Tag: Duch

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

Operación Chamartín: The Plot Thickens

30 September 2015 – El Confidencial

The small print of the agreements signed between the Government and the developers of Operación Chamartín, BBVA and San José, includes an important payment in kind that has gone undetected until now. A payment that will convert the Ministry of Development into one of the largest landowners of this development.

And so, not only will the company formerly known as Duch, now Distrito Castellana Norte, have to pay €1,240 million in cash to acquire the land (covering an area of almost 2 million m2) currently owned by Adif, it will also have to make a payment in kind, involving the transfer of urbanised land with buildability of 100,000 m2 for residential use.

This payment forms part of the principles of the agreement signed on 22 January between Duch and the public entities Adif, Renfe Operadora and Adif-Alta Velocidad, the owners of the land where the majority of Operación Chamartín is expected to be constructed and, therefore the main beneficiaries of this urban planning project.

Specifically, when this development, whose official sign off has so far been delayed for more than two decades, was reactivated at the beginning of the year, the economic agreement was structured around three pillars: the payment of a cash fee amounting to €984 million, the payment of interest linked to this expenditure over the next two decades (which takes the total amount of the cash payment to the aforementioned figure of €1,240 million), and the payment in kind in the form of plots of land.

But the public administrations’ role as landowner goes much further than that, given that the land that the Ministry of Development will take control of will be added to the plots (covering an area of almost 600,000 m2) that will correspond to the Town Hall of Madrid.

The Local Government, led by Manuela Carmena (who has the ultimate power to unblock this development) is set to become the second largest landowner, as a result of the sum of: the space (165,000 m2) it currently owns in the area; the area (150,000 m2) that houses the EMT’s garages in Fuencarral; and the land (300,000 m2) that corresponds to it from the transfer of 10% of the land from the developers, as required by legislation.

Sell or develop

At the current market price of €1,000 /m2, the value of the plots of land owned by the Town Hall could amount to around €600 million, whilst the land owned by Adif could be worth around €100 million.

In both cases, the public administrations have the ability to benefit from their roles as landowners to develop social housing on the Operación Chamartín site itself or to make profits to return to society.

And one of the main attacks launched against the developers of this site has been they are simply seeking to “strike it rich”, criticism that has been fuelled by the fact that the development is located in the north of the capital, an area traditionally regarded as very wealthy, and because the original plans include just 10% of social housing.

The reason why it looks like the people responsible for Distrito Castellana Norte are planning to construct so few VPO homes is partly because these calculations do not include the uses that the public administrations will make of all of their plots of land. Therefore, it is up to Carmena and Adif to increase the volume of social housing in this development.

Between the two of them, they own more than 20% of the total surface area (3.1 million m2) that makes up the Operación Chamartín site.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

BBVA Strives to Revive ‘Operation Chamartin’, SanJose Threatened

3/12/2014 – El Confidencial

The game is played between the chairman of BBVA, Francisco Gonzalez, and the head of Grupo SanJose, Jacinto Rey. Last week, the parties met at a contentious meeting of the managing board of DUCH (Desarollo Urbanistico CHamartin). This investee company controlled by the bank and the builder is responsible for developing a project known as ‘Operation Chamartin‘.

Clash between the business partners was caused by Mr Gonzalez’s proposal on a capital hike of €285 million, an investment impossible to perform by Mr Rey who is struggling to beat his own €1.6 billion debt down.

The proposition threatens Jacinto Rey, who holds 27.5% of DUCH through his Desarrollos Urbanisticos Udra, with being debarred from the game. To keep the stake unchanged, the businessman would have to inject €80 million. It is an enormous effort for a company found in the middle of debt refinancing process, after some of its main creditors, like BBVA, Santander, Sabadell or Barclays sold their debt share to vulture fund Värde Partners which is now lurking and watching each of its steps.

On the other hand, BBVA owns a 72.5% stake in DUCH throught its rela estate arm Anida, so the entity would have to contribute with nearly €220 million to maintain the holding. Beyond the amount, the bank ponders opening door to an investor willing to take part in the Operation Chamartin (covered area highlighted in the picture), as well as to buy the share in hands of SanJose.

According to procurement contract, DUCH was obliged to pay €984 million to Renfe and Adif for 1.8 million square meters embraced by the urban development at the beginning of 2014. However, the payment’s deadline was put forward when Madrid’s Supreme Court restricted the total buildability foreseen in the Partial Plan approved by the City Council.

As the project could move on the soonest in few months, Grupo SanJose reckons the capital hike is unnecessary at this point.

However, BBVA is fed up with waiting. Exactly one year ago, the entity decided to revive the large-scale project. First, it assigned David Martinez as its new Chief Executive Director and then Antonio Bejar for the chairman office.

 

Original article: El Confidencial (by Carlos Hernanz)

Translation: AURA REE