Fortress Dismisses Most Of The Lico Staff After The Failed Sale To Apollo

4 September 2015 – El Confidencial

Fortress dismisses most of the Lico staff after the failed sale to Apollo.

The American fund has announced the third record of employment regulation in the financial holding company which it bought from the savings banks to compete in granting credits.

Fortress admits defeat in Spain in its attempt to compete with banks in lending to small and medium enterprises. US fund, which requested a license from the Bank of Spain to operate as a credit institution, following the purchase of the financial holding company from the savings banks, announced this Thursday its plans to dismiss most of the staff in the face of inability to make Lico Leasing Division profitable.

Several sources have confirmed the announcement made by Fortress to about 130 employees  still working in this subsidiary, which was part of Lico Corporation, the financial group controlled by the Spanish Confederation of Savings Banks (CECA) until its demise due to bankruptcy and absorption of these entities left this company in the hands of banks.

Opportunistic fund bought the holding in 2013 for about 220 million euros, keeping all business and staff, in order to take advantage of economic recovery and the new demand for credit. But the investment has not gone as expected, that is why Fortress commissioned N + 1 to search for a buyer among others of the distressed funds who also had landed in Spain looking for bargains.

Opportunistic fund bought the holding in 2013 for about 220 million with the objective of taking advantage of economic recovery and of the new demand for credit.

In July, Fortress and Apollo reached a preliminary agreement for the transfer of the business. But at the time of the final signing, the entity that manages the NPLs of Banco Santander, Bankia’s Finanmadrid and part of the office network Abanca (renamed to Evo Bank), backed down. Apollo’s refusal has led to the start of the extinguishment of employment procedure, which will now begin negotiating with the workers.

Other sources indicate that this decision means the prelude to the liquidation of this subsidiary, an extreme step denied by those close to the fund. At the same time they assure that Fortress will continue in Spain with its business recovery of Geslico, which already applied for another record of employment regulation earlier this year, real estate and alternative investments.

The recent history of Lico Leasing demonstrates how these opportunistic funds work. Fortress bought it in 2013 for about 220 million euros after its shareholders – BBVA, La Caixa, Bankia, Unicaja, Sabadell, BMN and Kutxabank, among others – put it on sale after inheriting it from CECA (Confederation of Spanish Savings Banks). Soon, the fund presented a record of employment regulation (ERE) for 174 of the 450 employees of Lico Corporation.

Subsequently, it sold the credit portfolio to Goldman Sachs, which it had bought for a knockdown price, and handed over the local landmark office in Barcelona, located in the Windsor building on Avenida Diagonal, to Miguel Durán, the former president of the ONCE .

 

Original story: El Confidencial

Translation: Lee La

Bankinter Expects House Prices To Rise In 2015 & 2016

29 July 2015 – Expansión

Bankinter expects average house prices to rise gradually in the short term, with increases of close to 2% this year and 4% in 2016, in select locations.

Price rises are a contributing factor to the recovery of the sector, which is also marked by an increase in the volume of house sales, according to the report.

The entity believes that the improvement in employment, lower financing costs and the increased attractiveness of housing as an investment compared with other types of property, will all act as catalysts for demand, which will grow at a moderate rate in the short term to exceed 400,000 homes in 2016.

Furthermore, although the current recovery cycle is not expected to generate a new “boom” in housing demand, it is creating the conditions for sales to increase during the course of this year to 380,000 homes and next year to 420,000 homes.

Bankinter considers that 50,000 new homes will be sold in 2015 and that this figure will increase to 70,000-80,000 new homes in 2016.

In this sense, the entity points out that the outlook for the sector is continuing to improve and that 2015 will be the second consecutive year to register an increase in house sales of almost 4%.

In this context, Bankinter considers that the era of price adjustments is now over and that 2015 will be the year of stabilisation, prior to future price increases. However, it does not expect that house construction will ever return to the peak levels seen in the years before the crisis.

The possible increase in demand in the residential real estate market next year will depend on the acceleration of economic growth, the conditions for accessing financing and high liquidity and the attractiveness of housing as a good investment.

On a positive note, the entity highlights the increasing volumes of investment in large asset portfolios for their subsequent rental and management, as well as the rise in average rental prices for offices and shopping centres – their future evolution depends not only on changes in town planning regulations, but also on political uncertainty, which is leading to the postponement of certain investment decisions.

In short, the real estate sector is offering attractive investment opportunities, says Bankinter, which considers that the best investment options involve the purchase of real estate assets in prime locations in large cities and tourist resorts, with a target net return of around 3% and a minimum investment period of 3 to 5 years.

Nevertheless, the behaviour of the sector will also depend on the decline in the population and the unemployment rate, which it forecasts will continue to exceed 19%.

Original story: Expansión

Translation: Carmel Drake

Housing: Completions Exceed New Starts For 7th Year

30 March 2015 – Cinco Días

It is not easy to measure how robust activity is in the real estate sector. But if there is one indicator that has been taken into account historically to assess the sector’s health, it has been the volume of housing starts. That is where the problems begin. The permits that developers have to obtain to enable them to begin construction work did not always used to correspond to the exact number of homes that were built in the end, and so the gross figure that was published, had to be carefully extracted.

And this market suffers from another peculiarity. Since house building is a slow process, which tends to take between 12 and 24 months, it is not easy to halt developments that are already underway, even once it has been established that most of the homes under construction may not be sold upon completion.

These two aspects help us to understand what has happened in recent years, when we analyse the data for housing starts and completions. If we take the year 2000 as a starting point, when nobody doubted that the real estate market was heading towards a boom of as yet unknown proportions, the number of house starts began to open up a sizeable gap over the number of completed homes, of more than 40%, approximately. The former moved in the vicinity of 500,000 homes, whilst the latter remained at just over 350,000.

Right after that, house production volumes climbed to more than 600,000 per year, spurred on by demand for a primary residence by one of the largest population cohorts in Spain’s recent history (the baby boomers), strong employment and the almost unlimited access to very cheap financing over almost “eternal periods”.

Thus, the gap between the two variables continued to grow until 2008, when everything came to an abrupt end. In fact, that year closed with 264,795 housing starts, when just a year before the figure had amounted to no fewer than 651,427. In 12 months, activity had collapsed by 59%, but the majority of the construction work underway continued to run its course (only a minority of developments were left unfinished even during the worst years of the crisis), which explains why since then, the number of finished homes has exceeded the number of house starts, year after year, for seven years in a row.

Shortage of new supply

In 2014, this trend was almost reversed, but in the end it was not. Last year, construction of 34,873 houses began, which represented a slight increase of 1.7% compared with the figure a year before, but still a long way below the 865,561 homes that developers began building in 2006, during the height of the boom. This means that today, the number of homes being constructed accounts for barely 4.02% of the volumes that were being constructed during the economic boom. Moreover, the figure is slightly lower than the number of homes that were completed last year (46,795), which in turn represented 7.29% of the number of homes that were finished in 2007 (the peak of the series), when 641,419 homes were completed.

All indications are that this year will be the first year that the two curves cross again, in such a way that more homes are started than are completed. In fact, if this does not happen, there could be problems due to a shortage of stock of new homes in places where the stock has already been absorbed and demand is beginning to intensify. Another important indicator for the sector, namely the consumption of cement, also indicates the same trend. During the first two months of this year, cement consumption has increased by 6.6%, to amount to almost 1.6 million tonnes, which corroborates the theory that the cranes are returning, albeit in a selective way.

Another business niche, which is key to the recovery of the construction sector, but which does not seem to stop decreasing is: refurbishments. According to figures from the Spanish Confederation of the Construction Product Manufacturers Association (Cepco), 2014 closed with 22,428 permits for the renovation or refurbishment of homes, down 0.80% on the previous year. And the number of building permits barely grew (rising by only 2.8%).

