S&P Warns of Deceleration in Catalan Housing Market

7 February 2018 – El País

The Spanish real estate market is going to continue growing, but the Catalan crisis may have a negative effect on the housing market in the region. “Although Barcelona has recorded some of the highest property prices since the start of the recovery, in 2018, Cataluña could see a recession in its real estate market”. That is what the ratings agency Standard and Poor’s (S&P) thinks, according to its report about the real estate market in Europe, which indicates that “economic growth should continue to be strong this year and next, but the political uncertainty may have a more negative impact on companies and consumers. The main risk is the impact of the Catalan crisis, given that it is the largest economic centre in Spain, accounting for 20% of the country’s nominal GDP”.

Leaving aside Cataluña, the agency indicates that the strong economic conditions in Spain will continue to drive up the volume of house sales and will help to reduce the stock of homes. In fact, it forecasts that the volume of transactions in Spain will grow by around 8% this year.

Moreover, although interest rates bottomed out at the end of last year, they will continue at very attractive levels for house purchases. Nevertheless, the agency points out that accessibility ratios continue to be high, even though the number of years of salary needed to buy a home has decreased from 7.7 years at the height of the boom to 6.6. years in 2016. And it adds that second-hand house prices are going to continue to increase, although to a lesser extent that over the last two years.

The S&P agency considers that the Spanish economy will exceed the figures recorded in 2017, when average prices increased by 4.2% YoY in the last quarter, according to data from Tinsa. The city of Madrid exceeded Barcelona with an annual increase of 17% compared to 14.8% in the Catalan capital, where prices fell by 1.7% during the last three months of 2017. The volume of transactions amounted to 455,000 during the first 11 months of the year, compared with 375,000 in the previous year. Purchases by foreigners accounted for 17% of the total.

Original story: El País (by S. L. L.)

Translation: Carmel Drake

Metrovacesa Will Ask Investors for c. €850M in February Stock Market Debut

27 January 2018 – El Español

The real estate stalwart Metrovacesa is going to return to the stock market on 5 February, as it marks the centenary of its constitution in 1918, albeit with some misgivings.

In particular, concerns have arisen regarding its valuation of almost €3 billion for a company that, as sources at Bankinter say, “is currently in the initial phase of growth” and which has limited forecast revenues for the next few years from the sale of very few apartments.

Moreover, even the company itself acknowledges that it will not be in a position to hand over 5,000 homes per year until 2021 – which will allow it to generate a turnover of more than €1 billion – which means that the €500 million from the sale of land will become its main source of income for the next few years.

Income and dividends will have to wait

Nevertheless, and despite this acknowledgement of an initial shortage in terms of revenues and that no dividend will be distributed until 2020, nobody doubts that institutional investors will be willing to contribute approximately €850 million – equivalent to 30% of the property developer’s share capital – which the two shareholders, Banco Santander and BBVA, will put on the market.

In general, and barring exceptions such as those described by Bankinter, the consensus of the analysts is not worried about the continuation in Metrovacesa’s capital of Santander, with 50% and BBVA with 20% – they represent a valuable guarantee.

The pull of the expansive real estate cycle

Also working in favour of the return of the property developer to the stock market is the expansion of the real estate cycle, which in 2017 led to the stock market debuts of Neinor and Aedas, the first two companies from the sector to list in ten years following the burst of the real estate bubble.

The weight of the opposing positions held by analysts will determine the price at which the shares end up trading; the range has been set at €18 – €19.50. If, like in the case of Aedas, investors put pressure for a debut at the lower end of the range, then the contribution necessary to acquire 30% of Metrovacesa will amount to €819 million. If the placement price comes in at the top end, investors will have to spend almost €890 million.

This range implies a premium over the firm’s net asset value (NAV) of up to 9.6%, lower than that of the recent IPO of Aedas, another real estate company that is languishing on the stock market, below its placement price, after its stock market debut was affected by the Catalan crisis.

Not very significant starting numbers

With what numbers is Metrovacesa returning to the stock market? Not very significant ones, it seems. During the 9 months to 30 September, according to the brochure filed by the real estate company with the National Securities and Exchange Commission (CNMV), the firm’s turnover amounted to €18.88 million, split between €15.62 million from the sale of homes and €3.22 million from the provision of services to third parties. That turnover figure left it a gross margin of almost €4.27 million, after deducting associated costs of €14.62 million.

At the end of the third quarter, Metrovacesa’s stock – land, developments (in progress and completed) – amounted to €1.63 billion. Almost all of that balance was land (…).

The real estate company will make its stock market debut with around 2,300 homes under construction, to hand over between 2018 and 2020, for which it held sales commitments with clients amounting to almost €75 million, according to data as at 30 September 2017 (…).

In theory, the objective is to divest some of its land between 2018 and 2019, worth around €500 million or more if the current demand continues to grow.

To achieve this, Metrovacesa needs to generate value from these plots and turn them into buildable sites. An expensive business, in certain cases, for which the real estate company received a financial injection of €275 million just over a month ago. Unlike Aedas and Neinor, whose plots are ready to be built on immediately, 26% of Metrovacesa’s land portfolio still needs to be urbanised, or, worse, is still classified as non-developable (…).

Original story: El Español (by Juan Carlos Martínez)

Translation: Carmel Drake

Spain’s Socimis Have Properties Worth €1.2bn up for Sale

8 December 2017 – Expansión

Hispania and Lar are looking for buyers for their respective office portfolios, whilst Colonial plans to divest Axiare’s non-strategic assets if its takeover bid goes ahead.

On the verge of starting their fifth year of life, Spain’s large listed real estate investment companies (Socimis) are now working on a new phase. After spending their first few years growing in size, Merlin, Hispania, Lar España, Axiare and Colonial (which was converted into a Socimi in June) are currently focusing on becoming large real estate companies, each specialising in a different asset type.


Such is the case of Hispania. The company made its debut on the stock market in March 2014, with the financial backing of investors of the calibre of George Soros and John Paulson. At the time, Hispania proposed a lifespan of six years, spending the first three years focusing on building a diversified portfolio of rental properties and the remaining three years managing and subsequently divesting them.

In February, having completed the first three years, the firm’s shareholders decided to: continue with the initial plan of liquidating the company in 2020, focus on hotel assets for the next few years (in June, it became the largest hotel owner in Spain, with 38 establishments) and divest the rest of its properties. In this way, it began with the individual sale of residential assets, and it launched a block sales process for its offices.

In August, Hispania reached an agreement with the insurance company Swiss Life to sell it the portfolio of offices. Nevertheless, three months later, at the height of the Catalan sovereignty challenge, the Socimi decided to postpone the sale until next year. Now that the negotiations with Swiss Life failed, sources in the sector bet that Hispania will not launch a new block sale but rather will opt to divest the portfolio, worth €500 million in total, building by building. In fact, the Socimi managed by Azora already sold its first property in June, the future headquarters of the law firm Uría, for more than €37 million (around €7,800/m2).

Lar España

Hispania’s offices are going to come onto the market at the same time as a portfolio owned by another large Socimi. Lar España, whose major shareholder is the fund manager Pimco, has hung up the “For sale” sign on the office buildings it owns (three in Madrid and one in Barcelona) for €170 million. In addition, Lar will divest other assets regarded by the company as non-strategic, such as logistics warehouses and some medium-sized spaces, worth another €100 million.

These new divestments come in addition to the €110 million that the Socimi hopes to obtain from the sale of the 44 homes that comprise the luxury residential complex Lagasca 99 (which are being sold for an average price of €14,000/m2).

In total, Lar España expects to generate €380 million, which the Socimi managed by the real estate company Grupo Lar, will use to increase its portfolio of shopping centres.


On 13 November, Colonial completed its entry into Axiare’s share capital, started in October 2016, with the launch of a takeover bid for 100% of the company, with the aim of creating a large Socimi specialising in offices, worth almost €10 billion.

The CEO of Colonial has already revealed that he would sell the non-strategic assets worth around €300 million from that portfolio, which spans 1.7 million m2, to finance the takeover of Axiare.

Currently, Axiare’s portfolio comprises more than a dozen industrial assets, worth around €340 million (…).

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

BBVA Sells Majority Stake in its Real Estate Portfolio to Cerberus for More Than €5bn

28 November 2018 – Voz Pópuli

BBVA has closed a real estate mega operation. The entity chaired by Francisco González has agreed to sell the majority of its problem assets to Cerberus, in a deal worth between €5 billion and €6 billion, according to financial sources consulted by Vozpópuli. The Spanish group will receive a cheque for between €3.5 billion and €4 billion for the majority stake in a new company that will be controlled by the US fund. After months of intense negotiations, the bank and the fund decided to seal the deal at the beginning of this week. Whilst we wait for the official figures to be made public, financial sources indicate that the real estate package for sale amounts to between €13 billion and €14 billion (as this newspaper revealed) and comprise around 70,000 properties. The assets sold are valued with a discount of around 60%. The parties involved all declined to comment.

The discount is lower than that agreed for the sale of Popular’s property, which amounted to 67%. Santander sold €30 billion with a valuation of €10 billion. Blackstone paid €5.1 billion for 51% of that company.

After signing the agreement, the two parties will request time to review the small print of the contract and to obtain the necessary authorisations. In this case, approval must be given by the Deposit Guarantee Fund (FGD).

According to the latest figures, BBVA has real estate exposure amounting to €17.8 billion on its balance sheet. Of that amount, foreclosed assets (€11.9 billion) and doubtful loans (€3.4 billion) account for €15.3 billion. Those loans and properties have a coverage ratio of more than 61%.

A sale like the one that Cerberus has agreed will leave BBVA as one of the largest groups with the smallest real estate exposure in Spain, something that investors and regulators have been demanding for years.

This agreement arose as a result of a meeting between González and the President of Cerberus worldwide, John W. Snow, at the beginning of July. The US banker – and former US Treasury Secretary, under the presidency of George Bush junior – proposed this operation to the President of BBVA after his firm was left out of the sale of Popular’s property.

The operation has been managed by the operations team at PwC, led by Jaime Bergaz. The law firms Linklaters and Ashurst have worked alongside him, and on the buy side, the consultancy firm Deloitte. All of the parties involved have been working on this operation non-stop for several months. The deal only came close to dying during the worst moments of the Catalan crisis, given that a lot of BBVA’s real estate assets are located in that region.

Following this acquisition, Cerberus consolidates its position as one of the largest real estate investors in Spain, alongside Blackstone. The fund controls Haya Real Estate, which manages assets on behalf of Sareb, Bankia, Cajamar and Liberbank. With BBVA’s assets, it takes on one of the most sought-after portfolios in the sector.

Original story: Voz Pópuli (by Jorge Zuloaga and Miguel Alba)

Translation: Carmel Drake

Demand for Luxury Homes Plummets in Barcelona & Soars in Madrid

23 November 2017 – Expansión

Since 1 October, demand for luxury homes has plummeted by 50% in Barcelona, with a 20% decrease in prices; meanwhile, demand has risen by 40% in the Spanish capital where prices have gone up by 10%.

Secessionism is sinking the Catalan real estate market due to the threat of uncertainty. “Demand for luxury housing has plummeted by 50% in Barcelona between 1 October and 15 November”, explains Emmanuel Virgoulay, Founding Partner at Barnes International in Spain. Whilst Barcelona falls, interest from buyers in these kinds of assets in Madrid is soaring by 40%, according to the real estate company that specialises in the premium segment.

“For every home for sale in Madrid, there are four buyers”. In Barcelona, by contrast, “the damage has already been done”, explained Virgoulay, referring to the unilateral referendum. That process has marked a before and after in the Catalan economy. The uncertainty has caused panic to spread throughout the markets, leading to the flight of more than 2,600 companies, causing the confidence of businessmen and consumers to collapse and paralysing investments. Housing, along with tourism, has been the most affected sector.

Before 1-O, Barcelona was enjoying its best moment since the crisis. The prices of high-standing properties were growing at a rate of 15%. However, since 1 October, the decrease in prices amounts to 20%. During the same month, the cost of these types of assets in Madrid has also moved by double digits, but in the opposite direction, with growth of 10%, like in the Balearic Islands. In Andalucía, the variation has been somewhat lower, between 5% and 10%, according to market sources.

In Barcelona, the rise in prices had generated a bubble. “Some owners were aligning the price of their properties with those in the most exclusive parts of other cities in Europe”, explained Virgoulay. However, investors “put the handbrake on” several months ago now. In October, there was a 50% decrease in the number of deeds signed for the sale and purchase of homes and mortgages, with buyers pulling out and preferring to lose their deposits, which can represent up to 10% of the purchase price, than going ahead with their purchases.

“Investors are going to come to Madrid because the market is safer”, explains Virgoulay. Currently, 57% of the luxury real estate acquisitions that are made in Spain take place in Madrid. The Spanish capital is the most attractive city for domestic and international investors alike. “The weight of the investor market is comparable with the market for primary residences”, he explains.

Looking ahead to year end, Virgoulay considers that, since the Government took action, with the application of Article 155, “the outlook is stable and demand has been starting to recover since 15 November”. But, 21 December is emerging as a new door to uncertainty “anything can happen once again”. Nevertheless, “Prices are going to rise, in general, but in Barcelona, it is clear that they are not going to evolve, they are going to fall”.

In Madrid, like in Barcelona, the average price of luxury housing amounts to €8,000/m2. In the Balearic Islands, where the main demand is from European buyers for second homes, the price per square metre amounts to €7,500/m2.

Barnes plans to open new offices in 2018 in locations such as the Balearic Islands and the Canary Islands. Cataluña was another one of its objectives, but, for the time being, no date has been set for that opening.

Original story: Expansión (by Inma Benedito)

Translation: Carmel Drake

MK Premium Buys 2 Residential Buildings In Barcelona

15 November 2017 – Inmodiario

MK Premium, the family-owned real estate company, has just acquired two new buildings in the city of Barcelona, on the same street. With a total investment of €1.5 million, the two buildings, located in the Sants neighbourhood, specifically on Calle Gayarre, at numbers 38 and 42, have a combined surface area of 1,082 m2.

“We were presented with the opportunity to acquire the two buildings, which are almost next door to each other, at the same time. These properties date back to the end of the 19th and beginning of the 20th centuries and are located in one of the fastest growing areas of Barcelona in terms of population. The two buildings have a combined surface area of more than 1,000 m2 and contain 9 homes, plus one retail store, with the individual surface areas ranging between 70 m2 and 88 m2. Despite the political situation in Cataluña, the real estate market is still active; the outlook for the last two months of the year is very good”, said Daniel Leiva, Founding Partner at MK Premium.

The property on Calle Gayarre, 42 dates back to 1900, and has a total surface area of 660 m2, comprising 6 homes; whilst the building located at number 38 is older, dating back to the end of the 19th century (1878), comprising 3 apartments and a retail store, with a total surface area of 424 m2 (…).

From these two buildings, located in one of the most well-connected parts of the Catalan capital, MK Premium expects to obtain a profit of 8% from the rental of each one of the homes, but not before subjecting both properties to a comprehensive renovation process, to restore the two iconic buildings to their former glory. (…).

These two latest acquisitions take MK Premium’s portfolio to 94 assets in 2017. The company expects to close one of its best years ever, at a time when it has completed its expansion plans, by opening an office in Madrid, on Paseo de la Castellana.

Original story: Inmodiario

Translation: Carmel Drake

Sale Of Habitat Set To Close This Week Despite Catalan Crisis

15 November 2017 – El Confidencial

Last weekend marked the deadline for the three funds interested in buying the Catalan real estate company Habitat, namely Apollo, Bain and Oaktree, to submit their binding offers. Despite constituting one of the most important real estate sales of our times, there have been doubts in the market about the impact that the sovereign challenge in Cataluña may have on the appetite of these three investment giants. Their parent companies have ended up living through the worst moments of the crisis once again, requesting regular reports about the political situation in Spain.

And in the end, all three interested parties decided to push ahead and put their binding offers on the table for the purchase of the real estate company, which is worth between €200 million and €250 million. Irea, which has been engaged by the shareholders of Habitat to lead the sales process, plans to explain to them the pros and cons of each proposal between now and Friday, the day when the winner of the process is expected to be chosen.

Sources consulted by El Confidencial state that the most attractive offers were those presented by Bain and Apollo and they all but rule out Oaktree‘s chances. According to the schedule, the players behind the two best offers will be given the opportunity to fine-tune their proposals between today and Friday. Although the possibility also exists that Irea may choose the best proposal, without asking for any improvements, to present it directly to the shareholders of Habitat.

One way or another, the idea is that this week, the winner of the quest for Habitat will be chosen, a transaction that the interested parties are looking to complete before the end of the year.

Buildable land platform

The purchase of Habitat will allow the successful buyer to acquire an important platform through which to benefit from the recovery of the Spanish residential property development market. That desire has had a strong impact on the parent companies of the three interested funds, all from the US, allowing them to overlook the political and economic uncertainty unleashed by the independence challenge.

Habitat is the heir of the former Ferrovial Inmobiliaria, a company that the firm controlled then by Bruno Figueras acquired for €2,200 million at the end of 2006; that operation that gave rise to the fifth largest property developer in Spain. But, just two years later, during the first few months of the crisis in the sector, the company filed for the fourth largest creditor bankruptcy of all time, with debt amounting to €2,800 million.

Although it managed to get out of that hole in 2010, five years later Figueras was forced to cede control to the creditor funds, and firms such as Capstone, Goldman Sachs, Bank of America, Värde and Marathon acquired 70% of the share capital when the bulk of the debt was converted into shares. (…).

Bain, Apollo and Oaktree have all been trying to acquire a large domestic property developer for some time now, to allow them to create a large group through which to benefit from the recovery in the market. In fact, the former has just acquired, together with Oceanwood, €602 million in real estate assets from Liberbank, whilst Apollo fought to the end to acquire the €30,000 million portfolio of toxic assets from Banco Popular that was sold in the summer.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake