Almagro Capital, the Socimi Specialising in Homes for the Elderly, Prepares its MAB Debut

27 July 2018 – Idealista

Increasingly, more and more Socimis specialising in alternative assets are wanting to take their portfolios to the stock market. The latest is Almagro Capital, one of the largest Socimis to specialise in residential assets for the elderly. The company has proposed making its leap onto the Alternative Investment Market (MAB) in 2019 and raising €50 million to grow through purchases.

Almagro’s business model focuses on acquiring homes for the elderly whereby the vendors themselves become the tenants of their homes. These investments respond to an increasingly widespread problem in Spain that directly affects the elderly: 90% of people aged over 65 years live in a home that they own and 30% admit to struggling to make ends meet.

Almagro Capital was founded last year by former directors of Lehman Brothers and Merril Lynch. It will be the first Socimi from Orfila to focus its activity in Madrid. The company started with prime flats in the capital since they are assets with less volatility and which can achieve returns for investors of 10% per annum. Chamberí, Chamartín and Goya are the areas where the Socimi is centred.

The real estate vehicle has started the search for new assets, located in the metropolitan areas of the main Spanish cities, such as Madrid, Valencia, Málaga, Salamanca, Granada, Bilbao and Sevilla, amongst others, although it points out that its focus is placed on the Community of Madrid, and more specifically, on the region inside the M-30.

Almagro Capital is planning to make its debut on the Alternative Investment Market (MAB) in the summer of 2019. Until then, the company will continue to focus on the search for new opportunities in the market and is holding advanced negotiations to buy new assets in Madrid worth between €300,000 and €3 million.

Original story: Idealista

Translation: Carmel Drake

Ibercaja Sells 505 Property Developer Loans For €489M

10 July 2017 – El Periódico

On Friday, Ibercaja announced a sales operation that will allow it to significantly clean up its toxic assets. Specifically, the bank has completed the sale of 505 property developer loans and credits – most of which relate to “doubtful” assets” – amounting to €489 million. The size of this portfolio represents a decrease of 36% in terms of the total number of doubtful property developer loans that the entity held as a March 2017.

In this operation, known as Fleta, 43% of the portfolio comprises loans granted to finance land purchases, which represents “the highest percentage of such loans in an operation of this kind recorded in Spain to date”, said sources at the Aragon entity on Friday.

Moreover, the deal allows Ibercaja to bring its default rate below 8%, a figure that forms part of the strategy to optimise its balance sheet and provide a commercial boost, established in the entity’s strategic plan for 2015-2017.

Since the end of 2014, the year when the aforementioned plan was launched, the volume of doubtful loans has decreased by €1,103 million, in other words, to 57% of the initial volume.

The portfolio has been sold to the company Fleta Issuer Holdings Designated Activity Company, after a process in which “first-rate” domestic and international investors have participated “which reflects the interest received for the offer in the market”, said the bank.

On the other hand, Ibercaja has increased the financing of new real estate projects. In 2016, it tripled the number of homes it financed with respect to 2014. During those three years, it financed 150 new projects, most of which are located in Madrid, Barcelona and Zaragoza.

That milestone, add sources at Ibercaja, followed others that have been fulfilled in accordance with the strategic plan, which “is reinforcing the financial strength of the entity, driving the transformation of the business model and activating the geographical growth plans for the retail business”.

Financial operations

In March of this year, the entity considered the early repayment of all of the contingent convertible bonds (CoCos) issued by Caja 3 and subscribed by the FROB in 2013, amounting to €223 million.

Moreover, last October, the entity placed an issue of 7-year mortgage bonds amounting to €500 million on the capital markets. In July 2015, Ibercaja was the first unlisted entity to issue subordinated debt, amounting to €500 million with a 10-year term, since the start of the restructuring of the Spanish financial system.

A few months later, in October 2015, the bank closed an operation similar to Project Fleta, when it sold a portfolio of 428 property developer loans, mostly doubtful, for €698 million, in an operation known as Goya.

Original story: El Periódico

Translation: Carmel Drake

C&A: First Victim Of Primark’s Gran Vía Megastore

16 September 2016 – Cinco Días

The Dutch fashion retailer C&A has closed its store on Madrid’s Gran Vía, 48 because “it was not profitable”, according to sources at the firm. The premises, which have a surface area of 2,500 sqm and are located very close to the central Plaza de Callao, closed its doors for the last time on 31 August, according to the portal Modaes.es. It is the first victim of the mammoth Primark store, which first opened its doors on the street in 2015.

The C&A megastore first opened its doors to the public in October 2013, occupying a newly constructed building on the corner of Gran Vía and Calle Tudescos, on the site that previously housed the headquarters of Banco Atlántico. The property, which is 45m tall, was designed by the architect Rafael De La Hoz and represented the first new building on the Madrilenian avenue since 1932.

The Dutch firm leased the first floor of the building. “The store was not big enough to allow us to display all of our collections”, say sources at the firm. The rest of the property was dedicated to luxury homes and apartments. “Gran Vía was an innovative concept. It was the most modern store at the time”, said the sources. The owner of the commercial premises where the C&A store was located was the German real estate management fund GLL Real Estate, which acquired the site two years ago in an operation advised by the property consultant Aguirre Newman.

The arrival of the Irish chain Primark in Gran Vía in October 2015 has caused a revolution on the iconic Madrilenian Avenue. A real commercial rebirth, after several years when we saw mythical premises, as well as several cinemas close their doors. Rental prices in the area are rising after the crisis, driven by the constant pilgrimage of clients to the district. C&A did not want to associate the arrival of the low-cost fashion giant with the closure of its central premises. “It has not been a determining factor”, sources assured.

The firm explained that, after three years in the premises, it was no longer profitable. “Openings and closings are part of the evolution of a retail business”, they explained. The 16 people that worked in the store have been transferred to other shops. The only store that the chain still has in the centre of Madrid is located on Calle Conde de Peñalver, number 8, in the Goya area, premises that have a surface area of almost 5,000 sqm. Following this closure, the chain “does not rule out” opening other stores in the area, but it has not signed any deals.

The fashion chain, controlled by Cofra Holding – the investment group owned by the Brenninkmeijer family – has more than 2,000 stores in 23 countries and almost 60,000 employees all over the world. In 2015, the Spanish subsidiary, led by Domingo Esteves, reported losses of €10.6 million, a significant improvement compared to 2014, when it lost €41.1 million. Its turnover amounted to €363.1 million. The firm has more than one hundred stores across Spain. It will inaugurate its next store in the Fan Mallorca Shopping Centre, which is due to open on 22 September.

Original story: Cinco Días (by Eduardo Loren García)

Translation: Carmel Drake

Bank Of Spain: Residential Rental Yields Rise To 5%

18 May 2015 – Expansión

Residential market / The average annual return on rental properties is equivalent to 3.1x the return on public debt – a historical record. Demand for rental property has soared by 42.5% in three years.

After seven-years in decline, it seems that the housing sector is back. The residential market is oozing optimism once again, although it is also full of caution, learned during the post-bubble era, and  uncertainty, inherent in a recovery that is still recent.

But the data is improving and housing has become a good investment once again, above all due to the significant rental returns offered nowadays. Investors looking for yields that exceed those on deposits and public debt are on the hunt for properties in good locations, with high demand, with a view to buying them to let.

The data endorses this trend, since the rental income for a residential property offers an annual gross return of around 5%. On average, 4.7%, according to the Bank of Spain. It is the highest percentage recorded since June 2003, during the height of the housing bubble, although other reports, such as the one published by idealista, puts the figure even higher, at 5.3%.

The gross yield is a percentage of the total price of the house covered by the annual rental income. This yield, published by the Bank of Spain, also takes into account capital gains.

Taking into account the data from the body led by Luis María Linde, the average annual rental yield is no less than 3.1x the return generated by public debt on the secondary markets during the last quarter (1.5%). That is a historical record for this comparative ratio, which dates back to 1991. Meanwhile, bank deposits offer a return of 0.6% each year.

What does all this mean? Simply, that the moment is ripe for investment in buy-to-let housing, especially for small investors. The price of homes is beginning to increase and so are rentals, which means that the market is at an impasse of high returns without much risk. Moreover, the percentage of citizens who prefer to rent rather than buy has risen sharply, from 11.4% in the boom years to the current rate of 19%. In the past three years alone, the rental market has expanded to include one million more homes; it has grown by 42.5%.

On the other hand, the price of homes is starting to rise, specifically by 2.65% during the first quarter of the year, according to the registers. This trend towards stability in terms of property prices points to an easing of returns in the rental market, and so analysts believe that now is the best time to invest (rather than waiting to invest over the next few quarters).

According to the experts, the prime areas of the large cities are those that offer the safest opportunities, due to their significant demand, although without exorbitant returns. For example, the Madrid neighbourhood of Retiro, where the average price per square metre for sale is €3,289 and for rent is €11.6/m2/month, according to the index prepared by IE Business School and Fotocasa. A property measuring 100 m2 with these parameters would have an annual return of 4.2%. A second-hand home measuring 100 m2 in the Goya neighbourhood (Madrid) would have a return of around 4.7%.

“Homes in the best locations are the most attractive to rent. They will go up in price and there is no risk of default or lack of demand”, says the real estate consultant José Luis Ruiz Bartolomé. “It is possible that rental prices will also start to rise, although by less that sales prices. The rental margin will narrow, but that is because certainty will increase as well; I do not see that as a bad thing”, he adds.

And in the peripheral areas? “You have to look at where there is more demand than supply”, says Ruiz. Julio Gil, President of the Foundation for Real Estate Studies agrees: “It is the best option for small investors, due to the returns and minimal risk”.

Some properties offer higher yields than housing, such as commercial premises (7.2%) and offices (6.7%), according to idealista.com. Garages yield 4.5%.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake