Tag: hotels

Investment In Housing Returns To Barcelona After 7 Years

18 February 2015 – El País

The housing market is the last sector to emerge from the crisis. Nevertheless, investment returned to the residential segment last year, after seven years of sluggishness towards undertaking significant projects in the Catalan capital. In addition to the purchase of portfolios by vulture funds, nine major acquisitions were also recorded in Barcelona, corresponding to 55,095 square metres, according to the real estate consultant CB Richard Ellis. These developments, most of which are aimed at high-end clients, showed a move away from the traditional prime (residential) area – Sarria-Sant Gervasi – towards the neighbourhoods of Eixample, Ciutat Vella and Diagonal Mar.

The Vice President of CB Richard Ellis, Enrique Martínez-Laguna, described 2014 as a “historical” year because the volumes of investment amounted to €10,463 million across the whole of Spain, even higher than the levels recorded in 2007, the year in which most capital was invested. The Director of the consultancy firm in Barcelona, Anna Esteban, highlighted that property prices have fallen since then, and so more transactions were recorded in 2014 than in 2007. The consultancy firm expects investors’ appetite to continue this year, to the extent that “we will begin to see cranes (appearing on the horizon)”, says Martínez-Laguna.

The Catalan capital destroyed 90,000 square metres of office space in 2014

But the map of the city has not only changed in terms of the construction of housing. In total, 90,000 square metres of office space were destroyed in the city centre in 2014 alone. Buildings were converted or will shortly be converted into hotels and homes.

Changing landscape

For example, the Paseo de Gracia, has now become a residential and retail area. And something similar may take place on the Diagonal following its renovation. “There are also two buildings, at number 10 Francesc Macia and number 111 Paseo de Gracia, whose premises could be converted into the entrance of what may become a new open-air shopping centre” says Martínez-Laguna. At the same time, some of the buildings in the 22@ district are generating very similar rents to those being paid for other properties in the traditional business district.

The current rental price in the best areas of Barcelona amounts to c.€17.75 per square metre, down from the peak of €28/m2 recorded in 2007. Moreover, the consultancy firm considers that these rents have now bottomed out and will grow by 30% over the next two to three years.

Original story: El País (by Lluís Pellicer)

Translation: Carmel Drake

Student Halls In Spain: A Wise Alternative Investment?

17 February 2015 – Idealista

When we talk about real estate investment in Spain, we tend to mean the purchase of offices, hotels and shopping centres. Nevertheless, there is another type of property that may also generate high returns: student halls of residences. However, unlike in other European countries, this accommodation does not totally convince investors looking for assets in Spain. The lack of companies that know how to optimise them, and the shortage of the ideal product are some of the reasons why no transactions are being closed in this segment, despite considerable interest.

Spain had around 1.41 million students enrolled in universities during the academic year 2013-2014, according to the Ministry for Education, Culture and Sport. That is, a little over 3% of the Spanish population were university students. This percentage places Spain ahead of other countries such as Germany and France. The majority of these students (77%) studied courses in their home province, but 20% moved to another province to study and around 3% were from overseas.

Delving more deeply into their lifestyle: approximately 64% of university students live at home with their parents or other family members. At the other extreme, those who live away from home only have two options: rent (either in a shared house or on their own) or live in halls of residence. Specifically, only 2.8% choose to stay there.

In the opinion of the experts consulted, these figures are justified by the “very low” availability of public university halls. “Although there are significant cultural differences, certain aspects indicate that the market for university halls of residence in Spain will have to converge with that of the rest of Europe”, says a report published by JLL.

The consultancy firm is convinced by its analysis that the implementation of the Bologna education reforms will promote cross-border studying between European universities, “which tend to have much high percentages of students living in halls”. In Spain, it is normal for students to opt for this type of accommodation during the first and second years only.

“The flow of students travelling to study in other countries will increase over the coming years and not only in relation to Erasmus placements”, says Patricio Palomar, Director of Office Advisory and Alternative Investment at CBRE. In his opinion, issues such as the language (Spanish), the lifestyle and the affordable prices in comparison with neighbouring countries, are just a few of the attractions that draw many foreign students to choose Spain as their destination.

The main drawbacks

Unnim, the entity created from the merger of Cajas de Manlleu, Sabadell and Terrassa, is active in this market. The bank, which was acquired by BBVA in 2011, inherited this line of business from Caixa Terrassa. The former caja constructed its first hall of residence on the Avenida Parallel, 101, in the Poble Sec neighbourhood of Barcelona back in 2007.

According to the latest data available for Unnim, this business line generated a return of 7%. Sources in the sector explain that the net return on these types of assets can reach 10%, well above the rates offered by offices, hotels and shopping centres. In countries such as the UK and USA, this business generates returns of between 11% and 15%.

Juan Manuel Ortega, Director of Investment Offices at JLL, recognises that British firms are over-valuing these types of assets in Spain. These investors are looking for halls of residences that are larger than 5,000 m2 and that have between 60 and 150 rooms. Palomar also acknowledges this trend “the same funds that operate in the UK for example are looking (for opportunities) in Spain. The problem is that the same product is not available in other countries”.

Palomar maintains that student halls in Spain are obsolete and that many of them are stuck in the 1960s. That does not happen in cities such as Amsterdam where student accommodation is modern, hotel-like and less than 10 years old.

Another one of the pitfalls that affects this business is the ownership of these spaces. Most belong to the public universities, many of which have serious financial problems and cannot afford to finance the investment needed to optimise the assets. At the same time, they cannot sell the land and allow private companies to enter the sector.

This has a very direct effect on competition; it is low, which does not lead to an improvement in the facilities either. Similarly, experts recognise that the administration of these complexes is not simple, they require professional management.

Nevertheless, Palomar states that new student halls of residence are appearing in the outskirts of cities and near private business schools. “I think Spain should focus on other kinds of tourism, beyond the holiday market; educational and health tourism (have significant potential)”.

A trickle of transactions

The lethargy in this market is such that transactions are very scarce. The last known deal involved the purchase of the Galdós halls of residence in Madrid in 2012. The British firm, Knightsbridge Student Housing paid €20 million for the property, it was the first acquisition made by the company outside of the UK. Knightsbridge Student Housing was created in 2010 with the backing of Oaktree Capital Management.

Another of the most talked about transactions involved Lazora (Concha Osácar) when it acquired the Resa Group in 2011. Resa was created in 1994 and currently manages more than 8,000 beds in 32 halls of residence. The construction company Acciona also has give halls of residence (in Albacete, Cádiz, Castellón, Lleida and Murcia), which it has tried to sell in the past.

Further proof that this branch of real estate activity in Spain is still light years away from what is happening in other countries, is that Socimis dedicated to student accommodation already exist overseas. In 2013, GCP Student Living constituted the first REIT (Real Estate Investment Trust) in the UK.

Original story: Idealista (by Estefania Fonseca)

Carlton Group: Spain’s Real Estate Sector Records 2nd Best Year In A Decade

16 February 2015 – Property Funds World

Spain’s commercial real estate investment sector rose to approximately EUR9 billion in 2014, exceeding the most optimistic forecasts,  according to a new report by The Carlton Group.

2014 was the second best year within the last decade in terms of volume for Spanish commercial real estate investment, (surpassed only by 2007 when the value of each asset was significantly higher), the report said.

“Spain has once again become a relevant destination for real estate investors and the positive trend is expected to continue over the next few years,” says Javier Beltran, Managing Director of Carlton Iberia (Spain and Portugal) and head of Carlton’s Madrid office.

The report cites the “unparalleled arrival” of a very large number of international institutional and “off radar” investors from Asia, Middle East, Latin America, North America and Europe, along with the new Socimi, the Spanish REITs, that have contributed to the increased volume and value of commercial real estate transactions in Spain.

In 2014, the most desired Spanish assets for investors were prime office buildings and shopping centers, (two of the largest shopping centers in Spain were transacted during 2014), along with hotel, logistic and car park sectors, the Carlton report said.

Many investors have also started to buy “well located land development sites”  in Madrid, Barcelona and Spain’s Southern coast. This has contributed to an increase in construction activity that is also expected to rise in coming years.

The report points to the increased number of international investors, the general improvement of the Spanish economy, along with the renewed interest in Spanish banks’ lending capacity as contributing factors to a revaluation of real estate assets that is expected to continue during the next few years.

It also attributes a very robust hospitality investment market to the record number of international visitors coming to Barcelona, Balearic and Canary Islands, Madrid, Marbella, Valencia and Alicante over the last two years.

Prices in the Spanish residential market are stabilising and have shown slight increases in some areas of main cities, with the trend expected to increase price and activity, the Carlton report said.

The report concludes that Spanish real estate markets are “becoming more professional and international and all that is very good news,” says Carlton’s Beltran.

Original story: Property Funds World

Edited by: Carmel Drake

CNMC Authorises Santander’s Purchase Of Bankia’s 19% Stake In Metrovacesa

13 February 2015 – Expansión

With this purchase, Santander will assume ownership of 55.8% of the share capital, whereby taking control of the real estate company.

Santander has received authorisation from the National Markets and Competition Commission (Comisión Nacional de los Mercados y la Competencia or CNMC) to purchase Bankia’s 19% stake in Metrovacesa and whereby assume control of the property company, by taking ownership of 55.8% of its share capital.

The ‘super regulator’ has authorised the first phase of the operation, which is not deemed to generate any competition concerns, according to the records of the body.

At the beginning of December, Santander agreed to buy the 19% stake that Bankia, the nationalised bank, holds in Metrovacesa for €100 million.

Thus, by virtue of the transaction, the bank chaired by Ana Patricia Botín takes control of the real estate company and Bankia fulfils a new milestone in its plan to divest its industrial holdings, and also records a profit of €13 million as a result.

After Santander, the other shareholders in Metrovacesa are BBVA, with an 18.3% stake, Banco Sabadell (13%) and Banco Popular (12.6%).

The Sanahuja family

The company has been controlled by the aforementioned financial institutions since February 2009, when they foreclosed the debt held by the Sanahuja family, the then controlling shareholder of the company.

For Metrovacesa, which was delisted from the stock exchange in May 2013, the takeover by Santander represents a new phase in its share ownership.

The real estate company, which was once controlled by BBVA, was acquired from that entity in 2004 through a takeover bid (oferta pública de adquisición or OPA) by Bami, the company owned by Joaquín Rivero. Subsequently, the company was the subject of a ‘takeover war’ between the businessman and the Sanahuja family, but eventually the banks took control.

Metrovacesa is dedicated to the rental of real estate assets. Its portfolio includes buildings covering more than 1.1 million square metres, comprising offices, shopping centres and hotels, which are mainly located in Madrid and Barcelona. Amongst others, it is the owner of the iconic Torre Madrid in Plaza de España in Madrid, which will soon house a hotel to be operated by the Barceló chain.

Original story: Expansión

Translation: Carmel Drake

Wyndham Pays €50m For Dolce Hotels And Resorts

12 February 2015 – Cinco Días

The hotel chain strengthens its business tourism division as a result of the acquisition.

The hotel chain Wyndham revealed yesterday that it has purchased Dolce Hotels and Resorts for $57 million or around €50.4 million, to consolidate its position in the hotel segment dedicated to corporate and business tourism.

The US firm, a subsidiary of Wyndham Worldwide, which is listed on the NYSE, thereby takes on the management of 24 new hotels with more than 5,500 rooms. The establishments are located in the United States, Canada, France, Spain, Portugal, Germany and Belgium.

(….)

The US Group has confirmed that it will maintain and expand the Dolce brand alongside the other brands that it operates, including Wyndham, Tryp, Ramada, Baymont Inn and Travelodge. The group has 7,600 hotels in 71 countries and a total of 655,000 rooms.

(…)

In Spain, Dolce operates the Dolce Stiges, a hotel with 263 rooms, which Oaktree took ownership off at the end of last year, after it took on the €46 million debt that the previous owner, Ichindoney Parnership, held with one of its creditors, Allied Banking Corporation.

(…)

Original story: Cinco Días (by Laura Salces)

Translation: Carmel Drake

Barceló Doubled Its Profit In 2014 To Generate c. €50m

12 February 2015 – Expansión

Barceló recorded a profit of c. €50 million in 2014, whereby doubling its result from the previous year. The co-chairman of the hotel chain, Simón Pedro Barceló announced the result yesterday (the group’s definitive results for the year are still pending) and attributed the increase to “a significant increase in EBITDA (from €183 million to €215 million) and the incorporation of ten new hotels in Mexico and the Dominican Republic. Moreover, 2014 was the first full year to include the results of its new travel division.

Turnover exceeded €2,000 million, of which €1,100 million was generated by the travel sector and €900 million from hotels. The total figure amounted to €1,800 million in 2013. The co-chairman of Barceló said that it is too soon to say how the tourism sector will evolve over the course of the year, but he noted that “the Caribbean and Mexico have had a strong start to the year and although we do not know what will happen during the summer months, we believe that we will outperform the results recorded in 2014 by 10%”.

According to the latest information released by the Mallorcan company, Barceló has 140 hotels in 17 countries containing 37,380 rooms. Half of them are located in Europe and the remainder are in America, primarily in the US and the Caribbean. It also has 400 travel agencies operating in 22 countries.

New acquisitions

The group, which returned to the travel agency segment last year through its acquisition of Orizonia, together with Globalia, has not ruled out growth through further acquisitions. Yesterday, Simon Pedro Barceló confirmed that “new corporate transactions have not been ruled out” in the travel agency sector.

The family business owns 39% of its hotels outright, and leases or manages the remainder. Its goal is to be “a great hotel company”, said Barceló yesterday, which is why the company is continually adding new hotels to its portfolio. “We have just signed an agreement to lease a new 4 star hotel with 250 rooms in Berlin”, he said.

Barceló, who was giving a lecture at ESADE, was very optimistic about the future of the economy and the tourism sector in particular and encouraged employers to work together with entities that are independent and able.

Original story: Expansión (by Marisa Ángeles)

Translation: Carmel Drake

Investment In Property Returns To Pre-Crisis Levels

11 January 2015 – Expansión

According to the consultancy BNP Paribas Real Estate, investment in real estate assets amounted to €6,950 million in 2014, the second highest annual figure ever in Spain’s history.

The purchase of offices, hotels, commercial assets, warehouses and homes increased by 85% last year, building on the rise of 110% recorded in 2013. The figure recorded in 2014 has only been surpassed once, in 2007, when €9,000 million was invested.

By asset type, shops and above all, shopping centres, led the purchases closed in 2014 with transactions amounting to €2,367 million, i.e. 46% more than in 2013. Investment in offices exceeded €2,230 million and increased by 247%, compared with an increase of 89% in hotel acquisitions.

The types of property that best represent the reactivation of the Spanish market are warehouses and logistics platforms; investment in those assets grew by more than 406% during the year, according to BNP Paribas.

According to the consultancy, these very positive figures are set to continue in 2015. “This year will witness the closing of new transactions in the office and logistics segments. Transactions involving shopping centres will be more scarce than in 2014”, explains the consultancy.

By buyer type, the experts at BNP Paribas believe that, now that the Socimis have invested around €2,000 million in the real estate sector, this year acquisitions will be made by investors looking for “more consolidated assets, at higher prices, with a view to holding the properties for five years or more, that have no intention of selling them in the short term”, explains Francisco Machón, Investment Director at BNP Paribas Real Estate.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake

Silken Hotels’ Owner Files For Bankruptcy With €400m Debt

11 February 2015 – Cinco Días

The British investment fund Carey lobbied for Urvasco to file for bankruptcy

Urvasco has suffered from financial imbalances for years. When the financial crisis hit, the company held substantial investments in its hotel and property development businesses. To try and solve its problems, it has sold assets ranging from wind turbines to works of art, but has not managed to balance its books. Finally, this month, Commercial Court No. 1 of Vitoria has issued an order for the bankruptcy of the group owned by the businessman Antón Iráculis, which has liabilities of more than €400 million.

Carey Value Added has lobbied for this process, according to the judgement issued by the magistrate María Teresa Trinidad. The British fund was a partner of Urvasco when they launched a hotel together in London; the project failed.

As a result of that failed investment, Carey was left with a debt of €68.9 million, which was recognised by the High Court in London in April 2013. In 2008, Urvasco did not obtain financing for the construction of the hotel in the English capital because the financial institutions realised that it did not meet the required solvency levels; this damaged Carey, which had already financed some of the investment in advance.

The British investment fund requested the recognition and enforcement of that foreign resolution in Spain. That resulted in a long dispute between both parties, which ended in the Commercial Court No. 1 of Vitoria. In her sentence, the magistrate María Teresa Trinidad stated that Carey “has proven the general non-payment of overdue obligations”, by both the Grupo Urvasco (UG), as well as by its subsidiary Grupo Hotelero Urvasco (GHU), which is 93.25% owned.

The magistrate also added that the debt of €68.9 million was recognised in GHU’s accounts at the end of 2013. This stake is managed by the hotel chain Silken, which includes 32 establishments, according to information gathered from the company’s website. The best known are the Puerta América in Madrid and the Dómine in Bilbao; the latter is located opposite the Guggenheim Museum. They also own the Ciudad de Vitoria in the Álavan capital.

In addition to its hotel business, Grupo Urvasco is one of the leading property developers in Spain, although its shares are not publicly traded. In Bilbao, it constructed the Torres Isozaki, which house almost two hundred homes along the Nervion River.

Urvasco has 20 days to file an appeal with the Provincial Court of Álava against its insolvency. Sources close to the process take it as a given that the company owned by Anton Iráculis will resort to this action, since it previously fought “hard” against Carey’s debt to classify it as “not overdue and under judgement” (pending judicial review).

A significant part of the Basque group’s liability is a syndicated loan amounting to €152 million with a syndicate of financial institutions, including BBVA, Banco Popular, EBN and CaixaBank.

The total debt balances will be disclosed over time, when the bankruptcy administrator, the company Sindicatura, collects all of the information. The creditors have one month to communicate the Grupo Urvasco’s non-payments and close its consolidated liabilities.

Original story: Cinco Días (by J. Vadillo/L. Salces)

Translation: Carmel Drake

Best Start To The Year For Real Estate Market Since 2010

6 February 2015 – El Economista

Investment activity in the non-residential real estate sector in Spain has started the year with the same strength with which it closed 2014. In just one month, investment has risen to almost €1,100 million, approximately equal to the total amount recorded during the first quarter last year, according to data published by Savills, the international real estate consultancy.

This has been the best start to the year for the real estate market since 2010 in terms of transaction volumes. Nevertheless, in terms of the number of transactions, the level has not been particularly noteworthy compared with other periods – as of yesterday, only nine deals had been closed.

“In January and February, we tend to see transactions left over from before the holidays being closed, however, the pipeline of investment transactions in retail and offices currently exceeds €2,000 million. We expect investment volumes to be similar to or even exceed those recorded in 2014”, said Luis Espadas, Director of Capital Markets for Savills España.

Two transactions have accounted for almost 80% of the total investment in 2015. Firstly, the sale of Gran Vía 32, which was acquired by Pontegadea for around €400 million, according to market sources and secondly, the Puerto Venecia shopping centre, which was sold for €451 million – the deal was announced at the end of the year, but was actually closed in January.

“Both transactions not only support the rising trend in mega-deals (those exceeding €100 million), which accounted for 2.5% of all transactions in 2011 and for 9% last year, they also far outweigh the size of the largest operations recorded in 2014. Moreover, Savills highlights that in each case, the transactions involved a single building, rather than portfolios (of buildings) like in 2014 (when the Junta de Andalucía sold 70 buildings for €300 million and Carrefour sold a portfolio for €350 million).

Success in the office market

Amongst other transactions, interest for the office segment in Madrid stands out once again. It broke records in 2014 for the highest number of transactions ever recorded, with 71 transactions; and which has started 2015 on the right foot. Five buildings were sold in two weeks, almost all located within the M-30.

“The shortage of high quality properties for sale in the business district and other urban areas diverted the search for opportunities towards well-established business centres outside of the M-30, although 75% of investment last year was located inside the periphery” explained Espadas.

Nevertheless, there is an increasing drive towards refurbishment “to add value to office blocks, particularly those that are well located, which are being used either as offices or for conversion into hotels and shops”, added Espadas.

Meanwhile, yesterday, the consultancy firm Irea published its report about investment in the real estate sector in 2014, a year in which direct transactions in real estate assets tripled. Such investments accounted for €9,660 million worth of transactions, out of a total investment volume in the sector of €23,028 million, compared with €5,344 million in 2013.

Original story: El Economista (by A. Brualla)

Translation: Carmel Drake

Irea: Real Estate Transactions Tripled In 2014

5 February 2015 – Cinco Días

A study conducted by Irea validates renewed interest in the sector

More than €23,000 million was invested in the real estate sector in Spain in 2014, of which 84% was dedicated to direct investment in assets and the acquisition of real estate-backed debt portfolios. The remaining 16% related to transactions involving shares in real estate companies and servicers.

At a press conference on Wednesday, the CEO of Irea, Mikel Echavarren, explained that the increase in activity in 2014 “has helped to unclog the pipes of the financial sector and bring the sector out of its coma”. It is interesting to note that most of the investors that have shown interest in the Spanish real estate sector, are foreign: on the one hand, the main players included large funds, such as Blackstone and Lone Star, and on the other hand, listed real estate investment companies (Socimis) also played an active role, in particular Merlin Properties, which have a significant percentage of foreign capital.

In the specific case of investment in assets, Irea said that shopping centres accounted for 26% of all of the capital invested in assets in 2014 (€2,501 million), followed by offices (24%) and hotels (11%), with these last two segments in full ascent. Residential assets accounted for barely 8% of total investment, including both land and finished homes. Furthermore, 85% of those transactions related to finished assets, with land representing only 4%.

With all of this, Echavarren highlighted the “merit” of this low percentage of land sold, since it is an asset that will have to be sold at a later date. In the current context, 4% seems like an achievement, since although many developers “want to purchase land, they do not have sufficient capital to do so and it is very difficult for them to obtain financing”.

Irea’s CEO repeated that international investors accounted for 53% of all investment activity in assets, followed by Socimis, which were responsible for 24%. Developers accounted for only 3%. On the vendor side, investors sold 24% of all assets, whilst financial institutions disposed of a further 22%.

The appeal of debt portfolios

Although residential assets were not sufficiently attractive for investors in 2014, that was not the case for debt portfolios linked to residential assets. Overall, the volume of debt portfolio transactions amounted to €9,683 million, of which 48% related to the residential segment. Nevertheless, the majority of this amount related to the portfolio sold by CatalunyaCaixa to Blackstone. In this segment, international investors acquired 100% of the debt portfolios sold, and 91% were purchased by investment funds. On the opposite side, 90.6% of the vendors in this case were financial institutions and 9.3% were other entities. In addition, shares in Metrovacesa and Colonial (both listed) amounting to €820 million (22%) changed hands during 2014, whilst the remaining €2,866 million of shares in real estate companies that changed hands were not listed.

Original story: Cinco Días

Translation: Carmel Drake