Casanova Completes Lightning Operation On Calle Preciados

3 March 2017 – Cinco Días

Trinitario Casanova has completed his second lightning operation in Madrid. (…). On Wednesday, the Murcian businessman formalised the purchase of a building on Madrid’s Calle Preciados, the most expensive street for retail premises in the city, and immediately sold it to the Texan fund Hines.

The property acquired on c/Preciados by the owner of the Baraka Group has a surface area of almost 1,700 m2, spread over a basement floor, ground floor and four above ground floors. The idea is that the whole building will be renovated for commercial use and converted into a flagship store for a major brand.

This is the same approach to a deal that Casanova adopted when he purchased a Bankia branch on Gran Vía in Madrid last year. In that case, the end buyer was also Hines, after the hamburger chain Five Guys confirmed that it would lease the space. In exchange, Casanova obtained a fast profit.

It also resembles the major operation that the businessman has signed in Madrid recently – the purchase of Edificio España from the Chinese group Dalian Wanda. That transaction, amounting to €272 million, has not been closed yet, but the hotel chain Riu has confirmed its participation as a partner investor and brand, as well as the manager of the future hotel. Nevertheless, in September, the Murcian businessman admitted that he still needed to find €200 million to finance the renovation work (…).

In the case of the property at number 13, Calle Preciados, Casanova has purchased it from several families, in an operation advised by Pérez-Llorca and Cushman & Wakefield. The parties have not revealed the consideration paid.

Cortefiel has decided to close the store of its Springfield brand, which occupied this building until now. The property also currently houses a local fashion company called Símbolo.

Original story: Cinco Días (by A.S.)

Translation: Carmel Drake

Domo Submits Bid To Wanda For Edificio España

31 May 2016 – Cinco Días

Domo Gestora has submitted an offer to acquire the historical Edificio España as part of the sale process that the Chinese group Dalian Wanda currently has underway. Three sources close to the operation have confirmed the bid, but it is expected that the company will have to compete with other interested parties.

The sale of Edificio España is being managed by the consultancy firm JLL, which declined to comment on the process. The intermediary closed the first deadline for the presentation of non-binding offers last Friday, 27 May 2016. Over the next few weeks, the Chinese group will analyse the offers it has received for the building, in which Wanda had planned to open a hotel and luxury homes, as well as a shopping arcade. The plan is to finalise the sale before August. Domo is one of the possible candidates to take over the property and is expected to form an alliance with a hotel partner or other investor, whose identity has not been revealed.

Domo is a medium-sized company that specialises in the management of housing cooperatives. According to the sources familiar with the transaction, it could become the perfect local partner to take over the renovation and marketing of the apartments. The management firm has been in the news recently for its involvement in Residencial Maravillas, a luxury housing development on Calle Raimundo Fernández Villaverde (in Madrid), where work has not started yet and whose approval divided the municipal Ahora Madrid government.

The sources consulted understand that Wanda lost interest in this Madrilenian project after it was unable to carry out its renovation plans, which involved demolishing the property to rebuild it from scratch in keeping with the original style. After the plans were rejected by the Administration, the company decided to withdraw its complex renovation plans. The group purchased the 1950s building from Santander for €265 million in 2014. Domo is thought to have been inspired by a proposal put forward by the architect Carlos Rubio Carvajal, who submitted a more respectful design to the financial institution.

In addition to Domo’s offer, sources in the sector indicate that other investors, who were potentially interested in the building initially, have also analysed this operation, however, it is not known whether they have submitted bids in the end or not. The other parties include the Chinese fund Fosum, the Hong Kong-based firm Platinum Estates, the Philippine group Emperador – which recently acquired Torre Espacio from the Villar Mir Group -, the US fund Hines and the insurance company Axa, which declined to comment on its involvement in the sale. Both Wanda and JLL are maintaining the utmost confidentiality surrounding this transaction.

Experts in the sector indicate that Wanda will only be interested in selling the property if the consideration offered exceeds the €265 million it paid in 2014. Meanwhile, the Asian group is continuing its negotiations with the Town Hall regarding the handling of the renovation work, given that the property would be worth more if the group manages to obtain the necessary building permits.

