Tag: financial investments

2 March 2015 – El Mundo

2006 was a key year for Fernando Martín. Not only did the Chairman of Martinsa hold the presidency of Real Madrid for a short time, he also acquired the real estate company Fadesa for €4,000 million. Two years later, the burst of the (real estate) bubble put an end to his reign. Since then, the businessman has tried to resist (his downfall) until this week, when the banks and Sareb put an end to his adventures, by plunging Martinsa into bankruptcy. His creditors say that throughout the bankruptcy negotiations, Martín has demanded that he continue in his role as Chairman of the company and also retain his company car, his secretary and his salary of around €1.5 million, even though the company’s activity has been minimal.

With this defeat falls the last of the property lords who led the Spanish economy’s most important sector during the boom years, with negotiation tactics that many associate with lobster lunches and (VIP) boxes at football matches.

However, Martín’s fall coincides with the rebirth of the empire. Last year, institutional investors closed transactions amounting to €14,000 million in Spain (a volume of activity that was only exceeded in 2006 and 2007) and data from the housing market also shows that the property sector has turned the corner towards recovery. In fact, in 2014, the number of new mortgages taken out increased for the first time, after six years in decline.

This rebirth is accompanied by new businessmen with profiles more akin to those of bankers than (property) developers. The property kings’ successors are more used to having canopes for lunch, in true British style, and many of the important decisions about the future developments that will see the return of cranes to Spain’s landscape, are no longer being made in (VIP) boxes at the Bernabéu, but instead in offices in Madrid, the City of London, Dallas, New York and Beijing.

Former developers, such as Fernando Martín, Enrique Bañuelos (Astroc) and Rafael Santamaría (Reyal Urbis) have now made way for Wang Jianlin (Wanda), Ismael Clemente (Merlin Properties), Juan Pepa (Lone Star) and Concha Osácar (Azora).

These are executives who no longer depend on the banks to finance their projects; instead they are backed by large insurance companies, sovereign funds and even highly qualified investors, such as George Soros and Carlos Slim.

“We are facing a paradigm shift. During the boom (years), developers wanted to make more than they were able to and they focused on stocking up on land, due to the peculiarities of that raw material. However, (property) development is like manufacturing and no manufacturer purchases (his) raw materials 10 years in advance. When we hit economic difficulties, that model collapsed. Now, we are seeing different management and development models exist side by side. We are moving towards a more professional model, in which fewer developers compete, with stronger brands”, explains Luis Ruiz Bartolomé, co-author of the book ‘Return, property, return’ (‘Vuelve, ladrillo, vuelve’).

Under this model, the large investors, cooperatives and local developers that have managed to survive the difficult years, are going to co-exist. All of them will compete with a different mentality and with new ways of managing assets.

“The new players in the real estate sector will have to analyse the current key factors (effectively) to enable them to have a more global profile through increased specialisation and professionalization”, says the partner responsible for Real Estate at KPMG, Javier López Torres.

Wang Jianlin (pictured above)

On his trips to Spain, the Chinese tycoon has enjoyed evenings at the Teatro Real, but he also likes football. In fact, his first investments in this country were in the Torre España – a building he bought from Santander – and a stake in Atletico de Madrid. Now, the owner of the Wanda Group wants to launch the development of the so-called Wang mega-complex, a residential and leisure park that may be constructed on land that used to house former barracks in Madrid. Nevertheless, to date, the Asian millionaire’s investments in Spain have merely represented a token gesture, in the context of the global figures for his real estate business. The Wanda Group is the largest land-owner in China and it is constructing the largest residential skyscraper in London, next to the Thames. According to the Chinese press, Jianlin is also considering the purchase of the AC Milan football team.

Jaime Echegoyen

It is likely that when the Chairman of Sareb was CEO at Bankinter and Head of Barclays in Spain, he never imagined that it would end up holding the reins of the bad bank. This banker, who always works with office door open, is responsible for managing the real estate giant that was created in 2012 with 200,000 assets (80% financial and 20% property) amounting to €50,781 million. Echegoyen’s team is working on the completion of 1,000 homes (which it received ‘unfinished’ from the banks) across 52 sites. In addition, it is studying the development of some of the 5,000 plots of land that it received as inheritance, to be able to better market them before 2027, when the semi-public company will have to be dissolved.

Juan Pepa

This Argentine, who lives in London, is the Managing Director of the North American fund Lone Star and in 2013, he managed to convince US investors to back Spanish property. When Pepa comes to Spain and announces that his is going to launch the largest developer in the country this Spring, he does so with a level of enthusiasm that may surprise (people) after the hard times experienced in recent years. “We are going to fill the country with cranes”, he likes to declare. In recent years, Lone Star has purchased the real estate company Neinor from Kutxabank and Eurohypo’s loan business (together with JP Morgan) to launch this project. With a financial background and an MBA, Pepa plays polo and is the patron of the Pro Alvear Foundation, which works to promote education and technology in the La Pampa province of Argentina. This executive, who is less than 40 years-old, does not like the press referring to his fund as a vulture; he assures them that he has not come to Spain with a short-term view and although, he does not provide any details about his project, he says that the proof will be in the fact that it will generate value for the Spanish economy.

Ismael Clemente

Also a banker by trade – he used to work at Deustche Bank for example – but more closely related to property than Echegoyen and Pepa, Clemente founded Magic Real Estate during the worst year of the crisis (2012) and now is the head of Merlin Properties, the Socimi that debuted on the stock exchange in an IPO that raised €1,250 million.

George Soros and Carlos Slim

The tycoon who devalued the pound in 1992 and the Mexican multi-millionaire represent the many international investors who want to get involved in the recovery of the (real estate) sector through their financial investments. Soros is one of Hispania’s shareholders, whilst Slim has taken a stake in FCC. From there, he wants to acquire Realia to complete his business empire, which includes valuable assets from around the world, in many different sectors; América Móvil is one of the jewels in his crown.

Leopoldo Moreno

In addition to the businesses of large investors, cooperatives are also proving themselves to be a successful formula for development, as banks have closed the (financing) taps. The CEO of Ibosa has known how to take advantage of this model with numerous developments in the Community of Madrid.

Santos Montoro

This businessman from Murcia is a good example of how a family developer can compete in the (new) real estate model that has been imposed by the investment funds. In fact, his company, Monthisa (which was created in 1968) has managed to reinvent itself during this crisis to form a partnership with the fund H.I.G. to manage the Bull portfolio, a batch of apartments and garages that the US vehicle purchased from Sareb.

Enrique Bañuelos

After the fiasco involving Astroc, this deposed king has resumed his activity in London. From the City he wants to develop (property) in Spain through his new company called Veremonte and participate in BCNWorld, the tourism and leisure macro project that the Catalan authorities are looking to build

Original story: El Mundo (by María Vega)

Translation: Carmel Drake