Sareb Teams Up With RE Companies To Build 1,100 Homes

28 September 2016 – Diario Vasco

Sareb has chosen 19 plots of land from its portfolio, which have the capacity to house around 1,100 homes, for which it will team up with a dozen companies from the real estate sector to develop projects under both co-investment schemes as well as through direct sales.

Sareb explained in a statement published on Tuesday that this project forms part of the strategy that it is pursuing to revalue its assets and better execute it divestment mandate.

In this case, Sareb’s initiative is being driven in conjunction with several selected companies: Grupo Brial (with 4 developments), Construcciones Amenabar (3), Grupo Bertolín (3), Inmobiliaria del Sur (1), Aldesa (1), Aelca (3), Desarrollos y Construcciones Fomex (1), Atica (1), Monthisa (1) and Sequoia Desarrollos Inmobiliarios (1).

According to Sareb, the winning property developers were chosen after a competitive process was held, in which 76 candidates participated. It added that it has been supported in the selection process by Irea as well as by three of its management companies (Altamira, Servihabitat and Solvia).

The 19 plots of land that Sareb has chosen from its portfolio have a combined buildable surface area that the bad bank estimates has the capacity to house around 1,100 homes.

The plots of land in this operation are located in Andalucía (4), Madrid (4), Cataluña (3), Baleares (2), Aragón (2), Comunidad Valenciana (2), Asturias (1) and Castilla y León (1).

Sareb explained in its statement that most of the offers from the selected companies reflect a co-investment model, whereby the bad bank will retain ownership of the asset, and the property developers will contribute some of the investment funds and take responsibility for the construction the properties.

In five cases, Sareb has opted for a “financial swap” to maximise the economic return. It explained that this alternative involves the property developer partners buying the assets outright.

The price that Sareb is receiving for the land will be complemented in the future by a percentage of revenues from the sale of the homes.

The construction works are expected to be completed from 2018 onwards, depending on their characteristics.

Sareb is evaluating offers for other plots of land, which, if they go ahead, would further expand the perimeter of the co-investment initiative.

“The plots of land and projects that have been put on the market have been selected in accordance with criteria of efficiency, commercial suitability and the technical quality of the proposals”, said the Director of Direct Management at Sareb, Juan Ramón Dios.

In 2015, Sareb announced the development of 13 plots of land, some of which are now being sold.

Morever, since its creation, Sareb has completed 46 developments that it received in an unfinished state, and as a result, has already put around 1,000 new homes on the market.

Original story: Diario Vasco

Translation: Carmel Drake

Cogesa Paid c. €2,200/m2 For The Final Plots In Montecarmelo

25 September 2015 – El Confidencial

Some people regard it as an Urban Planning Action Plan (‘Programa de Actuación Urbanística’ or Pau) for “rich people” only. But, Montecarmelo, the smallest of the three new neighbourhoods in the north of Madrid – together with Sanchinarro and Las Tablas – has become the talk of the sector. And it is no wonder. The neighbourhood has starred in the most expensive land operation to be closed since the burst of the real estate bubble, and although it did not trigger alarm bells per se, it did raise concern amongst the main players in the market, for whom the memories of the worst excesses undertaken during the boom are still fresh and vivid.

Less than three months ago, at the beginning of July, the company Cogesa, which forms part of Grupo Dragados and is led by Enrique Pérez, the brother of Florentino Pérez (the President of Real Madrid Football Club), paid an “exorbitant” amount for the final few residential plots in Montecarmelo. Specifically, Cogesa paid just under €2,200/m2 for the land, i.e. significantly more than the figure (€1,400/m2 – €1,500/m2) the experts consulted by this newspaper consider should have been paid for the launch of a profitable development, unless, of course, it is developed as a cooperative.

Montecarmelo, which is located next to Monte del Pardo, the Colmenar motorway and the M-40 ring-road, was conceived at the beginning of the 1990s. With more than half a million square metres of land allocated for residential use – 8,500 homes, both unsubsidised and subsidised – it became the destination of choice for hundreds of young couples who saw the neighbourhood as a good place to live that allowed them to travel into the city centre each day to work. It was born as a commuter town (neighbourhood), just like Sanchinarro and Las Tablas, but is now witnessing the “overheating”  of land prices that seems to be happening once again. (…).

Knight Frank…estimates that there is only around 50,000 m2 of buildable space left in the development, i.e. 5% of the total, since the remaining 95% is under construction or has already been built. (…).

Cogesa’s bid took the other participants in the tender completely by surprise: Construcciones Amenabar and Grupo CP, two companies that have been involved in previous projects, as well as Momentum and the cooperative DMS have said as much…none of the other offers even came close to the figure that was put on the table by the Grupo Dragados’ company, to acquire the last large plot for sale in Montecarmelo. The company already has a presence in the neighbourhood, with around one thousand homes in several developments. At one of them, Las Terrazas de Montecarmela, the company has been selling homes for just under €3,000/m2.

“Cogesa already has interests there. It owns several plots, which means that by paying the amount it has done for this plot, it has also increased the value of its own portfolio there” says an expert consulted by this newspaper. (…).

However, the most recent land operations are raising concerns that the segment is “overheating”. In fact, the numbers do not add up for some developers. “A those prices, they would have to sell the homes for more than €3,500/m2, and not only is it going to be difficult to find buyers willing to pay that much, the figure also leaves minimal scope for profit. A logical price would have been €1,400/m2-€1,500/m2, because even if the cost of the land attributable to the final price of the homes was 50%, they could be sold at €3,000/m2 and not lose money”, explains a source at one developer, who prefers to remain anonymous.

“At these prices, the only thing that would make sense is a development on a cooperative basis, a formula that this company has adopted in the past. The developers need to make a profit of between 15% and 20%, however, in a cooperative, the manager does not earn any more than 10% and the risk is diluted amongst the cooperative”, says Ernesto Tarazona, Partner and Director of Residential Property and Land at Knight Frank, who believes that the lack of supply in the area benefits any project that is undertaken in Montecarmelo. (…).

Original story: El Confidencial (by Elena Sanz)

Translation: Carmel Drake