Tag: EU

Spain will Defend the Creation of a European Fund to Refloat Tourism and Transport

The Government is going to take its proposal to the European Council to create a fund amounting to between €1 trillion and €1.5 trillion to boost the economic recovery after the pandemic.

The Government is going to take its proposal to the European Council to create a fund amounting to between €1 trillion and €1.5 trillion to boost the recovery after the coronavirus pandemic, focusing on infrastructure and tourism.

The fund would be used to finance reconstruction initiatives with a special focus on the sectors most affected by the cessation of activity and the lockdown measures, such as transport and tourism.

Elite Partners Raises €150M for its European Logistics Fund

The Singapore-based firm Elite Partners Capital has successfully completed its first round of fundraising to invest in the logistics sector in the European Union and the United Kingdom.

The Singapore-based alternative investment asset management company Elite Partners Capital has successfully completed the first round of fundraising for its Elite Logistics Fund.

The Elite Logistics Fund was officially launched in January 2020 and is mainly aimed at investment opportunities in the logistics sector in the European Union and in the United Kingdom. It seeks to take advantage of the opportunities offered by this market with the rise of e-commerce.

The Sometimes Overrated Boom of Spain’s Socimis

20 July 2019 – Richard D. K. Turner

BME and JLL recently presented a study of the state of Spain’s 73 socimis. From 2016 to 2018, a total of 54 socimis, 70% of the current total, debuted on the market. Last year, those same socimis paid an average dividend yield of 3.8%. The firms distributed €879 million in dividends in 2018, up from €581 million in 2017, +51.4% year-on-year.

While the total stock market capitalisation of the socimis increased by 19.6% last year, compared to the IBEX 35’s fall of 15%, the Spanish market is still relatively small compared to the rest of Europe.  Only four of the socimis listed on the continuous market. The Spanish market ranks fourth out of eleven, behind the United Kingdom, France and Holland. Moreover, while Spain accounts for 31.5% of the total number of socimis in the EU, their assets represent just 12% (26.740 billion dollars at the end of March). The average socimi in Spain is valued at 371 million dollars; compared to €1.371 billion in the United Kingdom; €1.99 billion in France and a whopping €5.35 billion in the Netherlands.

Foreigners also accounted for the lion’s share of investment in Spanish socimis. According to the study, 75% of the investment in the office sector came from outside of the country, 85% of that in logistics and 80% of the investment in retail.

Original Story: ABC Inmobiliário

EU Concern Over Rapid House Price Rises in Spain

21 March 2018 – Eje Prime

Spain is now one of the countries in the European Union (EU) where house prices are growing the fastest. The Spanish residential market ended 2017 with an average growth in prices of 7.2%, exceeding the YoY variation rates in most of the continent’s major economic powers such as Germany, France and the United Kingdom, according to data from Eurostat.

This data, together with the bubble that the country suffered during the final years of the last decade and the beginning of this one, have raised concerns beyond Spain’s borders. There, according to reports by Cinco Días, observers see that the pattern of the previous bullish phase is being repeated.

During the third quarter of the year, for example, house prices across the EU markets as a whole increased by 4.1% in nominal terms. Out of all the countries in the Union, five stood out for their double-digit growth, namely: the Czech Republic (12.3%), Ireland (12.0%), Hungary (10.2%), the Netherlands (10.2%) and Portugal (10.4%).

Established economies such as the German, French and British saw their house prices rise by around 3%. Specifically, the price of housing in France grew by 3.1% last year; in the United Kingdom, the increase amounted to 2.8%; and in Germany, 1.8%. Meanwhile, Italy continued to see price decreases in its residential sector, with a reduction of 2% YoY last year. By city, London, Amsterdam, Madrid and Dublin are going to be the metropolises where prices grow by the most in 2018, with double-digit rises forecast, according to a study by Dbrs.

Original story: Eje Prime

Translation: Carmel Drake

Sareb To Create A Socimi For Its Rental Properties

19 May 2017 – Expansión

Sareb is preparing to create a Socimi through which it will manage its rental business. That is according to Luis de Guindos, the Minister for the Economy, Industry and Competitivity, who made the announcement yesterday. He stated that the Government is considering creating a real estate investment company, which it would “place on the market before the end of the year”. De Guindos made these declarations at a symposium about Spain’s role in the reworking of the EU, organised by the Association for the Advancement of Management (APD).

The objective of this strategy is three-fold. On the one hand, Sareb would obtain new income, through the dividends that its Socimi would generate from renting out its assets. On the other hand, the debut of this subsidiary on the stock market would allow the entity to raise capital, which could be used to reduce Sareb’s indebtedness. According to De Guindos, we should take into account that Sareb has already divested more than 20% of its assets. Finally, through the Socimi, Sareb would have a structure to accelerate its sales, given that it could place entire blocks of flats in the hands of the Socimi.

Several unknowns

The Minister of the Economy said that this strategy is supported by “the current, strong performance of the market”, which is turning its focus towards the rental segment, and as such, Socimis are generating significant returns from their assets. Nevertheless, the new Socimi presents several unknowns, such as how many assets may be transferred to the new entity. It is also worth remembering that the majority of the properties that Sareb manages are located in peripheral areas or in new urban developments, where the rental market is complicated. Nevertheless, the regulations governing this type of company require 80% of the revenues to come from rental properties, and so Sareb would have to be very careful when it comes to choosing the assets to transfer. De Guindos did not indicate how much private capital he hopes to raise through this initiative, how much weight individual shareholders would have in the Socimi or what percentage take would be assumed by institutional investors.

Sources at Sareb indicate that the entity has 4,600 homes, but has still not decided how many of those would be transferred to the Socimi, aside from stating that “it would be a small percentage”.

Asset sales

Over the last five years, since it was created, Sareb has divested 20% of its assets. That percentage is small still and makes it difficult to fulfil the entity’s mandate, which requires it to liquidate all of the assets that were transferred to it by the banks in a period of 15 years and in an orderly manner. Moreover, it is worth noting that Sareb has already sold the properties that were easiest to place, with the aim of boosting the market, which means that now it is left with those properties that have the least possibilities.

Although the volume of real estate transactions grew at an annual rate of 16.1% during the first quarter, according to data from INE, and the stock of unsold homes is starting to run out in certain areas, prices are still falling in certain segments of the market and sales are not being closed.

Finally, the launch of the Socimi would come in parallel to the decision taken by Sareb to start building an average of 1,500 homes per year until its liquidation, even through it estimates that the figure would be much higher during the next three years, reaching up to 4,000 homes.

Original story: Expansión (by Pablo Cerezal)

Translation: Carmel Drake

Europe’s Finance Ministers Consider Creating An EU Bad Bank

4 April 2017 – Expansión

According to working documents to which Efe has had access, the European Union’s (EU) Economic and Finance Ministers will meet on Friday to discuss the possibility of creating a bad bank in order to offload the non-performing loans accumulated by European banks in the market.

The text, drawn up by Malta in its role as the current Presidency of the EU, will serve as a basis for reflecting on the actions that may be adopted at the EU level, to reduce the burden of non-performing loans on European entities, during an informal meeting of the ministers in Malta.

These non-recoverable loans account for 5.4% of the total loan portfolio and are worth more than €1 billion (equivalent to more than 7% of the EU’s GDP).

In addition to the creation of an asset management company, widely known as a bad bank, consideration will also be given to the option of creating a secondary market in the EU for these types of loans, to improve supervision, strengthen insolvency regimes and tackle the accumulation of pending court cases.

“Experience suggests that the creation of asset management companies can help to tackle the accumulation of non-performing loans (NPL) regardless of their capital structure (public, private or mixed)”, said the document.

The Maltese Presidency highlighted that the establishment of this company “would very likely” represent a boost to the secondary market for these assets, by creating a transaction history, and at the same time, grouping together these loans would reduce the information gap between buyers and sellers and would facilitate access to the market for smaller banks.

Nevertheless, the Presidency explained that in the past, there have been cases in which these bad banks have served only as a “cushion for removing NPLs from the banks’ balance sheets” and that there have only been “limited sales” in the market.

As a result, it advocates a hypothetical bad bank that fulfils certain “success factors”, such as suitable governance agreements and proactive strategies to maximise the value of its portfolio.

The current EU Presidency considers that this measure should be accompanied by a “substantial boost” in investment in impaired assets in the EU, by private and public investors alike.

In this sense, it underlines that the creation of this company should be executed “in line” with EU rules regarding bank resolution and State aid.

Meanwhile, the Economic and Finance Ministers will analyse the options for boosting a secondary market in which these loans could be offloaded, which is currently being hampered by a lack of reliable information about the quality of the assets and differences in information between sellers and buyers.

In this sense, it opens the door to the creation of “state-sponsored” platforms for transactions involving non-performing loans.

Original story: Expansión

Translation: Carmel Drake

ECJ Puts An End To The Eviction Of Family Guarantors

21 October 2016 – Cinco Días

The European Court of Justice (ECJ) has ruled that mortgage guarantees from individuals to companies are protected by the European directive on unfair terms. In this way, the EU judges have opened the way for the cancelation of this kind of guarantee and its most draconian conditions, when the contracts favour financial institutions in an unfair way. The ruling also jeopardises the execution of guarantees between individuals, which are very common in the case of house purchases.

In less than a year, and thanks to one case in Italy and another in Romania, the European Court of Justice has revolutionised the treatment of mortgage guarantees, many of which will be protected by the European directive on unfair terms from now on. Until now, it was assumed that the guarantors of a company were responding to a professional relationship and therefore, they were not covered by the rules governing consumer protection.

However, that interpretation did not consider numerous guarantors whose relationship with the company was of a family or friendly nature, without any commercial interest whatsoever. And so, the European Court of Justice has put an end to the gap by classifying these types of guarantors as consumers.

In November 2015, the EU judges indicated and they have just reiterated (14 September 2016) that the European Directive 93/13 governing unfair terms should protect people who guarantee the credit of a company that they do not manage or hold majority shares in.

In such cases, the new European legislation considers that the guarantor is acting as a consumer and therefore, the national courts may cancel the guarantee if they consider that the contract did not inform them properly about the risks or if the contract grants an unfair advantage to the financial institution.

The lawyer Juan Ignacio Navas, Partner-Director of the law firm Navas & Cusí, classifies these types of guarantees, which do not generate any economic benefits for the guarantor, as “altruistic”. And he says that they are granted regularly, particularly in the case of small and medium-sized companies. (…).

Navas believes that the new legislation will not only affect guarantees for loans to companies but will also be extended to all types of individual guarantors. (…).

The lawyer said that many mortgage loans are signed with these altruistic guarantees: “Cousin, brothers, daughters, parents and friends, in other words, people linked by family or friendship ties, without any economic interest”.

Legal sources stress that in these types of contracts “the guarantor is risking something as important as his/her home without gaining anything in return and he/she does so because of the pressure exerted by financial institutions”. (…).

Nevertheless, other lawyers, such as the Partner of the law firm Jausas, Jordi Ruiz de Villa, warn that the rulings from the European Court only ensure that the conditions of these guarantees will be reviewed from the perspective of consumer protection and that even if a contract includes an unfair term, a judge may decide to just cancel that term or amend the commission charged without the need, for example, to cancel the entire guarantee.

As a result, some Spanish judges have already declared some mortgage guarantees to be null and void as they considers that they include unfair terms, which means that the rulings from the European Court may help halt the evictions of these kinds of family or friend guarantor.

Original story: Cinco Días (by Bernardo De Miguel and Juande Portillo)

Translation: Carmel Drake

EU: House Prices In Spain Will Rise By 6% Before 2017 YE

23 February 2016 – El Economista

Spain and Ireland, two of the European countries that suffered the most from the burst of the housing bubble, will see their property prices rise again over the next few years.

That is according to the winter forecasts published by the European Commission, which expects real house prices to increase by 6.5% until 2017 in the case of Ireland and by 6% in the case of Spain during the same period. Malta, where prices are also expected to increase by 6%, completes the podium.

Although house prices are expected to recover, the EU notes that loans taken out to purchase homes continued to decrease (in Spain) in 2015, as well as in Latvia, Hungary, Portgual, Ireland and Greece. In the case of Spain, the decrease amounted to 4% in 2015, below only Latvia and Hungary.

At the other end of the spectrum is Greece, where the EU expects house prices to fall further, in that case by 1.5%. According to the Commission’s report, Greece was the only country not to experience improvements in the financing conditions for homes, which were seen across Europe in 2015. According to the EU, the improvements in financing conditions lie behind the recovery in property prices and only Greece remains at the side-lines. In most countries, the improvement began back in 2014, apart from in Croatia, Lithuania and Italy, which all relaxed their financing conditions in 2015.

Where will prices fall?

Besides Greece, the EU predicts that house prices will fall in three other countries, namely in: Belgium, France and Bulgaria.

The Commission says that the ratio of house prices to disposable income in Spain amounted to 10.1 in 2014, well below the figure of 15.6 recorded in 2007, when the ratio peaked and also significantly above the figure of 8.6 registered in 2000. Ireland has experienced a similar evolution to Spain; there, house prices represented 13x income in 2000, increased to a peak of 16.8x income in 2007, before decreasing to 11x income in 2014.

In 2014 in Portugal, house prices stood at their lowest level since 2000: then they represented 11.2x income, compared with 9x income in 2014. And Germany has also experienced a similar trend – house prices there have decreased from representing 8.6x income to 7.2x income in 15 years.

The property sector in Spain has changed

The reality is that the housing market in Spain has changed (significantly), not only in terms of the decrease in the income requirement to pay for a home, but also in other aspects. The first is the decrease in the number of operations being closed each year: According to INE, 354,132 transactions were closed in 2015, which represents a similar level to 2011. However, that figure represents less than half the number recorded in 2007 (when 775,300 homes were sold).

Another aspect that has changed significantly is the size of the mortgages being granted. In absolute terms, they have decreased from almost €300,000 million in 2006 and 2007, to just over €41,000 million in 2014. On average, the size of mortgages granted has also plummeted, by 37%, to €106,655 in November 2015.

Original story: El Economista (by Inés Calderón)

Translation: Carmel Drake

Eurostat: Spanish House Prices Rose By 4.5% YoY In Q3 2015

21 January 2016 – Cinco Días

The evolution of house prices across the European Union varied significantly between countries during the third quarter of 2015, just as it did between different regions in Spain. In this way, the data published yesterday by Eurostat, the EU’s Office for Statistics, shows that house prices rose by 2.3% on average in the Eurozone and by 3.1% across the EU as a whole, compared with the same period in 2014. If the evolution of house prices is measured with respect to the second quarter of 2015, then they rose by 1.0% on average in the Eurozone and by 1.3% across the EU as a whole.

Spain stands out in the ranking by country, with an average increase of 4.5% between July and September compared with the same period last year. As such, house prices here rose by almost twice the average recorded in countries that share the euro currency. Moreover, that figure represents the greatest increase since the last quarter of 2007. The increase amounted to 0.7% with respect to the previous three months. The highest YoY increases amongst State members during Q3 2015 were recorded in Switzerland (13.7%), Austria (9.3%), Ireland (8.9%) and Denmark (7.2%).

By contrast, the countries that recorded the most significant price decreases were Letonia, with a YoY decline of 7.6%, Croatia (-3.0%), Italy (-2.3%) and France (-1.2%).

Economic recovery

A comparison of the evolution of real estate prices and GDP in the Eurozone, as well as in the rest of the EU, shows that in global terms, houses are currently being sold at higher prices in those countries in which the economic recovery is well underway and where employment is also on the rise.

Moreover, the improvement in access to credit in general terms across the whole of Europe is driving up property sales, such as in the case of Spain, and so the logical result is that prices are also rising. (…).

Other noteworthy statistics include the fact that house prices rose by 5.6% YoY in both the UK and Germany in Q3 2015. (…). Meanwhile, in France and Italy, house prices depreciated by 1.2% and 2.3% YoY in the same period (…).

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

Brussels Authorises CPPIB’s Investment In Puerto Venecia

10 August 2015 – Expansión

Brussels has authorised the transaction on the basis that it will not have a negative impact on Europe’s economic environment.

The European Commission has authorised the joint acquisition of the largest shopping centre in Spain, Puerto Venecia in Zaragoza, by the Canadian pension fund CPPIB and the current owner, the Luxembourg holding company Intu, on the basis that the transaction will not have a negative impact on Europe’s economic environment.

The company created by CPPIB and Intu already controls the Parque Principado shopping centre in Oviedo, but the European Commission considers that the new operation does not threaten competition in the EU, because it will have a “limited impact” on the structure of the market.

The case, which was referred to Brussels on 10 July, has been examined in accordance with the simplified procedures that apply to less problematic deals.

Original story: Expansión

Translation: Carmel Drake