Carmena Approves Los Berrocales, the Largest Housing Development in the South of Madrid

24 January 2019 – El Confidencial

The Government Board chaired by Manuela Carmena will give an important boost to the urban development area of Los Berrocales on Thursday. It is the largest in the city and the first to receive the green light of the sites that comprise the project known as the Developments of the Southeast (Los Desarrollos del Sureste). The Town Hall of Madrid and the Compensation Board for the area have finally agreed the initial text for the urban planning agreement for the management of the buildable land, which will see the construction of 22,000 homes on the largest land bank in the south of the city. 50% of the homes, around 11,000, will be dedicated to social housing.

The General Plan for the city of Madrid obliges the parties involved to sign an urban planning agreement for the management of this area. The Administration and the urban planning entity are signing the commitments assumed by both for the development of the area. According to comments made to this newspaper, the agreement reflects the obligation of the Compensation Board to urbanise the land (which spans 8,305,812 m2 in total) over the course of six phases, during which the planned buildings will be constructed and the services implemented. The project will run until 2034. Moreover, the agreed texts establish the criteria to ensure the equitable distribution of profits and charges between all of the owners (…).

The total buildability amounts to 3.3 million m2, of which 2,247,121 m2 will be dedicated to residential use. 50% of that will be for private housing, 31% for price-controlled housing and 19% for social housing (that latter two percentages correspond to 11,000 homes). The rest will be dedicated to industrial, tertiary, office and commercial use.

In terms of facilities, more than 2 million m2 will be converted into green space, 1.9 million m2 will be used for public facilities and services, 1.7 million m2 for infrastructure and 228,830 m2 will be used for social integration homes.

The agreement reached with the Compensation Board represents a victory for the municipal Government and specifically, for the Sustainable Urban Development department, led by José Manuel Calvo, five months before the end of the current legislature (…).

Following the green light from the Governing Board, the text of the agreement must be submitted for public consultation – a comment period – and afterwards, it will go to the municipal plenary. From that moment, the urban planning entity will be able to start work on the execution of the project.

Original story: El Confidencial (by Paloma Esteban)

Translation: Carmel Drake

The Would-Base Developer of 13,000 Homes in Sevilla is Declared Insolvent

29 May 2018 – ABC Sevilla

Desarrollo Urbanístico Sevilla Este (Duse), the company that was going to build more than 13,000 homes on a 330-hectare site next to the airport, Parque Alcosa and Sevilla Este, has filed for creditor bankruptcy in Mercantile Court number 1 of Sevilla after accumulating debt amounting to €300 million. The company has filed for liquidation after waiting fifteen years for the Town Hall to execute general infrastructure work, for which it had paid the Town Hall €60 million when Alfredo Sánchez Monteseirín was mayor.

Just when it seemed that we had seen the last of the bankruptcy proceedings involving major companies in Sevilla, the demise of Duse comes as a wake-up call for the local real estate sector. The liquidation of this company means the suspension of the urban development that was set to become one of the great areas of expansion in Sevilla: Santa Bárbara.

Duse is owned by Sando Proyectos Inmobiliarios (53.9%); Realia Business (30.5%), linked to FCC; the investment fund Vertrauen Corporate, to which Unicaja sold its 5.99% stake in 2016; Bankia (2.7%) and Bankinter (1.12%), according to the Mercantile Registry. The company owns two plots spanning more than 330 hectares on the Santa Bárbara estate. Some of this land was expropriated in the 1970s and returned to its former owners over the subsequent decades, including the heirs of Augusta Peyré, which ended up selling their land to Sando in 2002.

Urban planning agreement

Before the new PGOU was agreed in 2006, the owners of those plots signed an urban planning agreement to collaborate with the Town Hall of Sevilla to execute the urban development plan. Thus, in 2003, at the height of the real estate boom, urban planning agreements were signed between Sando and the Leaders of the Urban Planning Department for the development of the two plots spanning more than 330 hectares.

In those agreements, the Town Hall undertook to establish a certain buildability ratio for the plots and the owners agreed to bear the acquisition cost of the general infrastructure work (involving the construction of streets, avenues, roundabouts…). The PGOU established that a maximum of 2 million m2 could be built in Santa Bárbara, which would allow for the construction of 13,853 private and social housing units (…).

In exchange for that buildability, Duse paid the Town Hall €15.4 million for the acquisition of land for the external general infrastructure and €42.6 million for the execution of the construction work. In total, Duse paid the Town Hall €58.1 million, according to sources consulted by ABC (…).

The municipal Government received that money but failed to execute the general infrastructure work following the end of the economic crisis (…).

In 2017, Duse filed a claim against the Town Hall for €75.4 million – the €58.1 million it had handed over plus €17 million to cover interest, damages and harm – for the breach of the urban planning agreements (…).

In order to execute the project, Duse signed a loan with Caja Madrid for more than €200 million, which has now risen to an outstanding balance of €300 million due to the non-payment of the principal and interest. As a result of the reordering of the banking sector and the transfer of toxic assets to the so-called “bad bank”, Caja Madrid’s loan for the development of Santa Bárbara ended up in the hands of Sareb.

Sareb’s unpaid loan

In March, the loan in question matured, and so Duse offered Sareb the option to renew it, now that the economic recovery has reactivated real estate demand, or take over the plots as “dación en pago”. According to sources close to the operation, Sareb rejected both proposals. The economic crisis and the failure by the Town Hall to execute the general infrastructure work have ended up economically suffocating the property developer, which has finally thrown in the towel and filed for credit bankruptcy, starting liquidation proceedings.

What will happen to those plots now? In all likelihood, they will go up for auction. If nobody is awarded them, they will end up in the hands of Sareb, which is now the counterparty of the almost €300 million loan that Duse has outstanding (…).

Original story: ABC Sevilla (by María Jesús Pereira)

Translation: Carmel Drake

Telefónica to Close & Sell Off 650 Telephone Exchanges between 2018 & 2020

16 March 2018 – Cinco Días

Telefónica is continuing its intense level of activity in the management and disposal of its assets (…). In this way, the telco has recorded an impact on Operating Income Before Depreciation and Amortisation (OIBDA) of gains from the sale properties in Spain of almost €180 million over the last three years. This maximisation in the value of these assets has generated a positive impact on the profitability of the company during a period marked by strong competitive pressure. In other words, these sales have helped to improve the results on firm’s income statement.

According to the company, in the accounts for the last three years, the impact of gains from the sale of properties in Spain exceeded €35 million in 2017 (…), €71 million in 2016 and €73 million in 2015.

In recent times, Telefónica has focused a large part of its real estate activity on adapting its infrastructure to the real needs of the business. In this sense, the most recent drive has been motivated by the process to shut down copper exchanges, accelerated by the migration of clients from that traditional technology to new fibre optic networks, which the company has rolled out right across Spain. With this change, those facilities are no longer necessary for the operations.

And this process is going to continue to the extent that more copper exchanges are closed, in accordance with the company’s plans. Thus, the operation may accelerate the sale of these facilities, which in many cases are located in important buildings in central areas of provincial capitals and other cities.

Overall, Telefónica plans to close 650 copper exchanges in total right across Spain between 2018 and 2020, as part of its program to modernise its infrastructure and shut down the ageing networks, according to explanations provided by the group at the recent presentation of its results for 2017.

For example, the telco has put up for sale the exchange that it owns in Gijón, in the heart of the shopping district of the Asturian city, for a price that could reach €12 million, according to reports in the local press.

In any case, its sales in recent times have affected different types of buildings. According to sources in the sector, in recent years, Telefónica has sold iconic buildings in cities such as Madrid, Barcelona, Valencia, Bilbao, Santander, Tarragona and Zaragoza.

Sources in the sector also indicate that the gains (from future sales) may be high given that in many cases the buildings are old, and were acquired or constructed by the company a long time ago.

Amongst other movements in the real estate segment, in 2016, the operator sold several buildings in Madrid, Barcelona, Santander and Zaragoza to Beach Bienes Inmuebles for almost €50 million.

In turn, at the beginning of 2017, Telefónica sold a building in the Argüelles neighbourhood of Madrid to the British real estate group Princeton Investments for almost €25 million (…).

Original story: Cinco Días (by Santiago Millán Alonso)

Translation: Carmel Drake

JLL: Madrid is one of the World’s Most Attractive Real Estate Markets

6 March 2018 – Expansión

Madrid is one of the most attractive cities in the world for investing in the real estate sector and now competes with the global giants. That is according to a report by the real estate consultancy JLL, which places the Spanish capital on the second tier of the ranking. On the first tier, it places the planet’s seven major cities – London, New York, Paris, Singapore, Tokyo, Hong Kong and Seoul – which are now being chased by the so-called “contenders”, which are those cities that have experienced the most rapid growth in terms of real estate investment over the last decade and which, nowadays “have better development and attraction power” for large investors. Besides Madrid, the cities that stand out in this ranking are Los Angeles, Shanghai, Beijing, Amsterdam, Chicago, Toronto, San Francisco, Washington DC and Sydney.

Meanwhile, Barcelona is placed in the group of cities that stand out for their degree of influence at the global level, a category that it shares with Brussels, Frankfurt, Genoa, Kyoto, Miami and Vienna. “They are cities that have the most stable real estate markets due to their strategic locations for taking transnational decisions, hosting cultural events and doing business”, says the report Cities of the World: Cartography of Success, prepared by the consultancy firm in collaboration with The Business of Cities.

To prepare this ranking, the report is based on a rating system that takes into account 44 variables. They include the size of the markets, the infrastructure in place, the presence of large companies, the capacity to attract talent, telecommunications and the commitment to specialisation and innovation.

Infrastructure

In the case of Madrid, JLL highlights several aspects that place the Spanish capital on a clear trajectory towards the real estate peak: “Robust infrastructure, global connectivity, a large number of international conferences and conventions and a solid reputation”.

Another one of the elements that makes Madrid one of the major global destinations for real estate investment “is the forecast growth in office rents”. Not in vain, the Spanish capital is the European city where office rental prices are forecast to grow by the most during the period 2018-2020 (+3.6%), followed, incidentally, by Barcelona (+3.1%) and ahead of Manchester, Helsinki and Lisbon, according to JLL.

It is worth remembering that Madrid and Barcelona are the clear leaders in terms of the growth in residential asset prices in Spain. Homes became 17.1% more expensive in the capital of Spain and 14.8% more so in the Catalan capital, which lost ground in the last few months of the year due to the secessionist challenge, according to Tinsa. In any case, homes are still 20.3% more expensive in Barcelona than Madrid.

The appeal of Barcelona

In addition, Madrid is ranked as the fourth favourite city for commercial brands looking to locate stores, after London, Paris and Milan. Barcelona also features in the top 10: it occupies seventh place.

(…) In this regard, JLL highlights several aspects that justify its added value, such as “its tourist, cultural and business appeal”. Moreover, it points out aspects such as the fact that Barcelona is the fourth-ranked city in Europe in terms of visitor numbers.

The consultancy firm also emphasises Barcelona’s growing reputation as a smart city, “in large part thanks to the influence that the development of the 22@ business area has had in Barcelona. It has been erected as a technological hub, where large companies and start-ups are committed to setting up shop” (…).

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Christie & Co: Europe is Still the World’s Most Visited Region

9 January 2018 – Press Release

Europe was still the most appealing destination and most visited region in the world in 2017, despite some disruptions faced in recent years, according to a report published by Christie & Co.

The report, launched by Christie & Co’s Hotel Consultancy team and entitled ‘European Travel Trends and Hotel Investment Hot Spots’ identifies future investment opportunities in the European hotel market by highlighting areas for increasing the value of visitation in the European market, reviewing the growth opportunities of feeder markets in Europe, analysing issues surrounding accessibility and airport capacity and highlighting which markets are expected to achieve strong RevPAR increases in the coming years making them ideal candidates for investment.

Despite other reports detailing the impact of Brexit, to date, the impact on European tourism remains unseen and Christie & Co predict the general positive outlook for tourism in Europe will translate into increased demand for accommodation. European travellers remain the key source for European destinations with domestic and other European travellers accounting for almost 90% of demand. The established feeder markets including the US, Canada, Japan and Australia continue to generate visitation growth for the European market. India and China are expected to experience healthy GDP growth over the next five years and both have populations over four times the US and affluence continues to rise. Thus, creating tremendous visitation potential for the old continent.

Christie & Co have identified two opportunities for increasing the value of visitation in the European market; firstly, Spain and Greece lag behind Western and Northern Europe in terms of value of visitation per international arrival. Christie & Co sees a real opportunity to boost the value of visitation by improving the quality of the hotel stock. Secondly, there are good branding opportunities across the European market as the hotel stock in the majority of European markets remains currently heavily unbranded and in need of investment.

Airport capacity remains a key challenge as accessibility is one of the key drivers for tourism. Christie & Co have analysed eleven major airports in this report and the findings reveal that seasonality concerns can be mitigated through providing additional flights during the shoulder season, making seasonal destinations more attractive outside of their peak times. If airport capacity is addressed promptly it will create wider development opportunities for hotels and further infrastructure.

Anna Eck, from the hotels consultancy team at Christie & Co comments, “The findings of the report show quite clearly that whilst Europe as a destination remains extremely popular, there is huge opportunity for international brands to grow in the region. Markets such as Iceland, Poland, Demark, Portugal and Sweden provide options for hotel chains whilst Ireland, Spain, Portugal Poland and Sweden would be ideal for opportunistic investors willing to take more risk. These markets are all expected to achieve strong RevPAR increases in the coming years as well as demand growth in excess of supply.”

Carine Bonnejean, Head of Consultancy – Hotels at Christie & Co comments, “We have worked closely with our European colleagues to develop this report and as a pan-European team we are able to offer strategic advice to maximise the potential of our clients’ business and investments. The report finds that certain countries are ideal for different types of investor and we are able to identify which cities in those countries are worth prioritising. Whatever the situation, we help to formulate a strategy to generate the best outcome.”

Original story: Press Release

Edited by: Carmel Drake

Mount Street Takes Over the Management of WestLB’s NPLs in Spain

12 December 2017 – Expansión

The British firm also wants to negotiate agreements to manage the portfolios of Spanish banks and Sareb.

A new operator has arrived in the Spanish market for the management of debt in default or with a high risk of non-payment. Mount Street London Solutions has taken over a platform that manages the “toxic” portfolio of the former German entity WestLB and has whereby acquired an office in Madrid. Through this deal, the firm aspires to obtain new clients in Spain, including financial institutions and investment funds operating in the sector.

Mount Street was owned by the fund Greenfield Partners until February when its directors purchased the firm with support from the German bank Aareal Bank, which took over 20% of the share capital. In October, the loan manager took a leap in its business with the purchase of EAA Portfolio Advisors, an entity created in Germany to administer WestLB’s non-performing assets after the bank was rescued by the German Government in 2008. Its function is to try to recover those loans, restructure them, sell them on or foreclose the assets that secure them.

Of the €200 billion in problem loans that WestLB held, €22 billion remains, under the management of EAA. The portfolio includes loans, primarily to firms in the renewable energy sector, which WestLB granted in Spain before the crisis. By acquiring EAA, Mount Street has purchased its office in Madrid along with the 6 employees that manage its portfolio.

The objective of Mount Street is to use this foothold in Spain as a platform to grow towards new business areas, especially in the real estate debt segment. “The team that we have incorporated in Spain has been working for years to restructure debt in the infrastructure sector, in particular, in the solar energy segment, and we are now able to contribute our specialisation in the real estate area that we offer in the rest of Europe”, said Ravi Joseph (pictured above), Founding Partner of Mount Street, in an interview with Expansión.

The firm, which is headquartered in London, sees several opportunities for accessing the Spanish property market. On the one hand, he hopes to negotiate agreements with financial entities and/or with Sareb (…) to manage some of their portfolios of problem loans. Another option is to help those property developers struggling to make their repayments to allow them to “repurchase” their loans from the investment banks that acquired their debt from the banks back in the day. The final option is to collaborate with small investors that are still arriving in Spain interested in acquiring non-performing loans (…).

In Joseph’s opinion, the appetite of international investors to enter Spain is still very high despite the political crisis in Cataluña. “The major international investors are still very interested in Spain. Much more so than in Italy. Spain has entered a virtuous circle (…). The uncertainty in Cataluña may affect growth somewhat, but the overall trend will continue to be upward”.

After acquiring EAA, Mount Street now manages debt amounting to €48 billion in total.

Original story: Expansión (by Robert Casado)

Translation: Carmel Drake

Aena Submits The Only Bid To Manage ‘Ghost’ Airport In Murcia

31 October 2017 – Expansión

Yesterday, Aena came to the rescue of the international airport for the Region of Murcia with a multi-million euro offer to take over its operation, management and conservation for a period of 25 years. This ghost infrastructure was planned before the crisis by the regional government and a consortium of companies led by Sacyr, at a cost of €270 million. Nevertheless, the outbreak of the crisis submerged the installation into a tsunami of financial and legal problems, which prevented it from being opened even after the construction work had been completed, in 2012.

Five years later, in April, the regional executive opened a tender process, with a budget of €600 million. Aena, in which the Spanish State holds a 51% stake, was the only company that expressed interest in managing the infrastructure and it formalised its offer yesterday. Sources close to the bid say that the amount offered by Aena falls well below the tender price.

In all likelihood, the airport manager’s plan will involve moving operations from the San Javier military airport, 30 km away, to Corvera. The new president of Aena, Jaime García-Legaz, who has only been in the job for two weeks, has focused on the need to secure the management of the Murcian airport. “We are going to make an offer to win that is profitable for Aena”, he said last week in meetings held with the group’s personnel (…). García-Legaz is Murcian, but the offer had already been prepared by his predecessor, José Manuel Vargas.

Currently, 400 employees work at San Javier airport, of whom 72 form part of the workforce, which would be affected by the move. The managers themselves have reviewed the facilities in recent weeks to check that everything is in order so as to start the operation in the most agile way possible.

Some sources say that the first flights could begin next summer (2018). “The main objective should be to secure Iberia or another major airline to turn the airport into a key infrastructure hub”, they add.

The arrival of one or more large companies is key if the reduction in passenger numbers at the Murcian airport is to be plugged. Since 2007, traffic volumes have fallen by half, from 2 million users to 1 million in 2016, proceeding from low-cost airlines such as Easyjet, Ryanair and Norwegian. And that decrease has happened despite the recent investment of €70 million made by Aena to construct a second runway. The airport has a single domestic route, connecting with Madrid, and 19 international routes, primarily to/from the United Kingdom. 92% of users are foreigners visiting the region for tourist purposes.

By contrast, the aerodrome in Alicante – 90km away – has seen its user number increase from 9 million to 12 million during the same period. Corvera is now adding capacity to manage a visitor flow of 3.5 million each year. If Aena does end up winning the contract to manage the installation, Corvera would become the 47th airport that the group manages in the country. The company has the capacity to welcome 330 million travellers, 30% more than the 230 million that used its airports in 2016.

Sources at Aena highlight that the airport in Murcia would generate profits for the group (…).

The Region of Murcia’s Ministry of Development will convene a meeting on Friday to analyse Aena’s offer and proceed to award the contract to manage the airport “as soon as possible”.

Original story: Expansión (by Víctor Martínez)

Translation: Carmel Drake

Comsa Refinances A €719M Syndicated Loan

30 December 2016 – Expansión

Financial oxygen for the Comsa Corporation. In the early hours of Thursday morning, the construction group managed to complete the refinancing of its debt with a group of eight banks, which have granted it a new syndicated loan amounting to €719 million. The loan must be repaid after four and a half years. The following banks have participated in the operation: Santander, CaixaBank, Bankia, Sabadell, BBVA, Popular, Bankinter and Unicaja.

The company, which is owned by the Miarnau (70%) and Sumarroca (30%) families, whereby obtained the blessing of its creditors to launch a new strategic plan for the period 2017-2020, which will force it to concentrate its activity solely on the infrastructure and engineering business, with a special focus on railway construction.

Comsa has agreed with the banks to sell off its other businesses between now and 2020, which means that it will place assets worth €200 million on the market, the proceeds of which will be used, in their entirety, to repay some of the company’s debt. Following its divestments from Aritex and CLD, all of its investments in the areas of concessions, renewable energy and the environment will also be put up for sale.

The eight entities that have participated in the refinancing may also acquire 50% of the group’s share capital in 2021, given that they have included a convertible debt tranche in the syndicate agreement amounting to €250 million. Nevertheless, the owner families may exercise a purchase option over that 50% stake and whereby prevent the conversion if certain conditions are fulfilled in 2021. Uría has advised the banks, Cuatrecasas and PwC have advised the company, and the law firm Toda & Nel·lo Abogados has advised the family.

Strategic plan

The new strategic plan outlined by the group chaired by Jorge Miarnau forecasts an increase in revenues from the infrastructure business, up from €950 million to €1,400 million in 2020. Moreover, the group will step on the accelerator in the international market, which will be a key lever for achieving these figures. The objective is to obtain 70% of sales from overseas within four years, compared to the forecast figure of 49% for this year.

Original story: Expansión (by S.Saborit)

Translation: Carmel Drake

Inbisa Sells 27,000 sqm Logistics Platform To Primafrío

29 September 2016 – Mis Naves

“The ability of Inbisa and the Asua Real Estate Group to offer our clients the best options in terms of location and facilities, adapting ourselves to the needs and requirements in each case, is the key factor that enable transactions of this kind to go ahead”, said sources at the company.

Inbisa, through the Asua Real Estate Group, has sold the “Inbisa San Román Logistics Platform”, located at km 385 on the N-1 highway, 25km from Vitoria and 95km from the border with France, to the international transport company Primafrío.

The logistics platform has a surface area measuring more than 27,000 sqm, as well as more than 5,200 sqm of constructed space, split between a warehouse (covering 4,000 sqm in terms of floor space) with 20 loading bays and 10m free height inside and offices ( measuring 375 sqm). Moreover, the site has another independent building (measuring 903 sqm), which is used for fleet services, as well as workshops for maintenance and a car wash for trucks.

According to sources at Inbisa, “Primafrío, which will open one of its largest operating headquarters in Spain at the “Inbisa San Román Logistics Platform”, has chosen these facilities thanks to their strategic location, along one of the country’s main logistics corridors, which links Madrid with France and the rest of Europe. Similarly, the characteristics of the logistics platform are perfectly suited to the requirements of the transport company, as it offers all of the infrastructure necessary for it to undertake its business and logistics activity”.

Original story: Mis Naves

Translation: Carmel Drake

Lidl Opens Its Largest European Logistics Centre In Madrid

26 September 2016 – Expansión

In Alcalá de Henares (Madrid) on Thursday, the German supermarket chain Lidl opened the first phase of what will be the group’s largest and most technologically advanced logistics platform in Europe. The project will be completed in 2018, when the centre will become fully operational.

With this infrastructure, the company is making a strong commitment to the Spanish market, where it has been operating since 1994. The firm’s total investment will exceed €70 million. Thus, the result will be a site with 61,000 sqm of storage space (45,000 sqm being opened now, plus 16,000 sqm to be added in the second phase), with an automated silo measuring more than 40m tall. This centre will be able to store 71,000 pallets. (…).

With the launch of this first phase of the logistics centre, Lidl has created 100 new jobs. That figure will increase to 275 by the time the platform becomes fully operational in 2018.

Fourth generation

Lidl also unveiled its new eco-sustainable store model in Coslada (Madrid) yesterday. It is the most sustainable supermarket in Spain. (…)

Original story: Expansión (by María Sánchez)

Translation: Carmel Drake