ING Grants a €75M Green Loan to Colonial

5 March 2019 – Idealista

ING has granted a sustainable improvement loan to the Socimi Colonial amounting to €75.7 million. The terms of the loan are linked to the company’s performance in this field in that the interest rate varies depending on the rating that Colonial obtains from the Sustainability Agency GRESB for ESG (environmental, social and corporate governance) compliance.

It is the first loan of its kind to be granted to a Spanish company in the real estate sector and Colonial’s first sustainable transaction in the market. The real estate firm will use the funds to finance the LEED Gold certified building that it owns on Calle Almagro in Madrid, which is leased to the law firm Cuatrecasas.

Colonial has set itself the objective of having a portfolio of efficient buildings that consume fewer resources and reduce CO2 emissions and the amount of water used, amongst other factors.

Original story: Idealista 

Translation: Carmel Drake

Galil Capital Raises Financing Worth €4.5M to Continue its Growth

12 July 2018 – Eje Prime

A larger cushion for Galil Capital’s growth plans. The Socimi has signed a double operation to raise more funds. On the one hand, the company has signed a bank loan amounting to €2.5 million and, on the other hand, it has agreed a €2 million loan with its majority shareholder. “With these operations, the company is strengthening its financial capability to fulfil its strategy of new real estate acquisitions and capex projects”, say sources at the company.

The mortgage loan amounting to €2.5 million will have to be repaid in 2038 and has a one-year (repayment) grace period. The agreed interest rate amounts to 2.1% until July 2019 and will revert to Euribor plus 2.1% for the remainder of the period, according to a statement filed by the company with the Alternative Investment Market (MAB). By way of collateral for the loan, Galil has granted a mortgage right over the property that it owns at number 23 Calle Bejar in Madrid.

The loan from the majority shareholder, amounting to €2 million, will have to be repaid in December 2019 and the interest rate, in that case, amounts to 3%. The company is led by Jerry Mandel, a former executive of Merrill Lynch, but the majority shareholder is Gil Avraham Shwed, who controls 54.81% of the share capital.

Galil Capital owns a portfolio comprising six properties, all of which are residential use buildings located in Madrid and Barcelona. The valuation of the six assets amounts to €31.36 million.

The Socimi’s plans when it debuted on the MAB involved carrying out two acquisitions during the course of 2018. Nevertheless, the Socimi has not undertaken any operations during the first half of the year.

The company is looking for residential buildings in Barcelona and Madrid, above all small and medium-sized buildings (with between ten and fifty assets per building), although it does not rule out investing “at least 25% of its funds in commercial assets in Madrid and Barcelona as well as in properties outside of those two cities”.

Original story: Eje Prime

Translation: Carmel Drake

Grupo Ortiz Completes 5-Year Bond Issue Worth €50M

10 July 2018 – Eje Prime

Grupo Ortiz has finalised the placement of bonds worth €50 million with the aim of replacing a previous issue that is due to expire next year. Thanks to this operation, the company will reduce the cost of its debt and extend its maturity period.

The new bonds, subscribed by qualifying investors, are being launched over five years, in such a way that they will expire in 2023. The interest rate on the bonds is 5.25%. The new securities replace those issued for the same total amount in 2014, which are due to expire in 2019 and which generate a cost of the company of 7% per annum.

The new bonds, just like their predecessors, will be admitted for trading on the Alternative Fixed Income Market (MARF). Grupo Ortiz was the third company to launch debt securities on that market.

In 2017, Grupo Ortiz completed a portfolio of building work pending execution worth €6 billion, up by 45% compared to the previous year, boosted by the expansion of its international business, primarily in Latin America. More than two-thirds of the company’s business is generated overseas.

Original story: Eje Prime 

Translation: Carmel Drake

Santander & Blackstone Sign €7.3bn Loan for their Joint Venture

19 March 2018 – Expansión

Santander and Blackstone are moving forward with the creation of the joint venture that is going to hold the former real estate portfolio of Popular. The US firm controls 51% of the company’s share capital and also manages the assets, for which it has paid around €5 billion. Meanwhile, Santander retains 49% of the shares.

The joint venture is going to group together assets with a gross value of €30 billion. Within the framework of the agreement, the assets were appraised at €10 billion, the book value at which they are recorded on Popular’s balance sheet following the clean up applied by Santander.

The balance sheet of the joint venture, known as Project Quasar, is going to be backed by around €3 billion in capital to be contributed by the two partners and debt. In this sense, the company owned by Santander and Blackstone has just closed a syndicated loan agreement led by Morgan Stanley and Deutsche Bank amounting to €7.3 billion. Blackstone is also participating in the syndicate, through one of its companies, and will contribute €1 billion, equivalent to 14% of the total financing.

Conditions

The loan has been signed for a five-year term and is due to mature on 15 May 2023. The interest rate has been fixed at 1-month Euribor, with a floor of 0% and a spread of 3.15% for the first three years. From the fourth year onwards, the differential will increase to 3.25%. 1-month Euribor currently stands at -0.371%.

The loan has an initial commission of 0.8%. In turn, Santander and Blackstone must allocate 70% of their joint company’s net income to repaying the debt. According to financial sources, the price of the loan is in line with the conditions of the assets owned by Blackstone and Santander’s company. Although the joint venture’s portfolio comprises foreclosed assets and non-performing loans, the transfer of those assets to the new firm has been performed at around one-third of their nominal value; moreover, the assets have mortgage guarantees, which has allowed Santander and Blackstone to reduce the cost of its financing.

It is also worth noting the ranking that the loan has in the debt structure of the company. It is a senior liability, which means that it has collection preference over other claims. Ultimately, add the sources, it is the owners and not the banks who are going to be left with the asset risk (…).

Popular’s package of assets, included in the agreement with Blackstone is broken down as follows: €1.9 billion in properties; almost €3.2 billion in loans proceeding from real estate activity; and €4.3 billion in other types of assets linked to the property development sector, including deferred tax assets (…).

If the operation is not completely finalised by 31 March, the agreement for the joint venture may be terminated at the behest of either partner.

Original story: Expansión (by M. Martínez & I. Abril)

Translation: Carmel Drake

INE: Mortgage Lending Rose by 9.7% in 2017

28 February 2018 – RTVE

The signing of new mortgages for the purchase of homes grew by 9.7% in 2017 with respect to the previous year and reached 310,096 contracts, whereby closing its fourth consecutive year on the rise, after falling non-stop over the previous seven years, since the start of the crisis.

According to provisional data published on Wednesday by Spain’s National Institute of Statistics (INE), the value of all of the new mortgages constituted in 2017 amounted to €36.2 billion, up by 16.6% compared to the previous year, whilst the average amount loaned grew by 6.3% to reach €116,709.

In December alone, 20,681 new mortgage contracts were constituted to buy homes in Spain, a similar figure to the one recorded in the same month in 2016 but almost 17% lower than the figure recorded in November 2017, according to INE.

The average interest rate decreased by 13.5%

At the end of 2017, the average interest rate of mortgages constituted to purchase homes was 2.73%, down by 13.5% compared to December 2016, with an average term of 23 years.

62.5% of the residential mortgages constituted were variable rate products and 37.5% were fixed rate deals. The number of fixed-rate mortgages increased by 4.9% compared to the end of 2016.

The average interest rate at the beginning of a mortgage term is 2.54% for variable rate residential mortgages, down by 18.6% compared to a year earlier. Meanwhile, fixed-rate mortgages have an average rate of 3.13%, down by 3.5% compared to those signed a year earlier.

Greatest increases in Andalucía, Madrid and Cataluña

In terms of the distribution by autonomous region, the areas that recorded the highest number of residential mortgages constituted during 2017 were Andalucía (60,240), the Community of Madrid (56,644) and Cataluña (49.918). The regions where the most capital was lent for the constitution of mortgages were the Community of Madrid (€9.287 billion), Cataluña (€6.894 billion) and Andalucía (€5.898 billion).

