Sabadell Revises Down its Price Expectations for the Sale of its Property Developer SDin

21 May 2019 – Cinco Días

Banco Sabadell put its property development arm Solvia Desarrollos Inmobiliarios (Sdin) up for sale several months ago. Initially, the bank was expecting to receive proceeds of around €1 billion for the company, its employees and land. However, in light of the current climate, it is now revising down its expectations.

Investment funds are starting to face problems when it comes to generating returns from their investments in land and property what with many of the large property developers, such as Neinor Homes, slashing their short-term forecasts, the political uncertainty following the recent general election and the general nervousness that the current boom cycle is coming to an end.

As a result, the bank chaired by Josep Oliu (pictured above) is now hoping to receive binding offers amounting to around €900 million, which would considerably reduce the entity’s expected gains from the sale. Nevertheless, SDin owns around 300 prime plots and 130 promotions under development, whose combined valuation amounts to €1.3 billion, according Savills Aguirre Newman.

For the time being, Sabadell has four offers on the table from investment funds, including from Cerberus and Oaktree. The fund Kronos is also still in the running although it is less likely to prove victorious.

Sabadell had initially planned to close this operation by the end of June, but may now wait a little longer.

Original story: Cinco Días (by Ángeles Gonzalo Alconada)

Translation/Summary: Carmel Drake

Heron City Sale Fails to Spark Interest amongst Investors

12 December 2017 – El Confidencial

A concept too unique for a market that is used to something a lot more familiar. That is the moral that can be drawn from the decision by Heron International, the property developer behind the famous Heron City centres, to put into quarantine the sales process of the three leisure centres that it owns in Spain.

The offers received by the British company fall well below its expectations, which has caused it to reconsider its whole strategy and take the decision, last week, to suspend the current sales process, according to sources familiar with proceedings.

As El Confidencial revealed in September, the British company engaged CBRE to find a buyer for its whole portfolio, which comprises Heron City Las Rozas (Madrid), Heron City Paterna (Valencia) and Heron Diversia Alcobendas (Madrid), and which has a valuation of between €230 million and €250 million.

Nevertheless, the appetite in the market has been lower than anticipated because the usual suspects who typically participate in these types of operations (large international funds and Socimis) actually specialise in shopping centres, whose casuistry differs from those of leisure centres, and where lots of investment opportunities are still emerging.

In 2017 alone, with less than a month to go before the end of the year, 17 transactions involving shopping centres and retail parks have been closed across Spain, according to data from the trade association AECC, led by giants such as Xanadú. Moreover, during the next two years, around twenty new centres are expected to open and six centres are due to be expanded, which will see an additional gross leasable area come onto the market of more than 2 million m2.

The result has been that Heron International has decided to suspend the sales process and redefine its strategy. The three Heron City complexes, which span a combined gross leasable area of 84,000 m2, have 6,100 parking spaces, receive more than 12 million visitors per year, and represent a brand that arrived in Spain almost three decades ago with a very specific leisure concept, based on cinemas and a restaurant offer that tries to distance itself from classic fast food.

Since its arrival in Spain, Heron International has only starred in one operation, involving the sale of one of its leisure centred, namely Heron City in Barcelona, which it sold to Babcock & Brown and GPT at the end of 2006 for €138 million. Almost a decade later, as El Confidencial revealed, that complex was acquired by ASG, the Spanish subsidiary of Activum, a deal that represented that firm’s first operation in the Catalan capital.

The leisure centre in Barcelona, as well as those in Las Rozas and Paterna were all built by the British company. In the case of Diversia, it purchased that centre in 2003 in conjunction with Realia (50%) and a decade ago it took over all of the share capital when it also acquired the stake owned by FCC’s subsidiary.

Original story: El Confidencial (by R. Ugalde)

Translation: Carmel Drake

BBVA: Declining Interest Rates Boosted Demand For Housing In 2014

3 January 2015 – El Mundo

The financial institution has noted a “clear change in the trend” of mortgage financing and concludes that the expectations of business-owners in the residential construction sector “have improved slightly”.

BBVA Research, the research arm of the financial entity, estimates that 350,000 homes were sold in 2014. It explains that this improvement in the number of transactions was due to the evolution of employment and a moderation in interest rates.

In its latest “Flash Real Estate Spain” report, the bank said that “the evolution of employment, which grew by more than expected, and a further decline in interest rates, continued to favour the recovery in the underlying demand” for housing.

More mortgage lending activity.

According to BBVA, “the increase in the number of sales was also reflected in terms of mortgage financing”, as evidenced by the evolution of loans granted for the purchase of new homes during the month of November, which grew at a year on year rate of 34%.

During the first eleven months of 2014, the number of loans granted for house purchases increased by 45% in year on year terms, “which suggests a clear change in the mortgage financing trend”, said the research service. Data for the third quarter 2014 shows that gross household incomes rose for the second consecutive quarter.

Furthermore, the expectations of business-owners in the residential construction segment “have improved slightly”. Thus, in December 2014, the climate index for the residential construction sector recovered the ground lost in the previous month and ended the year 17.2 points higher than at the end of 2013, in year on year terms. All of the components of this index increased, above all those relating to employment and production.

Original story: El Mundo

Translation: Carmel Drake