BBVA to Sell Its 75% Participation in the Madrid Nuevo Norte Project

30 July 2019 – Richard D. K. Turner

The Madrid City Council has unanimously approved the Madrid Nuevo Norte project, also known as Operation Chamartín, after a twenty-five-year wait. The project must now gain final approval from the Community of Madrid government and weather lawsuits from community and environmental groups.

District Castellana Norte (DCN), which is 75% owned by BBVA together with Grupo San José (25%), is the developer in charge of the project. Though BBVA has publicly affirmed its commitment to see the project through, increased oversight by the ECB and a change in the bank’s leadership have fuelled speculation that BBVA will sell its participation of a single major investor.

Despite some changes to the urban development plan, Operation Chamartín will lead to the construction of 10,500 homes (20% with some kind of protection), a new financial district and the refurbishment of the Chamartín train station. In total, investors will plough roughly €6 billion into the project over about two decades. Construction is expected to commence in 2021.

Original Story: El Confidencial – Ruth Ugalde

Baraka Injects €13.4M to Strengthen its Residential & Commercial Businesses

17 May 2018 – Eje Prime

Trinitario Casanova is continuing to add projects to his real estate business in Spain. The Murcian group Baraka has just injected another €13.4 million into its companies that specialise in the residential and commercial sectors. The group’s upcoming plans in Spain include initiating operations in Chamartín, where it has just acquired a plot of land measuring 1.2 million m2.

According to the Official Gazette of the Mercantile Registry (Borme), Baraka has injected another €10 million into its company Baraka Renta. That business division of the group focuses primarily on the purchase of land and the subsequent development and execution of rentals for various companies, both domestic and international, in the food sector.

Baraka has also strengthened its company Baraka House, where it has increased the share capital by €3.5 million. That branch of the group focuses on the development of high-rise homes for young people. “This new line is being carried out in the main cities in Spain thanks to the use of pre-fabricated constructions”, explain sources at Baraka.

In this way, the group is injecting new resources into its companies to undertake new real estate projects in Spain. The latest deal that Casanova has carried out focuses on Madrid, specifically the Operación Chamartín macro-project.

The Murcian businessman has paid €400 million to the original owners of some of the plots of land in Operación Chamartín for their reversion rights to develop 1.2 million m2 of land that is currently owned by Adif.

Rente expropriated these plots with the idea of building the railway station on the site, but, subsequently, the public company reached an agreement with BBVA and Grupo San José to develop the land.

Both companies created the property developer Distrito Castellana Norte (DCN), which is now leading this urban development operation that is going to build 10,500 homes on a surface area spanning 2.66 million m2.

Nevertheless, Casanova wants to take advantage of the claim being made by the reversionists, who are asking the administration to be awarded the right to acquire their former plots in the event that Renfe decided to change the use for which they were expropriated and to sell them, as has actually happened, according to these parties.

Casanova’s next steps for this project in Chamartín involve first paying a cheque for €400 million to the reversionists, who have received a small payment for now whilst they wait for the rights that they are requesting to be activated or not, and later on to pay €1 billion to Adif for the outright purchase of the plots. That is the amount that DCN has promised to pay the Spanish railway manager.

Second generation and reinforcements for the property developer 

Proof that the residential sector is firmly in Baraka’s sights came with the appointment of Fuensanta Casanova, daughter of Trinitario Casanova, as the Head of Development and Investment at Baraka, as Eje Prime revealed in Madrid (…).

Original story: Eje Prime (by C. Pareja)

Translation: Carmel Drake

DCN Would Generate 214,000 Jobs & Increase GDP By €14,000M

20 April 2017 – El Mundo

The Distrito Castellana Norte (DCN) project planned for the North of the city of Madrid, in what is known as Operación Chamartín, would generate 214,000 jobs in total, of which almost 120,000 would see the light during the construction of the project, whilst another 94,000 would be created once the building phase comes to an end. Moreover, the project, which would involve an investment of more than €6,000 million, would increase GDP by €14,000 million and would generate revenues of €3,340 million for the public administrations from the economic activity that this initiative would create.

These data are detailed in the report Effects on the creation of employment of the project to lengthen the Castellana, which has been prepared by two professors from the Universidad Autónoma de Madrid (UAM), Antonio Pulido and Julián Pérez.

The developers of the project, which group together BBVA and Grupo San José, understand that a “reductionist” project, such as the one proposed by the Town Hall would “not only deprive Madrid of the necessary infrastructure to ensure an optimum quality of life for its inhabitants and visitors, it would also inevitably have a lower capacity to generate jobs”.
During the forecast 19-year construction period, almost 120,000 full-time jobs would be created, equivalent to 0.6% of total national employment, of which 52,650 would be direct jobs, 42,037 would be indirect jobs and 23,104 would be related jobs. Of those, 80,445 would be created in the Community of Madrid.

Once the neighbourhood has been constructed, the experts calculate that the new activities that would arise in the area would result in the creation of another 94,000 jobs, of which 63,000 would be direct and 31,000 would be indirect. These would be full-time jobs, which would likely be maintained over the long term.

The development of DCN would allow the creation of 6,200 jobs each year, on average. This job creation rate would mean an average reduction in employment in Spain of 0.03%. In the Community of Madrid, the decrease would amount to 0.12% and in the city of Madrid to 0.27%.

Focus on wealth

In their report, Pulido and Pérez calculate that the construction of the DCN project, with an investment of almost €6,050 million, a figure equivalent to nearly 0.6% of Spain’s GDP, would increase domestic production by €14,000 million and would generate new income amounting to €5,400 million. 78% of the new wealth generated would remain in the Community of Madrid.

That means that the project’s contribution to GDP would amount to €286 million each year, which represents an average of €117 per Spaniard per annum. Specifically, the annual income would be €71 for every inhabitant of Madrid, €35 for every inhabitant of the Community and €1.5 for every inhabitant of Spain.

Meanwhile, the public administrations involved in the project would receive tax revenues amounting to €3,340 million, a figure equivalent to 0.6% of the annual state budget for Spain. (…).

Original story: El Mundo

Translation: Carmel Drake

Who Are The New Owners In Spain’s RE Sector?

11 April 2017 – Cinco Días

Two weeks ago, Neinor Homes debuted on the stock market, the first residential property developer to do so in a decade. (…). Who is behind the current transformation of the sector?

Neinor Homes was created just two years ago by the US fund Lone Star, which purchased the former real estate arm of Kutxabank for €935 million. The Texan firm injected capital, bought land, renewed the image and put its first cranes in place to surf the top of the wave of the recovery in the house construction segment. The company debuted on the stock market, much more quickly than it had initially planned, with a valuation of €1,300 million, and an excess of demand over supply of 4.3 x, from large investors.

The real estate company led by Juan Velayos, as CEO, and Juan Pepa, as Lone Star’s strong man in Spain, has demonstrated investors’ appetite for residential construction – the last segment to recover in the real estate sector. Experts indicate that demand for homes in Spain will amount to around 150,000 properties per year, compared with the 50,000 units that are currently being constructed. This is a space that nobody has occupied in recent years, following the death of classic developers such as Martinsa-Fadesa, Reyal Urbis, Astroc, Nozar and Habitat.

But Neinor is just the first of many. It is being followed by the US fund Värde Partners, possibly the most active in terms of purchases in Spain, which created Dospuntos using its own land and the basis of the former real estate business of Grupo San José. Last month, it starred in its latest large acquisition, purchasing Vía Célere, the property developer created by Juan Antonio Gómez-Pintado, for €90 million. (…).

And following both of them is Aedas, backed by the fund Castlelake, which is also proving very active in creating an enormous bank of land. These three real estate companies alone are expected to invest around €5,000 million in land, purchases and investments. And the latter two may well follow in Neinor’s footsteps with stock market listings.

These new property developers are replacing the Socimis in the newspaper headlines (…), which since 2014 have been active in the first segment to experience the recovery, namely, rental assets: large office buildings, commercial premises, shopping centres, hotels and industrial warehouses.

The leader in that sector is Merlin Properties, which has become one of the leading real estate companies in Europe, with a portfolio of assets worth €9,800 million. (…).

The other large Socimi that has attracted international capital since 2014 is Hispania, managed by Grupo Azora, a Spanish fund backed by Concha Osácar and Fernando Gumuzio. (…). It has become the largest purchaser of hotels in Spain, with a giant portfolio worth €1,800 million.

Lar España, managed by Grupo Lar, and Axiare, chaired by Luis López de Herrera-Oria are the other large Socimis on the main stock market, which have created net assets worth more than €1,200 million in record time. But they are not the only ones. Attracted by the tax benefits, many wealthy families have also used this legal structure to organise their assets. Examples include the Montoro Alemán family with the Socimi GMP (…).

Not to mention the large international real estate funds, such as Blackstone, Cerberus, Iba Capital, TH Real Estate, Orion, HIG and GreenOak, which, together with the Socimis, have been and are the most active players in terms of acquisitions.

The Barcelona-based firm Inmobiliaria Colonial has also undergone a comprehensive clean-up, with the segregation of its toxic land and residential business, to become the second-largest real estate company in the country, after Merlin. (…).

Meanwhile, Metrovacesa has headed in the opposite direction. After transferring its tertiary business to Merlin, it is now getting ready to become one of the major players in the residential sector, with the backing of BBVA and Santander. Similarly, the Mexican magnate Carlos Slim has revived Realia, also giving new life to the dead activity of house construction.

Other key players in recent years have been the banks’ platforms or servicers, such as Aliseda, Anida, Solvia, Altamira and Servihabitat, which have been managing the real estate portfolios of the financial institutions and promoting housing developments. (…).

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Operación Chamartín: BBVA Prepares To Denounce Carmena

5 July 2016 – Cinco Días

The President of Distrito Castellana Norte, Antonio Béjar, has revealed that the company’s legal team will present an appeal to the High Court of Justice in Madrid (TSJM) within the next few weeks to denounce the nullity of the decision taken by the Town Hall to reject this project under development, known as Operación Chamartín.

In an interview with Europa Press, Béjar also detailed that “later on” and if the “blocking” situation continues, DCN’s legal team will submit a claim for damage to property and economic losses against the Town Hall after it rejected its plans without any technical basis, even though they fulfil the General Urban Development Plan (PGOU).

The President of Distrito Castellana Norte, the entity driven by BBVA and Grupo San José, expressed his “disappointment” at the position adopted by the Town Hall for denying its development plan based on “primarily political criteria, with no technical or legal basis”.

Regarding whether the outcome of the elections may change the Town Hall’s position and facilitate negotiations, Béjar said that the municipal government team has expressed “publically that its position was going to mainly depend” on the political decision taken by the Ministry of Development (Ana Pastor is a supporter of DCN’s project) in the event that there is a change in government.

“The Town Hall will have to take a decision in this regard. Meanwhile, we will not rest on our laurels, it is our duty to defend our rights when we understand that they have not been adequately addressed”, said the President of DCN.

“We are convinced that the courts will overturn the Town Hall’s decision, we consider that the reasons employed have no legal grounds”, he added to indicate that, according to the criteria set forth in its appeal, the Town Hall may only reject the definitive approval of the plan if it is able to cite reasons of general interest, whereas, in his opinion, the Town Hall has cited “minor formal reasons”. (…).

Meanwhile, Béjar confirmed that the Town Hall’s “blocking” of the development of Operación Chamartín, by rejecting its plan and presenting its own plan for Madrid Puerta Norte, is “detrimental” for Madrilenians. According to him, the municipal alternative is “not feasible and cannot be carried out in practice”.

“Madrid Puerta Norte – the Town Hall’s alternative project – is a proposal designed to drive out private initiatives…and to allow the public administrations to become the next property developers, using taxpayers’ money…” said the President of DCN. (…).

Original story: Cinco Días

Translation: Carmel Drake

Operación Chamartín: Carmena Cuts Number Of Homes By 75%

11 May 2016 – Cinco Días

Manuela Carmena, the mayoress of Madrid, has made her proposal for Operación Chamartín. Almost 25 years after the first plans were outlined, the team from Ahora Madrid revealed its plan on Tuesday, in an “open document”, according to the councillor, although the details have not been agreed or discussed with the site’s property developer, Distrito Castellana Norte (DCN), or with the other authorities involved. The Town Hall thinks that it should take charge of the city’s plans and so has presented this document to serve as a basis for negotiations.

The Town Hall has drastically reduced the number of homes in its plan, called Madrid Puerta Norte. From the 17,000 homes planned by the current developer, the Town Hall projects 4,600 homes (of which 1,000 will be social housing), representing a reduction of 75%. It also decreases the planned space allocated to tertiary use, by 15%, to 1.1 million sqm.

One of the points that will cause controversy, the buildability rate, is maintained at 1.05 m2, but that is because its calculation excludes all railway and road land, which means that the number of homes resuting from the calculation is significantly lower. Even so, sources in the sector say that the regional regulations approved in 2002 require the calculation of this ratio to include the railway land.

Carmena also proposes a business hub around Chamartín train station, whose profits would be used to finance the remodelling of the infrastructure for the Metro, roads and the station itself.

The last attempt to obtain approval for this urban development was undertaken last year, when the team led by Ana Botella (PP) approved the partial plan presented by the developer DCN (controlled by BBVA (75%) and Grupo San José (25%)) although it never received the green light from the Town Hall authorities.

DCN owns the rights to 61.6% of the land belonging to Adif, thanks to a contest won by the developer in 1993, organised by the Socialist Government of Felipe González. The agreement with the railway administrator, for which it would receive up to €1,300 million, is due to terminate on 31 December 2016.

“I would like us to see this as a starting point, for achieving synergies, rather than as a finished document” said Carmena, who will send the proposal to the Ministry of Development, the Community of Madrid and the development company. “We cannot evaluate the project because we do not know anything about it”, said a spokesperson from DCN. Now it is time to see whether there are enough points for negotiation.

For this reason, the Town Hall has reduced the weight of the infrastructures. It has decreased the proposed number of Metro stations from three to one, excluded another planned Cercanías (local railway) station and diminished the slabs required to bury Chamartín’s tracks underground by 90%.

Carmena also proposes the construction of a business centre around Chamartín train station, which is owned by Adif, whose profits will be used to finance the North Junction, the Fuencarral Junction and the renovation of the station itself. In this context, two iconic 40-storey skyscrapers will be constructed for office use, along with other buildings containing between 20 and 40 floors.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

San José Leaves Losses Behind With Profits Of €7.3M In 2015

2 March 2016 – El Economista

The San José Group generated a net profit of €7.3 million in 2015, compared with losses of €122.7 million in 2014, according to a statement from the construction and renewable energy company, which stated that its profits before tax rose by 49.5%, to €10.6 million.

The turnover of the group led by Jacinto Rey grew by 15.3% last year, to €536.1 million, thanks to a higher contribution from international construction work, which now accounts for more than half (58%) of revenues.

In fact, the group’s sales in the international market increased by 19% during 2015, to amount to €313.1 million, compared with a lower recovery of 10.4% in the domestic market, where revenues reached €223 million.

San José’s EBITDA stood at €43.8 million, up by 29.6% compared with 2014, whilst its EBIT doubled to exceed €30.7 million.

By business line, the construction segment contributed €442.1 million to the company’s sales, up by 15.8% compared with the previous year, meanwhile the concessions and services division recorded revenues of €46.6 million, up by 12.3%, driven by the definitive approval and launch of the concession phase of its hospitals in Santiago de Chile.

Meanwhile, San José’s sales from its energy division rose by 12.1% in 2015, to reach €12.7 million.

Original story: El Economista

Translation: Carmel Drake

Sareb Sells Its Debt In ‘Grupo San José’ To BofA

1 July 2015 – Faro de Vigo

Sareb, also known as the ‘bad bank’ has decoupled itself from Grupo San José‘s refinancing program. Sources confirmed yesterday that the body chaired by Jaime Echegoyen (pictured above) has sold the liability that it held with the Pontevedra-based construction group and will therefore not participate in the €100 million warrant issue (which may be convertible into shares) scheduled by the company. According to the same sources, the bad bank has sold its debt to Bank of America, which hereby strengthens its position as a creditor of San José and will acquire more than half of the warrants.

According to documentation submitted by the firm chaired by Jacinto Rey – which successfully dodged bankruptcy thanks to an agreement reached with its creditors – Sareb was going to acquire warrants amounting to €6.936 million. Sareb had voted against the Pontevedran group’s debt contract, but the Commercial Court approved the agreement and forced by the bad bank and KutxaBank – which had also rejected the program – to underwrite the obligations.

With the decoupling of Sareb from the construction group, the creditors that will acquire warrants will be: Bank of America (almost €54 million), Banco Popular (€25.1 million), Deutsche Bank (€10.468 million), Barclays Bank (€10.037 million) and KutxaBank (€251,241). According to the terms of the contract, this group of creditors will take ownership of 35% of the Galician group if it is unable to repay its €100 million loan in 2019. By virtue of the construction company’s bailout agreement, the creditors have now taken over control of the company’s real estate division, comprising assets worth more than €1,400 million (primarily land, completed developments and buildings for rent).

Original story: Faro de Vigo (by Lara Graña)

Translation: Carmel Drake