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

BBVA: Positive Outlook For Housing Market In 2015

3 March 2015 – El Economista

The positive outlook for economic growth, better employment figures and favourable financing conditions will drive further increases in house sales in 2015, which will be accompanied by a “moderate” increase in prices and a further increase in construction activity.

That is according to the latest “Real Estate in Spain – Flash Report”, prepared by the Research Department at BBVA, which also states that “2014 could be classified as the year in which the recovery of the real estate sector began”.

Sales recovery

The entity points out that, according to the General Council of Notaries (Consejo General del Notariado), demand for properties showed signs of recovery month after month during 2014, to close the year with 364,000 homes sold, up 19.1% compared with 2013. “That was the first increase since 2007 and it reflects the greater level of activity in the mortgage market”, says BBVA.

At the same time, data from the Ministry of Development shows that there was a 0.5% increase in house prices last year, again, the first increase since the start of the crisis.

This recovery in the key real estate parameters led to a 1.7% increase in the number of construction permits for new homes in 2014, which the financial institution notes “breaks the trend of seven consecutive years of decreases and makes 2014 the turning point in terms of construction activity”.

The report forecasts that this positive trend will really take hold in 2015. BBVA Research expects the Spanish economy to grow by 2.7% this year, with the creation of around half a million jobs and relatively stable interest rates.

“All of these factors indicate that there will be a further increase in house sales and that prices and construction activity will respond with further growth”, says the bank.

Original story: El Economista

Translation: Carmel Drake

Final Approval For Intermodal Logistics Centre In Aranjuez

11 February 2015 – misnaves.es

The Community of Madrid has granted the final approval for a specific amendment to the Urban Plan for Aranjuez, which will make way for the construction of the so-called Intermodal Logistics Centre, the first one of its kind to be built in the south of the Community of Madrid.

The centre will be constructed on a surface area of 34 hectares and will be completed in two phases, with investment from Adif expected to amount to €13 million and €8.5 million in each phase, respectively.

Previously, the central Government had already created the company Mixta Madrid Sur Logística Aranjuez, in which Adif holds a 47% stake; the remaining 53% is held by three private companies, which contributed initial share capital of €4.5million.

According to the mayor, “this approval will allow us to expand the railway network structure, to create a logistics centre in Aranjuez that will receive trains travelling along the Valencia-Madrid corridor, amongst others”. The mayor also highlighted that “the development of this logistics centre represents a new opportunity for both direct and indirect employment in Aranjuez”.

In addition to the surface area that the platform itself will occupy, the plot offers a further 70,000 square metres of space where other activities may be conducted, not only industrial but also tertiary including as hotels and the like. In total, the plot measures 350,000 square metres.

Original story: misnaves.es

Translation: Carmel Drake

The Average Home In 2014: 97m2, Second Hand, With Sea Views

11 February 2015 – Cinco Días

Last year, home ownership was yet another symptom of the start of the recovery of the global economy. In fact, the largest investment made by households over the course of their lives can only be re-actived once the households themselves perceive that their income is going to be stable and steady over the medium term and (in the event that they need financing) when they have access to credit.

And those are, in the opinion of all of the experts, the two variables (employment and financing) that started operating again in 2014 after years of very tough crisis and apathy from scarce solvent demand. According to the figures published this morning by the National Institute of Statistics (Instituto Nacional de Estadísticas or INE), prepared using information from regional property records, last year, 319,389 homes were sold, i.e. 2.2% more than in 2013 and the first increase since 2010.

89.7% of the homes that were purchased were unsubsidised (free), compared with the remaining 10.3% that were subsidised (VPO). Sales of unsubsidised homes increased by 3.2%, whereas sales of subsidised homes continued their decline, dropping by 6.2% in 2014.

Another key finding to come out of the information is that sales of second hand homes increased their prominence gradually and at an unstoppable rate during the crisis. Thus, whilst the norm during the boom was to sell almost as many new homes as second hand homes, last year only 37.4% of the homes sold were new builds, compared with 62.6% that were “used”. And again, whilst sales of the former decreased by 16.9% in 2014, the volume of second hand homes sold last year increased by 18.4% over the previous year.

Size and type

In terms of the regions where the most house sales were recorded, INE quantifies it in two ways. Firstly, it extracts the data from the property registers of each autonomous region and then it measures the volume of transactions per 100,000 inhabitants.

Thus, the regions with the greatest activity were Valencia, with 1,182 house sales per 100,000 inhabitants, followed by the Balearic Islands, with 1,043 and the Canary Islands with 1,015. In absolute terms, the Balearic Islands, Navarra, the Canary Islands, the País Vasco and Madrid were the five autonomous regions that experienced the greatest increases in real estate sales.

With all of these statistics, plus those provided to Cinco Días by Tinsa, about the type and size of homes sold last year, we can conclude that the profile of the typical house would be: an unsubsidised, second hand apartment or multi-family home (which accounted for 67% of the market), with an average surface area of 97 square metres and, in many cases, with sea views; since the typical home would likely be located in one of the territories that recorded the highest transaction volumes.

The information provided by the appraiser also shows that this best selling home would have been sold for an average price of €136,212, which represents a cumulative depreciation of 38% with respect to the average prices paid for a typical home in 2007, the year in which property prices reached their peak. Tinsa estimates that the average mortgage taken out last year amounted to €100,782, which was 32.3% lower than the average amount borrowed during the boom years.

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

Bank of Spain: Positive Outlook For 2015

28 January 2015 – Expansión

The Bank of Spain emphasises the “stimulation” of private consumption / It also highlights a “slight improvement” in the production of goods, car registrations and consumer confidence and acknowledges the positive trend in employment.

Although the spending power of Spanish citizens has not yet returned to its pre-crisis levels, it did improve during the last quarter of 2014. The construction sector, one of the areas hardest hit by the crisis, also experienced a revival. These are two of the conclusions of the January Bulletin issued by the Bank of Spain yesterday. One of the factors that has contributed to this progress is “an improvement in financing conditions”. That is, the depreciation of the euro, the decrease in interest rates and the collapse of oil prices. Another positive development is the “very favourable performance of the labour market”.

The supervisory body says that the construction sector experienced an “upturn” in the latter part of last year, evidenced by an increase in the number of Social Security enrolments and a rise in cement consumption. “The information indicates that the recovery in the construction sector will continue, a trend that, from the point of view of the type of work, will affect both the residential and non-residential segments”, says the report.

Furthermore, the Bank of Spain insist that “private consumption indices suggest that this component of demand experienced more dynamic behaviour during the final part of 2014”. According to the Bulletin, a “slight improvement” was observed in retail sales, car registrations (which recorded an increase of 0.2% in December following a decrease in November), the production of consumer goods and consumer confidence. The day before yesterday, the main association of car manufacturers, Anfac, reported that 2.4 million vehicles were manufactured last year, 11% more than in 2013.

Employment

According to the regulator, the improvement in the labour market also gives cause for optimism. The Bulletin states that the Labour Force Survey (LFS) for the fourth quarter of 2014 showed a quarter-on-quarter increase in employment of 0.9% in seasonally adjusted terms, with the creation of 434,000 jobs, which will benefit almost every sector (especially construction), with the exception of agriculture. In addition, the number of full-time employees grew at a similar rate to those hired on part-time contracts.

In terms of the performance of the industrial sector, the Bank of Spain said that the month-on-month decline in the industrial production index moderated in November by 0.4%, whilst the two most important indicators of progress in the sector (the European Commission’s industrial confidence index and the manufacturing PMI) remained at “levels that are consistent” with continued expansion in this area.

The report also celebrated the “dynamism” of foreign tourism. Nevertheless, it highlighted that both the export and import of goods grew at more moderate rates in November. The latter grew by 4.3% in November, compared with 9.9% in October.

Similarly, the Bulletin indicated that the evolution of prices during the last part of 2014 was greatly affected by the unstoppable decline in oil prices on international markets, which caused CPI to decrease by 1% in December, year-on-year.

