AEW Invests in Residential Rental Market in Barcelona

10 July 2019

The flood of money that led to a spike in prices for rental housing in Madrid has now reached Barcelona. The German firm AEW has just purchased a building at Via Augusta 59 in Barcelona for an undisclosed amount. The company previously announced that it was looking to begin operations in Spain’s residential housing market.

The property is mixed-use, residential and commercial, and is located in the district of Sarrià-Sant Gervasi, just 500 meters from Avinguda Diagonal, Barcelona’s main thoroughfare. The building is located next to the Gràcia metro stop, in a sought-after area.

The Edificio Mercurio, as it is known, has about 11,500 square meters of surface area. Eurostone, which had acquired the asset two years before, had begun major renovations which will result in a total of 91 flats on nine floors, along with three commercial premises.

Original Story: El Confidencial – E. Sanz

Adaptation/Translation: Richard D. K. Turner

Arcano Buys EFE’s Former HQ in Chamberí to Build Luxury Homes

1 April 2019 – El Confidencial

Arcano has just acquired the property at number 32 Calle Espronceda in Madrid, which previously housed the EFE Agency for several decades.

The firm’s new real estate fund has just purchased the building, which spans 8,000 m2, for more than €40 million from the fund Eurostone, where it plans to promote 50 luxury homes. The property is distributed over seven floors and has more than 200 parking spaces. Moreover, it has already been granted all of the licences necessary for the redevelopment work.

The operation has been advised by Colliers, Doble Dígito and TC Gabinete Inmobiliario and partially financed by CaixaBank.

Original story: El Confidencial (by Ruth Ugalde)

Translation/Summary: Carmel Drake

Teleno Real Estate Buys a Residential Building in Madrid for €16M

12 June 2018 – Idealista

The real estate consultancy firm BNP Paribas Real Estate has advised on the sale of a residential building in the north of Madrid, worth €16 million. The property comprises 59 homes, 42 storerooms and 96 parking spaces. Teleno Real Estate is the company that has acquired the asset; it has been advised by Jesús Segado and Javier Escudero, partners of Smart Invest.

The asset is located in the north of Madrid. The firm that has undertaken the purchase, the former Tauro Real Estate, invests in the purchase of real estate assets and is led by José María Xercavins. Tauro Real Estate was acquired in April by the Israeli millionaire, Teddy Sagi (pictured above), who paid €180 million for the company. Currently, it owns 600 flats in Madrid and Barcelona.

David Forteza del Rey, Head of Residential Investment at BNP Paribas Real Estate, explains that “these types of operations confirm the continued dynamism of the residential market, which is still offering attractive returns for investors in a low-interest rate environment”.

Last month, the consultancy firm also advised the investment fund Eurostone on the purchase of two real estate assets, in that case in the upper area of Barcelona, on Calle Tuset and Calle Aribau. Those properties have surface areas of 4,786 m2 and 7,461 m2, respectively. The first is a residential asset with a commercial premise on the ground floor. The property on Calle Aribau contains homes for residential use and tourist rental (…).

Original story: Idealista 

Translation: Carmel Drake

Eurostone Buys 2 Mixed-Used Buildings in Barcelona

21 May 2018 – Eje Prime

Major operation in the prime area of Barcelona. The Luxembourg-based fund Eurostone, managed by Grupo Mina, has purchased two entire buildings in the Sarrià-Sant Gervasi district of the city from a local family office for €50 million. The properties span a combined surface area of more than 12,000 m2.

The larger asset is located on Calle Aribau and measures 7,461 m2. Constructed in 1918, the property is designated for residential use, for living in as well as for tourist rental. In the internal patio, there is also an office building called La Farinera.

Meanwhile, the second building acquired by Eurostone, which has been advised in this operation by the consultancy firm BNP Paribas Real Estate, is located on Calle Tuset. The asset, constructed in 1944, has a surface area of 4,786 m2 and a commercial premise on the ground floor. The rest of the property is made up of homes.

“This operation highlights the interest that the Catalan real estate sector is sparking amongst the funds and other international players, who still see Barcelona as a priority market in which to invest”, says Francisco López, Director of BNP Paribas Real Estate in Cataluña.

Original story: Eje Prime

Translation: Carmel Drake

Property Developers Start Buying Land Without Building Permits

11 October 2017 – Real Estate Press

Overseas real estate funds, with a major presence in the Spanish real estate market, are owners of large portfolios of land as well as of debt secured by land as collateral, and many are operating in association with Spanish property developers.

The estimates for this year indicate that 80,000 new homes will be built in total.

