Aliseda’s CEO, Pedro Berlinches, Opines On The RE Sector

24 August 2015 – Expansión

Interview with Pedro Berlinches (pictured above right), CEO at Aliseda. 

The real estate company owned by Banco Popular and the funds Värde Partners and Kennedy Wilson will start to build homes this year.

18 months after Popular outsourced the management of its real estate assets to Aliseda, its CEO, Pedro Berlinches, takes stock and is optimistic about the future. The company – jointly owned by the funds Värde Partners and Kennedy Wilson (51% stake) and Popular (49% stake) – is already paying dividends (the yield for shareholders is 18.2%) and expects to close 2015 with a double digit growth in profits, after it recorded profits of €68.4 million in 2014. As well as managing Popular’s foreclosed assets and loans, Aliseda, which has recently received additional investment of €100 million from Värde, will commence the development of 900 homes this year, for completion in 2018.

How have your first few months been?

The overall picture has been very positive. We exceeded our targets for the sale of real estate assets during 2014 and the first half of 2015. And we are going to slightly outperform the objective we set for property sales (€2,000 million) by the end of the year (i.e. 33% more than in 2014). The sale of land has been boosted and we will end the year with much higher figures than in 2014.

Which new activities will you focus on?

Basicaly, the development of real estate and the management of portfolios for third parties, be they real estate assets or loans. (…).

Aliseda recorded profits of €68.45 million in 2014 (…). What is the profit forecast for 2015?

We expect profits to experience a significant double-digit increase compared with 2014.

Why was the share capital increased by 2014?

The company was created with a capital structure that included loans from shareholders and third parties. The shareholders converted around 50% of their subordinated debt into capital. (…).

What are the plaform’s main sales channels?

Banco Popular’s retail network plays a very important role, as it accounts for 73% of sales. Another 23% of sales are made through direct marketers and 4% of sales are closed online. We launched a new website in April to increase the weight of direct sales made online to 10% by the first quarter of 2016.

Why has the sale of a large batch of assets amounting to €450 million been postponed?

Due to the economic conditions of the offers received, Popular (the owner of the assets) has decided to postpone the transaction. (…).

Have international funds withdrawn from the market due to the political situation in Spain?

No, not for the time being at least. To date, we have not seen any funds withdrawing from the market, quite the opposite. We have seen concern amongst investors. I think they have been nervous about the political situation. But the decision to postpone Popular’s €450 million transaction was taken purely on the basis of price.

How do you think the real estate market and prices will evolve?

There is not a single real estate market in Spain. The evolution by province is going to be uneven. Prices decreased by 0.3% on average during the first quarter (of 2015), nevertheless, they increased in certain areas, such as in Madrid, Barcelona, Valencia, Alicante and Málaga, where there is demand and a shortage of supply. And prices have bottomed out now so that the trend is towards a slight increase. I do not see us having double-digit growth rates again like before the onset of the crisis. We shouldn’t think that the problems are over and everything is positive now, but clearly there has been a change in perception, the macroeconomic indicators are very positive. Local property developers and international investment funds are seeing that clear opportunities are arising.

Is there a danger of over-supply of new housing?

Quite the opposite. Permits for between 35,000 and 38,000 homes are being approved this quarter, whereas during the peaks before the boom, hundreds of thousands of permits were being granted per year. The supply of new homes is limited and yet there is demand. It is good that the number of permits has increased in recent quarters, but we are light years away from (the levels seen in) 2007.

Can we expect to see a wave of consolidation amongst the servicers?

It is too early to anticipate any movements. But experts are certaintly talking about a possible concentration of servicers. Most of them are at least partially owned by investment funds, which will establish their exit strategies at some point and that may lead to movements, but I do not see that happening in the very short term. (…).

Original story: Expansión (by Alicia Crespo)

Translation: Carmel Drake

Tinsa Heralds A New Era For The Hotel Sector

24 February 2015 – Expansión

More specialisation will be required to combat the maturity of the market.

According to Tinsa, the number of hotels has grown by 13.7% over the last seven years. By the end of 2014, there were 7,840 establishments and 1.26 million rooms in Spain.

In its Hotel Market 2014 study, prepared on the basis of the assessment of 2,700 establishments – 35% of the total market in Spain – the appraisal company states that the construction of a five star hotel requires an average investment of €262,000 per room, compared with €135,000 per room for a four star hotel, even though the number of rooms is typically similar in both cases – around 140. For three star accommodation, the investment required is around €89,000 per room. The report shows that profitability increases in line with the category. A five star hotel generates €29,600 per room per year, compared with €14,800 for a four star establishment. Revenue per available room (RevPar) is €117 for five star hotels and €60 for four star properties.

Tinsa indicates that, over the coming years, differentiation will become increasingly important. The hotel industry will undergo a similar transformation to that experienced by the airlines with the arrival of low cost competitors; some chains are already beginning to distinguish themselves with services such as mobile check-in.

Original story: Expansión (by Y. Blanco)

Translation: Carmel Drake