuing to gain visibility and its portfolio of land is gaining in value through all these important purchases of high-quality buildable land.

To date in 2017, the company has closed operations in Madrid, Corredor del Henares, Málaga and the Balearic Islands amounting to €114.7 million, with a buildable surface area of 321,500 m2 for the construction of almost 2,500 homes.

Altogether, adding to this figure the 1,226 homes to be developed in the portfolio, Quabit now has a portfolio of residential land on which to build 3,700 homes, which represents 90% of its target development between now and 2021 (4,090 homes) and demonstrates its vocation for growth and its commitment to take advantage of the opportunities currently available in the Spanish residential market.

Original story: Quabit

Translation: Carmel Drake