The signing of mortgages to purchase homes increased in all autonomous regions last year. The greatest increases were recorded in La Rioja (up by 18.4%), the Community of Madrid (+16.6%) and Asturias (+12.4%). Meanwhile, Aragón (+0.5%), Navarra (+0.7%) and Extremadura (+2.0%) saw the lowest increases.

In addition to mortgages for buying homes, the number of mortgage loans constituted for buying estates in general also rose. In total, during the whole of last year, 429,082 mortgages were signed, up by 7% compared to 2016. The number of mortgages constituted to buy rural estates decreased by 1.6% to reach 16,485 contracts.

The total capital lent for those loans amounted to €60.7 billion, with an average mortgage ticket of €141,445 (up by 5.8%).

Original story: RTVE

Translation: Carmel Drake

Socimi Vitruvio Signs €19M Loan With Abanca

5 December 2017 – Eje Prime

The Socimi Vitruvio has paid off an outstanding debt with a new loan. The company has subscribed a financing contract amounting to €19 million with Abanca. According to explanations provided by the group, the funds will be used to repay the debt resulting from the merger by absorption of Consulnor.

The debt assumed following the merger with the real estate company Consulnor amounting to €12.7 million will be paid off thanks to this new loan. The Socimi will also proceed to cancel the line of credit granted by Banco Santander amounting to €4.6 million.

The new loan with Abanca has a two-year grace period (until 30 November 2019) and a monthly repayment schedule of 14 consecutive instalments. The interest rate that Vitruvio will pay will be fixed at 1% during the first year, before rising to 1% plus 1-year Euribor from November 2018 onwards. The loan is due to mature in December 2031.

At the end of 2016, Vitruvio and Consulnor Patrimonio Inmobiliario (CPI) signed a merger agreement whereby CPI, a real estate investment vehicle created by Consulnor (the manager in which Banca March holds a 48% stake), transferred its assets to the Socimi in exchange for shares.

After closing the operations involving CPI and Madrid Rio, Vitruvio plans to undertake new investments amounting to more than €30 million this year.

Original story: Eje Prime

Translation: Carmel Drake

Ballesol Extends The Term Of Its €70M Mortgage With Santander

5 December 2016 – Expansión

Ballesol, a subsidiary of Santalucía, has refinanced the mortgage loan, amounting to €70 million, that Santander granted to finance the purchase of several properties, mainly housing nursing homes.

Ballesol has renegotiated its credit terms with modifications to the repayment period and the interest rate, amongst others.

The new loan was formalised after last year’s financial statements were closed and it was revealed that Ballesol, which specialises in nursing homes for elderly residents, did not comply with the gearing ratio specified within the loan guarantee. As a result, Santander granted a special dispensation to the subsidiary of Santalucía regarding its compliance with this indicator and established a less demanding level so that Ballesol could comply.

Following the refinancing, the maturity period of the loan has been extended by four years until February 2026, with an outstanding amount of €42.5 million.

In its accounts, Ballesol includes several loans granted by Santander, amounting to €73.4 million in total. It also has contracted interest rate swaps with the bank with a (nominal) value of €46 million.

Ballesol received a loan from Popular for €2.5 million, due to mature in 2019, to launch Lisman Mex in Mexico, after it reached an agreement with the Mexican firm Liber.

Ballesol has other loans too: with Popular, amounting to €16.5 million; as well as €5 million loan from BBVA; and €1.15 million from Sabadell. Its total debt amounts to €98.42 million, of which €54 million is long term and €9.6 million is short term, according to its own figures at the end of last year.

Ballesol reported negative working capital of €25.4 million at the end of 2015, compared with a positive balance of €17.8 million in 2014. “These figures may be indicative of a certain degree of uncertainty regarding the continuity of its operations, although that is being mitigated by the support that it is continuing to receive from Santalucía”, which owns 70% of the entity.

Santalucía, which specialises in life assurance, has several fines outstanding with the Tax Authorities. The entity follows “criteria of good governance and prudence in terms of its management. Furthermore, in order to offer the maximum legal security to its clients, it always recognises provisions for the maximum amounts claimed by the Tax Authorities”.

The insurance company has recognised provisions amounting to €80.8 million to cover the claim, which it has charged against other reserves. According to the Tax Authorities, the amount, which is still pending settlement, has arisen due to differences in the criteria applied for the calculation of corporation tax between 2011 and 2013.

The Supreme Court has reduced another penalty from the Tax Authorities relating to several taxes between 2003 and 2005 from €19 million to €4 million (…). Santalucía expects the same thing to happen in this case. (…).

Last year, Santalucía reported premium volumes of €1,287 million and a profit of €64 million, down by 44% compared with the previous year.

Original story: Expansión (by Elisa del Pozo)

Translation: Carmel Drake

Moody’s Warns Of Higher Default Risk For Restructured Mortgages

11 November 2016 – Expansión

Yesterday, the ratings agency Moody’s issued a warning about mortgages that are being restructured, which represents an increasingly larger pool, thanks to the economic recovery and the proliferation of real estate management platforms. In the entity’s opinion, several variables may lead to an increase in the risk profile of these assets. Specifically, restructured mortgages are more risky when: the mortgage term is extended; grace periods are granted for the payment of interest or the repayment of the principal; interest charges are reduced; and other modifications are made.

This warning comes just a few weeks after Blackstone created the first securitisation fund in Europe containing restructured loans, amounting to €265 million. It created the fund using mortgages that it purchased from Catalunya Banc at the beginning of 2015. Nevertheless, it only included loans that borrowers have been repaying normally, without any help, for more than 37 months.

Analysts at Moody’s consider that foreign residents in Spain are twice as likely to default on their loans than Spaniards. “A defaulted payment by a foreigner on a Spanish loan does not have any impact on his credit history in his country of origin; and clearly, that reduces the incentive for him to seek solutions to repay his debt”, say the experts. In turn, the risk of default is 30% higher for borrowers who have restructured mortgages over secondary residences compared with those who have restructured mortgages over primary residences.

Moody’s has also conducted analysis by geographic region and in this sense, its results are clear: borrowers who have restructured mortgages for homes on the coast are almost twice as likely to default than borrowers with restructured mortgages in Madrid.

The default rate

Meanwhile, Axesor forecasts that the default rate for loans to families and companies will close the year at 8.96%, which would bring it below the 9% threshold for the first time since May 2012. The balance of doubtful debts amounted to €116,613 million in August, which represented a YoY decrease of 17.58%, and that figure is expected to continue to fall at a double-digit pace, which means that we could close the year with a doubtful debt balance of around €110,051 million.

Original story: Expansión (by D.B.)

Translation: Carmel Drake

INE: 23,607 New Mortgages Were Granted In April

30 June 2016 – El Economista

Residential mortgages recorded strong growth once again in April, providing further proof that the recovery is well underway in the real estate sector in Spain, where prices are rising once again in the major cities. Forecasts indicate that 300,000 mortgages will be granted in total this year, although it is hard to believe that those figures will ever return to the level seen during the period 2005-2007 of 100,000 mortgages per month

According to the National Institute of Statistics (INE), 23,607 residential mortgages were recorded in the property registers in Spain in April, up by 24.6% compared with the same month in 2015 and by 2.7% compared to March.

That made it the highest YoY growth rate since August 2008, well above the increase of 14.5% recorded in March. The average residential mortgage in April amounted to €108,354, up by 5.1% compared to a year earlier. (…).

The banks are playing their part

According to Beatriz Toribio, Head of Research at Fotocasa, “Banks are very interested in granting mortgages at the moment and that is boosting the market at a time when prices are stabilising, which is also encouraging transactions”. (…).

The portal Idealista agrees with this view of “normalisation” in the sector, which is being supported by low underlying interest rates in the Eurozone.

Nevertheless, they highlight that the seasonality caused by Easter may be distorting the April figures and that in any case, the mortgage business is continuing to narrow given that more mortgage repayments are being registered still than new loans being granted.

In summary, Fernando Encinar, Head of Research at Idealista, says that “if we continue at this rate of growth, it is very likely that we will close the year with around 300,000 mortgages granted, well above the figure of 245,000 recorded in 2015”.

Despite the improvement, the 23,607 new mortgages granted in April fall well short of the more than 100,000 mortgages that were granted per month, on average, during the period 2005-2007.

Higher growth in Barcelona and Madrid

(…). Nevertheless, the improvement is very uneven and, whilst in the large cities, in particular, in Madrid and Barcelona, prices bottomed out several months ago, in other areas (such as small towns, rural areas and the east coast), the recovery is not being seen yet.

On Wednesday, ST Sociedad de Tasación published a report showing YoY price increases of at least 4% in June in Madrid and Barcelona, the cities that reported the highest increases of all of the provincial capitals.

According to the study, the price increases in Madrid and Barcelona are due, at least in part, to the scarcity of new housing stock. The study concludes that “the increasing trend observed since June 2015 allows us to predict that Barcelona and Madrid are going to act as the drivers of the recovery process for new house prices, albeit at a slow pace”. (…)

Nevertheless, the ratings agency Moody’s warned that the recovery could be “limited by various uncertainties and risks”, including the abundant stock of homes that the banks still own and the uncertainties regarding the formation of a government in Spain following the second round of general elections on 26 June. (…).

Original story: El Economista

Translation: Carmel Drake

Bankinter Revives Fixed Rate Mortgage War

9 June 2016 – Expansión

A new battle has commenced in the war between the banks to grant fixed rate mortgages. One of the most active entities in the commercial supply of these products, Bankinter, is redoubling its efforts. Yesterday, the bank announced widespread cuts in interest rates on its 5-, 10-, 15- and 20-year mortgages. Bankinter, whose fixed rate mortgages were already amongst the most competitive in the market, has cut the interest rate on its ten-year home loans from 1.75% to 1.6%; on its fifteen-year home loans from 2% to 1.8%; and on its twenty-year home loans from 2.3% to 2.1%.

The zero interest rate environment in the Eurozone has led the banks to offer fixed rate mortgages, given that 12-month Euribor, which is the index to which most floating rate mortgages are linked, is trading at negative rates (-0.018%). In this context, it is more profitable for the banks to offer fixed rate mortgages, given the limited margin they are able obtain on their variable rate products.

The main advantage for customers is that they know the amount of interest they will have to pay on the day they take out the mortgage; that figure is fixed and will not vary for the duration of the mortgage term. In other words, clients are protected against possible interest rate rises, although they would not benefit from any further hypothetical decreases.

Bankinter’s fixed rate mortgage has an arrangement fee of 1%, with a minimum of €350. It also charges a penalty of 0.5% during the first five years of the life of the loan in the event of its total or partial repayment, and of 0.25% thereafter, as well as a commission of 0.75% to offset the interest rate risk, in the event that the early repayment generates a loss of capital for the entity.

If Bankinter’s fixed rate mortgages are taken out to purchase a primary residence, then the value of the loan may not exceed 80% of the purchase price or appraisal value (the lesser of the two amounts). If the product is requested for a secondary residence, then the limit is 60% of the lower of those two values.

In addition, in order to benefit from these interest rates, the bank requires its borrowers to receive their salary into their Bankinter account, as well as to take out life assurance and home insurance with the entity. The applicable interest rates are higher if these products are not contracted.

The reductions also apply to the fixed element of Bankinter’s 15- and 20-year mixed (fixed and floating) rate mortgages, which decrease to 2% and 2.3%, respectively.

Original story: Expansión (by A.R.)

Translation: Carmel Drake