Tag: foreign funds

Deutsche Bank, APG & CBRE GI Enter Spain’s Residential Rental Market

7 December 2018 – Expansión

The large international investors have placed their focus on the residential market and, specifically, on the rental segment. The success of this sector, together with labour mobility, the difficult access to housing and changes in living habits mean that, increasingly, renting is an option over buying in Spain, and that has fuelled interest from capital in the sector.

Blackstone, the largest real estate investor in Spain, was one of the first funds to back the residential rental sector with the purchase of 18 developments comprising 1,860 units from the Municipal Housing and Land Company of Madrid (EMVS) in 2013, but it has not been the only one. The Dutch pension fund APG, in conjunction with Renta Corporación; the German bank Deutsche Bank; and the international fund manager CBRE GI have been some of the most committed investors in this market in recent months.

In this way, APG reached an agreement in the spring of 2017 with the Catalan real estate company Renta Corporación to launch Vivenio, a Socimi specialising in housing, with the aim of acquiring assets worth €1 billion in Madrid, Barcelona and the provincial capitals. The Socimi is going to close a particularly active year for acquisitions, with a total investment of €400 million and is planning to repeat that amount in 2019 to reach a total portfolio of €1 billion in just over two years. One of the largest purchases it has made this year was the batch of 1,100 homes that belonged to the manager Aquila Capital, headquartered in Hamburg, for €240 million.

With the aim of diversifying its portfolio and entering this growing segment, the international fund manager CBRE GI joined forces with Azora, the Spanish manager founded by Concha Osácar and Fernando Gumuzio, with experience in this sector, and the New York investment firm Madison to invest €750 million over the next two or three years. That three-way alliance started with a portfolio of 65 buildings and a total of 6,458 homes and has the aim of reaching, at least, 10,000 units.

Another large investor that is betting heavily on the Spanish residential sector is DWS, the asset management subsidiary of the German bank Deutsche Bank, which has prepared a budget of €500 million to acquire between 1,000 and 2,000 homes in Spain. In that case, it is backing new build developments and it will do so through three formulae: delegated development, the acquisition of construction projects from other property developers and direct development. The objective is to maintain the assets in its portfolio and rent them out. In that case, the vehicle will not be a Socimi because German regulation of the funds from which the capital proceeds do not allow that. 60% of the investment will be made with own funds and the rest, bank financing. The plan is to invest primarily in Madrid and Barcelona, but they will also study plots in cities such as Bilbao and Sevilla, provided the rental market is very liquid.

Meanwhile, Catella Asset Management Iberia (CAMI), the Spanish subsidiary of the Swedish fund manager is intending to reach 2,000 units by 2020. The manager, which will add 1,000 homes to its portfolio at the beginning of 2019, entered the residential rental market two and a half years ago and has invested around €160 million in the business to date. It plans to double that figure to reach 2,000 homes within two years.

Another real estate company that has teamed up with foreign funds to grow in this segment has been Elix. The firm, which is dedicated to the purchase of buildings, their renovation and the sale of homes by unit, has signed an alliance with KKR and Altamar to invest in buildings, renovate them and dedicate them to the rental market. Its aim is to invest €200 million in Madrid and Barcelona through the Socimi Elix Vintage.

Finally, Redevco has created a new fund to invest €500 million in residential projects in several European markets, including Spain (…). Redevco is planning to build a pan-European residential portfolio comprising approximately 2,500 units.

Original story: Expansión (by Rebeca Arroyo & Marisa Anglés)

Translation: Carmel Drake

Overseas Funds On The Hunt For Holiday Hotels

26 March 2015 – Expansión

Socimis (‘socidedades cotizadas de inversión inmobiliaria’ or listed real estate investment trusts) and the appetite of overseas investment funds are driving the professionalization of the hotel sector in Spain, to separate the ownership of properties from the management of establishments, in line with the Anglo-Saxon model.

That is one of the conclusions to come out of a conference held in Madrid yesterday about the evolution of the hotel sector over the last decade. The conference was organised by Magma Hospitality Consulting and the Intercontinental Hotels Group (IHG), the largest hotel group in the world by size.

Liquidity

“Socimis are an essential tool that Spain has needed for a long time, to provide liquidity to a portfolio of assets, respond to generational renewal and professionalize management”, said Luis Migual Martín, Investment Director at Azora.

This company launched a Socimi (Hispania), which formed an alliance with Barceló at the start of the year to create the first listed investment vehicle specialising in the hotel sector (Bay Hotels), which has assets of more than €420 million.

For his part, Alejandro Hernández Puértolas, CEO at HI Partners, the hotel fund driven by Solvia – Banco Sabadell’s real estate arm – added that “the Socimis could bring together assets in Spain amounting to €8,000 million”. In the USA, the REITS – equivalent to Socimis – that specialise in the hotel sector have (assets under management amounting) to more than €70,000 million.

Nevertheless, there is still room for improvement. For Martín “there needs to be a change to the current legislation to reflect the management model, which now falls outside of (the scope of) the Socimis”. Arturo Díaz, CEO of Business Development at Renta Corporación, added that “other instruments will be created besides the Socimis”.

In the case of international funds, the focus has shifted from the city to the beach. “Institutional investors are starting to get involved into the vacation segment. The main difficulty is obtaining a portfolio of assets, but the appetite is there”, said Díaz, who called for restraint when it comes to changing the use of office buildings and homes into hotels.

Original story: Expansión (by Y. Blanco)

Translation: Carmel Drake