Oaktree Joins Forces with Sabadell to Promote Iberdrola Land

17 May 2018 – El Economista

Oaktree and Sabadell, through its subsidiary Bitarte, have requested permission from the European Commission to constitute a joint venture through which they will dedicate resources to residential development in Spain. Most of this new joint venture’s portfolio, at least initially, will comprise land that the US fund is going to buy from Iberdrola Inmobiliaria, which has declined to comment in this regard.

According to experts in the sector speaking to this newspaper, Oaktree is going to close the operation to acquire at least five plots of land worth approximately €100 million during the course of this month. As soon as the US fund’s alliance with Sabadell has been approved, the land will be integrated into the new company, whose purpose is going to be to continue growing through new land acquisitions.

Sabadell has chosen its subsidiary Bitarte, an instrumental company dedicated to the world of real estate, to carry out this association with Oaktree, although its stake in this new company is going to be managed by Solvia Desarrollos Inmobiliarios, the arm of the bank that is responsible for property development. The entity constituted that firm, which owns land worth around €1.2 billion when it completed the carve out of Solvia Servicios Inmobiliarios.

According to explanations from the same sources, Sabadell’s role in its alliance with Oaktree will be that of industrial partner with experience in the property development market, and so the fund will have a financial role, contributing the majority of the capital.

Assets

At first, the possibility was raised of an alliance between all three parties, which would see Iberdrola not only contribute assets, but also hold onto a stake in the company, and for that deal, the figures that were bandied around at the time amounted to around €130 million.

In the end, the alliance will be signed between the fund and Sabadell, and so the electricity company will contribute somewhat fewer plots. Of the chosen sites, in the absence of the definition of the final plots to be transferred, one in Móstoles (Madrid) stands out, where Iberdrola has already started work on a residential development project: Villas del Sur 2. This development comprises 22 terraced homes with three and four bedrooms and a private garden.

The other plots selected are located in Salamanca, the Costa del Sol, Pamplona and Pozuelo de Alarcón. This is a small part of Iberdrola’s land portfolio, which owns assets with a buildable surface area of 3.5 million m2. Specifically, the real estate company is working on the construction of more than 330 homes located in different places around Madrid, Murcia, Santander and Valencia.

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake

Vía Célere Invested €227M in 2017 Buying 473,000 m2 of Land

5 February 2018 – Eje Prime

The property developer led by Juan Antonio Gómez-Pintado accelerated its pace in 2017. By the end of the year, Vía Célere had invested in land purchases amounting to €227 million, whereby increasing the surface area of the company’s buildable land portfolio by 473,000 m2.

With its stock market debut looming, the company also closed some high-profile corporate operations last year, such as the integration of Dos Puntos into the group, in which the US fund Värde Partners has held a stake for a year, and the carve-out of its property business.

Vía Célere’s portfolio of land for residential construction now spans 1.43 million m2. With these plots, the property developer has the capacity to build 12,200 homes in Spain over the next few years.

The most recent purchases made by the real estate company in this field were in Barcelona, A Coruña and Ibiza. The investment on the White Island was the first to be made by the company in that area of the Balearics.

By region, besides the provinces already mentioned, Vía Célere closed land purchase operations in 2017 in provinces such as Madrid, Sevilla, Valladolid and Girona. During the course of its ten-year life, Vía Célere has handed over more than 2,300 homes, a figure that, in light of the business plan launched, it is seeking to increase to 10,000 units over the next two years.

Original story: Eje Prime 

Translation: Carmel Drake

Insur Carves Out its Property Development & Rental Businesses

29 January 2018 – El Confidencial

In order to adapt itself to the preferences of investors, Grupo Insur is carrying out the separation of its two main branches of activity: property development and real estate management – the latter arm will hold onto the rental properties. This carve-out could be described as historical given that the firm, which is listed on the main stock market and led by Ricardo Pumar, has used the combination of both businesses as its best antidote against the cyclical crises of the real estate sector. But now, although the two activities will continue to be owned by the parent company and consolidated for reporting purposes, they will generate independent income statements, belonging to the two subsidiaries.

According to sources close to the Sevillan company, the first step in this sense has been to increase the share capital of Insur Promoción Integral, the real estate parent company, to reach assets worth €80 million. The firm had a frantic 2017 in terms of house sales, with activity soaring by 41% in the last two quarters to reach €37.4 million between June and September (including the sale of properties jointly owned with third-party partners, whose amounts are not recorded by Insur).

In total, the group’s development activity generated sales of €60 million between January and September – up by 82% YoY – of which €28 million proceeded from revenues for the construction of housing developments, both in-house, as well as for initiatives with partners such as BBVA, Santander and the bad bank (Sareb). Insur planned to have 1,000 homes under construction distributed across 18 developments in Andalucía and Madrid by the end of last year.

By contrast, the real estate management activity is continuing to see a decline in its contribution, in line with previous years. Insur owns rental buildings spanning around 116,000 m2, almost all of which are located in Andalucía, although it is currently building a business park in Madrid. Its vacancy rate has fallen by 10 points in recent months, to 23% in September, and the rental income generated during the first three quarters of last year amounted to €7.5 million compared with €8 million during the same period in 2016.

The Junta de Andalucía, to which Insur has traditionally leased space, especially in Sevilla, vacated 12,000 m2 in May 2016 and whereby increased the total amount of space that it has stopped leasing during the final years of the crisis to 33,000 m2. Insur details in its accounts to September that the annualised rental income from tenants that have already signed contracts (not all of them have moved in yet as the offices are being refurbished) is €12.7 million. The picture of this business area is completed if we look at the request for additional information about the accounts for 2016 that Insur sent to the CNMV in October, which shows that each year it spends €6.8 million on these rental properties (…).

Coverage from Sabadell

For all these reasons, and according to the same sources, the managers of Insur rule out the creation of a Socimi to group together the real estate management activity, for the time being, given the need to improve its results and have better visibility over its evolution in the future. Moreover, there is no need for it to provide liquidity to its shareholders, given that 43% of Insur’s share capital is free-float. The company’s 15 directors control 37.5% of the share capital.

Insur’s share price has increased by more than 50% over the last 12 months, to reach €12.50. Its shares are soon going to be covered by analysts at Banco Sabadell, who will join the more specialist firms that have been following the stock until now: Arcano, Kepler and Fidentiis.

Original story: El Confidencial (by Carlos Pizá de Silva)

Translation: Carmel Drake

Sabadell Seeks Investors to Develop More Than 2 million m2 of Land

28 December 2017 – Expansión

The bank, through Solvia, has spun off the management of assets worth €600 million into a new company, which will be headquartered in Madrid.

Solvia, the real estate management company of Sabadell, wants to replicate the operation that it carried out in the hotel sector earlier this year, when it sold its hotel business to Blackstone for €630 million, generating profits of €55 million.

As such, the entity has decided to carve out its activity relating to the development of land into a new company called Solvia Desarrollos Inmobiliarios. That company will manage 2.22 million m2 of land in total, equivalent to almost 300 football pitches. The construction of 4,000 homes, across more than 84 developments, is already underway.

The portfolio of assets under management amounts to €600 million, equivalent to approximately 15% of Solvia’s total income. That size places it in the second division in the sector, just behind the listed real estate companies, led by Metrovacesa, Neinor, Aedas and Vía Célere. The largest owner of land in Spain is Sareb.

This new company will be headquartered in Madrid and will be led by Francisco Pérez, former CEO of the Catalan property developer Vertix. “The idea is to grow hand in hand with the large overseas investors that are looking for high returns in Span, but which do not have any structure here. Most of the funding will come from outside of the country”, explains Javier García del Río, CEO of Solvia (pictured above).

The plans

Solvia Desarrollos will develop not only Sabadell’s land – the bank owns 83% of the portfolio – but also plots owned by family offices that the bank manages and the developments that Sareb is granting it. Solvia was one of the four entities chosen by the bad bank in 2014 to help it sell its homes to the general public. Specifically, it took over the problem loans proceeding from Bankia, Ceiss and Banco Gallego.

Sabadell has been developing land since 2013 and has grown a considerable business in that time. It was the first bank to get back on the horse after the real estate bubble burst. “Land is behaving magnificently, although we do not expect to see any abrupt growth. Areas that were very risky in 2013, such as Huelva, are no longer”, said García del Río.

