Vbare Acquires 14 Homes in Málaga for €1.35M

28 June 2018 – Eje Prime

Vbare is branching out of the Spanish capital. The Socimi has made the leap to Málaga with the acquisition of a block of residential assets for €1.35 million. This operation forms part of the company’s growth plans after it carried out a €3.2 million capital increase in June.

According to a statement filed by Vbare with the Alternative Investment Market (MAB), this week, the company has signed the acquisition of a batch of fourteen homes on Calle Eugenio Gross in Málaga. The operation, which has been financed using the company’s available cash, was initiated in May when the company signed the deposit agreement.

Twelve of the homes acquired are leased and the remainder are vacant, “but in optimal conditions for their immediate rental”, according to the company. Vbare estimates a return of approximately 5.1% once the building has been fully let at market rents.

So far this year, Vbare has carried out five operations in the residential and commercial sectors. The Socimi ended the first quarter of the year with 210 assets under management and has set itself the objective of expanding its portfolio to include up to 261 residential units under management.

VBare is a real estate investment vehicle specialising in the acquisition and management of residential assets for their rental. The company was constituted in March 2015, is chaired by Fernando Acuña and led by Fabrizio Agrimi (pictured above) as the Director General.

Original story: Eje Prime

Translation: Carmel Drake

Grupo Ortiz To Partially Spin Off Its RE Business

9 February 2017 – Cinco Días

A new company is getting ready to join the fruitful world of the Socimis. Grupo Ortiz, a Madrid-based construction company founded in 1961, is working with the financial group Arcano to prepare for the debut of its real estate business on the Alternative Investment Market (MAB). The new company will own the Group’s real estate assets, which are all rented out, according to sources familiar with the operation.

Through this transaction, the company is looking to bring assets amounting to around €150 million to the market, along with associated debt amounting to €55 million. Moreover, the company chaired by Juan Antonio Carpintero is looking to take advantage of the future listed company to secure other investors for his business, and Arcano will act as advisor. Both companies declined to comment on the operation.

The intention of the construction group is to open up the Socimi to other investors and whereby partially sell off part of the new company, but to retain ownership of at least 30% of the capital. The company is currently undergoing a process of internationalisation, and sources close to the group indicate that these resources could be reinvested in new opportunities.

The market expects the new Socimi to be constituted within the next few months. Experts in the sector say that the objective, given Grupo Ortiz’s portfolio of assets, is to offer to pay a quarterly dividend, which could exceed 5% p.a.

The portfolio will initially comprise several office buildings, plus more than 340 rental homes, a parking lot on Calle Ortega y Gasset in Madrid with 800 parking spaces, as well as retail premises and warehouses, most of which are located in Madrid and the surrounding area. According to the Group’s website, Ortz has 36,000 m2 of tertiary assets leased out and 1,445 social housing properties, owned by Madrid’s Housing Institute (Ivima) and the Municipal Housing Company (EMV).

It also has 24,000 m2 of office space leased out in Madrid, primarily in the area around La Gavia (Ensanche de Vallecas). According to its annual accounts for 2015 (the latest available), the real estate business generated revenues of €55.34 million.

The group’s total turnover amounted to €376 million in 2015, with an EBTIDA of €41.22 million. Although the firm started out as a construction company, it has since diversified and now operates four divisions: concessions, energy, services and real estate.

The Socimi structure allows those who adopt its tax regime to enjoy exemptions from corporation tax in exchange for the compulsory payment of dividends to their shareholders each year (who do pay tax). The structure has served to boost the Spanish real estate market, with the backing of international funds, and many large property owners have also benefitted from these structures. Around 30 Socimis are currently listed on the MAB.

Grupo Ortiz launched its international activity in Peru in 2010. It currently has operations in Colombia, Peru, Mexico, Panama and Algeria, with energy projects in Italy and France, photovoltaic solar plants in Guatemala, Honduras, Chile, El Salvador and Japan and other integrated water management projects in Romania.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

80% Of Popular’s Bad Bank Will Comprise Finished Homes

24 October 2016 – El Confidencial

The first details are emerging about Project Sunrise, the bad bank in which Banco Popular is planning to segregate properties amounting to €5,800 million (gross) (€4,000 million net). Approximately 80% of its assets will be finished homes, which the entity hopes will reduce the risk associated with the project and facilitate sales of the vehicle, according to financial sources close to the project. As a result, the entity chaired by Ángel Ron hopes to reach “break even” in its third year of life, in other words, in 2019, and to generate profits thereafter.

