Operación Chamartín’s # 2 Jumps Ship To Castlelake

21 September 2016 – El Confidencial

Just three years ago, BBVA and San José hired David Martínez as the CEO of Duch, the property developer of Operación Chamartín, which was subsequently renamed Distrito Castellana Norte. It was a high profile move, given that Martínez was CEO of Valdebebas at the time, the only large real estate development in the capital that had managed to resist the crisis.

With those credentials, Martínez became the number two in command at Operación Chamartín, behind only the Chairman, Antonio Béjar. He was also the key figure that allowed the project to be relaunched, a year later, with the consent of the three administrations involved: the Ministry of Development, the Community of Madrid and the Town Hall of Madrid.

But that consensus broke down with the arrival of Ahora Madrid in Palacio de Cibeles. They reversed the plan and submitted their own proposal, Madrid Puerta Norte, which cut the scope of the original plans in half.

In the middle of this blockade, whose most recent chapter has just been written by the High Court of Justice in Madrid, with the admission of the appeal submitted by DCN against the Town Hall, Martínez has abandoned ship to join one of the major international funds in the Spanish real estate sector: Castlelake.

As El Confidencial revealed, the US firm has reached an agreement with Merlin to launch its own property developer from what was leftover of the former firm Vallehermoso, and the 1 million sqm of land that the fund has been acquiring over the last two years.

New property developer

Martínez said goodbye to DCN on 1 September to join this new company, which is expected to start work in October under the brand, Aedas Home. The firm has offices on Paseo de la Castellana and an 11-man team that used to form part of Vallehermoso, Sacyr’s former property developer subsidiary, which was liquidated two years ago.

Martínez’s recruitment is a statement of intent regarding the plans that Castlelake has for Spain, given that he is one of the most recognised professionals in his sector in Spain – he was at the helm for eight years at Valdebebas and then has spent another three years at Operación Chamartín. In fact, many consider him to be the real brains behind these two developments, on whose future the final configuration of the north of Madrid depends.

With Aedas Home, Castlelake has finished shaping the new map of the largest property developers in Spain, a market whose present and future is marked by the clear commitment that three large international funds, in particular, have made to the Spanish real estate sector: Lone Star, which acquired the developer Neinor from Kutxabank for €930 million two years ago; Värde, which together with Marathon and Attestor has launched Dos Puntos from the ashes of the former San José Desarrollos; and now, Castlelake.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

BBVA Gets Ready To Reactivate ‘Operación Chamartín’

14 September 2016 – Expansión

Antonio Béjar, the Chairman of Distrito Castellana Norte, the company owned by BBVA and Sanjosé, has criticised Manuela Carmena’s team for “turning their backs on locals” and not thinking about Madrilenians.

Operación Chamartín reached a deadlock in May, when the Town Hall of Madrid, with votes from Ahora Madrid and PSOE, decided to deal a blow to Distrito Castellana Norte’s project and present an alternative option, which is unlikely to prosper, as it faces the outright refusal of the Community of Madrid and the Ministry of Development.

One of the biggest victims in this lethargy is DCN, which has seen how a project that had been fallow for decades and that seemed to be on the verge of progressing, following the approval of the final general town plan (PGOU) and the apparent acceptance of the parties involved, is now in danger of becoming little more than ink and paper following the arrival of Manuela Carmena’s municipal government.

Despite the circumstances, the Chairman of DCN, Antonio Béjar (pictured above), said in an interview with Expansión, that he feels “more encouraged than ever”. “This is an initiative that affects 500,000 people (i.e. the citizens who live in and around the affected areas). “We have always thought that it would be impossible to undertake this project behind people’s backs. For this reason, right from the start, we employed means and made efforts to get people to participate and contribute ideas”, explained Béjar.

The Director also explained that, in the face of the flood of suggestions and information requests received, they decided to open an office in Fuencarral a few months ago, and they plan to open at least two more – in Las Tablas and Chamartín – with the aim of maintaining an “open and permanent dialogue with people”. Béjar hopes that the municipal Government will reconsider its decision given the response from locals. “The Town Hall’s blockade against our project is very unpopular”, he said.

Similarly, the Chairman of DCN hopes to be able to resume talks with the Town hall and the other bodies involved to remedy the situation and whereby share the property developers “negotiating spirit”. Nevertheless, he warns that red lines exist, which are not going to be ignored. “We are not willing to be the sponsor of a project that lacks ambition or is associated with low quality. Moreover, we represent investors that have a duty to not, cannot and will not invest in projects that do not have appropriate returns”.

For the Director, the plan proposed by the Town Hall is a “very poor initiative”. “The administrations do not have the resources necessary to cover works that require billions of euros. They propose that the public sector bears the business risk, either through taxes or other items of social spending and they force citizens to pretend that they are entrepreneurs”.

Béjar fears that the unmovable attitude of the Town Hall will continue, at least until a new national Government is formed. “Political priorities should not take precedence over technical matters. We have not even been allowed to negotiate with the Town Hall”.

In the same way, he points out that the concession of land from Adif expires on 31 December and that the option to extend the period “is not currently on the table”. “We cannot keep investing forever without any signs of returns”, he noted.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

DCN Files Appeal Against Suspension Of Operación Chamartín

1 August 2016 – Expansión

On Friday, the company Distrito Castellana Norte submitted an administrative appeal before the High Court of Justice in Madrid. Through this measure, DCN seeks to obtain a ruling that nullifies the agreement whereby the Town Hall of Madrid suspended Operación Chamartín.

Original story: Expansión

Translation: Carmel Drake

Operación Chamartín: BBVA Prepares To Denounce Carmena

5 July 2016 – Cinco Días

The President of Distrito Castellana Norte, Antonio Béjar, has revealed that the company’s legal team will present an appeal to the High Court of Justice in Madrid (TSJM) within the next few weeks to denounce the nullity of the decision taken by the Town Hall to reject this project under development, known as Operación Chamartín.

In an interview with Europa Press, Béjar also detailed that “later on” and if the “blocking” situation continues, DCN’s legal team will submit a claim for damage to property and economic losses against the Town Hall after it rejected its plans without any technical basis, even though they fulfil the General Urban Development Plan (PGOU).

The President of Distrito Castellana Norte, the entity driven by BBVA and Grupo San José, expressed his “disappointment” at the position adopted by the Town Hall for denying its development plan based on “primarily political criteria, with no technical or legal basis”.

Regarding whether the outcome of the elections may change the Town Hall’s position and facilitate negotiations, Béjar said that the municipal government team has expressed “publically that its position was going to mainly depend” on the political decision taken by the Ministry of Development (Ana Pastor is a supporter of DCN’s project) in the event that there is a change in government.

“The Town Hall will have to take a decision in this regard. Meanwhile, we will not rest on our laurels, it is our duty to defend our rights when we understand that they have not been adequately addressed”, said the President of DCN.

“We are convinced that the courts will overturn the Town Hall’s decision, we consider that the reasons employed have no legal grounds”, he added to indicate that, according to the criteria set forth in its appeal, the Town Hall may only reject the definitive approval of the plan if it is able to cite reasons of general interest, whereas, in his opinion, the Town Hall has cited “minor formal reasons”. (…).

Meanwhile, Béjar confirmed that the Town Hall’s “blocking” of the development of Operación Chamartín, by rejecting its plan and presenting its own plan for Madrid Puerta Norte, is “detrimental” for Madrilenians. According to him, the municipal alternative is “not feasible and cannot be carried out in practice”.

“Madrid Puerta Norte – the Town Hall’s alternative project – is a proposal designed to drive out private initiatives…and to allow the public administrations to become the next property developers, using taxpayers’ money…” said the President of DCN. (…).

Original story: Cinco Días

Translation: Carmel Drake

Operación Chamartín: Carmena Cuts Homes & Offices By 50%

10 May 2016 – El País

On Tuesday, the mayoress of Madrid, Manuela Carmena will present her plans “to boost the development of the north of the city”, an “open document” prepared by municipal technicians, which amends and reduces the plans for Operación Chamartín. After working on the project for almost a year and refusing to negotiate with BBVA or San José, the Town Hall is effectively burying Distrito Castellana Norte. The Town Hall’s alternative plan, to which El País has had access to, maintains the buildability coefficient, but removes all of the roads and railways from the planned surface area calculations, which Distrito Castellana had taken into account. In this way, the profitable surface area for homes (17,000 were going to be built) and offices is cut in half. Carmena proposes undertaking the renovation of Chamartín train station, the Northern junction (Nudo Norte) and Fuencarral immediately, using public money, and taking Pasillo Verde (which runs from Atocha to Principe Pío) as an example.

Distrito Castellana Norte, the private project promoted by BBVA (75.5%) and the construction company San José (24.5%) forecasts investing €5,974 million to rebuild the 3,114,336 sqm area.

But the local government believes that the initiative should “be the responsibility of the Administration”, particularly given the dimensions of the area (311 hectares; by way of comparison, the Centro district covers 523 hectares). Thus, the Town Hall proposes “more weight in the public management” in the “largest town planning operation in Madrid”. And to this end, it proposes “the creation of a public urban consortium to develop the area to the south of the M-30”, leaving the initiative to the north of the motorway in the hands of private property developers.

BBVA and San José plan to extend the Paseo de la Castellana by 3.7 km to the north, and to construct 17,699 homes and a financial district with the tallest skyscraper in the European Union (70 floors), as well as five other towers, similar in height to the four towers already in place (45-57 floors). For this, they plan to apply a buildability coefficient of 1.05 sqm for every metre of land, thanks to the increase approved by the PP (before, that figure stood at 0.6).

The Northern junction and Fuencarral

The Town Hall’s plans respect that building density, but “exclude land relating to the road and railway networks from the calculations, as well as all land that is not necessary to undertake the operation or whose transformation is not planned”. As such, it would leave 1,440,387 sqm of space occupied by the M-30, the M-40 and railway infrastructure out of the operation, and instead proposes “continuing with its current use and rating”.

After these exclusions, the total surface area of the operation would be reduced to 1,744,549 sqm (of which 233,082 sqm correspond to Chamartín train station.

Therefore, applying the buildability coefficient, there would be 1,587,040 sqm of space for residential and commercial use. This would reduce the private project by half, which had calculated that there would be 3,261,000 sqm of profitable space (1,774,000 sqm for homes; 1,046,000 sqm for offices; 165,000 sqm for hotels; and 176,000, sqm for retail).

(…)

Original story: El País (by Bruno García Gallo)

Translation: Carmel Drake

The RE Sector & Its Challenges For The Future

14 April 2016 – Cinco Días

“Few countries in the world have as much regulatory complexity as Spain”, said Alfonso Benavides, Chairman of the Urban Land Institute in Spain yesterday, at the Sustainable Urban Development Forum organised by the newspaper El País and sponsored by Distrito Castellana Norte. According to experts, the diversity of legislation hampers growth in a sector that has great potential for expansion. The politicisation and lack of a roadmap for management plans represent another obstacle”. “There is no strategic vision”, said Eduardo Fernández-Cuesta, Chairman of RICS in Spain.

The system is so complex (and hard to interpret) that it generates more questions than it answers. The continuous updates to the regulatory framework resolve one set of problems and create another. “The private sector can work with complexity, but not with uncertainty over timings”, warned Benavides, who pointed out that the first draft of an urban planning request alone can be up to 2,500 pages. The proposed extension of the Castellana being managed by Distrito Castellana Norte has been in the pipeline for more than 20 years, awaiting the various approvals.

“The fundamental concept is legal security, something which we currently lack”, said Ricardo Martí-Fluxa, Chairman of the Spanish Association of Real Estate Consultancy Companies. It is estimated that for every €1 million of real estate investment, between 18 and 20 jobs are created. In his opinion, we should stop demonising the economic gains of projects because the private sector, which has to drive these processes, must be able to generate a return from its investments and he noted that Town Halls in other European capital cities, such as London, are determined to give companies facilities so that they can execute such investments.

Juan Antonio Gómez-Pintado, Chairman of the Association of Real Estate Developers in Madrid, expressed the same views. He noted that the first people who are interested in putting an end to speculation are property developers. “It is absolutely essential that land is available, when it is restricted, a natural speculative process occurs. By the law of supply and demand, when land is restricted, its price increases”, he complained. (…).

The big question is, following the burst of the real estate bubble, whether Spain needs to continue building homes. The Ministry of Development, which prepares an annual report, estimates that there are 43,000 empty new homes in Madrid alone. Sources in the sector dispute those figures. “The report is prepared using a valid methodology, but it does not reflect the reality because, for example, it does not take account of the fact that the owner of a new home may not want to sell it”, said Juan Fernández-Aceytuno, CEO of Sociedad de Tasación. The actual number, if we look on a promotion by promotion basis, does not exceed 8,000 homes in Madrid. “One of the major problems is that we have run out of stock”, said Gómez-Pintado.

Nevertheless, the experts agree that, a new bubble is unlikely, especially due to the lack of available mortgage financing. In 2006, around 1.3 million loans were granted. In 2014, that figure barely reached 350,000. “There is no risk of a bubble”, said Fernández-Aceyuno. “We expect a period of stability in terms of house prices across the country”.

Original story: Cinco Días (by Carlos Santana)

Translation: Carmel Drake

Operación Chamartín: DCN To Build Tallest Tower In EU

14 April 2016 – Expansión

The property developer behind “Operation Chamartín” plans to construct six towers – five will be around the same height as the four already in place and a sixth will measure more than 300m.

Distrito Castellana Norte (DCN) owned by BBVA and the construction group San José, has unveiled some of the plans for Operation Chamartín. The Chairman of the property developer, Antonio Béjar, explained yesterday that the project will include the construction of what will be the tallest skyscraper in Europe, measuring more than 300m tall and spanning 70 floors.

In total, this project will involve the construction of six towers, five of which will be around the same height as the four towers on the Castellana and a sixth, which will be the tallest in the European Union. DCN also said that 80% of the space will be allocated for use as public spaces and green areas and 20% will be used for the construction of homes, businesses and offices.

“The project is alive and kicking. Now we just need to submit it to the Town Hall for final approval”, said Béjar during the Sustainable Urban Development Forum organised by the newspaper El País. According to DCN, the urban plan has been approved by all of the relevant authorities and technicians through 48 favourable sectoral reports. (…).

Ministry of Development

Béjar reiterated that the completion of the process and the approval of the plan no longer depends on the Ministry of Development, but rather on the Town Hall alone.

In terms of his relationship with Manuela Carmena and her team, Béjar made it clear that DCN has not participated in the recent debates organised by the Town Hall to analyse the feasibility of the project…(…).

“At the moment…our intention is not to take this process to court, not at all. We want to reach agreement and consensus with all levels of government. However, clearly, that does not mean that if the project is harmed or damaged by government decisions that we consider do not comply with the law, that we will stop defending our interests….”.

The Chairman of DCN said that his intention was to unveil the details of the plan so as to “clear up unknowns”. In this sense, he denied that the buildability level would be excessive and pointed out that it is “significantly” lower than the levels in well-established neighbourhoods, such as Chamberí (3x higher), and Paseo de la Castellana (2x higher). He also added that infrastructure represents an investment of more than €1,400 million, which will be funded in full by the owners and will represent “zero cost for the residents of Madrid”. “By adopting a public-private partnership model, the infrastructure will be developed by the owners at the request of the various government bodies and for the benefit of Madrid’s citizens. (….), said Béjar.

Original story: Expansión

Translation: Carmel Drake

Carmena Creates ‘”Political Table” To Resolve Operación Chamartín

29 October 2015 – Cinco Días

Manuela Carmena, the mayoress of Madrid, wants to start to resolve the situation known as Operación Chamartín, a town planning project in the North of the city that has been up in the air for more than 20 years now. The project is being led by the company Distrito Castellana Norte, in which BBVA owns a stake of more than 70%; the remaining shares are owned by Grupo San José. In order to move forwards, two working groups will be launched, one political and one technical, comprising officials from the Town Hall.

The Town Hall of Madrid will constitute a so-called “political and social table”, which all four of the political parties that have representation in the local government (Ahora Madrid, PP, PSOE and Cuidadanos) will be invited to join. Neighbourhood associations and the company Distrito Castellana Norte will also be encouraged to participate, according to sources at the Town Hall.

The mega-project, which was initially going to be approved by the PP during the previous legislature, will involve private investment amounting to around €6,000 million, the development of land covering 3.1 million m2 and the construction of up to 17,500 homes, over several phases.

The political table will monitor the conditions that Operación Chamartín will have to fulfil to be accepted, based on those approved yesterday by Ahora Madrid and the PSOE, which in turn rejected proposals made by Ciudadanos to create the table immediately and resolve the project within three months.

Ahora Madrid and PSOE agreed instead to an amendment to replace the proposal submitted by Cuidadanos. That group had released a statement defending the immediate creation of the table with the municipal groups, in order to establish the basic guidelines for resolving the operation within a maximum period of 90 days.

Meanwhile, the representative for Sustainable Urban Development, José Manuel Calvo, responded that it does not make sense to limit the duration of the debate to three months, however he added that there is no doubt that the current situation needs to be resolved soon.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

The Electoral Shift May Undermine Operación Chamartín

27 May 2015 – El Mundo

The Ministry of Development fears that the electoral shift may undermine the plans for the project known as Distrito Castellana Norte, which is worth more than €6,000 million.

From June, the new municipal political map in Spain will face decisions regarding the future of dozens of urban development projects in the country’s large capital cities, worth thousands of millions of euros, many of which are still awaiting licence approvals from their respective town halls.

The largest one is Operación Chamartín, in Madrid, the largest urban development plan in the capital. The project has been in the pipeline for 20 years – four less than the Partido Popular held office for at the town hall – and was accelerated in recent months by the incumbent mayoress, Ana Botella, in an effort to obtain the final approvals.

The inability to comply with all of the procedures required for the operation, located in the North of the capital, covering 3.7 km in length and three million square metres in surface area, with plans to build 17,000 homes, as well as offices, retail areas and green spaces, forced Botella to leave the final approval (of the project) in the hands of her successors at the Town Hall. Specifically, to the resolution of around 1,800 claims and above all, to the approval of a partial plan for the extension of the Paseo de la Castellana.

Until 24 May, it was expected that a new municipal team led by the Partido Popular would continue the project, which promises to transfer the centre of the city from Puerta del Sol to the North. But the setback suffered by the Partido Popular in the capital last Sunday leaves the project in the air. The most likely option, that of a left-wing coalition between Ahora Madrid and the PSOE, is raising concerns amongst the stakeholders. The focus of the likely team, led by Manuela Carmena, would centre on social housing rather than on million-euro urban developments.

The project known as Distrito Castellana Norte is estimated to be worth more than €6,000 million; BBVA and the construction company Grupo San José are the main partners in terms of financing and development. The operation also includes municipal and regional land, but the majority is owned by the Ministry of Development, and in particular, its two largest companies: Renfe and Adif.

The urban development plan that Ana Botella was unable to finalise involves covering over the train tracks at Chamartín station. The value that the sale of this land to BBVA and San José would have for the companies owned by the Ministry of Development amounts to €1,200 million, most of which would be paid to Adif, whose debt amounts to €18,000 million this year, making it the State’s most indebted public company, behind only the FROB (Fund for the Orderly Restructuring of the Banking Sector). Given the financing needs of the conventional railway infrastructure companies and the lack of funds available for such investments, the minister Ana Pastor has publicly backed the plan. In fact, Adif was already counting on the payment of €200 million this year based on the approval of the pendingpartial Plan.

Now the deadlines are being called into question, at least the fast-track option is, which carries the support of the incumbent town hall. But the amendment, rejection or definitive approval of the largest chapter in the capital’s urban planning cannot be left on the sidelines for long.

After its launch in 1995, with the granting of land to the current BBVA, the project has survived (changes in) municipal teams, real estate bubbles and judicial processes, which have delayed its approval and halved the value that the property developers were guaranteed to generate.

In the end, last year, the grant was awarded, but BBVA and the Grupo San José extended their offer up to a maximum deadline of 2016. If there is no partial plan by the new Town Hall and the new extension expires, the Ministry of Development will see its largest urban development project die, although it is likely to be a legacy that another Government will pick up in due course.

Original story: El Mundo (by César Urrutia)

Translation: Carmel Drake