The experts in the sector endorse his opinion. “The turning point in this market came in 2015 and 2016. This year has been exceptional, with more than 20,000 transactions involving land”, explains Samuel Población, National Director of Residential and Land at the consultancy firm CBRE. He calculates that property developers are capable of generating margins of between 18% and 22% from the construction of private housing blocks in Spain.

“The funds that left Spain have returned and investors are interested in buying land”, says José García Montalvo, Professor of Economics at the Universidad Pompeu Fabra and an expert in the real estate sector.

Solvia manages a portfolio of 148,000 real estate assets, whose value exceeds €31 billion. Last year, it generated a gross profit of €57.8 million and brokered the sale of 20,321 properties. Between 2011 and 2016, it sold more than 91,000 assets.

Sabadell granted new financing of €1.35 billion to property developers in 2016, up by 56%. Last year, it started granting property developer loans again in CAM’s area of influence after four years of restrictions imposed by Brussels.

Original story: Expansión (by R. Lander)

Translation: Carmel Drake

Metrovacesa Starts Building Offices Again

2 December 2017 – Expansión

Metrovacesa, which is controlled by Santander and BBVA, is looking to generate value from its tertiary (non-residential) portfolio of land and resume the development of offices. The real estate company plans to start construction of 37,000 m2 of space on tertiary land in Madrid and Barcelona.

The company, which has been focused on house building until now, owns more than 1,317,000 m2 of tertiary land, with an approximate value of €684 million. Of the total, it plans to allocate approximately 83% to offices and 10% to hotels.

In this way, in November, Metrovacesa completed the sale of an office under construction to the Socimi Axiare for €29.7 million. That property, located at number 40 Calle Josefa Valcárcel in Madrid, has a leasable area of 8,652m2, spread over seven floors and 261 parking spaces. The firm plans to hand over the asset during the last quarter of 2018.

Metrovacesa’s land does not require any urban planning permissions, and so the plots are very liquid and ready for construction to begin, allowing a quick response to the most important demands that may arise in the market.

“Our team has more than 20 years of experience in these assets, and so we are in a privileged position to maximise value through a sustainable proposal that follows the latest trends and that knows how to take advantage of the current potential in that market”, explained María Ruiz Gallardo, Director of Tertiary Assets at Metrovacesa.

Metrovacesa’s portfolio of tertiary land accounts for 25% of the total value of its assets, which amount to €2.6 billion.

These plots proceed from both the former Metrovacesa, as well as from the contributions made by the shareholder banks.

In this way, the new Metrovacesa emerged following the carve out of the land business from the 100-year old real estate company, which integrated the rest of its activities with Merlin. Metrovacesa’s shareholders decided to give the company a significant boost, with the contribution of new land worth €1.108 billion in June. Santander owns a 70% stake in Metrovacesa, having taken over the 9.21% held by Popular, whilst BBVA controls 29.6%.

Following this injection, which was articulated through a non-monetary capital increase, Metrovacesa now owns a portfolio of buildable land spanning 6 million m2 for the construction of more than 40,000 homes. Its main rivals, Neionr and Aedas, own land with the capacity to build 12,000 and 13,000 homes, respectively.

Metrovacesa, which plans to return to the stock market in February, has convened an extraordinary shareholders meeting for 19 December, when it plans to give the green light to the request for admission to the stock market of the company’s shares.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Saba Wants To Complete A Major Purchase Before Its IPO

1 June 2017 – Expansión

Saba is analysing several major operations with the aim of growing in size before it debuts on the stock market, according to the plans that the company’s President, Salvador Alemany (pictured above, right) outlined yesterday, at the car park group’s General Shareholders’ Meeting.

“We are looking at operations that would allow us to grow significantly and which would take several months or years to complete; afterwards [with our debut on the stock market], we would see the results of all of the efforts that we have been making since 2011”, said Alemany yesterday, in response to two questions from the company’s two minority shareholders. For the time being, there is no specific timetable for the firm’s debut on the stock market – Saba set itself the objective at the same time that it was carved out from Abertis in 2011.

The CEO of Saba, Josep Martínez Vila (pictured above, left), confirmed that Empark is one of the operations under analysis, but that there are also others in the running. The advantage of acquiring that firm stems from the fact that it would allow Saba to double in size; by contrast, it would mean concentrating its business even more in Spain, which last year accounted for 71% of its turnover.