Economy-wide growth

Meanwhile, the Secretary of State for the Economy, Íñigo Fernández de Mesa, also said yesterday that growth in Spain will be “much more intensive in terms of labour, because more jobs will be created with less growth, and less intensive in terms of credit” and (growth) “will be based on all of the engines that drive the economy”, both the export sector and internal demand. “We are confident that 2015 is going to be a year of consolidation”, since “for the first time in a long time, Spain is not only growing, but all of the imbalances are also being corrected”, he said.

“Spain has gone from being the problem-child of the euro zone to being the country that is generating the highest growth and helping to drive the eurozone economy in a more intense way”, he said. He also pointed out that “growth is now greater” in those countries in which “the most significant reforms have been carried out”.

Original story: Expansión (by Yago González)

Translation: Carmel Drake

ST: Housing Becomes Investor Safe Haven Once More…

20 January 2015 – Cinco Días

…in the face of stock exchange volatility.

Experts forecast more sales in the future but do not expect significant price rises.

Refurbishments, rental and tourism are the three key niche areas for housing.

The housing market is preparing to emerge completely renewed from its worst crisis in recent history. Or at least that is the view of the latest study conducted by one of the main real estate valuation companies, Sociedad de Tasación. All of the parameters that drive the market are in better shape today than they were a year ago and that, coupled with the challenges facing this activity, means that forecasts are much more optimistic.

The CEO of Sociedad de Tasación, Juan Fernández-Aceytuno, said today that property prices are showing a clear trend towards “stabilisation”. Particularly, in used homes, where the growth in demand has caused smaller price decreases and even the first annual price increases. “In resale homes, we are seeing very clearly that prices have bottomed out, whereas for new homes, if all of the other variables fall in line with our expectations, then prices should reach their minimum levels at some point this year”, said the CEO of the real estate valuation company.

Refurbishment and rental

Speaking of variables, Fernández-Aceytuno, cited three key parameters: employment, purchasing power and finance. Continued improvement in the labour market will be crucial for ensuring that demand for housing continues to increase, now that the banks deem determined to re-establish the flow of credit. “In fact, all indicators show that, as at the end of previous crises, demand is building, as potential buyers wait for prices to come down to the desired level or to the level that they consider they can afford. As soon as that happens, sales will increase” said the CEO of Sociedad de Tasación.

This indicates that over the short to medium term, the market will see more sales without necessarily having to raise prices. And this does not even take account of the fact that some of the circumstances that occurred in the early 2000s, when the last boom in property prices began, are now repeating themselves.

And it is now, like then, that experts believe that housing is regaining its traditional appeal as a safe haven in the face of low returns on deposits and the high volatility of the stock market. With the euro, oil and other commodity prices all in decline, it is inevitable that investments in property and gold, amongst others, become more attractive, explain analysts. In addition, uncertainty exists overseas.

“We see more clouds on the horizon outside of Spain that within it. We are concerned by the situations in Russia and Greece, by terrorism, by how the deflationary situation in Europe will develop in the face of economic and price growth in the US. In Spain, the evolution of the economic situation is critical”, noted Fernández-Aceytuno.

Asked whether international investors seem concerned about the rise in political groups such as Podemos, the CEO of Sociedad de Tasación was keen to minimise the effect that such factors have on the decision-making of companies investing in Spain. “As you would expect, they ask about Podemos, Cataluña and corruption, but we are not aware of any project that has been halted for any of those reasons”, he said.

In terms of future challenges, refurbishment, rental and tourism are the three areas in which experts at the real estate valuation company expect to see the highest growth. In refurbishment, because 90% of existing homes do not meet the requirements of the 2006 technical code. In rental, because buy-to-let is one of the fastest growing trends in the market given its high yields (depending on the area, yields can exceed 6%). And finally, tourism because statistics show that up to 12 million travellers will stay in houses instead of hotels every year, “tourism represents a huge niche in which hotels can compete by buying homes, refurbishing them and offering them up for rent”.

Original story: Cinco Días (by Raquel Díaz Guijarro)

 Translation: Carmel Drake