According to the plans for the aforementioned bad bank, more than €3,000 million of Sunrise’s balance sheet will correspond to finished homes, whereas only around €400 million will relate to land – the second most important asset. In third place, the bad bank will hold developments in progress with a gross value of €300 million and finally, Popular will transfer homes for rent amounting to another €200 million. It total, more than 40,000 individual assets will be transferred to the new entity.

The bank is looking to increase the quality of the assets that it transfers to this vehicle and whereby achieve a dual objective: on the one hand, improve its prospects for sales and revenues, given that finished homes have more appeal in the market (when compared to land or developments in progress, which require additional investment to be completed); on the other hand, allow lower provisions to be recognised upon transfer, given that the prices at which the assets were awarded to the bank do not need to be reduced by as much in these cases. The average provisioning level of Sunrise’s assets will amount to 31%.

Profits from year 3 onwards

And it is precisely thanks to this greater ease to sell the bad bank’s assets that Popular expects that the new vehicle will emerge from losses during its third year of operation, in other words, in 2019 (it plans to list on the stock market in 2017). Sunrise’s business plan forecasts profits of around €50 million per year for the next two years, according to sources consulted.

To this end, the bank chaired by Ron is relying on a strong performance in the Spanish real estate market, based on good economic forecasts, low interest rates and improvements in other indicators, which are already being seen in some cases, such as the number of mortgages, the volume of house transactions and the prices of operations. According to their calculations, house prices are still undervalued and as a result, will continue to rise over the next few years.

The bad bank, vital for achieving its objectives

The segregation of the bad bank is one of the fundamental milestones in the restructuring plan that Popular presented to justify its €2,500 million capital increase in June, given that, by removing almost €6,000 million (gross) in real estate assets from Popular’s balance sheet, the entity will free up capital and strengthen its solvency levels. Nevertheless, it has faced difficulties due to the lack of buyers interested in the vehicle, and so it has decided to list the vehicle on the stock market by gifting its share capital to the banks current shareholders in the form of a dividend. (…).

Original story: El Confidencial (by E. Segovia and J. A. Navas)

Translation: Carmel Drake

Santander & BBVA Will Transfer c.7,500 Homes To Testa

28 June 2016 – El Confidencial

Spain’s largest landlord is called Testa Residencial. This is the company that has been chosen by Merlin and Metrovacesa to take over all of the homes that they have for rent – 4,700 properties in total – and to create a new jointly owned company in which the former will hold a 34% stake and the later, the remaining 66% stake.

But those numbers are just the first step of a calculated road map designed by the banks that own Metrovacesa – Santander, BBVA and Popular – which want to take advantage of this new arrangement to get rid of thousands of homes from their own balance sheets.

Although still in the analysis phase, according to sources in the know, the entity chaired by Ana Botín (pictured above) wants to transfer between 4,000 and 6,000 homes, whilst BBVA hopes to transfer around 2,500 of the homes that form part of its real estate portfolio, closed eight years ago.

During the harsh years of the real estate crisis, the two entities struggled to cope with this load, along with the rest of the sector, following the debacle that began back in 2007. But now, they have found a way of reducing the burden.

In fact, if the plans go ahead as expected and they receive all of the necessary blessings, the two entities may begin transferring assets this year, a move that would turn Testa Residencial into the largest rental home company in the country, ahead of Fidere, within a matter of months.

Depending on the final number of homes that end up being transferred to Merlin Properties’s subsidiary, the future Socimi will own between 11,000 and 13,000 homes for rent, which means that it will compete head to head with Azora, which owns 11,892 homes and far exceed the 6,000 homes owned by Fidere and the 775 held by Hispania, the Socimi managed by Azora, which has already announced its decision to put the brakes on its residential business.

Five years to debut on the stock market

Now that this giant has been created, the real challenge for all of its shareholders will be its debut on the stock market, the natural destination and reason why they have created this joint Socimi, which has been given a maximum period of five years to complete its IPO.

First, they must define the definitive portfolio of homes, value them, get rid of those assets that do not fit within the plans of the new Socimi through small operations, and above all, find the ideal window of opportunity on the market for the debut.

The key to the success or failure of this business will depend on the price at which Merlin and the banks manage to sell their shares when the time comes to list the subsidiary on the stock market. (…).

The new Testa Residencial that will emerge from this agreement has been given a period of two years to become a Socimi. Its shares are held by Merlin (34.24%) and the banks (65.76%), as follows: Santander 21.95%; BBVA 6.41% and Popular 2.86%.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake