Tag: gross yield

Témpore Finalises Purchase of 1,100 Flats from Sareb worth €160M

31 October 2018 – Eje Prime

Témpore Properties is shopping at home. The Socimi, listed on the MAB, is finalising the acquisition of a portfolio of 1,110 homes from Sareb worth €160 million. The company, created by the bad bank, is planning to sign the operation before the end of the year, according to explanations provided by its CEO, Nicolás Días Saldaña, during the Investment in the real estate sector through a Socimi listed on the MAB day, organised by Renta 4 and the CEOE.

The Socimi, which specialises in the rental market, will use own funds to complete the purchase of this package, through which it will benefit from the right of first refusal that it has over Sareb’s assets.

This privilege reflects the interest that the bad bank has in ensuring that Témpore achieves portfolio growth over the next few years to become a reference play in the rental segment and debut on the main stock market before 2021, with a portfolio worth €500 million.

On the other hand, the Socimi is working on the sale of 20% of the company’s dispersed assets. The aim of that plan is to raise capital to use to make new investments in developments and entire blocks.

Currently, Témpore has 1,330 homes in its portfolio and generates revenues from rental income of around €7 million. The Socimi has an occupancy rate of more than 90% and obtains an average gross yield of 4.1% from its assets. The management company’s delinquency rate is 3%.

Original story: Eje Prime

Translation: Carmel Drake

Merlin Buys Several Logistics Warehouses for €78.6M

10 September 2018 – Expansión

According to a statement issued by Merlin, the recent acquisitions made by the Socimi – since July – will add an estimated rental income of €6 million p.a. to the asset portfolio, with a gross estimated yield of 7.6%.

In Cabanillas (Guadalajara), Merlin has acquired a logistics warehouse spanning 15,075 m2, which is leased in its entirety to Jaguar Land Rover under a 10-year contract, with a gross yield of 6.2%.

Moreover, also in Cabanillas, Merlin is going to start construction work on two logistics warehouses spanning 42,500 m2 with an estimated gross yield of 7.7%.

In Vitoria, on the Júndiz industrial estate, Merlin has acquired two logistics warehouses, which span 26,775 m2 and are leased to DHL under a supply contract with Mercedes-Benz, and which have a gross yield of 7.5%.

The company has also signed a turnkey project for a warehouse spanning 35,282 m2 on an industrial estate in Ribarroja, with connections to the A3 and A7 motorways, close to Valencia. The delivery of the warehouse is scheduled for the middle of 2019, with an estimated gross yield of 7.2%.

Other Merlin projects include the start of a “built-to-suit” site and a speculative project in the ZAL of Sevilla, with a gross surface area of almost 18,500 m2 and an estimated gross yield of 9.9%.

Original story: Expansión 

Translation: Carmel Drake

CBRE: House Prices Will Rise by 6% in 2018

25 May 2018 – Expansión

Good omens for the Spanish residential market. After experiencing a serious setback five years ago, with a significant decline in demand and, as a consequence, a decrease in prices, the housing market is now well on the road to recovery, with a positive outlook for the year ahead. In this sense, for 2018, the predictions are optimistic, with an estimated increase of 6% in average house prices at the national level, according to data compiled by the real estate consultancy firm CBRE.

“We expect strong growth over the next six to twelve months, which will reach 6% compared to the current YoY rise of 5% and, then growth at a lower intensity from then on of between 3% and 5% for 2019”, says Álvaro Martín, Head of Research at CBRE.

This growth rate of 6% will be more acute in the large cities such as Madrid and Valencia, as well as in tourist towns such as Málaga and the Balearic Islands, where the YoY increases will reach up to 10%, according to the consultancy firm.

“In large cities such as Madrid and Barcelona, we have seen price tension but prices are still 50% lower than the average prices over the last ten years”, explains Samuel Población, National Director of Residential and Land at CBRE España. According to estimates from the consultancy firm, house prices in Madrid will increase by between 8% and 10% this year with respect to 2017.

Despite these price increases, the absolute values are still well below those seen during the real estate boom. In this way, although house prices have been rising at the national level since 2014, the intensity of that growth has been moderate, with YoY increases of around 5%. “In recent years, price rises of between 5% and 6% have been recorded, but during the boom, those figures reached 12%”, recalls Población.

Nevertheless, there are exceptions to that moderate rise: such as the case of towns like Madrid, Barcelona and Palma de Mallorca, where new build house prices have risen by 23%, 34% and 13%, respectively with respect to the historical minimums recorded at the beginning of 2014. Meanwhile, in the second-hand segment, the increases registered amount to 28% in Barcelona, 27% in Palma and 21% in Madrid (…).

Transactions

The price rises are being accompanied by an increase in demand, which, currently, is focused on those buyers who are looking for homes to reposition themselves or as investments.

“House sales have grown at a constant rate since 2015, but they have been very oriented towards the second-hand market, which accounted for 90% of transactions in 2017, due to the lack of supply in the new build segment and the absorption of much of the unsold stock”, says Población (…).

The consultancy firm predicts that demand for housing will continue to grow, with more than 575,000 transactions being closed in 2018, up by 8% compared to the previous year.

Of those operations, foreign buyers will retain an important role, above all, in the market for second homes. “The bulk of that demand is concentrated around five provinces, with established tourist infrastructure: Alicante, Málaga, Barcelona, the Balearic Islands and Tenerife, which accounted for more than half of the average annual volume of transactions by overseas citizens between 2006 and 2017”.

Another buyer cohort will be investors who buy properties to let them out, taking advantage of the growth in the rental market, which currently accounts for around 22.5% of the total stock of Spanish households. “The expansion of the rental market is attracting lots of investors, something that wasn’t happening ten years ago, given that they can now achieve returns of between 4% and 6% on average”, says Martín. By city, in Madrid, the average gross return amounts to 4.7% p.a., compared with 5.4% in Barcelona and 5.8% in Sevilla.

“If we also consider gains from the appreciation in property values, we see yields of up to 9% in the large cities”.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Merlin Considers Creating New Hotel Socimi

15 November 2016 – Expansión

Merlin is going all out following its merger with Metrovacesa and is now busy exploring new market niches. The new real estate giant is analysing alternative options for the sale of its non-strategic assets, and now that it has set the future of its residential business on course, it is searching for a solution for its hotel portfolio – one option includes creating a new specialist Socimi to compete in the market.

“We will analyse the book value of our assets and we will determine whether a block sale from the portfolio is possible. If not, because the cost of capital of the potential buyers is very high, then we will probably opt for a solution that is similar to the one we have applied to the residential business. We will create a subsidiary, we will look for partners and we will constitute a company, in which we hold a majority, minority or equal stake, to serve as an owner of urban hotels”, explains Ismael Clemente, CEO of Merlin.

Following the integration with Metrovecesa, Merlin has gone from having 12 hotels worth €398 million, to owning 24 hotels with a gross value of €654 million. In this way, the new Merlin has multiplied the value of its hotel assets by 1.6x following the integration. By number of rooms, the union between Merlin and Metrovacesa has given rise to a giant hotel company with almost 4,500 rooms and a gross yield of 5.8%, according to the most recent data available.

In terms of its main rival in the sector, Hispania, Clemente says that “if there are any solutions that we can find together, we would be delighted to explore them”.

Merlin is now beginning a new phase in its journey, having created a business with assets worth €9,500 million in just two years. (…).

The listed real estate company, the only one to feature in the Ibex 35 following Colonial’s departure in 2008, faces a difficult year ahead with the major task of integrating Merlin and Metrovacesa’s teams. “By the end of the first quarter, the integrated team will work together in one location, which will not be where either of them are currently based”.

In addition, one of Merlin’s other challenges for 2017 is to dramatically improve the occupancy rate of the offices that it has inherited from Metrovacesa, as well as to perform a “significant” intervention in the shopping centres of both companies. (…).

Growth in housing

In terms of its plans for Testa – the subsidiary that owns the Socimi’s rental homes – Clemente says that, at the moment, the firm is holding conversations with other companies, as well as with its shareholder banks, with the aim of increasing its portfolio by incorporating new assets.

“We think that this vehicle has the potential to become a major player in the professional market for residential rental properties in Spain. The vehicle could own between 9,000 and 10,000 homes by the end of 2017”. (…).

Original story: Expansión (by R.Arroyo and R.Ruiz)

Translation: Carmel Drake