The group closed 2016 with turnover of €202 million, compared to €225 million in 2015, a year when it was still recording revenues from its logistics parks. Saba, which yesterday approved the distribution of an issue premium amounting to €20 million, earned €4 million from its ordinary activity, a figure that increases to €32.36 million with the profits from its logistics business.

The company, which was just awarded the contract to manage 12,000 parking spaces in three shopping centres in Chile, has also just agreed with the banks to improve the conditions of a €465 million loan.

Original story: Expansión (by A. Zanon)

Translation: Carmel Drake

The Montoro Family Prepares For Monthisa RE’s IPO

28 April 2017 – El Confidencial

With the discretion that characterises family businesses, the Montoro family, which owns the real estate firm Monthisa, has been working for two years on one of the major milestones in its recent history. Known as Project Maura, the operation is aimed at creating a large portfolio of rental assets, with the firm’s debut on the stock market as the ultimate objective.

To deal with this firm, the company segregated its entire real estate business into the company Monthisa Real Estate, which was just another subsidiary until then, and sold one third of the capital to the US fund Proprium Capital, the same entity that has been a shareholder of Grupo Lar for almost a decade, which currently controls 16.5% of that company’s shares.

This asset manager is the heir of Morgan Stanley’s former special situations fund, which ended up being spun off from the parent company in the United States for regulatory reasons, although the management team continued, with Tim Morris at the helm.

Although Proprium – whose representative on the Board of Monthisa Real Estate is Philipp Westermann (…) – is a minority shareholder, the two partners signed a pact by virtue of which they established joint control over Monthisa Real Estate and committed to multiplying the assets in record time.

The result of this alliance has been the creation of a new real estate giant, whose first major purchase was the acquisition of the El Corte Inglés’ ground-floor retail premises on Paseo de la Castellana for almost €150 million, an operation that was closed in September last year; and most recently, the purchase of a building on the Madrilenian Calle Montera, which will be used for tertiary activities (offices and a hotel).

Following these operations, Monthisa Real Estate has a portfolio worth around €250 million, given that the company was constituted with commercial premises, offices and hotels that the Montoro family already controlled, worth more than €100 million.

Its assets include: the Correos Building, so called because the tenant is the public postal company; number 8 on Ribera del Loira, currently occupied by Dell; and the Hotel Radisson, on Calle Moratín 52, on the sought-after Prado Recoletos thoroughfare.

But the Montoro family and Proprium are also rotating their asset portfolio, as demonstrated by the sale of the office building that they used to own in Berlin – a 7,975 m2 property, leased in its entirety to MTV; and a unit in the Plaza Norte 2 shopping centre, occupied by Cinesa cinemas.

Survivor of the crisis

Monthisa is, together with Lar, GMP and Pryconsa, one of the few domestic real estate companies that managed to survive the crisis and, like the first two, it is committed to carving out its real estate business and teaming up with overseas funds to take advantage of the recovery in the sector.

Before reaching this point, the Montoro family’s property development arm regularised its situation with Sareb (…) and reached an agreement with the entity chaired by Jaime Echegoyen to develop properties jointly.

Following all these changes, the next major milestone involves turning Monthisa Real Estate into an iconic real estate company and, if the script is followed, providing an exit for Proprium, with the capital markets as the preferred option.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Popular Will Open 40 Branches To Sell Its Homes

17 January 2017 – Invertia

Banco Popular has launched a new network of 40 branches, four regional teams and a workforce of 400 people to manage its newly carved out real estate business.

According to a statement made by the entity, 12 of these branches will be located in Cataluña and Levante, 10 in Madrid and the Centro region, 10 in the North and the Pastor region and 8 in Andalucía.

The objective of this network, which will report directly into the General Director of Real Estate Business and Asset Transformation is to manage the bank’s real estate business and to manage collections in a holistic way “with the perspective of optimising capital, in line with the bank’s overall objective to reduce non-productive assets”.

The creation of this network forms part of the restructuring process that the bank is currently carrying out and which has involved the separation of its core and real estate businesses.

Original story: Invertia

Translation: Carmel Drake

Banco Popular’s Complex RE Clean Up Continues

24 November 2016 – Expansión

Popular was the most profitable bank in Spain’s financial sector until it decided that it did not want to get left behind in the real estate development business. The problem is that it joined the party too late, when the real estate bubble had already begun to burst (….). The result is that, several years after the outbreak of the crisis…Popular is the bank with the highest proportion of toxic real estate assets on its balance sheet. It also has one of the lowest levels of coverage. The bank’s total real estate exposure amounted to €25,376 million in September, with a coverage ratio of 35%.

In this context, the essential axis of Popular’s clean up plan, designed by the heads of the bank and approved by the supervisory bodies, placed the emphasis on the €2,500 million capital increase that was carried out in June (to reduce the bank’s installed capacity by closing branches and reducing the staff), and, above all, on increasing the coverage for toxic assets to bring the entity in line with the rest of the sector, in such a way that it would make it easier for it to divest these assets.

That is what the entity is looking to carry out with its project to create a separate real estate company using some of its assets. Ownership of those assets will transfer from the bank directly into the hands of the financial institution’s shareholders.

But now, data provided by Popular, when it presented its results for the third quarter, has revealed that the net debt of the real estate and associated businesses amounted to €15,518 million in September and that the provisions amounted to €9,858 million. The total exposure therefore amounted to €25,376 million and the coverage afforded by those provisions stood at around 35%. The rest of the financial sector has provisions to cover up to 50% of their respective exposures.

The bank’s plan is to reduce its non-profitable assets by 45% by 2018 and for the coverage of its toxic assets to increase to 50%. In fact, sources at the bank say that the latter was fulfilled at the end of October (…).

The constitution of these new provisions should facilitate both retail sales, as well as the sale of portfolios of toxic real estate assets, because the entity will be able to sell at more competitive prices in the market without incurring fresh losses in its income statement. The new provisions should also allow the headline figures to be outlined for the real estate company that is pending approval by the financial supervisors and the CNMV. Undoubtedly, when authorisation is granted and the bank ceases to be the owner of real estate assets amounting to €6,000 million (book value), it will represent a huge relief for the bank’s future quarterly results.

However, the question is whether that will be sufficient, or not, for investors to consider that Popular is undertaking the clean up process at the right pace and will ever return to profitability.

Whilst decreasing the volume of toxic assets by €6,000 million involves significant effort, even once that hard work has been completed, the entity will still have a high volume of problem assets on its balance sheet, between €19,000 million and €20,000 million, according to its own accounts. The bank will have two years to reduce its exposure to the real estate and associated sectors by €5,400 million if it is to achieve the established objective of reducing this caption of its balance sheet by 45% with respect to its current level.

Original story: Expansión (by Salvador Arancibia)

Translation: Carmel Drake

Värde Given Green Light To Buy 40% Of La Finca Global Assets

14 November 2016 – Real Estate Press

In August, a judge suspended the sale of part of Procisa to the fund Värde, due to a family dispute, which left the operation up in the air. Now, the precautionary measures have just been lifted and the BOE has published its proposal for the carve out of the firm into three companies, which will allow the definitive sale to go ahead.

The agreement carves out Procisa into three companies: La Finca Global Assets, containing the office assets; La Finca Promociones y Conciertos Inmobiliarios, containing the residential assets; and La Finca Somosaguas Golf. Sources close to the operation indicate that this is the final step in the process for the agreement with Värde to be signed.

The new company that owns the office assets will be converted into a Socimi. For the time being, the consideration paid for the operation will not be revealed. Meanwhile, Procisa, founded by the late Luis García Cereceda, is being led by the second generation of the same family, in the form of Susana García Cereceda.

The new Socimi’s main asset is the La Finca business park in Pozuelo, constructed alongside the luxury residential urbanisation. The company contains 20 buildings, of which 16 are offices and the rest are used for social and commercial purposes. Tenants at the site include companies such as Microsoft, Orange and Accenture. The Hotel AC La Finca is also located there. This is one of the most sought-after business parks in Madrid, with an occupancy rate of almost 100%, according to market sources. The future Socimi will manage an office surface area covering 227,000 m2, which includes other office properties in addition to the complex in Pozuelo.

Original story: Real Estate Press

Translation: Carmel Drake