Ingria Investment Sells Commercial Premises On c/Serrano To AEW

2 February 2016 – Mislocales.es

Cushman & Wakefield has advised the investor group in the sale of the property, located at number 7, Calle Serrano in Madrid.

Ingria Investment, an investment fund mainly constituted by Rockspring, has sold a commercial premises to the German company AEW Europe in the heart of Salamanca district of Madrid, precisely in Calle de Serrano, No. 7. The space is part of a building being fully restored, whose works are planned to be finished by the first quarter of 2017.

The commercial premises has a total of 750 m² distributed over two floors, one at street level and one on the first floor. It features a clear area, plus large shop windows and eight balconies, which allow plenty of natural light.

Marc Langenbach, Fund Manager of AEW Europe commented: “As the first investment fund in Spain, this operation is a welcome addition to our portfolio. Our intention is to rent the place to an international retailer during the construction period and we have already detected a strong interest. During the coming months we will continue expanding our portfolio in the main streets of the major cities in Europe”.

According to Beatriz Lopez Cid, Retail Associate in Cushman & Wakefield Spain, “the premium brands are increasingly moving to the Puerta de Alcalá, due to the limited availability of premises. This requires for buildings to be remodeled and adapted to new needs. The closing of this transaction confirms the confidence of investors in HS assets  in Spain, and  indeed, the premises purchased by AEW Europe go in this direction. “

Calle Serrano is considered the most emblematic of the Spanish capital, located in the famous Golden Mile of Madrid, and hosts luxury brands like Prada, Cartier, Louis Vuitton, Versace, and Adolfo Dominguez, among others.

Original story: Mislocales.es

Translation: Aura Ree

Bank of Spain: House Rental Yields Soar To 9.1%

29 December 2015 – Expansión

The returns on buying a home have not been as high in Spain since September 2007, at the peak of the bubble. The average gross annual yield on homes currently amounts to 9.1%. That is according to the most recent data published by the Bank of Spain, which relates to the end of the third quarter. Three months earlier this indicator amounted to 8.6%; whilst in March it equalled 6.2%, which gives us an idea of the speed with which residential returns are growing.

The total gross return on residential properties “is calculated as the estimated gross return from rent, plus capital gains”, according to the body led by Luis María Linde. In other words, the calculation takes into account not only the amount an investor can expect to obtain each year from leasing out the property, but also the gain he/she can expect to make from selling it in twelve months time.

The gross annual yield is the most important indicator for investors. Much of the appeal of homes as investments is that they offer returns that are significantly higher than those currently generated by public debt and deposits. Specifically, the average home is 5.2 times more profitable than 10-year State bonds, whilst deposits offer returns of just 0.4%, according to the body led by Luis María Linde. (…).

We are currently experiencing an impasse involving high returns with minimal risk. And there are many reasons for it: house prices are starting to rise (by 2.6% in 2015 and by more than 6% in 2016, according to Servihabitat) and rental prices are on the increase as well, although more gradually (by around 1%, according to the index prepared by IESE and Fotocasa). The average price paid by tenants has increased significantly in Spain’s two largest cities, Madrid (4.67%) and Barcelona (6.19%), according to data from Tecnocasa.

In addition, the percentage of citizens choosing to rent rather than buy is increasing, from 19% to 21.2%. In the last three years, the rental market has increased by 1 million homes and is now 42.5% larger.

For this reason, investors looking to obtain higher returns have started to hunt for properties in very established locations, with high demand, with a view to renting them out.

Rental yield, excluding capital gains

Another way of measuring the attractiveness of investing in homes is the gross rental yield, excluding capital gains. In the second quarter of 2015, that indicator amounted to 4.6% and had been stable since March 2014. Prior to that, such high rental yields had not been seen since June 2003, when house prices were increasing at two-digit rates.

The most profitable city is currently Sevilla. The Andalucían capital offers a gross rental yield of 8.2%, according to a study by Tecnocasa. In Madrid, the yield on homes amounts to 7.7%; in Zaragoza, it is 7.4% gross p.a.; and in Barcelona, it amounts to 6%.

Other real estate assets offer even more attractive gross rental yields (excluding capital gains) than homes. Commercial premises continue to be the most profitable product (7.5%), followed by offices (6.8%) and garages (4.6%). (…).

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Bankia Considers Cerberus’ Offer For 75% Of ‘Big Bang’

13 October 2015 -Expansión

Bankia’s Project Big Bang is moving towards the finishing line and a clear frontrunner has emerged: Cerberus. In recent weeks, the US fund has submitted a bid for 75% of the assets forming part of the macro-project through which the nationalised entity wants to get rid of all of its foreclosed assets. Cerberus must have put around €2,100 million on the table, according to financial sources.

The same sources say that only one counter-offer has been submitted, by the fund Oaktree, one of the most active players in Spain in recent months. However, its offer must have been lower and for a smaller package of assets.

Other large funds such as TPG, Apollo, Lone Star and Blackstone all exited the process before the binding offer phase, due to the complexity and costs associated with the transaction. They were also deterred by the fact that Cerberus has first-hand knowledge of the assets, since it manages them through its real estate platform Haya Real Estate, formerly Bankia Habitat, which it acquired in 2013. For this reason, Cerberus has been able to offer a price that is closest to the reality of the assets, without having to incur significant expenses in terms of appraisal and consultancy fees.

Bankia’s department for Corporate Investments has been analysing the offers since they were submitted two weeks ago. This stage of the process is very complex, since each one of the proposals is limited to different groupings of the 46,000 assets up for sale, which include homes, commercial premises and plots of land. Moreover, the offers have been received just as Manuel Lagares, the Head of the Corporate Investment team, is leaving the firm, to move to Credit Suisse.

The key behind the success of this operation will  be whether the prices are more or less aligned with those of the provisions. The portfolio, initially valued at €4,800 million has provisions amounting to €1,900 million, and therefore Bankia is not going to be willing to sell for less than €2,900 million.

The complexity of the process forced Bankia to announce over the summer that it would consider dividing up the portfolio. As such, it is possible that the entity led by José Ignacio Goirigolzarri will award the portfolio to both Cerberus and Oaktree. It may also opt to open a new round of offers with a more segmented portfolio, as a means of maximising its value.

Negotiations

In fact, according to sources close to the operation, the key obstacle is that the funds are leaving the lowest quality assets outside of their offers, and Bankia is not willing to be left with only the least attractive homes, commercial premises and land in the real estate market.

The investment bank Credit Suisse and the consultancy firm KPMG are advising the nationalised entity on this transaction.

The Big Bang portfolio comprises 38,500 homes, with a nominal value of €3,300 million; almost 5,000 commercial premises, worth €1,100 million; and 2,600 plots of land, with a gross price of €400 million.

For Cerberus, winning Project Big Bang would enable it to obtain economies of scale in its commitment to the recovery of the Spanish real estate sector. The US fund has acquired the real estate managers of Bankia and Cajamar – Cimenta2 – in recent years, as well as AyT, the securitisation fund manager, previously owned by Ahorro Corporación and Cecabank. But it still has not bought any large asset portfolios like its competitors Lone Star and Blackstone.

Meanwhile, Oaktree has revealed itself to be one of the most active funds in Spain in recent months, due to its purchase of a portfolio of mortgages from Bankia.

Original story: Expansión (by Jorge Zuloaga)

Translation: Carmel Drake

Urbas To Earn €250M From Sale Of 1,600 Homes Over 5 Years

29 July 2015 – El Economista

Urbas has launched a new business plan that forecasts the sale of 1,600 homes, located in 49 developments, over 5 years, through which it expects to generate turnover of €250 million and profits of more than €40 million.

The company has calculated this turnover volume on the basis of an average expected price of €167,000 per home, said the Urbas Grupo Financiero in a statement today. The company expects to begin selling the homes it owns in Spain during the third quarter of the year (…).

The company will also deal with more than 9 million square metres of land, commercial premises and buildings that it holds, most of which is located in the Corredor de Henares and Guadalajara.

Integration of assets

This represents a new stage for the company, which has spent the last year completing all of the regulatory processes and appraisals necessary following its absorption of the assets previously owned by Aldira Inversiones Inmobiliarias and Alza Residencial. The transaction has allowed Urbas to increase in size by a factor of 13 in the last year, whereby “gaining financial muscle and increasing its volume of assets, to become one of the medium-sized listed real estate companies on the market”.

With the final integration of the assets, approved by the General Shareholders’ Meeting on 10 July 2015, Urbas is now redirecting its own resources to positive figures, through a capital increase amounting to €384 million, which will result in a market capitalisation of approximately €600 million and a reduction in its debt ratio to 33%.

The General Shareholders’ Meeting also approved the new corporate regulations to update and improve its corporate governance. The company’s share capital has been divided into three basic packages of similar proportions, which are controlled by the groups Darivenia Markets, Quantium Venture and Alza Residencial.

The rest of the capital will continue to trade on the stock exchange, ensuring that the company has “a high volume of liquidity, which has made it one of the most active companies in terms of share sales on the Spanish stock exchange in recent years”.

Following the transformation of its financial structure, in line with the economic recovery, and given that none of its shareholders are financial institutions, the group hopes to leave the economic crisis behind and embark on a promising future, focused on the real estate sector and its listed status on the stock exchange.

Original story: El Economista

Translation: Carmel Drake

La Caixa: House Prices Increased By 2.65% YoY In Q1 2015

6 July 2015 – Cinco Días

The recovery in the housing market is strengthening with rising sales prices, an increase in the volume of mortgages and a decrease in the number of mortgage foreclosures. In parallel, major transactions are being signed in the market for offices once again.

The official statistics show that house prices increased by 2.65% YoY during the first quarter of 2015 and by 1.88% with respect to the end of 2014 – property prices fell by 31% on average during the crisis -. Furthermore, growth is being seen across all regions, with the País Vasco and the Balearic Islands leading the charge.

Between January and March 2015, 16.2% more house sales were registered than during the period from October to December 2014, and 9% more were recorded than during the same period in 2014. The sale of used homes rose by 23.8% during the first quarter.

Transactions involving foreigners – who are driving the sector – increased by 8.9% with respect to the same quarter in 2014. Certificates for mortgage foreclosures decreased by 4.3% with respect to the first quarter in 2013 and have now fallen by 14% since their peak in 2010. A report from La Caixa says that supply, demand and prices are all adjusting accordingly. The inclusion of Spaniards (as buyers) will happen in due course, supported by the “improved labour market and easing of access to credit” thanks to the ECB’s program and the clean up of the banking sector. There is still a high level of stock to sell and lease, and the market for the construction of new developments is only just beginning to recover. The study warns that we should continue to monitor the market for signs of a possible bubble.

Furthermore, activity is returning to the segments for offices, warehouses and commercial premises. During the first quarter, there was a five-fold increase in transaction volumes with respect to the same period in 2014, say Savills, and four purchases alone amounted to €1,340 million in total.

According to PricewaterhouseCoopers, Madrid is one of the European cities with the best investment prospects; that is reflected in the “surge in capital inflows, which began in 2013 and is not showing any signs of receding”. And the money is coming from all sources, including global funds and tycoons such as Warren Buffet. Spain is a good place to invest.

Original story: Cinco Días (by Carlos Gómez Abajo)

Translation: Carmel Drake

Bank Of Spain: Residential Rental Yields Rise To 5%

18 May 2015 – Expansión

Residential market / The average annual return on rental properties is equivalent to 3.1x the return on public debt – a historical record. Demand for rental property has soared by 42.5% in three years.

After seven-years in decline, it seems that the housing sector is back. The residential market is oozing optimism once again, although it is also full of caution, learned during the post-bubble era, and  uncertainty, inherent in a recovery that is still recent.

But the data is improving and housing has become a good investment once again, above all due to the significant rental returns offered nowadays. Investors looking for yields that exceed those on deposits and public debt are on the hunt for properties in good locations, with high demand, with a view to buying them to let.

The data endorses this trend, since the rental income for a residential property offers an annual gross return of around 5%. On average, 4.7%, according to the Bank of Spain. It is the highest percentage recorded since June 2003, during the height of the housing bubble, although other reports, such as the one published by idealista, puts the figure even higher, at 5.3%.

The gross yield is a percentage of the total price of the house covered by the annual rental income. This yield, published by the Bank of Spain, also takes into account capital gains.

