International Funds Rule Spain’s Residential Sector

10 March 2017 – Expansión

The recovery in the market is fuelling investors’ interest in housing. International funds such as Lone Star, Värde and Castlelack are the new stars.

The recovery of the residential market is starting to take shape in certain autonomous regions and international investment funds are positioning themselves to benefit as the boom takes hold. According to data published on Wednesday by INE, the price of private (unsubsidised) housing rose by 4.7% on average in 2016, which represents the third consecutive annual increase following six years of decreases and the highest rise since 2007.

And as they await the reactivation of the sector, several of the funds have made in-roads. Värde, Lone Star, Castlelake, Texas Pacific Group, Apollo, Cerberus and Kennedy Wilson are just some of the stars of the new residential market.

These funds maintain their presence in the residential market in several ways: as holders of debt, as servicers and as owners of the new generation of property developers, which are much more professional than their predecessors.

Specifically, Värde has been one of the firms that has staked the most on the real estate sector in Spain in recent years. The fund recently announced the purchase of the property developer owned by Juan Antonio Gómez-Pintado. That followed its purchase two years earlier of the real estate subsidiary of Grupo SanJosé (formerly Parquesol), which it subsequently renamed Dospuntos. The fund’s plans now involve integrating those two companies into a single firm, which will have more than 1 million m2 of land and more than 10,000 homes in progress or in its portfolio. In addition, Värde plans to list this firm on the stock market in the medium term.

Moreover, in 2014, the US fund purchased 51% of Banco Popular-e’s credit card business, for which the entity generated gains of more than €400 million. And as Expanión revealed, in December 2016, the fund acquired 40% of La Finca Global Assets, a division of the group owned by the Cereceda family, which specialises in the management of premium offices in Madrid.

Another fund that has been seduced by the residential market is Lone Star, which controls the property developer Neinor. The former real estate subsidiary of Kutxabank will be the largest exclusive property developer to debut on the stock market since Realia in 2007 (the large Socimis that have also debuted since then invest in tertiary assets). The fund is looking to place up to 60% of the company’s shares on the stock market, through the issue of new shares and the placement of existing shares. Lone Star, which will see its stake diluted as a result of the operation, will use the funds raised to reduce debt and continue with its plans to reach cruising speed by 2020 with the completion of between 3,500 and 4,000 homes per year.

Another fund that has positioned itself well in this market is Castlelake with Aedas. The group specialising in the residential segment, controlled by the US fund, has a portfolio of developable land worth €1,000 million, which will allow for the construction of more than 12,000 homes. The fund decided to back the house building segment and, on the advice of Merlin Properties, has launched fourteen developments in Alicante, Barcelona, Madrid, Málaga, Sevilla and Valencia.

Similarly, the funds have known how to gain a foothold in the market through the servicers. Servihabitat, Altamira, Haya and Aliseda are all controlled, in whole or in part, by international investors. These companies, created by the banks during the crisis to accelerate the divestment of assets from their balance sheets, have evolved into multi-service platforms, with financial and real estate assets.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Procisa Group Undergoes A Corporate & Financial Makeover

30 December 2016 – Expansión

Procisa, the group owned by the Cereceda family, which in turn owns La Finca, the business and luxury residential complex, in Pozuelo de Alarcón (Madrid) has embarked upon a profound corporate and financial restructuring process involving: a capital injection amounting to €395 million; the entry of the US fund Värde; and the strengthening of its corporate governance.

In terms of the corporate changes, from now on, the company will be organised around the Grupo La Finca holding company, which will in turn own three separate companies: La Finca Global Assets, dedicated to the real estate business and to the operation of the high-end office market; La Finca Casablanca, which will construct the largest luxury residential development containing more than 500 homes; and La Finca Real Estate, upon which the group’s future development will hinge.

Under the framework of this operation, the US fund Värde, owner of Dospuntos (the former real estate division of Sanjose) and owner of a stake in Aliseda, Banco Popular’s real estate asset manager, has acquired 39% of La Finca Global Assets. The US private equity firm, which manages more than $40,000 million in assets around the world, has been one of the most active investors in Spain since the outbreak of the crisis.


By virtue of the agreement signed yesterday, Värde, which must have paid around €130 million for its stake, will become a shareholder of the current office buildings in the portfolio and of the new projects in this area of the business. In addition to the La Finca business park, La Finca Global Assets’s properties include a property located on Calle Marcelo Spínola – a business centre comprising seven seven-storey buildings – and another property on Calle Martínez Villergas, comprising three seven-storey buildings.

Meanwhile, the La Finca business park, covering 220,000 m2 of premium rental space, comprises 20 buildings, 16 of which are used as offices plus the remaining four, located in the centre of the complex, which are used to provide the necessary services to the users of these offices. The complex’s current tenants include technological companies such as Orange and Microsoft.

In terms of the injection of funds, the company has signed a financing agreement with a syndicate led by Société Générale, CaixaBank and Santander amounting to €395 million, which it will use to pay off existing debt and tackle new projects. According to the latest available balance sheet, Procisa’s debt amounts to €525 million.

Specifically, the subsidiary La Finca Casablanca is planning to construct a development containing 515 luxury and exclusive homes, a shopping and leisure centre, as well as sports facilities and a golf course, in the south of Pozuelo de Alarcón.

New directors

Meanwhile, the group owned by the Cereceda family has strengthened its corporate governance by hiring some new directors. Susana García-Cereceda, the current Chairman of Procisa and one of the heiresses of the family empire created by the businessman Luis García Cereceda, who died in 2010, will lead the holding company and each of its subsidiaries, as the CEO.

In addition, Grupo La Finca will hire Jorge Morán as the Vice President of the holding company. (…). Moreover, Värde will join the Board of La Finca Global Assets with the appointment of three board members. (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

The Cerecedas Seek Financial Partner To Buy 30% Of Procisa

3 June 2015 – El Confidencial

Procisa, the real estate company made famous for developing the luxury La Finca estate is looking for a financial partner to provide the financial resources that it needs to continue with its other developments.

At a time when the interest of international funds in the Spanish real estate market is being called into question, one of the country’s iconic property developers is attracting interest from several overseas investors. Procisa, the company owned by the Cereceda family, which was made famous for its development of the luxury La Finca estate, is negotiating the sale of up to 30% of its share capital and is holding talks with several institutional investors.

The process, which is being managed by N+1, has been on the radar of the large players in the sector for several months – they see this as an opportunity to invest in a company that owns some of the most important plots of land in the capital.

After initially exploring the option of an IPO, which was dismissed following analysis with Citi, the real estate company has made progress in its talks with a small number of funds to which it has proposed the deal, with the clear message that their role will be limited to one of financial partner.

In line with the deals closed by other companies in the sector – GMP sold a 30% stake to GIC, and Acciona agreed to allow KKR to join as an investor – Procisa plans to form an alliance with a major investor, which will take a minority stake, but which will provide the financial resources the RE company needs to continue with its promotions.

N+1 has knocked on the doors of giants such as Goldman Sachs, JP Morgan, Cerberus, Bank of America, KKR and Blackstone to propose the deal to them. They could end up acquiring a stake of less than 30%, but this would be represent a historic milestone for this family company, led by Susana Cereceda, following death of her father, Luis Cereceda García, five years ago.


A RE giant, heavily dependent on bank financing

With assets of €900 million, own funds of almost €200 million, debt amounting to €600 million and losses of €13 million in 2013 (the last year for which official results are available), the company is looking for a financial partner, after it reached an agreement with its lender banks last year to accommodate a loan amounting to €400 million, dating back to December 2009 and after it consummated the merger with Agruva and Luarce, some of the other companies through which the Cereceda family has constructed its real estate empire.


During these talks, the banks imposed a series of conditions on Procisa, which explains why the Cereceda family is now keen to find a financial partner that will allow it to resume its activity, after years of decreasing results and the creditors’ sword of Damocles hanging over its head.


As well as La Finca, Procisa is also the owner of Parque Empresarial La Finca, an office complex on Calle Cardenal Marcelo Spínola (Madrid), as well as several office buildings spread across the capital and it is planning the development of two replicas of its famous Somosaguas development in La Romana (Dominican Republic) and Cartaya (Huelva).

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake