Spain’s Four Largest Socimis Already Control €30 Billion of Real Estate

8 August 2018

The largest of these real estate companies multiplied their assets fourfold since their first major acquisitions in 2015. Axiare left the continuous market and Hispania will soon follow as the sector undergoes a period of concentration.

The success of the socimi regulatory regime since its launch in 2013 is reflected in the gigantic portfolio of assets that these real estate companies have amassed in the last few years. The four largest listed companies have already accumulated portfolios of properties worth nearly 30 billion euros in three or four years of operation, according to the companies’ financial reports for the first quarter of 2018.

The development of a regulatory regime for these listed real estate investment companies was helmed by the then Minister of Finance Cristóbal Montoro, as these companies were exempted from paying corporate taxes in exchange for obligations such as having to distribute at least 80% of their dividends (which is taxed) and a listing on the stock exchange, guaranteeing transparency, among other requirements. The regulatory regime followed the example of REITs (Real Estate Investment Trust), which have a long history in the US and Europe.

These companies are focused on the property business, and they lease their properties, which are principally offices, shopping centres and commercial premises, hotels, rental homes and logistics warehouses.

The launch of the regulatory regime coincided with the recovery in international confidence in Spain (after the sovereign debt crisis and doubts about its financial system) as some foreign firms (mainly investment funds and later institutional capital such as insurers) that returned to the market, betting on a recovery in the reactivation of the Spanish real estate market. Moreover, socimis have been one of the principal channels for investing these international flows of capital in this type of asset.

At Least €15 Billion More on the MAB

Spain’s Alternative Stock Market. The MAB found a way to grow through the socimis. 59 of these real estate companies have already listed on the market, often as purely tax vehicles, with no major movements in their limited free float and which also do not carry out large purchases. Among them, three big ones stand out: GMP (owned by the Montoro Alemán family and Singapore’s sovereign wealth fund, GIC), Uro Property (with Santander’s banking offices) and General de Galerias Comerciales (owned by the executive Tomás Olivo). At the end of last year, there were 44 of these companies in the MAB, with a value of 12.221 billion euros (+60% y-o-y), according to data from Armabex, a registered advisor.

Testa Residencial. Among the 15 socimis that joined the MAB in the last months, Testa, which is owned by Santander, BBVA, Acciona and Merlin, stands out. Testa debuted at the end of July with €2.275 billion in rental housing. Along with other companies that launched on the market this year, there are now 59 firms with at least €15 billion in property. Initially, Testa had planned to debut on the continuous market, but market doubts in June led the company to opt for its plan B. The company still plans on a move to the continuous market in the future.

Records for investments in this type of property were broken in 2015, 2016 and 2017. In the past year, 13.99 billion euros were allocated to acquisitions, according to the real estate consultancy JLL, with international funds and socimis as the main players.

The growth of these companies over the last three years has been spectacular. In the first semester of this year, when the socimis published updated property valuations, the big four had €27.336 million in their portfolios (up 3% compared to the end of 2017). The four include Merlin Properties, Colonial, Hispania and Lar España. Taking the first quarter of 2015 as a baseline, when the largest of these companies were already active and began to make their large purchases, these same companies had a total of €6.691 billion. That is a fourfold increase in three years.

If one takes into account that Colonial had not yet become socimi that year (the developer changed status in 2017), the jump is even greater since, at the time, Axiare (absorbed a few months ago by the Catalan company) is one of the top four, with only €465 million in its portfolio. At that point, Merlin, Hispania, Axiare and Lar España had total assets of €4.2 billion, 6.5 times less than at the present date.

The success of these companies has led them to be targets of large corporate operations in the sector in recent months, in a period of concentration that experts believe will continue for the time being.

The largest then, as now, is Merlin (listed on the Ibex-35), which has Ismael Clemente as its CEO. The socimi already owns properties worth €11.755 billion, mainly offices and shopping centres and commercial premises, although with increasing investments in the thriving logistics warehouse sector. The company was launched after convincing investors, mainly Americans, to acquire the so-called Árbol (Tree) portfolio and its 800 BBVA banking branches.

