Tag: capital

Funds Seek Out Dilapidated Buildings For Renovation

24 August 2015 – El Economista

The interest from international funds in Spanish real estate has no limits. These investors are not only looking for iconic buildings and premises right in the centre of Madrid, they are also willing to buy dilapidated residential properties for renovation.

Interest is growing in the acquisition of these kinds of assets in cities such as Madrid and Barcelona, explains Samuel Población, National Director of CBRE Residential. According to the director, these investors, which tend to be international funds of Anglo-Saxon, US and French origin, are willing to pay between €5 million and €25 million to buy properties that need to be fully refurbished. “They spend up to €50 million on a single asset, but there do not tend to be many buildings for that price on the market”, he adds.

The modi operandi of these funds are almost always the same. They form partnerships with Spanish property developers, which contribute a smaller proportion of the capital, but who know the local market and who can streamline the administrative procedures. If a fund has a good business plan, it may generate a return within two and a half year, explains Población.

These investors also purchase properties to demolish them and build new ones in their place; in fact, that is often a cheaper option than a complete refurbishment. In this sense, Población indicates that “the problem they face is that the listing levels (for the protection of buildings) are very high and do not allow developers to demolish buildings and construction new ones. They have to restrict themselves to full refurbishments, preserving elements such as stairways and façades, which drives up the construction costs significantly”.

That is exactly why Población believes that introducing more flexibility in terms of the listing levels of buildings would allow the stock of homes to be refurbished more quickly, since more investors would enter the market. The reality is that Spain needs this type of investment, since around two million homes in the country are in poor conditions and need renovating, according to the figures provided by the Institute for Energy Diversification and Saving (IDAE). These figures place Spain, which has 25 million homes in total, as one of the most obsolete real estate stocks in the European Union.

A real reflection of these numbers has been seen in Madrid this month, where two properties have been demolished due to their poor condition. To avoid these kinds of incidents, Norberto Beirak, a member of the Governing Board of the College of Architects in Madrid, considers that certain protocols need to be established, which must be fulfilled when Technical Inspections of Buildings are carried out (ITE).

“There are no rules governing the procedures for these inspections”, he explains. Moreover, it is typically the buildings’ owners that pay for this service and they tend to commission very basic inspections due to a lack of resources.

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake

INE: Mortgage Lending Increased By 10.9% In May

29 July 2015 – El Economista

According to the National Institute of Statistics (INE), the number of mortgages granted over homes recorded in the property registers amounted to 19,732 in May 2015, up by 10.9% from the same month in 2014. This data is sourced from public deeds signed in previous months.

With the YoY increase to May, residential mortgages recorded twelve consecutive months of two digit increases. Nevertheless, the rise in May was ten points lower than the one seen in April, when the number of residential mortgages increased by 21.4%.

The average size of a residential mortgage amounted to €103,922 during the fifth month of the year, up by 4.4% from the same month in 2014. Meanwhile, the total amount of capital loaned increased by 15.8% in YoY terms to exceed €2,050 million.

In monthly terms (May versus April), the number of mortgages increased by 4.6%, the lowest rise in five years, whilst the volume of capital loaned grew by 8%, compared with an increase of 14% one year ago.

During the first five months of the year, the number of residential mortgages signed increased by 20.1% with respect to the same period in 2014, with a 24% increase in the total amount of capital loaned and a 3.3% rise in the average mortgage amount.

Andalucía leads the ranking

By region, the autonomous communities that recorded the highest number of new residential mortgages in May were: Andalucía (3,717), Madrid (3,378) and Cataluña (3,085).

During the fifth month of the year, the regions that recorded the highest YoY variations in the number of new residential mortgages were: La Rioja (+43.4%), Navarra (+31.8%) and Galicia (+26.8%).

Meanwhile, the regions that loaned the most capital for the constitution of mortgages were: Madrid (€496.3 million), Cataluña (€371.4 million) and Andalucía (€323.4 million).

Mortgages increase over all properties

According to data from the statistical body, 29,712 mortgages were constituted over rural and urban properties (including homes) during the fifth month of the year, which represents an increase of 7.3% with respect to May 2014.

The capital of the mortgage loans granted increased by 15.1% with respect to the same month in 2014, to €3,736.8 million, to the extent that the average amount of the mortgages constituted over all properties amounted to €125,802, up 7.3% from May 2014.

The average interest rate for residential mortgages was 3.40% in May, compared with 3.82% a year earlier, whilst the average interest rate for all properties was 3.38%, with an average term of 21 years.

Mainly variable interest rate mortgages

Finally, 92.8% of the mortgages granted in May had variable interest rates, compared with 7.2% that had fixed rates. Euribor was the most commonly used reference rate, and featured in 92.2% of the new contracts signed. (…).

Original story: El Economista

Translation: Carmel Drake

Sareb Unlikely To Meet Its Property Sales Goal In 2015

14 July 2015 – Expansión

The President of Sareb acknowledged today that the bad bank will probably need the entire 15-year period originally granted to it, to sell all of its assets.

Speaking at a briefing organised by Europa Press and Servihabitat this morning, Jaime Echegoyen recognised that it will be hard for Sareb to meet the goal it had set for 2015 of selling 15,000 properties to individuals. During the first half of the year, the bad bank only sold 5,400 homes, i.e. 33% fewer than during the same period in 2014.

Sareb’s President insisted that the entity is selling its assets slowly (on purpose) to protect the capital of its investors. 51% of the bad bank’s capital is owned by private investors – all of the major banks except for BBVA, insurance companies and other entities – and the remaining 49% is held by the State.

Echegoyen has said that Sareb will probably need the entire 15-year period originally granted to the entity to sell all of its assets. “I would go as far as to say that we will end up needing all of the time originally granted to us. We are planning to use up the entire period, but if we manage to sell all of the assets sooner, then we will”, he said.

Carmena and Colau

The head of the bad bank also said that he wants to hear the proposals that the mayoresses of Madrid and Barcelona, Manuela Carmena and Ada Colau, respectively, are going to make. Echegoyen confirmed that he is meeting Carmena tomorrow and Colau next Friday and that his position ahead of those meetings is to be “flexible and listen carefully”.

Echegoyen also repeated the message he delivered to Congress’s Economic Committee last week, saying that Sareb has made 2,000 (social housing) homes available in several autonomous communities, and he reaffirmed that he hopes to sign more agreements in more regions soon.

Original story: Expansión

Translation: Carmel Drake

Merlin Buys Logistics Centre In Meco For €22.2M

13 May 2013 – Mis Naves

The Socimi Merlin Properties has purchased a logistics centre located in the R-2 industrial estate in Meco from the real estate asset management company Kefren Capital for €22.2 million. The property, built on a plot of land measuring 50,727 m2, occupies a surface area of 35,285m2, and contains four modules, 31 loading bays and 4 HGV doors. The Dachser Group leases the entire platform.

The legal advisors to the transaction were Broseta on the sell-side and Garrigues on the buy-side.

KCRE acquired this asset in August 2014 following the bankruptcy of the company Coperfil and it financed the transaction through Nordic investors, which acquired capital, as well as by securing a loan for the project from CaixaBank.

Original story: Mis Naves

Translation: Carmel Drake

Merlin Properties Completes Its €614M Capital Increase

8 May 2015 – Expansión

Merlin Properties has completed a capital increase amounting to €613.75 million following the subscription of 64.6 million shares in the listed real estate investment company.

The company will use the funds raised to finance new investment projects.

During the preferential subscription period, which ended on 2 May 2015, 64.5 million shares in Merlin were subscribed, representing 99.8% of the number offered, according to the company’s submission to Spain’s National Securities Market Commission (CNMV).

Moreover, during the period for assigning additional shares, 787 million additional shares in Merlin were requested, despite the fact that only 124,901 shares were available for placement.

In total, the shares subscribed during the preferential subscription period and the additional shares requested show that demand exceeded supply (the number of shares offered during the capital increase) by 13.2x.

The new shares, which will start trading on 12 May, represent 50% of the share capital of the company before the share increase and 33.3% of the share capital following the increase.

Merlin’s CEO, Ismael Clemente, highlighted the outstanding response to the capital increase and the great interest (sparked) amongst institutional investors in Spain.

On 15 April, the Board of Directors of Merlin Properties agreed to increase its share capital by €613.8 million.

At the time, it stressed that the shares issued would have a nominal issue value of one euro plus a premium of €8.50 per shares, which would result in the payment in cash of €9.50 for each new share.

Original story: Expansión

Translation: Carmel Drake

Lualca Sells 2% Of Its Stake In Realia Before Hispania’s Takeover Bid Is Approved

29 January 2015 – Expansión

The real estate company Lualca has reduced its stake in Realia to less than 3% (specifically, to 2.94%), after selling 2% of its capital.

The company, led by Luis Canales Burguillo, first invested in the real estate company Realia in January 2008, when it acquired a 5.02% stake. Lualca paid €88.37 million at the time, which represented a valuation of €6.35 per share.

Yesterday, the company’s share value stood at €0.605, still a long way off of the price per share (€0.49) specified in the takeover bid that Hispania launched over 100% of Realia’s capital at the end of 2014.

FCC continues to be Realia’s largest shareholder, with a 36.89% stake, followed by Bankia, with 24.95%. Grupo Prasa also holds less than 3%.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake

The Gap In House Prices By City: Falls Of 10% And Rises Of 3% In 2014

27 January 2015 – Expansión

House prices are evolving at different rates, depending on the region or city that you look at. Whilst in 2014, seven provinces and eight capitals recorded decreases of more than 10%, others experienced increases of close to 3%, according to Tinsa’s IMIE Local Market Index.

Overall, prices declined by 4.5% during the last quarter of 2014, compared with a year-on-year decrease of 4.3% in the third quarter and the fall of 8.3% from a year earlier.

“Although average house prices in Spain began to stabilise a little over a year ago and there has been progressive moderation of year-on-year decreases, the statistics show that some areas have started this stabilisation process more slowly and are still experiencing significant decreases”, says the document.

The gap that exists between cities is very noticeable. For example, whilst in Malaga, prices increased by 4.7% during the fourth quarter with respect to the previous year, house prices in the city of Ávila recorded a year-on-year decrease of 11.7%. “Another seven capitals recorded decreases of more than 10% in 2014. Namely, Huelva and Bilbao (both with a decrease of 11.1%), Almería and Badajoz (both with declines of 10.8%), Córdoba (-10.6%), Oviedo* (-10.4%) and Vitoria (-10%)”, adds the document published by the valuation company Tinsa.

By city, the most notable increases were in: Melilla (+2.3%), Palencia (+1.3%), Palma de Mallorca (+0.5%) and Barcelona (+0.2%). Meanwhile, prices stabilised in Burgos (0.0%). Three capitals recorded decreases of less than 2%: León (-0.5%), Murcia (-1%) and Vigo (-1.7%).

Looking back, Ávila is the capital that has experienced the greatest cumulative decrease in prices since 2007, at 56.1%, followed by Zaragoza and Guadalajara capital, where the decline during the crisis years reached 55.1% and 55%, respectively.

By province, the behaviour of prices in Navarra (-14.1%), Lérida (-14%) and Cuenca (-12.7%) contrasts with the increases in Palencia (+3%), Teruel (+2.8%) and Melilla (+2.3%).

In terms of the data by autonomous region, only two regions have experienced notable price increases: Melilla and the Balearic Islands (by 2.3% and 1.5%, respectively). On the other hand, decreases were recorded in Navarra (-14.1%), Asturias (-9.4%), the Canary Islands, Castilla y Leon and Valencia (all -6.8%) and Murcia (-6.5%).

*Provisional data

Original story: Expansión (by M. G. Mayo)

Translation: Carmel Drake

Renta Plans To Buy €500m Worth Of Buildings In Spain

23 January 2015 – Expansión

The real estate company Renta Corporación has begun 2015 with its eye once again on acquisitions. With a healthy balance sheet and the threat of bankruptcy behind it, the company has agreed an alliance with two overseas funds to buy buildings amounting to €500 million in Madrid and Barcelona this year.

Under the plans, Renta Corporación will contribute 10% of the capital and will act as the manager of the transactions, whilst the funds will provide the remaining 90%. Together, they will spend €250 million and the other half, up to €500 million, is expected to be financed by banks.

One of the funds is Kennedy Wilson Europe Real Estate, with whom the real estate company signed a partnership agreement last December. And its alliance with the second investment fund is in the “advanced” stage, explains the Chairman of Renta Corporación, Luis Hernández de Cabanyes.

The €500 million will be used to acquire a range of buildings including offices, residential properties, hotels, shopping centres and land. Renta, which has historically focused on the purchase, renovation and sale of residential buildings, will hereby enter other segments of the real estate market.

At the end of December, Kennedy Wilson Europe Real Estate and Renta Corporación closed their first purchase under the new alliance, in Madrid. The target, an office building in Calle Santísima Trinidad, will be converted into luxury homes, with a planned investment of more than €5 million.

The Chairman of Renta Corporación considers that “financing will experience an upturn over the next twelve months”. The banks “are in much better shape, from a solvency perspective, than in 2008”, he said.

Hernández de Cabanyes points out that Renta Corporación’s vocation has always been the purchase of “buildings with potential for value generation”. Now, with the help of these funds, “we have the peace of mind that comes from having more financial muscle”. It may take anything from six months to four years for the alliance between Renta and these funds to make purchases, create value and realise sales.

According to Hernández de Cabanyes, the prices of buildings in Madrid and Barcelona are currently 55% of the peak values they reached in 2007. In the case of land, its current value amounts to just 25% of the prices seen before the burst of the housing bubble.

In November, Sareb, Popular, ING and Banco Caixa Geral all invested in the share capital of Renta Corporación, in exchange for the cancelation of their debt in the company.

Original story: Expansión (by Marisa Anglés)

Translation: Carmel Drake