EDTL Sells Hotel Innside Madrid Génova To Armando Álvarez Group

5 May 2017 – Real Estate Press

The Armando Álvarez group has acquired the iconic Hotel Innside Madrid Génova to form part of its Sardinero Hoteles hotel chain. JLL Hotels & Hospitality Group has advised the seller on the transaction.

This four-star hotel has 65 rooms, four of which are suites, as well as a breakfast area, a cocktail lounge, 2 meeting rooms, a gym and two magnificent terraces, all spread over a total surface area of 3,700 m2.

In its new phase, the Hotel Innside Madrid Génova will be operated by the buyer group itself, which has prior experience in hotel management. This is a strategic asset for the Armando Álvarez group, which sees the arrival of the Sardinero Hoteles brand to the Spanish capital, as well as due to the intrinsic real estate value of the building.

Inaugurated in 2013, following a refurbishment that involved the change of use of the property from residential to hotel, it offers a perfect balance between historical features and modern facilities. Moreover, it has an excellent location, next to one of the most exclusive areas of Madrid, in Plaza de Alonso Martínez, close to the main shopping areas (Calles Serrano/Fuencarral), businesses district (Plaza de Colón/Paseo de la Castellana) and cultural and leisure  offerings (Chueca/Malasaña/Alonso Martínez).

The price paid per room, which exceeds €400,000, sets a new precedent for four-star hotels in Madrid.

According to Luis Arsuaga, Director at JLL Hotels & Hospitality Group, “this operation is an example of the strong investment appeal that Madrid in terms of hotels. In 2016, investment volume in the hotel segment amounted to €2,155 million across the country, the second-best level in the last decade, of which almost 28% corresponded to properties in the Spanish capital. All indications are that the trend will continue this year and that the interest in Spain and in Madrid, in particular, still has a long way to go, and will continue increasing”.

Original story: Real Estate Press

Translation: Carmel Drake

Popular Stakes Its Future On The Segregation Of Its RE Arm

4 November 2016 – Expansión

Banco Popular is in the eye of the storm. The bank’s senior officials are facing the future by effectively placing a firewall between the entity’s normal banking activity and its real estate risk, however, the markets do not seem to be able to trust that they will succeed in finding their way out of the tunnel the entity entered when the real estate bubble was about to burst.

Following two major capital increases, amounting to €2,500 million each, and a third, smaller, capital injection of €450 million, as a result of which a Mexican investment group, led by the Del Valle family, became a shareholder of the group, the value of the bank (based on its share price) currently amounts to less than €4,000 million, making it the domestic financial entity that has seen its market capitalisation decreased by the most this year.

Popular has two lives: one afforded by its traditional business, which focuses on rendering financial services to individuals, self-employed people and SMEs, and where its efficiency and profitability ratios are high; and the other one, linked to the real estate sector, where the cumulative losses due to the impairment of its assets represent a real threat to the rest of its activity. (…).

Although the bank has received several offers to join a larger and more powerful financial group, the Board of Directors and the main shareholders who serve on the Board have categorically rejected them all, preferring instead to continue to lead the entity along its own path. “We do not want Popular’s intrinsic value to benefit others”, the entity has said time and time again, in order to justify its negativity towards a corporate operation in which it would fail to take over the reins. (…).

The two capital increases (the first one was carried out in December 2012 and the second one at the start of the summer) were accompanied by the appointment of Francisco Gómez (a man who has worked at the bank for his entire life) as the CEO (in the case of the first) and by his replacement by Pedro Larena, previously from Deutsche Bank and Banesto (in the case of the second). The aim was the same in both cases: to try to convince the market each time that the change in management was going to effectively deal with the recurrent problems, in other words, to eliminate the real estate risk.

Popular has tried to resolve its problems in the traditional way…by selling off its damaged assets at significant discounts, offset by growing provisions…but this has not proved sufficient, not least because the entry of damaged assets onto the balance sheet has been higher than the volume it has managed to sell through individual sales. (…).

Now, Popular is pursuing a strategy to segregate a substantial part of the real estate risk that it holds on its balance sheet (€6,000 million in book value), by placing it into a company that it will also endow with sufficient capital (around 20% of its liabilities). This capital will distributed free of charge amongst Popular’s existing shareholders in a way that will completely dissociate the entity from the transfer/sale. (…).

However, even once Popular has managed to eliminate a significant part of its real estate risk, the bank’s problems will not be over. That is reflected in the ERE that it is currently negotiating with the trade unions (which should be finalised by Sunday 6 November at the latest), which proposes the closure of 300 branches and a reduction in personnel of around 1,600 people through early retirement and voluntary redundancy packages. (…).

Original story: Expansión (by Salvador Arancibia)

Translation: Carmel Drake