The socimi debuted on the stock exchange in 2014 and grew rapidly with the acquisition of Testa from Sacyr in 2015 (€1.8 billion cost) and the integration of Metrovacesa’s tertiary assets (buildings valued at €1.67 billion) in 2016. At this point, Santander became its largest shareholder, with 22.6% of the capital. The rest is highly diluted, with large international funds as the most common investors. Its flagship buildings include the Torre Agbar, where Facebook will open an office (through the CCC outsourcing company) to monitor and control harmful content on the social network.

Merlin is closely followed by Colonial (Ibex 35), which has assets valued at €11.19 billion, compared to €2.185 billion in 2015. The historic real estate company began operations in Barcelona in 1946 and decided to become a socimi last year for the tax benefits. It has made major strides through its investments, including its recent takeover of Axiare, for which it paid €1.7 billion, giving Madrid a greater weight in its portfolio. The portfolio, mainly offices (91%), includes properties controlled by its French subsidiary SFL, with buildings in Paris (33% of the total value). The core of Colonial’s shareholders includes the Mexican investor Carlos Fernández González (18.3% of the capital), the Qatar Investment Authority (10.6%), the Colombian group Santo Domingo (7.3%) and the perfume family Puig (5.1%).

The other major socimi that has been the protagonist of a recent corporate deal is Hispania, listed since 2014, which was recently taken over by the giant American fund Blackstone. In fact, Blackstone has controlled 90.5% of the socimi since the end of July and is expected to abandon the socimi tax regime in the coming weeks. The company has €2.185 billion in real estate, 66% of which corresponds to hotels. The US fund plans to use Hispania’s assets to create a large hotel platform after having also acquired the HI Partners from Sabadell for €630 million.

After the acquisitions of Hispania and Axiare, the only large company that will remain on the continuous market is Lar España, which is managed externally by Grupo Lar, with the Pimco fund as its main shareholder (19.6%). It was the first socimi to make the jump to the stock market and has assets of €1.58 billion, of which 82% are shopping centres, following its strategy of focusing on the retail sector. With that in mind, the company announced the sale of its logistics park to Blackstone for €120 million at the end of July.

Original Story: Cinco Días / El País – Alfonso Simón Ruiz

Translation: Richard Turner

Healthcare Activos Acquires 3 Nursing Homes for €40M

7 February 2018 – Eje Prime

The assets in question are located in Gijón, Burgos and Valladolid. For this operation, the group has teamed up with La Saleta Care, which will manage the nursing homes for the next 25 years.

Healthcare Activos is continuing to expand its portfolio of investments in Spain. The fund’s latest operation has involved the purchase of three nursing homes for the elderly in Gijón, Burgos and Valladolid, for which it has paid €40 million. With this disbursement, the fund has now invested €102 million since it started operating in 2016.

To date, Healthcare’s new assets were owned by Baugestión, a group that has now been integrated into La Saleta Care. To seal the operation, the company has teamed up with that Valencian group, which has signed a contract to be the tenant of the three nursing homes for the next 25 years.

This portfolio of alternative assets spans a surface area of 22,000 m2 and operates in a market that has recorded a significant increase over the last year. Nevertheless, these kinds of residential properties, be they for the elderly or for university students, are attracting a great deal of interest, primarily from international funds.

Under the leadership of Jorge Guarner, its founder and CEO, and Oaktree, Healthcare Activos now owns a portfolio that has reached a dozen assets in just two years. Headquartered in Barcelona, the fund started to acquire properties in 2016 with three centres in Amma, for which it paid €25 million. A few months later, it added two assets in Logroño and one in Barcelona, for which it paid €16 million.

Healthcare Activos’ plans for 2018 include investing €150 million during the course of the year to reach a size of €450 million over the next few years. All of this, without leaving the domestic market, for the time being.

Original story: Eje Prime 

Translation: Carmel Drake

Deloitte: Inv’t In Retail Sector Will Reach €3.046bn in 2017

23 November 2017 – Expansión

Shopping centres have reached their cruising speed. After breaking all records last year, with a transaction volume of €3.769 billion, investment in the sector is maintaining its strong dynamism and could reach €3.046 billion by year-end. That would represent the second highest annual figure for a decade, according to research by Deloitte for The Shopping Centre Handbook.

So far this year, investment in shopping centres has amounted to €2.296 billion, which represents 30% of the total volume invested in the non-residential real estate market in Spain. Moreover, the remaining weeks of the year are expected to be particularly busy, which should allow the figure to exceed the €3 billion threshold in 2017.

Historical operations, such as the purchase of Xanadú (Arroyomolinos, Madrid) by the British fund Intu Properties for €520 million and the subsequent sale of 50% of that asset to TH Real Estate for €264 million; and the acquisition by Klépierre of Nueva Condomina, in Murcia, for €230 million, have catapulted investment this year despite the fact that, if the outstanding operations in the pipeline materialise, the total volume will be 19% lower than in 2016.

Record operation

Compared with other countries in Europe, Spain is consolidating its position as the third largest market in terms of investment, accounting for 16% of total volume. In this sense, the purchase of Xanadú leads the ranking of the largest operations transacted in Europe this year. Nueva Condomina also features in the list of top 5 deals, together with the purchase of Rathaus Galerie Leverkusen, (Germany) and Le Befane Shopping Centre (Italy), both of which were acquired by Union Investment, for €220 million and €244 million, respectively.

“Investors in shopping centres in Spain believe that the strong macroeconomic outlook will continue to boost household consumption and with that, the valuation of retail assets”, said the Partner in Financial Advisory at Deloitte, Javier García-Mateo.

In terms of the investor profile, García-Mateo explains that this year, “the stage has been shared by Spanish Socimis, which have seen their stake of total investment fall to 16%, to the benefit of international funds, which are looking to build large multi-country platforms”.

The Director of Financial Advisory at Deloitte, Ana Granado, also points out that this year, financing for shopping centres amounting to between €1.2 billion and €1.5 billion has been closed. “The traditional banks are being joined by a select group of alternative providers of capital, which are willing to finance the development of land and projects in the transformation and renovation phase”, she said.

Regarding the supply, currently, the average commercial density of shopping centres in Spain amounts to 285 m2 for every 1,000 inhabitants. By province, Zaragoza (with 638 m2 for every 1,000 inhabitants) and Las Palmas (with 641 m2 for every 1,000 inhabitants) are the Spanish provinces with the highest commercial density. At the other end of the spectrum are Lérida, with 40 m2 for every 1,000 inhabitants and Gerona, with 65 m2 for every 1,000 inhabitants.

Renovation

In terms of the commercial park, José María Espejo, Senior Manager at Deloitte Financial Advisory, indicates that 45% of the current supply of shopping centres is showing signs of significant technical obsolescence. “Any renovation processes will have to go hand in hand with some major capex investment”, he said.

According to Deloitte’s calculations, the amount of investment required to reposition the obsolete assets amounts to around €1.08 billion.

By way of example of some of the shopping centres that have been repositioned in recent years, La Moraleja Green, in Madrid stands out, with an investment of €10 million. That shopping centre, located in Alcobendas and inaugurated in 1995 is owned by Kennedy Wilson, which bought it from ING Real Estate in December 2015 for €71 million. Meanwhile, Unibail Rodamco, has invested €148 million in the repositioning of the Glòries shopping centre in Barcelona and Intu has spent €12 million on improvements at its shopping centre in Asturias.

Omni-channels

In terms of challenges for the future, commercial spaces are going to have to adapt to cater for the new habits of consumers and to make e-commerce an ally.

According to the report, shopping centres are at very preliminary levels of evolution and only the most advanced have online shopping platforms, mobile applications and loyalty programs for their clients.

Specifically, the level of omnichannel use of shopping centres in Spain amounts to 33%. By category, retail outlets achieve the highest degree of omnichannel use, whilst shopping centres bring up the rear in terms of their degree of digitalisation.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

International Funds Reactivate RE Sector By Building Thousands Of Homes

2 October 2017 – Expansión

After years of drought, the residential real estate market is starting to show signs of recovery, with a significant increase both in investment in land as well as in the construction of new developments. In this new phase, international investment funds have become a major player, with more than €1,000 million invested in the Spanish residential sector and thousands of homes under construction. “Interest from these types of funds in the residential property development market is the result of the recovery that the segment is experiencing, as a consequence of a clear improvement in the underlying macroeconomic indicators”, says Borja Ortega, Director of Capital Markets at JLL.

For its investments in Spain, large international funds such as Värde, Castlelake, Lone Star and Morgan Stanley have opted for alliances with local operators (…). “This formula (…) is very beneficial for the market as it combines access to capital and international sources of financing with knowledge and experience of the local real estate development sector”, says Ortega.

“In most cases, the international fund provides the bulk of the capital, whilst the local partner participates in each project with a smaller percentage investment, but bringing to the table its expertise in terms of the acquisition of land and the construction of developments”, highlights Samuel Población, National Director of Residential and Land at CBRE España.

Lone Star stands out amongst the major investors. The fund, led in Spain by Juan Pepa, has invested more than €1,000 million in launching Neinor Homes, the first property developer to debut on the stock market in almost a decade. Another key player, Castlelake, is willing to spend a similar figure on the creation of another real estate giant, in this case, Aedas, which will also make its debut on the stock market soon.

Alongside them, Värde, which channels its investments in the residential sector through two companies: Vía Célere and Aelca. These three funds lead the national ranking, with 11,189 homes under construction and almost 5 million m2 of land.

Property developments

The giants Lone Star, Morgan Stanley, Castlelake and Värde are not the only players to be investing in housing in Spain. The German fund ASG is another one of the most active investors. Through its Spanish subsidiary, ASG Iberia, it is currently working on the construction of 2,000 homes, across six sites, including in San Juan (Alicante), Alcalá de Henares (Madrid) and Málaga (…).

Other active players include Stoneweg; Harbert Management Corporation (HMC), which has teamed up with the Spanish management company Momentum; the German institutional fund Patrizia; and Pimco, which joined forces with the Socimi Lar España (…).

Other partnerships are purely financial. Such is the case of the agreement between Avenue Capital and Quabit, where the fund has granted two lines of credit, amounting to €100 million in total, to the property developer to buy land.

Pressure

According to CBRE, investment in residential assets exceeded €600 million between January and September. And, according to the experts, that figure is going to continue growing. “We will continue seeing interest from international funds, given that the outlook for growth in the sector is strong for the next three to four years. The funds already present will continue with their activity and it is probable that others (not yet present) will also join in, given that the investment pressure is high”, says Población.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Apollo, Bain & Oaktree Compete To Acquire Habitat

25 September 2017 – El Confidencial

A new large real estate operation is on the horizon. The process to sell Habitat Inmobiliaria has entered the home stretch, after the Catalan company selected a shortlist of three candidates to submit their bids.

The three finalists are the international funds Apollo, Bain and Oaktree, whose binding offers are expected to be received by the beginning of October, according to several sources familiar with the operation. The bids are expected to amount to between €200 million – €250 million and the intention is to announce the winner before the end of the year.

Habitat is the heir of the former Ferrovial Inmobiliaria, the subsidiary that the Del Pino family’s group sold to the Catalan property developer, controlled at the time by Bruno Figueras, for €2,200 million at the end of 2006. That deal was signed just before the outbreak of the crisis and it converted the Catalan company into the fifth largest property developer in the country. Nevertheless, that glory was short-lived.

Just two years after that Pharaonic purchase, Habitat filed for the fourth largest creditor bankruptcy in history, by declaring itself in ‘suspension of payments’ with debt amounting to €2,800 million, exceeded only by Abengoa, Martinsa-Fadesa and Reyal-Urbis.

From there, it began a titanic fight to survive, which included a preliminary agreement in the spring of 2010, which saw it emerge from bankruptcy and then, a modification to that agreement, five years later, which gave control of the company to its creditor funds.

In 2015, firms such as Capstone, Goldman Sachs, Bank of America, Värde and Marathon acquired 70% of the company’s capital, by converting the bulk of its debt into shares, and they ordered a return to house construction, to take advantage of the recovery in the sector.

Moreover, those firms continued as the group’s main financiers, with a participation loan of €70 million and another senior loan of €80 million, they took over the management, and they gradually sidelined Bruno Figueras; he currently holds the role of Vice-President.

At the time, the company analysed the option of organising a sales process, but that never ended up happening. The same idea was revived during the first half of this year when Habitat engaged Irea to organise a sale, merger or the entry of a new shareholder into the company.

After almost 11 years (since the purchase of Ferrovial Inmobiliaria), the Catalan property developer is barely a shadow of its former self, but it still holds a juicy portfolio of buildable land – currently, the most sought-after asset by international funds – concentrated in Madrid, Cataluña, Andalucía and Valencia, plus the company also has a presence in Aragón, Portugal and Hungary.

The three finalists in the bid for Habitat have competed in the past for some of the most important real estate operations of recent times, such as the purchase of Vía Célere by Värde, which Bain analysed, and the acquisition of the €30,000 million in real estate assets from Santander-Popular by Blackstone, which Apollo bid for.

Whoever ends up taking control of Habitat will have the perfect platform to create its own group and to start to compete with other investment giants who have already trodden this path, such as Lone Star, the owner of Neinor Homes; Castlelake, owner of Aedas; and Värde, the primary shareholder of Vía Célere and Aelca.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

JLL: RE Inv’t Amounted To €8,757M In 2016

13 January 2017 – Expansión

Between January and December, investors spent €8,757 million buying tertiary assets, according to data from the real estate consultancy JLL. This figure is the second highest in the last decade, and is €650 million below the volume of sales and purchases recorded in 2015. That was the year when the invasion of international funds into Spain and the consolidation of the Socimis took the real estate market to figures never seen before, with a volume of investment upwards of €9,400 million.

But, unlike the previous year, 2016 saw the rise of commercial assets (primarily, shopping centres and high street premises) to lead the ranking in terms of real estate investment by segment, accounting for almost €3,000 million (€2,977 million, according to JLL) compared to €2,806 million spent on offices.

Two operations, the purchase of Torre Foster by Amancio Ortega, for €490 million and Merlin’s acquisition of Parque Adequa for €380 million, boosted the investment figure in the office segment, which, although hasn’t completely lost its appeal for buyers, has been relegated to second place due to a shortage of available prime space. (…).

Funds are selling off assets

The opposite is happening in the case of large commercial establishments. International funds’ interest in selling the properties that they bought during the crisis led to a boom in major operations last year, including the sale of the Diagonal Mar shopping centre by Northwood, which was acquired by one of Deutsche Bank’s real estate funds for €493 million; and the sale of Gran Vía de Vigo, for which the Socimi Lar España paid the fund Oaktree €145 million. (…).

In the case of hotels, despite significant one-off sales, such as the operation involving Hotel Villamagna, which was acquired by the Turkish group Dogus for €180 million, overall the investment volume fell from €2,739 million in 2015 to €2,155 million last year. Even so, the figure for 2016 exceeds the investment volume recorded in 2006, which previously held the record, when hotel sales amounted to €1,600 million (out of a total non-residential investment volume of €8,482 million).

Although commercial properties led the ranking as the preferred asset for investors, logistics assets also performed very well. Between January and December, €819 million was invested in logistics warehouses, platforms and centres, according to JLL. This figure practically doubles the purchases completed in 2015, when investors disbursed €434 million on these types of properties, according to the consultancy.

The key behind this success is due to the fact that logistics assets still offer high returns, compared with other properties, such as offices and shopping centres, which have lost some of their investment appeal, due to the high degree of interest in these assets in Spain.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Merlin Buys Torre Agbar In Barcelona For €142M

13 January 2017 – Cinco Días

The company General Aguas de Barcelona has sold Torre Agbar to Merlin Properties for €142 million. As such, the project announced by Emin Capital in 2013 to convert the property into a luxury hotel has been abandoned, given the difficulties involved. In theory, the plan was for a hotel to be opened there and managed by Hyatt, but the hotel moratorium imposed by the mayoress Ada Colau made that project impossible, according to sources at the fund.

In the end, Merlin pipped the Andorran investor group Emin at the post and purchased the iconic skyscraper, which will be used for office space. As such, the Socimi will not need to request any change in its designated use. Meanwhile, yesterday, Emin asked the Town Hall of Barcelona to cancel the request it had filed to change the designated use of the building to allow it to open a hotel.

Located at number 211 on Avenida Diagonal, the building designed by Jean Nouvel has become a symbol of the city and marks the entrance to Barcelona’s technological district, 22@. The pace of activity in the office market in the district has caused the number of operations to double in the last two years, establishing it as the city’s business hub.

At 142 m, Torre Agbar is the third tallest building in the city and has a gross leasable area of 37,614m2, spread over 34 floors and an auditorium with capacity for more than 350 people. In addition, it has 300 parking spaces on four underground floors and until July 2015, it housed the headquarters of Aguas de Barcelona.

Merlin – listed on the Ibex 35 – is the largest Socimi in Spain. It has a portfolio of assets worth €9,600 million, following its acquisition of Testa from Sacyr and the integration of Metrovacesa’s portfolio of commercial properties. Its main shareholders include Santander and BBVA, as well as international funds.

The company, led by Ismael Clemente, sold 19 hotels to Foncière des Regions for €535 million at the end of December, given that that type of property does not form part of its strategy. It has announced that it will allocate the resources raised to reducing its debt and to possible acquisitions. It also revealed that it wants to grow its presence in Barcelona, which accounts for just 13% of the value of its portfolio. On this occasion, it has been advised by Savills. (…).

Original story: Cinco Días (by Alfonso Simón Ruiz and Laura Salces)

Translation: Carmel Drake

C&W: RE Inv’t Amounts To €5,500M During YTD Sept 16

30 November 2016 – Expansión

Change in the trend / Investment fell by 25% during the first nine months of the year, excluding Merlin’s purchase of Metrovacesa’s assets.

During the first nine months of 2016, real estate investment in Spain (excluding the purchase of residential and corporate assets) amounted to €5,500 million, down by 25% compared to the same period last year, but in line with the first three quarters of 2014.

If we include Merlin’s integration of Metrovacesa’s assets, this figure increases by €1,000 million, explain sources at the consultancy firm Cushman & Wakefield (C&W) in their latest report.

By type of buyer, international funds lead the investor ranking, accounting for 57% of all investment, however, Spanish firms, led by the Socimis and in some cases privately owned firms such as Pontegadea, are starting to bring domestic capital into line with overseas capital as we head into the final month of the year. In 2015, domestic buyers accounted for 57% of all operations.

The decrease in investment volumes in 2016 is explained by a reduction in purchases during the first six months of the year, given that, during the third quarter, several large operations have been signed, including the acquisition of the Diagonal Mar shopping centre in Barcelona, by Deutsche Bank’s real estate fund, which paid €495 million for the property; and Torre Foster, which was acquired by Amancio Ortega’s real estate company (Pontegadea) for €490 million.

Excluding these operations, the average volume per acquisition has decreased this year, from €55 million to €40 million, say sources at Cushman & Wakefield (C&W). The average over the last decade stands at €50 million.

Shopping centres

By type of asset, the large shopping establishments (centres, retail parks and flagship stores) have been the stars of the investment market so far in 2016, accounting for 44% of the total, according to the report. In this way, in addition to Diagonal Mar, the following establishments have changed hands: the ABC Serrano in Madrid and the Gran Vía in Vigo. “Investment in retail in Spain is much more oriented towards foreign capital, above all, in the case of shopping centres”, say sources at the consultancy firm.

Meanwhile, offices have accounted for 25% of the total investment volume, compared with 30% on average over the last ten years.

Purchases of logistics assets are recovering well, thanks to the high returns that they now offer compared to other types of properties, whose returns have started to decrease due to high demand. One of the most important operations of the year saw the fund CBRE Global Investors purchase 16 logistics centres from Metrovacesa.

By location, Madrid maintained its position as the leading destination for real estate investment in Spain, accounting for 30% of the total.

After a strong third quarter, the forecast for the end of the year is positive, but lower than the figure recorded in 2015. “We estimate a total spend of around €8,000 million for the full year (excluding Metrovacesa’s office portfolio, worth €1,000 million), compared with €8,600 million last year”, say C&W.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

The New RE Kings: Professional & Discreet

7 November 2016 – El País

The property sector still suffers from its soiled reputation as the cause of the bubble that led to the ruin of so many real estate companies, savings banks and families, ultimately bringing down the Spanish economy. But in a very discrete way, the sector is recovering its strength and real estate companies are becoming involved in major corporate operations once again, from purchases to mergers to stock exchange IPOs. The large corporations have also turned their business models on their heads. Whilst previously they undertook all kinds of activity (from property development to rental), we are now seeing specialist companies, many of whom are controlled by overseas investment funds.

The kings of property have also lost the glamour that those self-made businessman, such as Enrique Bañuelos (Astroc), Luis Portillo (Colonial) and Fernando Martín (Martinsa) enjoyed as their fortunes shined on the Forbes rich list (…). Nowadays, the new real estate companies do not have a visible face but rather are professional undertakings, and in many cases the managers are anonymous. The Socimis have taken up their place alongside the private equity funds and the large international investors such as the US businessman George Soros; Wang Jianlin, the richest man in China; and the Mexican magnate Carlos Slim.

Real estate stalwarts, such as Martinsa-Fadesa, Metrovacesa and Astroc, whose names used to feature on property developments, were left for dust, devoured by the black whole of gigantic debt. Their place has been occupied by the Socimis Merlin, Hispania, Lar and Axiare, whose names are barely known by the majority of the general public; by property developers such as Vía Célere and Neinor Homes, some of which have been created by overseas capital either investing directly in their capital or through partnerships for specific projects; and even by the former real estate arms of the banks, most of which are now owned by international funds.

One of the few exceptions to the empires from the last decade that has managed to survive is Colonial, which has cleaned up and transformed into a company that specialises in rental properties, and which is back with new investment plans. Last month, the company chaired by Juan José Brugera acquired 15.1% of the Socimi Axiare for €135 million. “Most of the companies that are left are a selection of the most professional enterprises”, said the Professor of Applied Economics at the Pompeu Fabra University, José García Montalvo. (…).

“The new managers of the real estate companies are more professional”, argues García Montalvo. In addition, the companies are more specialised and some even focus only on specific segments. One example is Lar España, a Socimi that specialises in shopping centre management (although it does also own a few office buildings), which has launched a €240 million investment plan for next year, supported by the major funds that comprise its shareholders, such as Franklin Templeton, Blackrock and Pimco.

Another example is Hispania, in which the US multimillionaires and fund managers George Soros and John Paulson hold stakes. It has also grown rapidly since it debuted on the stock market in 2014 and now manages assets amounting to almost €1,500 million. Its strategy is clear: to grow in size. Although it failed in its purchase of Realia, the company led by Concha Osácar and Fernando Gumuzio has absorbed the hotel Socimi Bay and all of the experts in the sector have tipped it to play an important role in upcoming operations. (…).

Original story: El País (by Ramón Muñoz and Lluís Pellicer)

Translation: Carmel Drake

CBRE: Real Estate Investment Down By 24% In H1 2016

5 July 2016 – Expansión

The real estate sector is still a preferred investment destination, after a record and unusually active 2015, but investors are now putting the brakes on, which has caused investment volumes to decrease during the first half of 2016.

Between January and June 2016, real estate investment amounted to €3,921 million, 24% less than during the same period in 2015 when, excluding the purchase of Testa, investment stood at €5,200 million. This difference is even more marked if we include Merlin’s purchase of Testa, in which case, investment during the first six months of last year soar to €8,400 million, according to data from the real estate consultancy CBRE.

The decrease in investment reflects a reduction in the supply of real estate properties, the uncertainty at the political and economic level and a normalisation of the quality-price relationship of assets. Despite everything, the level of investment to June was 40% higher than the average recorded over the last ten years.

By sector, the most affected has been the office segment, with a reduction in terms of investment of 48%, to €871 million. Meanwhile, investment in retail and hotel assets fell by 30% and 48%, to €1,341 million and €543 million, respectively. Meanwhile, investment in logistics assets doubled to reach €462 million; that segment now accounts for 12% of total investment.

In terms of type of investor, the Socimis, which accounted for 42% of all real estate investments made last year, have lowered their profiles to participate in just 10% of real estate transactions during H1 2016. By contrast, international funds now account for 68% of total investment. In terms of the geographical origin of the overseas capital, the USA leads the way, with 39% of total investment, followed by Australia (8%) and the UK (6%).

The most important operations during the first six months of the year included: Blackstone’s purchase of 4,500 rental homes for €540 million; Invesco’s acquisition of a portfolio of Gonuri hypermarkets for €358 million; and the purchase of the car park manager Parkia by the Australian fund First State for €300 million. In the office sector, the largest deal was GreenOak’s purchase of the Las Mercedes business park in Madrid for €128.5 million.

Optimistic outlook

Looking ahead towards H2 2016, the President of CBRE España, Adolfo Ramírez-Escuero, acknowledges that the forecasts made at the beginning of the year, that investment would amount to between €8,500 million and €9,000 million in 2016, seem “somewhat optimistic” six months on.

Ramírez-Escudero explained that the result of the UK’s referendum has taken the European real estate sector by surprise. “It is likely that investors will wait until the rules that are going to frame the relationship between the UK and the EU have been defined more clearly, as well as to find out how they will influence the economy on both sides”, said the President of CBRE España regarding Brexit.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake