Tag: demolition

Baraka Teams Up With Riu To Promote Edificio España Hotel

13 January 2017 – Cinco Días

The Baraka group has taken a giant step forward in its acquisition of Edificio España from the Chinese holding company Wanda. The company, through which the Murcian businessman Trinitario Casanova is handling the operation, has announced the launch of a joint venture with the hotel chain Riu.

Through this joint company, Rui will hold a stake in the property amounting to between 25% and 30%. Sources close to the agreement indicate that the hotel chain will participate as an investor through the joint venture for the acquisition and renovation of the building, which is actually still owned by the Chinese group Wanda.

The Mallorcan hotel chain, founded by the Riu family, in which the tour operator giant Tui owns a 49% stake, will also manage the future five-star hotel in Edificio España, which will operate under its Riu Plaza brand under a long-term lease contract. It will be the first property to operate under the brand in Spain, which was created in 2010 and which specialises in urban destinations, such as New York and Miami in the USA, Guadalajara in Mexico and Berlin in Germany.

The future establishment, which may open its doors at the end of 2018, will have almost 700 rooms, spread over 22 floors and will have a surface area of just under 70,000 m2. It will join six other properties operated under the same brand across Europe and America. (…).

Riu operates more than 100 hotels across 18 counties and each year receives more than 4 million clients, which means that the future hotel in Edificio España will have a very international profile.

Meanwhile, Baraka also made a second payment for the historical building yesterday, amounting to €14 million….the final operation must be signed before 31 March 2017, at which point the Murcian businessman will have to pay the remaining balance to make up the figure of €272 million agreed with the Chinese group.

Casanova reached an agreement with Dalian Wanda to purchase the property in July. The Chinese investor Wang Jianlin had purchased the building from Santander in 2014 for €265 million, but his plans to demolish the building and reconstruct it were never approved by the Town Hall ruled by Manuela Carmena.

Casanova had been looking for a partner to deal with the renovation of the property, which will have an additional cost of around €200 million. The businessman was looking for an operator for the hotel with which he could sign a fixed lease contract, which caused the major international chains to withdraw their interest. And that, despite the fact that Baraka managed to negotiate a 30 year contract with the US group Hard Rock. (…).

Original story: Cinco Días (by A.S. and L.S.)

Translation: Carmel Drake

Carmena Grants Partial Demolition Licence For Former MOD Building

9 December 2016 – Expansión

The Town Hall of Madrid has granted a licence for the partial demolition of the Precision Artillery Workshop, on Raimundo Fernández Villaverde, despite opposition from Ganemos.

Cooperativa Maravillas, the property developer behind the residential project that is going to be constructed on a plot of land that used to be owned by the Ministry of Defence, on Calle Raimundo Fernández Villaverde, has received some good news this week. The Town Hall of Madrid has granted the management company Domo a licence to demolish the Precision Artillery Workship, now in disuse, despite opposition from Ganemos, one of the parties that forms part of the municipal government’s coalition.

Following a favourable report from the Community of Madrid’s Local Heritage Committee, the Town Hall has authorised the partial demolition of the building. The remodelling of the property forms an essential part of the management company’s plans, which involve the construction of more than 300 homes on this street, located in the Madrilenian neighbourhood of Chamberí.

In any event, the licence for the complete demolition is pending a decision by the Heritage Committee to determine whether the building’s basement still contains any old air-raid shelters from the Civil War, in which case, they should be preserved. In addition, the cooperative is waiting for the agreement reached between the Town Hall and the management company to be ratified.

Details of the agreement

According to this agreement, the Town Hall of Madrid will receive 5,422 m2 of land for residential use, corresponding to 10% of the obligatory concession.

Similarly, the Town Hall of Madrid will receive 3,360 m2 of green space and 1,000 m2 of space on the ground floor of the building, where it plans to building a primary school. It will also receive 250 m2 of free space.

Manuela Carmena’s urban planning team has reached an agreement with the property developer to assign the property in this way, rather than monetise it, with the aim of “covering the deficiencies of these types of facilities in the district of Chamberí”, explained the Town Hall.

The agreement, which is necessary for the approval of the urban planning project and the subsequent work and construction licence, will be circulated for public information purposes and referred to the Town Hall for its ratification.

Opposition from Ganemos

The decision to demolish this building does not have the blessing of Ganemos. The municipal platform, which forms party of Ahora Madrid, considers that “there is no reason” to grant a licence to allow the demolition of the historical building, given that the management agreement required to be able to construct the new buildings has not been approved. According to the platform, several legal cases are still open with the Prosecutor’s Office and the High Court of Justice of Madrid that may still result in the cancelation of the urban planning project. (…).

Meanwhile, the cooperative pointed out that the buildings belonging to the former Workshop are not classified as being of cultural interest, nor do they have any kind of offical protection. “The General Urban Planning Plan of 1997 and its subsequent review did not foresee the need to classify buildings or land as urban land for residential use.”

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Larrain & Loiola Gestión Buy Illunbe Leisure Complex For €17.1M

22 November 2016 – Noticias de Gipuzkoa

The exiting Illunbe leisure complex (in Donostia) will soon be demolished and a new shopping centre, called El Mirador de Illunbe, will be constructed in its place. The aim of the property developers Larrain SL (which forms part of the Moyua Group) and Loiola Gestión Inmobiliaria (owned by Altuna y Uria), to whom the Town Hall of Donostia has awarded the sale of the leisure complex for €17.1 million, is to create a modern “first rate” shopping centre, in a prime location in the city, with views overlooking the sea. To achieve this, the developers will invest a total of €80 million over the next two years (including the aforementioned purchase price of €17.1 million and another €5.5 million to improve access to the site, as required by the Town Hall), in addition to €30 million that the future tenants may invest. The new Illunbe centre is expected to open its doors in time for Christmas 2018.

Although the sale still needs to be formalised (the municipal Government plans to approve and sign the deal soon), the JV (UTE or Unión Temporal de Empresas) formed by Larrain and Loiola Gestión Inmobiliaria was the only group to present an offer and the municipal services team has given their bid the green light. For this reason, the developers have spent the last few weeks marketing the property and making contact with potential tenants; and they admit that the proposal has received significant interest.

The new retail and leisure space will comprise three buildings. Two will be completely new and will be located to the south of the bullring: one will house a 3,000 m2 supermarket and the other will be home to a four-star hotel, with around 75 rooms. The third building will be the star attraction and will be constructed on the land that currently houses the existing property, which will be completely demolished (only the two underground parking floors will be maintained, and another similar floor will be added). Above ground, there will be four new floors and 30,000 m2 of space dedicated to retail and leisure, with a glass façade overlooking Donostia and the sea. “Instead of turning its back on the city, the new centre will look it in the eye”, said Juan Merino from Idea Real Estate, the company that is marketing the new premises at Illunbe on behalf of the property developers Larrain and Loiola Gestión Inmobiliaria. (…).

Original story: Noticias de Gipuzkoa (by Arantzazu Zabaleta)

Translation: Carmel Drake

Atxa Buys Podavines Building In Donostia For €10M

10 November 2016 – Diario Vasco

The Podavines de Amara building in San Sebastián-Donostia was sold on Tuesday to a property developer who is going to convert the property into (unsubsidised) housing. The Department for Social Security organised an auction for the land…and just one bidder participated, Atxa, S.A., who will pay the starting price of €9,959,000. The proceeds will be paid to the Department for Social Security, which will use the funds to finance pensions payments, according to sources at the Government’s Sub-delegation in Guipúzcoa.

The Department for Social Security carried out the public auction of this property on Tuesday and the building was awarded to the company Atxa S.A., which, given that it was the only firm to submit a bid, logically offered the minimum tender price of €9,959,000. The State’s Central Administration will conduct checks over the next few day to ensure that the company does not have any debts with the Department for Social Security and will proceed to formalise the award of the property, according to sources at the Government’s Sub-delegation in Guipúzcoa.

This building, located at the intersection of Calle José María Salaberria, Paseo de Errondo and Avenida Carlos I, has been unoccupied for the last year and a half. Its previous tenant, the Department for Social Security, moved to new facilities in Riberas de Loiola at the beginning of February last year. The building is 43 years ago and the urban planning classification for the land is residential. The property comprises a ground floor plus four other above ground floors and three basement floors. Its total above ground surface area amounts to 9,534m2 (it has a useful constructed surface area of 8,351 m2, according to registry and cadastral data) and a further 1,560 m2 under ground. In reality, the building has three entrances (on Podavina 1 and 3 and on Avenida de Carlos I, 34-36-38) (…).

The company that has purchased the plot clearly considers that the land has significant potential to be used for unsubsidised housing. Diario Vasco has made contact with the company but its spokesperson was not able to specify timeframes or clarify whether the property will be demolished or renovated for the new residential project. (…).

Original story: Diario Vasco

Translation: Carmel Drake

Housers Will Build First Building In Spain Using Collective Financing

26 August 2016 – El Economista

The real estate market has evolved so much in recent years that now anyone can become a residential developer without triggering the start of a new real estate bubble, as happened before the crisis, when many entrepreneurs decided to enter this business without any prior knowledge of it.

This has been made possible thanks to an initiative developed by Housers, which has started to raise funds, through crowdfunding, for the construction of the first residential building in Madrid to be financed by this shared investment model, and the subsequent sale of its homes. This is also the first real estate project of its kind to be undertaken in Spain.

The project involves the purchase of land, the demolition of a small existing residential property on the site, as well as the complete construction of a residential building, which will comprise five homes and three duplex lofts.

According to the company, the turn-key construction projectwill begin once the financing has been raised, and will take approximately 24 months. The homes will go up for sale when the building work commences.

The cost of the real estate project is estimated to amount to €1.041 million, of which €255,228 corresponds to the gross acquisition cost of the existing building, €539,000 relates to the construction of the new building, and the remainder corresponds to processing costs, taxes and a cushion for unforeseen expenses.

The project aims to raise €748,000 (71.8% of the project) through crowdfunding, with each investor able to participate from as little as €50; and €293,000 through a mortgage to improve returns for investors.

The term for the sale of all of the homes is 24 months. During this period, the gross yield is expected to amount to 44.06% and the net yield will reach 27.94%; those profits will be distributed in the form of dividends to all of the participating investors. Housers estimates that the sale of all of the homes in the building will generate €1,242,000. The residential building will be located in Madrid, in the district of Tetuán, an area that has very high potential given the scarce stock of new homes there.

Housers celebrated its first birthday a month ago and in that time, it has created a community of more than 8,000 investors and has received contributions amounting to more than €8.5 million to finance the purchase of 38 properties in Madrid, Barcelona, Valencia and Marbella.

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake

Sareb Sold 25 Homes Per Day During H1 2016

15 June 2016 – El Mundo

The Chairman of Sareb estimates that the company sold 25 real estate assets per day during the first half of 2016, a pace that he considers “normal”, albeit below the historical average of 27 properties per day for the last 3years, since the so-called bad bank was created.

“At Sareb, we are constantly pedalling hard. We can’t stop”, said Jaime Echegoyen, who also pointed out that the company has debt to pay off. In this regard, he estimated that Sareb has already paid €3,100 million in interest.

He also admitted that the banks’ efforts to clean up their balance sheets by selling off real estate assets is affecting Sareb’s rate of property sales, due to increased competition. Nevertheless, he said that Sareb will benefit from the trump card in that it has on its side, namely, time.

“Sareb is not in any rush (to sell)”, he said at a summer course organised by the Universidad Internacional Menéndez Pelayo (UIMP) and the Asociación de Periodistas de Información Económica (APIE).

No plans to demolish any properties

The Chairman of Sareb reaffirmed an earlier prediction that the company will stop losing money in 2017 and he confirmed that the bad bank does not expect to undertake any demolitions, despite the fact that some of the assets on Sareb’s balance sheet may take years to sell or “may never be sold”. “Would it be better to knock them down than hold onto them? Perhaps, at first”, he reflected, before adding: “But we are not thinking about demolition, because you need money for that”.

Echegoyen stated that the revenues that the bad bank is generating are mostly being used to pay off debt. In a summary of Sareb’s first three years of life, Echegoyen said that the company has sold 35,200 properties and generated revenues of €12,800 million. In addition, the so-called bad bank has reduced its portfolio by €7,800 million and has repaid €7,700 million (of debt).

On the other hand, Echegoyen stated that the real estate sector “has woken up with clarity” and is enjoying a really “sweet moment”, judging by the recovery in the number of construction permits for new homes and the “stability” that demand for real estate is showing.

Homes as a haven

The Chairman of Sareb emphasised that the improvements in real estate indicators have not only been observed in the large (regional) capital cities; and he pointed out that, at a time of significant volatility on the stock market, properties represent a haven for “Spaniards”.

Finally, the Chairman highlighted the change that is happening in terms of the (property) investment (market), from sale to rental, which is leading to an increase in prices in that segment.

Original story: El Mundo

Translation: Carmel Drake

Chinese Investors Await Edificio España Verdict

3 June 2016 – Expansión

The negotiations between the Town Hall of Madrid and the Wanda investment group, the owner of the property, over the future of Edificio España, has had the sector on tenterhooks, and not only the main players involved, but also the Chinese investment community in general, which is waiting for the outcome before deciding whether Spain is an appropriate destination for their capital.

The Chairman of Wanda, Wang Jianlin, said recently in an interview with Chinese state television CCTV that he is waiting for “written” permission from the Town Hall of Madrid to demolish Edificio España, whilst, in parallel, he analyses offers to resell the building. In the interview, Wang Jianlin complained about the change in the conditions surrounding the building’s renovation following the arrival of the new mayoress.

Recently, the Chinese ambassador to Spain, Lyu Fan, acknowledged that some Chinese companies are determining their future plans on the negotiations being held by the Chinese giant in Madrid.

Investments in 2015

Interest from Chinese capital in Spain has grown considerably in recent years. The Director of the Economics Department at Casa Asia, Amadeo Jensana, explained that in 2015, total investment (by Chinese players) amounted to €850 million, compared with an average of around €100 million five years earlier. (…).

The Head of Development and Expansion of the company Christie & Co in Asia, Joanne Jia, said that Spain has always been a very active market, but she acknowledged that what is happening with Wanda will undoubtedly have an effect. According to Jia, investors are waiting to see what will happen with Edificio España before they take their investment decisions. “If it is resolved favourably, it will be promising. If not, it could cause some investors to stop looking for opportunities”…given that a blockage in negotiations would mean less confidence in the legal system, in addition to the cultural barriers. (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Wanda To Resume Renovation Of ‘Edificio España’

21 April 2016 – Expansión

The Town Hall of Madrid and Wanda wrote another chapter in their tug-of-war story that began back in July 2014, when the Chinese Group purchased Edificio España from Banco Santander for €265 million, with the aim of converting it into a luxury hotel, shopping centre and homes.

The main sticking point in the negotiations between Manuela Carmena’s town hall team and Dalian Wanda has centred around the Town Hall’s requirement to maintain the façade of the landmark building, an idea that Wanda opposes. The group has threatened to look for alternative solutions and even to abandon the project.

But now, it seems that Wanda has accepted Carmena’s conditions to go ahead with its plans. In the face of the uncertainties generated by the Chinese company’s position, the Town Hall of Madrid sent a letter to Michael Qiao, the CEO of the Asian Group, on 6 April, asking him to confirm the decision regarding their plans for the building within 15 days. The councillor for Sustainable Urban Development, José Manuel Calvo, announced yesterday that the Asian firm has responded to the letter indicating that it still intends to construct a hotel and that, following this confirmation, it expects the project to resume “shortly”. Nevertheless, Calvo was wary of discussing timeframes.

In parallel, the Chinese group still has a mandate with the consultancy firm JLL to sell the property and its efforts to find a potential buyer are on-going, according to sources close to the process.

Other interested parties

As part of this process, the US fund Hines and the Philippine Group Emperador have both expressed their interest in the property. JLL declined to make any comment about the matter. (…).

The councillor for Sustainable Urban Development confirmed that “there is no way” that the property “will be demolished”, although “it is perfectly reasonable for any one element that is in poor condition to be replaced”.

Calvo referred to the leaked letter and highlighted that it contained the urban planning rules and corresponding exceptions, but insisted that “no-one has had to resort to selling out or changing any laws”.

At the beginning of March, the multinational company confirmed to the mayoress that it intends to stay in Madrid and implement its plans for Edificio España, after weeks of speculation regarding the possible abandonment of the project, which were fuelled by the Chinese group’s decision to close its headquarters in Madrid.

At the beginning of the year, Wanda Madrid Development decided to close the office that it had opened in the Spanish capital to undertake the remodelling of the landmark building, which has been empty for years.

The Town Hall has always maintained that Wanda purchased the building knowing that the building was a partial level 3 listed property, due to its historical-artistic value, which prevents it from being knocked down.

The Local Historical Heritage Commission, in which the Community of Madrid and the Town Hall participate, agreed to relax the requirements to promote the sale of the building, which is very run down due to inactivity, provided the façade is respected.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Wanda Sounds Out Market Re: Sale Of Edificio España

4 February 2016 – Expansión

The Wanda Group has started to sound out the real estate market regarding its possible sale of Edificio España. A priori, the group’s only requirement is that the transaction price be at least equal to the amount the Chinese company paid Banco Santander when it acquired the property in 2014, in other words, €265 million.

However, unless those terms are relaxed, the operation has little chance of success. According to the first round of preliminary conversations, investors with a potential interest in acquiring the skyscraper would be willing to pay between €180 million and €220 million. That amount could increase to €240 million if the Local Heritage Committee changes its mind and allows the demolition of the building’s façades; however, that is unlikely, at least until there is a change in the Government of the Community of Madrid (which chairs and holds a large majority on the board of that body), but in any case, the figures fall well short of the amount set originally by the holding company led by Wang Jianlin.

Although the sale of Edificio España is now its preferred option, Wanda has not yet ruled out the possibility of pushing ahead with the renovation of the property, which would involve the construction of around 300 luxury homes, a 200-room hotel and a five-storey shopping centre, with a budget of €700 million. The last meeting with the representatives of the capital’s Town Hall was held last Wednesday, and the only message to emerge from it was that the company’s spokespeople did not declare that they are planning to abandon the project, despite weeks of speculation to that effect.

There is also a third hypothetical scenario, assuming that the sale of the building does not go ahead and that Wanda rules out the option of renovating the property without demolishing the façades. This option, which Jianlin’s company is currently evaluating, would involve keeping the property in its portfolio for four years, whilst they wait for a change in Madrid’s government, which may result in urban planning actions that would not require it to conserve the skyscraper’s external structure.

Real estate sources indicate that the only option that the Chinese tycoon is not considering is that of abandoning the operation as he does not want to send the message that he has lost money. They also say that Edificio España is still a very attractive asset, thanks not only to its location, but also to the combination of authorised uses (hotel, residential, commercial). (…).

Although the renovation project has not been ruled out completely, the company has now rescinded the contracts that it had signed with several architectural firms and legal advisors in Madrid. It is keeping its sales office open in the hope that it may help the group achieve its goal of transferring the skyscraper to a new owner.

Meanwhile, Grupo Wanda suffered a further setback yesterday, in addition to the huge losses it has experienced on the stock market since the start of the Chinese crisis last summer: the ratings agency Fitch lowered its credit rating to BBB from BBB+, on the basis of lower sales forecasts for 2016 and 2017.

Original story: Expansión (by Luis M. De Ciria, M. Belver and R. Bécares)

Translation: Carmel Drake

Colonial Will Invest €15M In Office Building In Madrid

14 January 2016 – Expansión

The real estate company Colonial is going to invest €15 million in the demolition and construction of a new office building on the site of the property that it acquired last summer at number 112, Calle Príncipe de Vergara in Madrid. The asset cost €30 million.

Original story: Expansión

Translation: Carmel Drake