Taking into account the data from the body led by Luis María Linde, the average annual rental yield is no less than 3.1x the return generated by public debt on the secondary markets during the last quarter (1.5%). That is a historical record for this comparative ratio, which dates back to 1991. Meanwhile, bank deposits offer a return of 0.6% each year.

What does all this mean? Simply, that the moment is ripe for investment in buy-to-let housing, especially for small investors. The price of homes is beginning to increase and so are rentals, which means that the market is at an impasse of high returns without much risk. Moreover, the percentage of citizens who prefer to rent rather than buy has risen sharply, from 11.4% in the boom years to the current rate of 19%. In the past three years alone, the rental market has expanded to include one million more homes; it has grown by 42.5%.

On the other hand, the price of homes is starting to rise, specifically by 2.65% during the first quarter of the year, according to the registers. This trend towards stability in terms of property prices points to an easing of returns in the rental market, and so analysts believe that now is the best time to invest (rather than waiting to invest over the next few quarters).

According to the experts, the prime areas of the large cities are those that offer the safest opportunities, due to their significant demand, although without exorbitant returns. For example, the Madrid neighbourhood of Retiro, where the average price per square metre for sale is €3,289 and for rent is €11.6/m2/month, according to the index prepared by IE Business School and Fotocasa. A property measuring 100 m2 with these parameters would have an annual return of 4.2%. A second-hand home measuring 100 m2 in the Goya neighbourhood (Madrid) would have a return of around 4.7%.

“Homes in the best locations are the most attractive to rent. They will go up in price and there is no risk of default or lack of demand”, says the real estate consultant José Luis Ruiz Bartolomé. “It is possible that rental prices will also start to rise, although by less that sales prices. The rental margin will narrow, but that is because certainty will increase as well; I do not see that as a bad thing”, he adds.

And in the peripheral areas? “You have to look at where there is more demand than supply”, says Ruiz. Julio Gil, President of the Foundation for Real Estate Studies agrees: “It is the best option for small investors, due to the returns and minimal risk”.

Some properties offer higher yields than housing, such as commercial premises (7.2%) and offices (6.7%), according to idealista.com. Garages yield 4.5%.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Amancio Ortega’s RE Jewels In The Heart Of Madrid & BCN

26 March 2015 – Expansión

The largest shareholder of Inditex has an extensive real estate portfolio that includes properties and retail stores on the two most desirable streets in both cities.

They are the most sought-after streets in Spain for any real estate investor. On the one hand, Paseo de Gracia, in Barcelona, the star shopping street in the Catalan capital. On the other hand, the Paseo de la Castellana, in Madrid, an object of desire for any investor and a prime office location. As such, both have piqued the interest of Amancio Ortega, who owns more than ten buildings on the two thoroughfares.

Through Pontegadea, the company that the founder and majority shareholder of Inditex channels his investments through after closing his Sicavs, Ortega has purchased six buildings on the Catalan avenue and another five on the Madrid street.

In the case of the Paseo de Gracia, the most recent acquisition was made last year when Ortega purchased an office building located at number 1 on the street, on the corner with the famous Plaza Cataluña, for €44 million. This space, which has been leased to Banesto until now, will be converted into an Iberostar Hotel. A few months earlier, he acquired the commercial premises in the same building for €80 million, which are leased to Apple (see picture above). That US multinational is not Ortega’s only illustrious tenant; others include Fnac, Baker & Mackenzie, Burberry and Google.

In March 2012, Pontegadea acquired another building also on the Paseo de Gracia. In that case, Ortega’s company paid Sacyr €53.5 million for the building located at number 56. Measuring more than 9,000 square metres, it is leased to the British textile manufacturer Burberry. The Inditex owner is also the landlord of the building at number 93.

Madrid

The purchases made in the last decade have made Amancio Ortega one of the largest property owners on Madrid’s main thoroughfare: the Paseo de la Castellana. The owner of Zara joined the select club of property owners in that area in 2004, when he acquired number 92 (that same year he made a joint purchase with Metrópolis of an office building on the Paseo de Gracia, 16, which was converted into luxury housing). On the Castellana, Ortega also owns number 35, which he acquired in 2005; and number 79, the former headquarters of Axa, which he renovated to create a new office building with a shopping area, now leased to Fnac and Habitat.

But, undoubtedly, the jewel in Ortega’s crown in Madrid was acquired at the end of 2011, when he signed an agreement with FCC to purchase the Torre Picasso. He paid €400 million for the skyscraper that sits in the heart of the city’s financial district, just a few metres from the Paseo de la Castellana – a record figure for a single building, second only to the €815 million that the then Caja Madrid invested in the Torre Foster.

Nevertheless, it was not the first time that Pontegadea had paid so much in a real estate transaction. At the end of 2007, Amancio Ortega paid €458 million to Santander for the acquisition of ten buildings located in several Spanish cities, which included Castellana, 24 and Paseo de Gracia, 5.

These two great Spanish streets are just an example of Ortega’s extensive property holdings, which also include buildings leased to Inditex companies, such as for example Serrano, 23, in Madrid, which is leased to Zara. In the last full financial year (2013), Pontegadea’s assets were valued at €4,519.5 million and they generated a profit of €93.3 million, compared with €70.5 million a year earlier.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Madrid Earns €360M From The Sale Of Public Properties

25 March 2015 – El Confidencial

The Community of Madrid sold around thirty real estate assets between 2012 and 2014, including an entire housing development and a number of buildings on Gran Via.

The sale of public properties generated income of more than €360 million between 2012 and 2014. In total, during this period, around thirty real estate assets of all types were sold, ranging from an entire housing development, to a number of buildings in the heart of Gran Via, as well as flats, plots of land and commercial premises.

The starting gun for “property” sell-off began in the summer of 2012, with the sale of a plot of land for tertiary use in Pozuelo de Alarcón for €5 million. In the same year – when Spain was on the black list of all investors – Metro de Madrid sold another plot of land that it owned on Calle Cardenal Cisneros for €2.1 million.

However, the largest transaction signed to date by the Community of Madrid did not take place until July 2013. Then, it sold a 32 home development, owned by Ivima, to Azora and Goldman Sachs for €200 million, whereby the buyers paid almost 20% more than the initial asking price (€168.9 million).

At the end of 2013, two further transactions were signed that “fattened up” the public coffers by more than €26.5 million. These involved the sale of Gran Via 18 for €18.6 million to Iberia Project Management, although the Texas Pacific Group (TPG) was actually behind the bid – that fund purchased 51% of Servihabitat Gestión Inmobiliaria from CaixaBank in September of the same year. The second sale was of Gran Via 3, which the Community sold for €8 million to Baech Bienes Inmuebles.

Then in 2014, when real estate investment in Spain really took off, more than a dozen transactions were signed; the most noteworthy was the sale of a building measuring more than 9,000 square metres for €40.2 million to Línea Directa, the insurance arm of Bankinter. Last year, Gran Via 20 was also sold to the real estate company of Caja Rural de Almendralejo, which paid almost €20 million for the property.

The final two transactions last year were closed in December: a building on the Carretera de San Jerónimo, measuring 4,500 square metres for €14.1 million and another measuring almost 3,000 square metres on Los Madrazo for €3 million; both were owned by Arproma.

The plans to sell off public assets are on-going. The Community of Madrid has placed a “for sale” sign above another 22 assets that is owns. Office buildings, residential properties, commercial premises, plots of lands, flats and individual buildings. Through these, it hopes to “fatten up” the public coffers by around €56 million, taking advantage of investors’ renewed appetite for Spain.

Nevertheless, the jewels in the real estate crown have been sold already. By price, the following assets are up for sale: an office building on General Díaz Porlier, which has been on the market since October 2013 and for which the Community of Madrid is asking €11.1 million. In terms of land, there is a plot for sale in Tres Cantos for €5.8 million and there is also a flat for sale measuring 170 square metres on Calle Fernando el Católico for €467,000.

The Community is organising public auctions to sell these assets as well as direct sales. To give more visibility to its properties, like in the past, the Community has is making use of specialist websites, such as addmeet.com, which lists the assets sold to date, as well as the buildings for sale and the real estate auctions that are underway.

The sale of the building next to Puerta del Sol is on standby for the moment; the Community of Madrid is asking €10.7 million for that property.

Original story: El Confidencial (by Elena Sanz)

Translation: Carmel Drake