Original story: Cinco Días (by Alfonso Simón)

Translation: Carmel Drake

Wanda Plans To Sell Edificio España Before August

26 May 2016 – Cinco Días

The Chinese group Dalian Wanda is pushing ahead with the sale of Edificio España, and at the same time it is continuing its negotiations with the Town Hall of Madrid to refurbish the building. The process to complete the transaction is progressing quickly. In fact, the company owned by the magnate Wang Jianlin expects to close the deal before the summer holidays, according to sources close to the talks.

Over the next two weeks, the Chinese group will receive the first non-binding offers from parties interested in buying the building, where Wanda plans to open a hotel and luxury homes, as well as a shopping arcade. These bids will be analysed and a due diligence process will begin. Wanda expects to have closed the sale before August.

For this process, the Chinese investor has engaged the real estate consultancy JLL to act as intermediary, which is pushing ahead with the transaction. Both Wanda and JLL are conducting the transaction with the utmost confidentiality. (…).

The sources consulted understand that Wanda has lost interest in this Madrid mega-project, as it has been unable to carry out its refurbishment plans, which included demolishing the property to reconstruct it from scratch in a similar form to the original. In the face of the rejection from the Town Hall, the Group has decided to forego the complicated refurbishment.

Nevertheless, Wanda is continuing its negotiations with the municipal technicians to find a solution for tackling its future renovation and whereby obtain the necessary construction permits. Market sources insist that it would be positive for the Chinese Group to have these permits, because they will add value to the property for the potential buyers, as would resolve the problems with the Town Hall of Madrid regarding the renovation.

Companies reported to be evaluating the purchase come from Asia, Europe and USA. In some cases, these companies and funds are looking to form alliances with Spanish partners or with firms that have knowledge of the local market, so as to entrust the refurbishment work to them. The figure being talked about in the sector for the sale amounts to just under €300 million.

Wanda paid Santander €265 million in 2014 for the skyscraper, constructed in the 1950s, which is currently unoccupied. It planned to undertake an ambitious renovation, which included reconstructing the building from scratch, but it met with refusal from the Local Heritage Committee, in which the Town Hall (Ahora Madrid) and regional Government (PP) participate, due to the protection afforded to the façades. However, differences of opinion started to emerge last year. The Asian conglomerate decided to put the building up for sale in February. In recent weeks, however, it has resumed talks with the Town Hall.

Nevertheless, there was a new twist in the tale on Monday. The President of the Asian conglomerate broke his silence to confirm that he is still waiting for official confirmation from the Town Hall that his company will be allowed to demolish the property and rebuild it from scratch. “The Town Hall is holding talks with us again saying that we can demolish it. We are waiting for a written document to confirm this, rather than their verbal promise”, said the Chinese magnate to CCTV, the state television channel in his country.

In this way, he contradicted the team led by Manuela Carmena, which has stressed to date that it will not allow the demolition. Sources close to the project say that they do not know why the Chinese officials in Spain agreed to not demolish the building after months rejecting the municipal proposal and they consider that they have gone to the limit to obtain the upper hand in the negotiations.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Edificio España: Renovation Prohibited So Wanda May Sell

13 January 2016 – Expansión

The Chinese company Dalian Wanda is considering putting the iconic Edificio España building on the market. It acquired the property from Santander for €265 million in 2014, but is not being allowed to completely renovate it and convert it into a luxury hotel, with a retail space and homes.

The group founded and led by Wang Jianlin wanted to pull down the tower, located in Plaza de España (Madrid) and reconstruct its façade with a design that is identical to the current one, however the new Town Hall of Madrid, led by Manuela Carmena, has rejected those plans, on the basis that the façade must be protected as it forms part of the city’s artistic heritage.

After months of fruitless negotiations between the Asian company and the Town Hall to begin the construction work, Wanda has now decided to sell the building, according to several sources consulted by this newspaper.

As a preliminary step, Wanda Madrid Development has decided to close the office that it opened in the Spanish capital to carry out the remodelling of the iconic building, which has stood empty for many years.

Following the commotion caused by the plans set out by Jianlin, the wealthiest businessman in Asia, the Town Hall of Madrid said yesterday that it was not aware of any plans for the building to be sold.

Meanwhile, the PP’s spokesperson at the Town Hall, Esperanza Aguirre, asked the municipal Government to “think twice” and allow Wanda to demolish and reconstruct Edificio España from scratch, because losing the investment (opportunity) and the jobs that would result from the Asian group’s plans would have “very serious consequences”. The spokesperson for Cuidadanos, Begoña Villacís warned that, if the decision is confirmed “Madrid could become an investment desert” since it is “a city with lots of development projects on the table and investment opportunities that we must not miss out on”.

Background

Despite the disagreements, Dalian Wanda, which also paid €45 million for a 20% stake in Atlético de Madrid last year, reaffirmed “its commitment” to “the citizens of Madrid” in October last year, as well as to the restoration of an “icon of the urban landscape”. The group confirmed that it was willing to hold “open and transparent dialogue, provided safety and the law are put first above everything else”.

At the end of November, the councillor for Urban Planning at the Town Hall, José Manuel Calvo, confirmed that the plans were moving ahead to enable the renovation work to start “as soon as possible”, although the administrative procedures must first be completed.

Madrid’s local historic heritage committee issued a binding ruling, which resolved that the façade must not be demolished or dismantled, but Wanda insisted that maintaining such a tall façade during the renovation work would be unsafe, which is why the company proposed that it be dismantled and then reconstructed.

Original story: Expansión (by R.R./A.F.)

Translation: Carmel Drake

Madrid: Third Favourite Investment Market In Europe

12 February 2015 – Expansión

PwC Report / The Spanish capital is the third favourite investment market after Berlin and Dublin. The commitments made by George Soros and Dalian Wanda are generating the “pull effect” (in 2015).

The financial investor George Soros, the giant Chinese corporate Dalian Wanda and the new fund manager Tiaa Henderson all have something in common: they have all invested in the Spanish real estate sector in recent months. This activity has not gone unnoticed by other investors, since not only has real estate investment in Spain returned to figures not seen since the boom years (2007), but also the phenomenon is also expected to continue in 2015.

According to the ‘Trends in the European Real Estate Market 2015’ report, prepared by PwC, Madrid is the third favourite destination for investors at the European level, behind Berlin and Dublin. “There is a mixture of 28 cities in this ranking: classic investment destinations such as Berlin and Munich, capitals that are in recovery, such as Athens – the survey was conducted in November before the Greek elections – and Dublin”, explains Rafael Pérez Guerra, the partner responsible for the real estate sector at PwC.

Of the 28 cities studied, only those in Russia have limited prospects for investment growth, even though 61% of respondents believe that the good assets (known as “the core” in the sector) are overvalued in virtually all of the European markets.

This boom has led many investors to seek out new markets. “Another important area of interest are the secondary cities, such as Birmingham, which is ranked in sixth place, above London and Munich. Investors have started to take on more risk because profitability in the large markets is scarce; as a result they are exploring secondary sites”, he adds.

Spain

The change in the Spanish real estate sector is reflected in the rise (up the ranking) of its main markets as investment destinations: Madrid has risen from 19th place to third and Barcelona from 22nd to 13th, according to PwC’s report.

“There is a very high level of interest and activity in Spain. It is not that the market is not over-heating, but rather that the dynamics of the sector are changing, with an imbalance between a scarcity of good deals in prime areas and significant demand from opportunists who remain in the market and more stable investors who are arriving”, says Enrique Used, the partner responsible for transactions in the real estate sector at PwC.

This commitment to the Spanish market will continue in 2015, according to the survey respondents, and will not be limited to the large markets. “International capital has moved towards Spain, en masse. Prices have risen considerably in Madrid, which suggests that the investors that are looking for the highest returns, should set their sights on the secondary markets in Spain during 2015 to obtain higher returns.

Although the 500 people surveyed by PwC see a clear recovery in investment in Spain, they still believe that the market for the construction of new homes should improve; Madrid and Barcelona are ranked only 14th and 23rd, respectively, although that represents an improvement with respect to 2013 when they were ranked 21st and 25th.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake