Tag: developer

Quabit Finalises Acquisition of Enough Land to Develop Another 1,000 Homes

10 July 2019 – Richard D. K. Turner

Quabit, a listed developer controlled by the Rayet group, announced that it had acquired 105,000 square meters of buildable land, in a total investment of €21.7 million. The seven plots of land are located in the provinces of Madrid, Guadalajara, and Valencia, and are sufficient to build 550 new homes.

Next to these lands, the firm also acquired another 42,000 square meters of land, enough for 380 homes. Finally, Quabit bought a 5,760-m2 building, which it intends to renovate for another 57 flats.

Original Story: Expansion – Rocío Ruiz

Sabadell Opts to Sell Subsidiary to Oaktree

1 July 2019

Banco Sabadell, a Catalan bank, has opted to sell its developer, Sabadell Desarrollos Inmobiliarios, to the U.S.-fund Oaktree in a transaction reportedly worth 850 million euros. The asset management firm beat out its main rival for the asset, a partnership made up of Cerberus and Kronos.

Sabadell and Oaktree will now negotiate any additional particulars to the agreement. The sale would bring in a windfall for the Catalan bank, strengthening its capital ratio while reducing its risk-weighted assets (RWA).

Oaktree, in turn, will now compete with Neinor, Metrovacesa, Aedas, Via Célere and others. The developer’s holdings include high-quality, developable lands to the north of Madrid and in Barcelona.  Two thirds of the land is ready to develop or already under construction.

Original Story: El Confidencial – Jorge Zuloaga

Adaptation/Translation: Richard D. K. Turner

 

Lar España Sells 47% of its Portfolio of Non-Strategic Assets in Just One Year

9 October 2018

The socimi will use the 522 million euros it obtained from the sale of its portfolio of logistics assets and offices to focus on the ownership and management of its shopping centres.

Lar España is implementing its divestment plan successfully. The socimi sold 47% of its total portfolio of non-strategic assets in just one year and will use the influx of cash to focus on the ownership and management its shopping centres, a sector in which it is one of the principal players in the country.

Lar España’s assets that do not correspond to the retail segment are valued at 522 million euros. The company plans to sell the entire amount between 2018 and 2021. For the moment, it has already sold off all of its logistics properties and two of its five office buildings for a total of 276 million euros.

The socimi will take a significant additional step in its process of divestment when it delivers the luxury homes it has built in the Madrid’s city centre, at 99 Lagasca, before the end of the year. Lar España expects to raise 115 million euros through the operation. The company is also in the process of selling its other three office buildings.

The company, which is chaired by José Luis del Valle, will allocate these resources to strengthen its presence in the Spanish retail market. Lar España’s business plan envisages allocating 265 million to build and improve shopping centres, and another 250 million for acquisitions without the need to resort to new capital increases or tighten its financial structure.

Lar’s latest acquisitions include the Rivas Futura retail park, in Madrid, for 62 million euros, and the Abadía shopping mall, in Toledo, for fourteen million euros.

Original Story: EjePrime

Translation: Richard Turner

A Peak Inside The Luxury Homes On Juan Bravo, 3

12 March 2015 – Expansión

The Socimi and the North American management company are investing €120 million to rescue the most exclusive residential project in the city. Designed by Rafael de La-Hoz, its 50 apartments will cost around €4 million (each).

Three months ago, the Socimi Lar España and the North American management company Pimco agreed to purchase the company Juan Bravo, 3. The agreement will result in the revival of one of the most exclusive residential projects in Madrid, which has suffered from the full force of the real estate crisis.

“It was a transaction that was in the market and we were not the only interested party. Nevertheless, many funds dropped out when they saw the complexity of the project. There were lots of stakeholders: from the judge overseeing the bankruptcy process to the former owners of the company and its creditors”, explains Jorge Pérez de Leza, who heads up Lar España.

The Socimi proposed that the company be brought out of bankruptcy, rather than be liquidated, through the purchase of the remaining loans from its main creditor (Santander). In total, both partners invested €120 million in the land and (associated) loans, as well as in a residential building adjacent to the plot, which used to belong to the former owners of Juan Bravo 3. “The existing creditors are going to be paid, which is the innovative part (of the transaction), and we hope that the bankruptcy proceedings will be lifted within the next few days”, said Pérez de Leza.

The investment has been made through a company whose share capital is owned split 50:50 between Lar and Pimco, one of the largest fund managers in the world. “When Pimco joined the Socimi as an ‘anchor investor’, it suggested that we make a number of joint ventures in the Spanish market. Pimco wants to continue investing in Spain and we think that the next wave of investment will be in the residential market”, predicts the director. With this project, Lar does not exceed the threshold set for Socimis (that no more than 20% of the assets in their portfolio may not generate returns) and therefore it does not rule out continued investment in the premium residential sector.

After closing the acquisition of this land, Lar España hired the architectural firm Rafael de La-Hoz, which had also been appointed by the former managers to design the project. “Juan Bravo 3 offers the opportunity to construct a new building concept with four façades. The homes, from the garages to the bedrooms, will be completely new. As such, we will have almost total freedom in terms of the form (it takes) and we will be able to do without elements such as common areas and patios”, says Rafael de La-Hoz.

This architect will be responsible for designing the block of homes, which will contain between 50 and 55 units, on a plot of land measuring 26,203 square metres. “Last summer, we conducted a study in the market to see what type of project would fit best and we identified that there is room for luxury (properties) in this area. Therefore, each home will measure at least 250 square metres and on average, will measure between 400 and 450 square metres, as well as having three parking spaces”, says Jorge Pérez de Leza.

The homes will have an average price of €10,000/m2 (prices will range from €8,000/m2 to €12,000/m2 depending on the floor). “It will be different to anything else that exists in the area. There will be common areas with a gym, spa and a space for events. We are going to customise the product and for that reason, we have created a specific team of technical architects to advise clients in their choice of materials and the distribution of their homes, as well as on implementation costs and timings”.

Buyers

The sale of these homes will begin this summer, although the developers have already received a number of requests. “We expect 60% of the homes to be sold to foreigners; and the remainder to be sold to people who live in the area and want a new home, or who have a home in La Moreleja or Somosaguas and now want to move to the centre”. The construction work will begin at the start of 2016 and will be completed in mid-2018. “Some of the below-ground work has already been completed, but we will have to improve it because it is somewhat dilapidated”.

In addition to fifty homes, the property will also have a shop space measuring around 1,000 square metres, which will be rented out.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Gomez-Pintado: “We Will See Real Estate Companies On IBEX 35 Again”

8/01/2015 – Expansion

Juan Antonio Gomez-Pintado, the newly named chairman of Madrid’s Association of Developers, abbreviated to Asprima by its name in Spanish, holds a degree in Economics from the Esite business school and a Master degree in Real Estate and Construction Management.

Mr Gomez-Pintado (pictured) stepped into the chairman’s shoes when long-standing president Jose Manuel Galindo had left.

His ample, 30-year experience in the sector, first acquired in family office Agofer and then in Via Celere, pushed him to take an immediate decision about reorganization of the association’s structure.

“We must overcome an organizational paralysis. Before the recession, we had 276 members and now we are only 70. Our number-one goal is to get back our associates, and we have been doing it successfully so far. Some people disagreed with the previous management and now they are returning”, pointed out Mr Gomez-Pintado. The executive hopes to band together “125 to 150 members”.

Apart from getting the number of real estate firms back, Asprima’s new head works on better image of the entire industry. “I want to show a positive picture to the future society. We significantly contribute to job creation and the Spanish GDP. True, there have been some shameful cases, but that happens in every sector. The Public Administration has demonized us a lot”, he assures.

“We are an essential tool for Spain’s economic recovery as the industry encompasses 1.2 million jobless people”, the chairman adds.

The new growth stage has nothing to do with the previous boom. “We will be much more reasonable and instead of 800.000 homes, we will build 225.000. Besides, we will focus on the rehabilitation business and the Socimis” (REITs).

In this context, Mr Gomez-Pintado believes that the new players in the sector like Real Estate Investment Trusts or Socimis or servicers will play a relevant role in this beginning chapter for Asprima. “The Ibex 35 [the benchmark stock exchange market index of Spain’s principal bourse, translator’s note] will illuminate with big property managers again. On one side, there are the banks which have sold their REO platforms and now can go for trading, and on the other, there are the international funds teaming up with local companies [like Monthisa and Lar] to generate value within five-to-seven years”.

Next, Asprima will modernize and recycle both the member companies and the businessmen. To achieve that, the association will put a pressure on exchange of the knowlegde among the associates, something not practiced ever before. “We need all the real estate firms to be the leading ones because only one of such cannot be running the sector”, the chairman concludes.

 

Original story: Expansión (by Rocío Ruiz)

Translation: AURA REE

Developers More Indebted Than Mortgagors

19/12/2014 – El Pais

Default on mortgages for home purchase held by individual customers screeched down and halted at 6% at the end of September. The number is a copy of 2013, when it showed 5.99%. Just the opposite happens in the property sector, whose indebtness increased by 37.4% year-on-year, the Bank of Spain reported.

At the end of the third quarter, non-performing mortgage loans amounted to nearly 35.21 billion euros inside the total credit portfolio of 586.09 billion. In turn, the developer debt owed to Spanish banks was reaching almost 156.2 billion in September, of which 58.49 billion or 37,4 % were delinquent. This means a 33.6% increase from the last year, and a 38% fall in respect to the end of 2013.

 

Original article: El País (by S. L. L.)

Translation: AURA REE

Spanish House-Building Awakening After Seven Years of Hibernation

17/12/2014 – Invertia

On a busy street in the heart of Madrid, Juan Jose Perucho shows where he is going to raise one of the tallest residential blocks seen in the capital, on a piece of land equal to five-times the size of a football pitch area which he bought from Madrid’s subway in November.

‘We have sold-out the developement faster than ever’, said the chief executive of real estate firm Ibosa referring to a 25-storey tower with a swimming pool and hanging gardens. ‘I have never seen anything like that during my 24 years in the business’.

The country, where the view of working cranes has been a daily bread for decades, shakily starts to take steps towards the activity after seven tough years which came after the real estate bubble burst.

In the three months from June to September, residential construction has registered its first quarterly rise since the recession began.

But while data proves growing confidence of Spaniards in their economy faring better, experts agree the odds are low for the activity to go back to the pre-crisis level.

Today’s c0nstruction in Spain accounts for 5% of its GDP, or 50 billion euros, compared to the 10% share the industry had during the real estate boom.

Also, the sector employs nearly a half less than before the market crashed in 2008, showing no projections for an abrupt rebound.

At the heights of its building frenzy, Spain was raising more dwellings annually than Germany, France and Italy altogether. The activity has left a stock of 740.000 unsold new homes, with no prompt outlook for their absorption as many of them are located out of big cities, in areas like Guadalajara or La Rioja, where demand is difficult to detect.

Spanish banks, with 161 million euros in loans to builders, many of them troublesome, have pushed new lending cautiousness to the limits, approving exclusively upmarket developments in Madrid and Barcelona, where prices slightly started to rise.

Moreover, developers have to have at least 50% of apartments sold off-plan before the financing agreements are sealed. Also, they must pay for the land out of their own pockets and put around half of the building costs, too, said banking sources.

But even with the strict lending conditions, so much different from the construction bonanza decade when even a small bricklayer could enjoy unlimited financing from banks, there are more projects than last year, especially in regard to Madrid and Barcelona.

From January to October, the City Hall of Madrid gave out 3.131 permits for new residential construction, more than it granded during the entirety of 2013.

Another property manager, Domo, is planning to construct a new block of apartments on a plot located in exclusive Chamberi neighbourhood and acquired from the Ministry of Defense in November.

The banks, seeing their margins dipping down and selective when it comes to elegible customers, bet on high-end homes as a way of capturing wealthy customers who could be subsequently offered other products.

Although 80% of Spaniards own their houses, a double of the eurozone average, new mortgage amount has declined by one-tenth if compared to 127.233 real estate loans ceded in March 2006.

‘One of the biggest motivations to finance developers again is to capture mortgage holders’, said Joan Bertran, director of real estate investment at Banco Sabadell.

As a year ago the bank would sniff at loan applications for property developement, today the executive and his team are weighting up 150 of them. Already approved are eight new investments in Madrid and a similar amount in Barcelona.

Coming back to the former Metro plot where Madrid’s tallest residential tower is going to stand on, Mr Perucho obtained financing from CaixaBank. The developer claims that most of the buyers are Spanish and they treat the properties as places to live in, not to invest in.

Mr Perucho explained that noteworthy is the percetage of the Spaniards who currently work abroad at very well-paid positions, as a prove of specialists helping the country to crawl out from the recession.

In these extremely selective circumstances when thousands of apartments remain unsold for years, the most savvy real estate firms brace for biddings of other developable lots in large cities showing significant interest, like the spot currently occupied by the Atletico de Madrid football club’s stadium located at a bank of the Manzanares River.

‘It is a return to relatively normal activity, and not a boom at all’, Mr Perucho said. ‘The market has been absolutely inactive for seven years and there comes the unleashed demand’.

 

Original story: Invertia (after: Reuters, by Sonya Dowsett)

Translation: AURA REE

Get Ready For Flat Prices & More Building Sites

1/12/2014 – Cinco Dias

In this last month of 2014, the real estate sector of Spain already notes that this year has been much better than the previous one. All the evidence is that this was the last annus horribilis for Spanish housing, at least for the moment. Both prices and development activity suffered abrupt drop-offs, reflected in, for instance, data showing that from more than 860.000 dwellings started in 2006, only 34.200 were finished till 2013. Secondly, prices have contracted by 30.7% on average since the 2007/2008 peaks, official statistics point out.

And this is the average as in some municipalities depreciation reaches 50%. A slight improvement in employment and recent return of lending seem to be the key factors for ‘the sector’s stability‘. It is predicted that prices will go down ahead but not as sharply as they used to. Moreover, experts await more cranes in desirable areas where ‘reasonably priced’ homes would be welcomed. In spite all these positive signs, specialists agree Spanish housing won’t come back to mid-2000 levels… will it?

The Prices

Over the past months, various statistical sources were repeatedly reporting seemingly contradictory data. Some said houses cheapened, while others claimed there have been first rebounds in prices, first in  month-on-month and then in year-on-year comparisons.

However, all contained a grain of truth. The catch is that each of them employs different periodical information. The calculations coming from the notaries are not equivalent to studies from the registrars (who base on deal figures from 2-3 previous months). Similarly, pricing reports using appraisal data are not comparable to a real-market study involving visits to new building sites.

The proof that all of them are reliable is that all conclude pointing at the same trend, also showing that the free-market laws apply. Thus, they coincide in showing an increase in sales, earlier stock absorption, a slowdown in pricing slump and reapearance of cranes in new property developments.

The Wealth Effect

Let it be the Ministry of Public Works’ data or the Appraisal Association’s, two sources which have been providing reports on Spanish housing for at least the last 20 years, average accumulative decrease of house values in the country posts 30%, meaning the same level as in 2004. As Maria Romero from Analistas Financieros Internacionales (AFI) says, the figures mean a negative equity for those households which acquired a dwelling ever since.

Still, statistics also show that in some geographical areas prices started to rise. Will the trend expand? ‘High unemployment rates and insufficient income especially affect the first-home buyers, as well as prospective demand. In any case, we do not expect any additional, deep adjustments’, claims Mrs Romero. Experts from Sociedad de Tasación portend the prices will continue to go down until finding what they call ‘the balance point similar to end-2000’.

The Stock

At the beginning of this new cycle, prices and sales in in-demand areas level out, whereas in the zones where product is in excess, prices are being squeezed down and new development seems impossible in there.

The increase in transactions contributes to faster absorption of new homes for sale which shrank by one-third since the 2010 peak (700.000 units).

The New Property Development

At the moment, large cities’ centers, excellently located neighbourhoods and those with good infrastructure were the first to see return of house construction. They are very carefully selected projects with 100% sales guaranteed and attractive prices. It is demonstrated by the fact that building permits bounced back in September for the sixth consecutive month (up 31.6% year-on-year).

Logically, developers strike areas of high demand and income per capita which proves better financial ability of the buyers.

Experts forecast further rise in building permits’ number in the next months, triggering a phenomena unseen since the recession began – more homes will be started than finished. In fact, works completion certificates keep steering down (by 35.6% annually in the third quarter). To compare, last year only 4% was started of what was constructed throughout 2006.

The Financing

Like individuals, developers also started to receive the ‘approved’ seal on their loan applications. Thus, as the Bank of Spain reported, not only mortgage lending to eligible customers is returning but also loans to developers become more and more common.

What is more, value added to investment in housing again increased quarter-on-quarter by 1.3% in Q3.

Recent studies reveal that in all European countries where homes regained value also the GDP grew up. That means that better conjuncture is vital for housing sales to confirm a recovery, which in turn feeds up economical well-being: from more real estate transactions, through related industries (decoration, repairs, etc.), vivid activity, more jobs, increased confidence, and here we go again, more housing sales.

 

Original article: Cinco Días (by Raquel Díaz Guijarro)

Translation: AURA REE

Sabadell Expects New Developer Credit to Rebound

28/11/2014 – Expansion

Spanish banks detect improvement in the real estate market, including segments so much battered by the crisis as the housing development.

At the latest meeting organized by Esade Business School, Sabadell’s Property Investment head Joan Bertran (pictured leftmost) assured that the entity noticed an increase in applications for new home construction loans. Moreover, he foresaw that the financial sector will grant €5.5 billion to developers in 2015.

Mr. Bertran explained that around 15%-20% of 300.000-350.000 homes sold each year is new. And of those, 80% have been raised relatively recently.

In the director’s view, banks should approve the loans as they are demanded by ‘best developers who survived the recession and for quality product. This might not be seen in the next years’, he added.

Deleveraging

A year back, such an increase in developer lending was unthinkable because this kind of asset turned toxic and made up to €320 billion in 2009 in the Spanish entities’ balances. Since then, until the end of the first half of 2014, a €161 billion amount has been deleveraged, as the Bank of Spain informs.

Likewise, Spain’s bad bank’s CEO Jaime Echegoyen (pictured next to Bertran) explained that the banks return to lending due to engines like carry trade effect, bringing 15% of the revenues, having disappeared. Speaking of Sareb’s future, Mr. Echegoyen foresees closing ‘large, living-up and complex’ – five or six – deals.

Among the portfolios he referred to one may find €250 million outstanding developer loan Project Olivia, a €130 million worth of hotel credits inside Project Meridian, Project Aneto with  €40 million in non-performing loans given for land and residential purchases, €80 million residential loan portfolio with collateral property in the Balearic Islands called Project Dreamland, as well as Project Agatha including debt linked to subsidized apartments and Project Corona and its four office buildings located in the north part of Madrid.

 

Original article: Expansión (by J. Z.)

Translation: AURA REE

Sabadell Moves to Sell €500 Mn Project Triton Loan Portfolio

4/11/2014 – Expansion

Banco Sabadell also wants to make profit on the funds’ appetite for acquiring loans and collateral real estate assets. The entity sells a NPL portfolio worth between €450 and 500 million.

Of the amount, 80% corresponds to non-performing loans to developers and 20% are REO assets. Ernst & Young advises on the operation named Project Triton. More than 20 international bidders attended the first (non-binding) phase of the tender.

The Second Phase

Started last week, this stage sifted out two final candidates. They will conduct the portfolio’s due dilligence and submit their binding offers at the end of November.

As a plot of circumstances, another Catalonian entity, CaixaBank, has also announced a sale of €400 million Project Tower loan pool . Bankia does not fall behind with its portfolio sold for nearly €80 million.

This sort of sales attracts attention of such funds as Cerberus, Apollo, Blackstone, KKR, Soros or Chenavari. They buy discounted product and grab collateral properties.

Inside its non-core asset divestment plan, Sabadell sold its debt management and collection branch to Lindorff for €162 million earlier this year.

Moreover, last Friday Sabadell placed an issue of 7-year covered bonds which turned out to enjoy great popularity on the part of more than 100 investors, with demand exceeding €3 billion.

 

Original article: Expansión (by S. Saborit & J. Zuloaga)

Translation: AURA REE