Moraleja Green Gets a Makeover with 19 New Stores

7 March 2019 – Expansión

Moraleja Green, the shopping centre located in Alcobendas, in north  Madrid, saw its visitor numbers increase by 12% in Q4 2018, following the completion of a €12 million renovation project by its owner Kennedy Wilson. The US fund purchased the shopping centre, which has a surface area of 30,200 m2 and 1,300 parking spaces, from ING in 2015. Following its renovation, the medium-high end retail space opened 14 new stores last year and will welcome five more in 2019, with brands such as Mango, Dolores Promesas, Scalpers Women, Poete and Parfois all opening premises.

Shopping centres in Spain are enjoying something of a renaissance, despite the surge in online shopping. They offer consumers a plethora of in-person entertainment options besides retail, including gastronomic, leisure and sports facilities.

In particular, Moraleja Green’s renovation has allowed it to expand its gastronomic offering to include Tierra Burrito, Pizza Jardin and NYB restaurants, amongst others. The shopping centre also offers charging points for electric vehicles and access to wifi throughout its premises.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Santander Awards the Management of Popular’s €5bn Portfolio to Blackstone

12 November 2018 – Expansión

Santander and Blackstone have reached an agreement whereby the US fund, through the real estate servicer Aliseda, has taken on the management of a portfolio of assets from Popular amounting to €5 billion, which Santander is retaining on its balance sheet. The portfolio includes real estate assets and loans linked to the retail segment and Santander is retaining ownership of 100% of the assets. They were left out of the transfer of Popular’s assets to Quasar, the joint venture that the bank and Blackstone launched last year.

Santander transferred the bulk of Popular’s damaged portfolio to Quasar (€30 billion gross, linked primarily to property developers), along with 100% of the share capital of Aliseda. Blackstone controls the management of Quasar and 51% of the shares and Santander the remaining 49%. The bank has this stake valued at €1.7 billion on its balance sheet.

“The assets under management have been classified into two different groups, to reflect their owner: the Santander Group portfolio, owned by Popular (and now absorbed by Santander) and the Popular portfolio, owned by Project Quasar 2017”, according to the annual accounts of Aliseda. Specific teams have been configured within the servicer to manage Santander’s assets.

As at June, the latest available disaggregated figures, the entity chaired by Ana Botín still had a portfolio of foreclosed assets amounting to €10.5 billion gross. They have been cleaned with €5.2 billion in provisions (48.9%), which brings their net value to €5.4 billion. Nevertheless, in September, it sold a portfolio of properties worth €1.5 billion to Cerberus. In addition, Santander has loans to property developers amounting to €5.7 billion. Of the total, €1.8 billion are doubtful balances, with a default rate of 32%.

Santander currently has agreements with three servicers (Altamira, Aliseda and Casaktua). It paid those three companies almost €460 million in management commissions last year.

Meanwhile, Aliseda, which is now controlled by Blackstone and Santander, has rescinded the syndicated loan that it signed in 2015. At the time, the funds Värde Partners and Kennedy Wilson owned 51% of the real estate manager’s share capital and Popular owned the remaining 49%.

Following the acquisition of Popular by Santander, the entity chaired by Ana Botón repurchased the 51% stake held by Värde Partners and Kennedy Wilson, as a step prior to the transfer of 100% of Aliseda to Quasar.

“According to the syndicated financing contract subscribed on 27 November 2015, the cancellation of the loan has been formalised, following the repayment of the principal and outstanding interest, and of the cancellation penalty for the overall amount of €266.03 million”, said Aliseda’s report.

The bank with the greatest share of the loan was Popular itself (33.33%), with an outstanding balance of €87.86 million at the end of 2017. Bankia, Santander, Sabadell and Bankinter, with shares of 10%, had outstanding balances of around €25 million each. ING (€24.3 million), Crédit Agricole (€23.3 million) and BBVA (€17.5 million) completed the group of banks in the syndicate.

The interest rate on the loan, conditioned on the debt ratio and the gross result of the company, was six-month Euribor plus a spread of between 2.75% and 3.50%.

Following the change of ownership of Aliseda and its senior management team, the servicer paid compensation for redundancies of €1.4 million last year. It also paid €5.64 million for a remuneration plan that granted certain executives the right to receive remuneration in the event of a change of control of the company.

Original story: Expansión (by M. Martínez)

Translation: Carmel Drake

Apollo Engages Goldmans to Sell Altamira for c. €600M

8 October 2018 – Eje Prime

Apollo is getting down to work to divest Altamira and, to this end, has engaged Goldman Sachs to execute the mandate. The US fund renewed its contract with the investment bank and has now distributed the sales document for the servicer to potentially interested parties for an amount that ranges between €500 million and €600 million.

The real estate asset and loan manager, Altamira, is primarily owned by Apollo, which holds 85% of its share capital, whilst the remaining 15% stake is in the hands of Santander. The intention of the fund is to officially launch the sale over the coming weeks and to close the operation during the first quarter of 2019, according to reports from Expansión.

Just over a year ago, Altamira’s portfolio was valued at close to €1 billion, but the amount has varied depending on the assets under management at any given moment. At the end of 2017, the package of assets that the company had under management amounted to €50 billion.

Similarly, the principal value of the servicer is the long-term contract that it has with Santander, as well as the contract for the management of assets owned by Sareb. Potential buyers of Altamira include funds such as Deutsche Bank, Bain Capital, Kennedy Wilson, Baupost and Castlelake.

Original story: Eje Prime

Translation: Carmel Drake

Sareb Seeks Partner(s) to Create Joint Venture With NPLs Worth €10bn

20 March 2018 – Expansión

Sareb has decided to emulate the large financial institutions and find a partner to help it digest its portfolio of foreclosed assets. The entity chaired by Jaime Echegoyen (pictured below) has decided to create a vehicle into which it will place loans with real estate guarantees (known as NPLs) and in which it will retain a minority stake.

Into this joint company, Sareb will place loans with a gross value of €10 billion, although the definitive figure has not been finalised yet, explain sources in the sector. It would be the largest sale ever made by the company that was itself created with assets proceeding from the intervened banks, and loans with all different kinds of real estate guarantees would be included: from land to tertiary assets. Sareb’s objective is to open up this new company to one or more financial partners and it has engaged the firms EY and CBRE to lead the negotiations. The process is still in a preliminary analysis phase, but the aim is to close it during the second half of the year or at the beginning of 2019.

Contacts

In making their preliminary contacts, the consultancy firms have approached the main international funds and managers with investments in the Spanish real estate sector to gauge their possible interest in this portfolio, which will initially be called Project Ebro. Once investors have confirmed their interest in the vehicle, thought will be given to defining how the alliance will be forged, say sources in the sector. Possible interested parties include investment giants such as Cerberus, Bain Capital, Blackstone, Apollo, Kennedy Wilson and Goldman Sachs. With Project Ebro, Sareb would be following in the footsteps of entities like Santander, which has reached an agreement with Blackstone to create the company Quasar, with real estate assets proceeding from its purchase of Popular.

In that case, the US fund owns a 51% stake, whilst Santander retains 49% of the shares.

This is not the only loan portfolio that Sareb currently has up for sale. The company has three other processes underway, although Ebro, given its size, is the star project. In this regard, it has engaged Arcano to sell the Nora portfolio, comprising non-performing loans (NPL) backed by residential collateral worth around €400 million; the Vilasoa portfolio, which includes €300 million in loans secured by land; and project Dune, a portfolio that has been relaunched in 2018 comprising €2.6 billion in unsecured loans. In that case, Sareb has engaged PwC to coordinate the sale.

These processes are happening in parallel to the search for a partner to strengthen its property development business. In that case, Sareb is holding talks with large real estate companies and funds with activity in the residential sector with the aim of working together on the development of buildable land and construction projects in progress.

In total, that portfolio is worth around €800 million and Sareb would contribute those assets to a company in which its partner would hold a majority stake.

Original story: Expansión (by Rocío Ruiz)

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

Bankia Considers Rapid Sale Of BMN’s Property Portfolio

13 October 2017 – Cinco Días

Bankia is currently considering how it will deal with the exposure to real estate through BMN that it will end up with following the planned integration of the two entities at the beginning of 2018. The bank chaired by José Ignacio Goirigolzarri is considering the rapid sale of BMN’s problem assets to one of the opportunistic funds that typically participate in these types of operations.

Goirigolzarri’s entity has already made contact with several of the intermediaries that typically advise on these types of transaction, according to sources familiar with Bankia’s intentions, to sound out the options available. These intermediaries include large consultancy firms and several investment banks. The bank has reportedly asked all of these companies to share their ideas about how to best handle a potential sale.

Bankia’s initial idea involves carrying out a rapid operation, similar to the deal undertaken by Santander in August, with the sale of the portfolio that it inherited from Popular that it transferred to the fund Blackstone in just six weeks. That agile move was very well received by the market.

Unlike in the case of Popular, BMN’s exposure to property is considerably less. The entity owns around €1,100 million in net foreclosed assets, according to data about the merger of both entities reported by Bankia in June. The entity has a coverage ratio of 28% over its foreclosed assets and 40% in the case of its doubtful debts (somewhat lower than the average for the sector, which stands at around 50%).

Moreover, of the total net foreclosed assets, 64.4% correspond to finished homes and 19.1% relate to land. In terms of the entity’s total loan book, which amounts to €21,900 million, only 2.7% relates to property developer loans.

The merger of Bankia and BMN was approved by the General Shareholders’ Meetings of both entities in September. The authorities are expected to declare their approval of the union in December and the definitive integration is forecast to take place at the beginning of 2018. The operation will be articulated through the handover of 205.6 million newly issued shares in Bankia to the shareholders of BMN, which effectively means assigning a value of €825 million to the latter (0.41 times its book value).

As such, BMN’s shareholders will hold 6.7% of Bankia’s share capital. Following the merger, Bankia will be the fourth largest entity in the country, behind Santander, BBVA and Caixabank (…).

Another of the differences compared to the operation involving Popular is that BMN does not have its own servicer. In the case of the bank acquired by Santander, it repurchased the 51% stake in Aliseda that was held by the funds Värde Partners and Kennedy Wilson, to subsequently include it in the operation that was then sealed with Blackstone.

In 2014, BMN sold its real estate asset management company Inmare to the servicer Aktua (controlled by the Norwegian fund Lindorff), to become strategic partners in the management of those assets.

The most likely scenario is that Bankia will execute the sale of the assets proceeding from BMN as the single transfer of a portfolio, given that it no longer owns a servicer. The entity chaired by Goirigolzarri declined to comment on any possible operation given that the merger has not yet been approved by the authorities (…).

The potential buyers will presumably include the usual suspects, such as Apollo, Oaktree, Bain, Cerberus, Blackstone, Lone Star, Castlelake, Värde Partners, Lindorff, TPG and Goldman Sachs.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Property Developers Start Buying Land Without Building Permits

11 October 2017 – Real Estate Press

Overseas real estate funds, with a major presence in the Spanish real estate market, are owners of large portfolios of land as well as of debt secured by land as collateral, and many are operating in association with Spanish property developers.

The estimates for this year indicate that 80,000 new homes will be built in total.

The funds Blackstone, Cerberus, Kennedy Wilson, TPG, Värde Partners and Apollo started to acquire servicers, created by the banks, when the real estate sector began to recover. Other funds, such as Lone Star, Centerbridge, HMC, Eurostone, Aquila, Oaktree, Castlelake, Värde and Pimco, have been backing residential development. In this way, they have become the new residential property developers that need land as their raw material.

Now, unlike in prior years, no one wants to risk buying land that still needs some kind of building permit approval to turn it into buildable land, due to the risks involved, and that is why the price of buildable land is rising.

Funds were able to acquire land in areas with high demand for housing, such as Madrid, País Vasco, Barcelona, the Costa del Sol and the Alicante coast, at low prices before residential activity started to recover. But over the last year, land prices have also been recovering in other large capital cities, such as Valencia, Zaragoza, Sevilla and Málaga.

Nevertheless, the potential that these entities see in the residential development segment has allowed them to reduce the urban planning risk in more mature markets, such as Madrid and Barcelona, until now, and start to place their focus on plots that still have not received building permit approval. Moreover, there is no shortage of people who are demanding that the administrations adopt their expansive urban planning policies once again.

Original story: Real Estate Press

Translation: Carmel Drake

Large Funds Thrash It Out To Buy Residential Land

9 October 2017 – El Periodico

The 10 largest property developers in the country are in a position to start work on the construction of around 20,000 new homes in 2018. That volume of output is possible thanks to the collection of buildable urban land that they have managed to accumulate over the last year. The large Spanish property developers – many of which are owned, at least in part, by investment funds – as well as overseas funds themselves, are competing, at an almost frenetic pace, to acquire plots of land on which they will be able to build without modifying the classification (to residential use).

“Overseas investors are very present in the new Spanish real estate landscape, be it as owners, debt holders, servicers or property developers investing together with other local property developers, both in the renovation of existing buildings and the construction of new ones, as well as in the rental sector and through the constitution of Socimis”, says Samuel Población, Director of Residential and Land at the real estate consultancy firm CBRE. The consultancy indicates that at the end of 2016, the large property developers in Spain owned €8,000 million in assets for construction.

80,000 homes in 2017

The real estate sector is expecting the output of new homes to reach 80,000 units in 2017. That figure is still below the short-term goals. “We should be producing 150,000 homes (per year), although we will not achieve pace that for another three years”, says Juan Velayos, CEO at Neinor Homes, one of the real estate companies – whose main shareholders are investment funds – that has purchased the most land over the last two years. “We set ourselves a land investment target of €380 million for 2017 and 2018, but we have already covered most of that budget this year”, he adds. His firm is currently working on the construction of 5,000 homes in Spain and hopes to achieve a completion rate of 3,500 units per year.

The funds Blackstone, Cerberus, Kennedy Wilson, TPG, Värde Partners and Apollo started to acquired the commercial and management platforms that the banks had created (the servicers) when the real estate sector started to recover in 2013. In parallel, the overseas funds Lone Star, Centerbridge, HMC, Eurostone, Aquila, Oaktree, Castlelake, Värde and Pimco are strongly backing residential development. In this way, they have become the new house builders. And they cannot build if they don’t own land.

The problem is that, for various reasons, the administrations are not producing raw material. “No reclassifications (of land) are being performed, because someone will always get hurt”, says Lluis Marsà, President of the Association of Property Developers and Constructors (APCE). “We do not take the risk of buying non-buildable land that has to be transformed because the production costs are rising, the risk soars”, says Velayos.

Nevertheless, that situation has the benefit that agents in the sector are adjusting output to the maximum in order to maintain returns despite the new quality standards for homes, which are higher than in the past. “One of the positive effects of the profound transformation of the sector, with the arrival of new players, is the greater degree of control over the finances and execution periods that we are seeing”, says Población.

Investors adding value

The profile of funds has evolved quickly from opportunistic to value added (…). The focus of these firms is to acquire plots in areas where demand for housing is high, such as Madrid, País Vasco, Barcelona, the Costa del Sol and the Alicante coast. But during 2017, there has also been a positive recovery in land operations in other large capitals such as Valencia, Zaragoza, Sevilla and Málaga (…).

Original story: El Periodico (by Max Jiménez Botías)

Translation: Carmel Drake

The Banks & Rifá Negotiate Future Of Gran Hotel Almería

7 September 2017 – La Voz de Almería

The future of the Gran Hotel Almería, the most iconic hotel in the city, which has been closed for almost three years, has been in the hands of a US investment fund since August.

The fund in question is Blackstone, the financial group chaired in Spain by Claudio Boada, which, based on a decision by Banco Santander, has been awarded the entire real estate portfolio that it inherited from Banco Popular, including Aliseda. The portfolio contains, amongst others, the legendary Almería hotel, which has housed many stars from the spaghetti westerns, amongst others.

The portfolio sold to the fund by Ana Botín includes 100% of the sales platform that it received from Popular just a few months ago. The ownership of Aliseda will now be shared between Blackstone (51%) and Santander (49%), in a deal that saw Botín’s bank receive €5,000 million from its new North American partner. Previously, Santander had purchased that stake from the private equity funds Värde Partners and Kennedy Wilson Holdings.

Altogether, the properties transferred – including the Gran Hotel Almería – have a book value of €30,000 million, which is whereby removed from Banco Popular’s balance sheet. The portfolio contains a range of assets from retail premises to homes, industrial warehouses, hotels and plots of land, the majority of which are located in Andalucía.

Miguel Rifá, the Tax Authorities’ largest debtor in Almería, with an overdue balance of €27.5 million, is still the official owner of the Gran Hotel. The property has remained closed for more than two years, during which time Banco Popular decided not to execute the embargo order because, according to financial sources, it did not have a clear project or a solvent buyer (…).

Aliseda spokesman

A spokesman for Aliseda in Madrid declared yesterday to La Voz de Almería that “the Gran Hotel Almería file is still with the loan management department; it is no longer on the balance sheet of Banco Popular; and negotiations are being held with the owner to find a solution for the property”.

All indications are that the role of Blackstone is going to be key over the next few months if the Gran Hotel Almería is to be unraveled from this financial web in which the establishment is immersed. Stars of film and music have stayed there including Sergio Leone, Harrison Ford, Claudia Cardinale, Steven Spielberg, Brigitte Bardot and Ringo Starr.

Santander’s aim is for the weight of Popular’s real estate ballast to be insignificant within two years. Blackstone has extensive experience in Spain in the management of delinquent mortgages.

In 2014, it was awarded a portfolio containing 40,000 contracts by Catalunya Caixa. On 3 December 2012, Miguel Rifá filed for voluntary creditor bankruptcy for the companies Hotel Almería S.L.U., Predios del Sureste and Vosges due to insolvency. Nevertheless, he excluded the Gran Hotel Almería asset from that procedure, of which Banco Popular was the principal creditor.

The combined debt of the Miguel Rifá’s bankrupt companies amounts to €54 million.

Original story: La Voz de Almería (by Manuel León)

Translation: Carmel Drake

Santander Negotiates With Blackstone Re Sale Of Popular’s RE

2 August 2017 – Expansión

A month after announcing that it was putting Popular’s toxic real estate up for sale, Santander has chosen the fund with which it wants to negotiate. The bank is looking to sell a portfolio of Popular’s foreclosed assets and doubtful real estate debts with a gross value of €30,000 million. It will be the largest sale of a toxic real estate portfolio in Spain in recent years. And the process is already taking shape, in the hope that Brussels will give the definitive green light to the Cantabrian bank’s acquisition of Popular, due at the end of this month.

Yesterday, Santander announced that it will negotiate exclusively with Blackstone from now on to sell a majority stake in the vehicle in which it placed the toxic property inherited following the purchase of the entity wound up by the European authorities. Santander’s initial idea is to sell 51% of this vehicle, which will allow the group to deconsolidate those real estate assets from its balance sheet. The assets and doubtful loans that Blackstone plans to acquire will be managed by Aliseda. That company already administers Popular’s real estate assets and is 100% owned by Santander after the bank repurchased the 51% stake held by Kennedy Wilson and Värde Partners a month ago.

After buying Popular, whose merger will be completed over the course of the next two years, Santander has increased its exposure to real estate risk to €41,048 million, according to the latest available data. Popular’s real estate risk amounts to almost €37,000 million, including its stakes in real estate companies, which amount to around €7,000 million.

Several offers

According to a statement made to the CNMV yesterday, Santander has received binding offers from “several investors” over the last few days for one of the largest portfolios ever to go onto the market in Spain, and also in Europe. The operation sparked immediate interest amongst the large international funds when Santander announced that it was putting Popular’s real estate up for sale on 30 June. In addition to Blackstone, Apollo, TPG, GreenOak and Goldman Sachs, amongst others, approached the bank to find out more.

Financial sources indicate that Apollo and Lone Star fought hard until the end to acquire the majority of Popular’s toxic real estate. In the last few days, some of the interested funds have asked Santander, which is being advised by Morgan Stanley, for more time to conduct due diligences (…).

The rapid sale of Popular’s real estate portfolio, which is being piloted by the Deputy Director General of Santander, Javier García-Carranza, could result in revenues of €5,000 million, according to estimates in the sector. Santander has recognised provisions of €7,900 million to increase the coverage ratio of Popular’s real estate to 69%, well above the sector average (52%). This means the bank can afford to get rid of the real estate portfolio at significant discounts and thereby recognise gains (…).

Original story: Expansión (by R. Sampedro)

Translation: Carmel Drake