The funds Blackstone, Cerberus, Kennedy Wilson, TPG, Värde Partners and Apollo started to acquire servicers, created by the banks, when the real estate sector began to recover. Other funds, such as Lone Star, Centerbridge, HMC, Eurostone, Aquila, Oaktree, Castlelake, Värde and Pimco, have been backing residential development. In this way, they have become the new residential property developers that need land as their raw material.

Now, unlike in prior years, no one wants to risk buying land that still needs some kind of building permit approval to turn it into buildable land, due to the risks involved, and that is why the price of buildable land is rising.

Funds were able to acquire land in areas with high demand for housing, such as Madrid, País Vasco, Barcelona, the Costa del Sol and the Alicante coast, at low prices before residential activity started to recover. But over the last year, land prices have also been recovering in other large capital cities, such as Valencia, Zaragoza, Sevilla and Málaga.

Nevertheless, the potential that these entities see in the residential development segment has allowed them to reduce the urban planning risk in more mature markets, such as Madrid and Barcelona, until now, and start to place their focus on plots that still have not received building permit approval. Moreover, there is no shortage of people who are demanding that the administrations adopt their expansive urban planning policies once again.

Original story: Real Estate Press

Translation: Carmel Drake

Large Funds Thrash It Out To Buy Residential Land

9 October 2017 – El Periodico

The 10 largest property developers in the country are in a position to start work on the construction of around 20,000 new homes in 2018. That volume of output is possible thanks to the collection of buildable urban land that they have managed to accumulate over the last year. The large Spanish property developers – many of which are owned, at least in part, by investment funds – as well as overseas funds themselves, are competing, at an almost frenetic pace, to acquire plots of land on which they will be able to build without modifying the classification (to residential use).

“Overseas investors are very present in the new Spanish real estate landscape, be it as owners, debt holders, servicers or property developers investing together with other local property developers, both in the renovation of existing buildings and the construction of new ones, as well as in the rental sector and through the constitution of Socimis”, says Samuel Población, Director of Residential and Land at the real estate consultancy firm CBRE. The consultancy indicates that at the end of 2016, the large property developers in Spain owned €8,000 million in assets for construction.

80,000 homes in 2017

The real estate sector is expecting the output of new homes to reach 80,000 units in 2017. That figure is still below the short-term goals. “We should be producing 150,000 homes (per year), although we will not achieve pace that for another three years”, says Juan Velayos, CEO at Neinor Homes, one of the real estate companies – whose main shareholders are investment funds – that has purchased the most land over the last two years. “We set ourselves a land investment target of €380 million for 2017 and 2018, but we have already covered most of that budget this year”, he adds. His firm is currently working on the construction of 5,000 homes in Spain and hopes to achieve a completion rate of 3,500 units per year.

The funds Blackstone, Cerberus, Kennedy Wilson, TPG, Värde Partners and Apollo started to acquired the commercial and management platforms that the banks had created (the servicers) when the real estate sector started to recover in 2013. In parallel, the overseas funds Lone Star, Centerbridge, HMC, Eurostone, Aquila, Oaktree, Castlelake, Värde and Pimco are strongly backing residential development. In this way, they have become the new house builders. And they cannot build if they don’t own land.

The problem is that, for various reasons, the administrations are not producing raw material. “No reclassifications (of land) are being performed, because someone will always get hurt”, says Lluis Marsà, President of the Association of Property Developers and Constructors (APCE). “We do not take the risk of buying non-buildable land that has to be transformed because the production costs are rising, the risk soars”, says Velayos.

Nevertheless, that situation has the benefit that agents in the sector are adjusting output to the maximum in order to maintain returns despite the new quality standards for homes, which are higher than in the past. “One of the positive effects of the profound transformation of the sector, with the arrival of new players, is the greater degree of control over the finances and execution periods that we are seeing”, says Población.

Investors adding value

The profile of funds has evolved quickly from opportunistic to value added (…). The focus of these firms is to acquire plots in areas where demand for housing is high, such as Madrid, País Vasco, Barcelona, the Costa del Sol and the Alicante coast. But during 2017, there has also been a positive recovery in land operations in other large capitals such as Valencia, Zaragoza, Sevilla and Málaga (…).

Original story: El Periodico (by Max Jiménez Botías)

Translation: Carmel Drake

International Funds Reactivate Residential Development Market

7 July 2016 – El Economista

After several years away, cranes are appearing on Spain’s landscape once again. Their return has come thanks to several large international funds, which have managed to reactivate the property developer market in record time and just at the right moment. Thanks to their presence, property developer activity in Spain grew by 30% last year, with 50,000 new construction permits; and the experts are certain that the residential business is now unstoppable.

The financial capacity of the new players is overwhelming in some cases. They have liquidity surpluses that the historical property developers would have envied, but, nevertheless, they do not know the ‘ins and outs’ of the local market, and their experience in terms of land is practically non-existent. For this reason, their entry into the Spanish market has been undertaken through the purchase of property developer platforms and through partnerships with local companies (…).

In light of the high profile partnerships that have been signed in the last two years, involving players such as Lone Star, Värde and Kennedy Wilson, the experts predict that the high level of activity will continue this year with the purchase of plots of land. In fact, they confirm that sales of non-developable land are starting to accelerate and that demand for land purchases will increase, especially those in the final stages of development, due to the high level of competition that has been generated between the key players in the sector – property developers, investment funds and cooperatives.

All of these players have realised that the opportunities that the residential development business is now offering “have yields that are considerably higher than those of other investments”, according to Solvia’s Market View report, which states that transactions have grown by 8.6% and prices have risen by around 4.5%. With these positive indicators, the development figures being talked about now include 150,000 new homes and 50,000 secondary residences per year until 2020.

Most of these homes will come onto the market thanks to Neinor Homes, which is looking to become the largest property developer in Spain. This company will be one of the most active over the next few years, given that according to its own forecasts, it expects to build between 2,500 and 3,000 homes per year. The firm, led by Juan Velayos – the former CEO of Renta Corporación – is the largest residential real estate company created in Spain following seven years of recession.

Its potential was proven last year, since between its creation, in May 2015, and the end of the year, it invested own funds amounting to €800 million on the purchase of land, on which it plans to construct 10,000 homes over the next few years, bringing together the largest bank of high-quality developable land in Spain (…).

But Lone Star is not the only fund that has made a long-term commitment to the Spanish residential market. The US fund has had a major competitor for several weeks now, in the form of Värde, which after acquiring 25% of the real estate arm of San José from Banco Popular, has now created a new property developer.

The company is called dospuntos and its Business Plan for 2016-2012 forecasts an investment of almost €2,000 million in the Spanish real estate market over the next six years, to complete the construction of 2,000 homes per year on average from 2019 onwards. For the time being, the group already owns a sizeable bank of land for the construction of more than 7,000 homes across Spain.

Inmobiliaria Habitat is another company with history in the sector, which in 2015, after finding itself in a very delicate financial situation and incapable of paying its debt, ended up in the hands of a group of funds – Bank of America Merril Lynch, SP101 Finance Ireland, Capstone and Goldman Sachs, amongst others. In this case, although the commitment by the funds has been key, it is nonetheless a temporary measure, given that they plan to exit the group within two or three years.

The latest residential report from the consultancy firm CBRE highlights other partnerships between international funds and domestic developers such as: Grupo Lar and Pimco; Renta Corporación and Kennedy Wilson; Momentum Real Estate and HMC; Aquila Capital and Inmoglaciar; Mina Inmobiliaria and Eurostone; Aelca and Värde; and Q21 Real Estate and Baupost. (…).

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake

Overseas Funds Are Behind Madrid’s New Luxury Homes

12 April 2016 – El Confidencial

British, German, Luxembourg, American…international investment funds are behind the majority of the super-luxury residential projects currently underway in the centre of Madrid. Foreign capital has established a strong foothold in the Madrilenian residential market, to become an undisputed protagonist of major land purchases – examples include InmoGlacier and Aquila Capital’s purchase of Parque Ingenieros in Villaverde from Sepes –, corporate operations – Lone Star’s purchase of Neinor, the real estate arm of Kutxabank –, and housing developments, which has become a great luxury product over the last year. (…)

The well-known firm Pimco (USA), which is leading the iconic Juan Bravo 3 project together with Lar España – which has just managed to record a 7% valuation increase – has been joined by names such as Eurostone (Luxembourg), Patrizia Inmobilien (Germany) and UK & European Investment (UK), which regard the luxury residential segment as a goldmine in light of the resurgence of the real estate market in Spain.

Between them over the next few months, they will put more than a hundred high quality homes on the market, in the most exclusive neighbourhoods of the capital, where the supply of new homes for sale is very scarce. (…).

Luxury homes in EFE’s former headquarters

The trickle of operations has been constant in recent months. The latest, closed just a few days ago, was Eurostone’s purchase of EFE’s former headquarters on Calle Espronceda 32-34 from BBVA. The fund plans to develop a residential project on the site, containing 46 luxury homes with up to four bedrooms, terraces, gardens, a swimming pool, gym and almost 230 parking spaces. Eurostone is working with Mina Inmobiliaria on this project (…).

And that is not the fund’s only project of this kind – i.e. with a good location and high quality -. Eurostone is also managing…the property located on Calle Génova 7 (pictured above), right on Plaza de Alonso Martínez, in the exclusive neighbourhood of Almagro.

Meanwhile, Mina Inmobiliaria has several super-luxury projects underway in the capital, not only with Eurostone, but also with AKM Real Estate, funded by Spanish capital, constituted at the end of 2014 with the aim of acquiring residential properties in Madrid and Barcelona.

One of the most striking developments is on Calle Menéndez Pelayo, 41, opposite El Retiro park – acquired for €12.6 million -. A renovation project where more than twenty homes will be constructed with an average price that will range between €7,000/m2 and €8,000/m2. Other buildings are also being renovated on Calle Modesto Lafuente, 18, Calle Barquillo, 11 and Calle García de Paredes.

Another actor to have emerged onto the scene in recent months is the German firm Patrizia Inmobilien. At the beginning of February, it purchased the building located on Calle Claudio Coello 108 for €22 million from Lar España and Pimco. It plans to construct 14 luxury homes there, measuring around 300m2, with two or three parking spaces per home. According to a recent report compiled by the appraisal company TecniTasa, the market value of those homes may reach €10,900/m2.

Juan Bravo 3 – Pimco and Lar’s flagship project

This building is located just 50 metres away from what will undoubtedly be the flagship project of the high-end market in the capital, Juan Bravo 3, which has been renamed Lagasca 99. (…).

For the time being, no details have been revealed about the project in terms of the number of homes and prices. Nevertheless, several sources indicate that around fifty homes will be constructed on the 2,250 m2 site, measuring between 250m2 and 450m2 each, and prices are likely to reach €10,000/m2, on average, with the most affordable homes costing around €8,000/m2 and the most expensive costing around €14,000/m2.

Just a kilometre away, in Plaza San Juan de la Cruz, next to Nuevos Ministerios, another project will be constructed over the next few months. This is the former tenement building that Pontegadea, the investment arm of Amancio Ortega, sold a few months ago to the Catalan property developer Uniq, which specialises in the development of luxury homes.

According to sources, Uniq will construct 41 homes, in other words, it will be responsible for the development of the project, but another company, the British fund UK & European Investment, put up the capital to close the deal, which amounted to €20 million. (…).

Original story: El Confidencial (by Elena Sanz)

Translation: Carmel Drake

Eurostone Buys EFE’s Former HQ To Convert Into Luxury Homes

30 March 2016 – El Confidencial

Eurostone, a real estate company headquartered in Luxembourg, has purchased the building located on the Madrilenian street Calle Espronceda, 32-34 from BBVA, which until 2013 housed the headquarters of the new agency EFE, which occupied the property for 35 years. The consideration paid for the operation has not been disclosed, but BBVA acquired it in March 2007 from SEPI (la Sociedad Estatal de Participaciones Industriales) for €51.25 million. The consultancy firm CBRE has advised the vendor, whilst Gabinete Inmobiliario and J. Pueche have advised the buyer.

The property, located just 300 m from Paseo de la Castellana, has a surface area covering more than 8,000 m2 spread across seven floors and more than 200 parking spaces. Eurostone already owns one property in Madrid following its purchase of a building on Génova 7 and three buildings in Barcelona, all in good locations.

The fund plans to convert the building on Espronceda into a luxury residential project in a neighbourhood, namely Chamberí, that has a shortage of new, high quality homes, and so it is hoping to become one of the iconic developments in the capital. The project, which will involve collaboration with the architect studio Lamela, will comprise homes and duplex apartments containing up to four bedrooms, terraces, gardens, a swimming pool, gym, etc. In addition, it will have more than 230 parking spaces and 1,700 m2 of retail space.

The building forms part of Project Zafiro, whose sale is being managed exclusively by CBRE. The portfolio of assets owned by BBVA comprises 15 buildings of different types, located in major Spanish cities, as well as in Lisbon, with a total surface area of more than 100,000 m2 and 1,300 parking spaces. This process has sparked interest from several funds, both domestic and international, and is close to being finalised. (…).

In addition, the building in question is located just 100 m from the former block of tenement flats (arranged around a patio, typical in Madrid, known as a “corrala”) that Pontegadea, the investment arm of Amancio Ortega, sold less than a year ago to the Catalan property developer Uniq, which specialises in the development of luxury homes, and which will be responsible for leading the development of the project.

According to sources at the time, Uniq will construct the homes, but another company, an investment fund whose identity has not been revealed, put up the capital to close the deal. The price of that operation amounted to around €20 million.

In addition, less than a kilometre away, on Calle Claudio Coello, number 108, another international fund, in this case the German fund Patrizia, recently entered the neighbourhood of Salamanca, with the acquisition of a residential building from Grupo Lar and Pimco for €22 million, where it plans to construct 14 luxury homes measuring 300 m2, with two or three parking spaces per flat.

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake