Amancio Ortega’s RE Jewels In The Heart Of Madrid & BCN

26 March 2015 – Expansión

The largest shareholder of Inditex has an extensive real estate portfolio that includes properties and retail stores on the two most desirable streets in both cities.

They are the most sought-after streets in Spain for any real estate investor. On the one hand, Paseo de Gracia, in Barcelona, the star shopping street in the Catalan capital. On the other hand, the Paseo de la Castellana, in Madrid, an object of desire for any investor and a prime office location. As such, both have piqued the interest of Amancio Ortega, who owns more than ten buildings on the two thoroughfares.

Through Pontegadea, the company that the founder and majority shareholder of Inditex channels his investments through after closing his Sicavs, Ortega has purchased six buildings on the Catalan avenue and another five on the Madrid street.

In the case of the Paseo de Gracia, the most recent acquisition was made last year when Ortega purchased an office building located at number 1 on the street, on the corner with the famous Plaza Cataluña, for €44 million. This space, which has been leased to Banesto until now, will be converted into an Iberostar Hotel. A few months earlier, he acquired the commercial premises in the same building for €80 million, which are leased to Apple (see picture above). That US multinational is not Ortega’s only illustrious tenant; others include Fnac, Baker & Mackenzie, Burberry and Google.

In March 2012, Pontegadea acquired another building also on the Paseo de Gracia. In that case, Ortega’s company paid Sacyr €53.5 million for the building located at number 56. Measuring more than 9,000 square metres, it is leased to the British textile manufacturer Burberry. The Inditex owner is also the landlord of the building at number 93.

Madrid

The purchases made in the last decade have made Amancio Ortega one of the largest property owners on Madrid’s main thoroughfare: the Paseo de la Castellana. The owner of Zara joined the select club of property owners in that area in 2004, when he acquired number 92 (that same year he made a joint purchase with Metrópolis of an office building on the Paseo de Gracia, 16, which was converted into luxury housing). On the Castellana, Ortega also owns number 35, which he acquired in 2005; and number 79, the former headquarters of Axa, which he renovated to create a new office building with a shopping area, now leased to Fnac and Habitat.

But, undoubtedly, the jewel in Ortega’s crown in Madrid was acquired at the end of 2011, when he signed an agreement with FCC to purchase the Torre Picasso. He paid €400 million for the skyscraper that sits in the heart of the city’s financial district, just a few metres from the Paseo de la Castellana – a record figure for a single building, second only to the €815 million that the then Caja Madrid invested in the Torre Foster.

Nevertheless, it was not the first time that Pontegadea had paid so much in a real estate transaction. At the end of 2007, Amancio Ortega paid €458 million to Santander for the acquisition of ten buildings located in several Spanish cities, which included Castellana, 24 and Paseo de Gracia, 5.

These two great Spanish streets are just an example of Ortega’s extensive property holdings, which also include buildings leased to Inditex companies, such as for example Serrano, 23, in Madrid, which is leased to Zara. In the last full financial year (2013), Pontegadea’s assets were valued at €4,519.5 million and they generated a profit of €93.3 million, compared with €70.5 million a year earlier.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Savills: Spain’s Commercial Property Market Outlook Is Improving

11 March 2015 – Property Wire

There are already signs that Spain’s residential property market is recovering and now a new report shows that its commercial markets are also growing.

International real estate advisor Savills is predicting CBD office yields in Madrid will move from 5% to 4% and 4.5% for super prime properties, as a lack of good quality stock puts pressure on pricing.

This follows strong investment volumes in Spain’s office market during 2014 in which €2.8 billion was transacted, triple the €990 million total in 2013.

The firm states that in terms of location, 60% of investment was made in Madrid, 30% in Barcelona and the remaining 10% in other locations throughout the country.

Savills reports that the growing amount of demand and the lack of supply continues to push achievable yields down in the CBD and the main business areas. Prime yields at the end of the year moved by 100 basis points, secondary areas by 75 basis points and out of town locations saw a change of 50 basis points.

‘Investors preference for Spain’s more mature market of Madrid is undeniable, accounting for a total of €1.65 billion. But the lack of good quality stock is putting pressure on yields,’ said Luis Espadas, director of investment at Savills Spain.

‘The yield in the CBD stands at 5%, and for super prime properties could achieve between 4% and 4.5%,’ he added.

The firm finds that SOCIMIs, the Spanish equivalent of REIT’s, were very active in the office market, with 27% of their total capital being invested in commercial property and 76% of that total in offices.

‘Whilst the SOCIMI and domestic investors were very active in 2014 this year we predict we will see large Latin American investors capitalizing on opportunities in the Spanish office market,’ said Pablo Pavia, director of investment at Savills Spain.

The Savills report also states that take up in the office market at the end of 2014 was 382,000 square meters, some 2.5% less than the previous year. However, 2013 take up was heavily distorted by the Vodafone letting of 50,000 square meters, and discounting that letting take-up grew 12% on the previous year.

Additionally, it points out that there are a number of large space requirements currently in the market, several of which are seeking space exceeding 5,000 square meters.

‘Thanks to signs of a recovery in Spain some occupiers are more willing to sign pre-lease agreements on speculative space in the CBD which in term is prompting major market players to carry out speculative developments. The increase in take up activity will cause rents in the best properties to continue to rise through 2015,’ said Ana Zavala, director of office agency at Savills.

According to Savills rents in the CBD are currently in excess of €25.50 per square meter and could reach €28 per square meter in 2015 given continued strong take up. The firm also predicts landlord will continue to undertake refurbishment projects in 2015, with three quarters of new space in the pipeline for the upcoming year related to refurbishment projects.

Original story: Property Wire

Edited by: Carmel Drake

DIA & Blackstone Close Largest Industrial RE Transaction Since 2013

11 March 2015 – ABC

The two companies have signed a contract for the rental of logistics buildings covering 30,000 square metres.

Logicor, the logistics platform owned by Blackstone, has signed a long-term rental agreement with the supermarket chain DIA for 30,000 square metres of space, which makes it the largest lease transaction in the industrial sector since 2013.

The rental contract covers a substantial part of a 37,000 m2 warehouse in the Miralcampo Logistics Park (in Corredor de Henares), a building that was acquired by Logicor at the beginning of 2014, according to JLL, the real estate consultant that has advised this transaction.

Logicor is the largest owner of logistics warehouses in the Iberian Peninsula, with a portfolio of 960,077m2. According to Logicor’s director general for Southern Europe, the positive changes in the real estate investment market in Spain are starting to be reflected in occupancy rates in the logistics sector.

That, combined with the limited availability of large, modern logistics warehouses in Madrid, has meant that tenants are under more pressure to hire the highest quality products, he added.

The CEO and Chairman of Logical, Mo Barzegar, highlighted that this transaction reflects the company’s investment strategy to purchase functional warehouses, close to urban areas, that are attractive to clients. JLL España advised Logicor in this transaction.

Original story: ABC

Translation: Carmel Drake

CaixaBank Will Be S&P’s New Neighbour On The Castellana

9 March 2015 – Expansión

Lease Agreement / The bank is going to rent 2,800 square metres of office space in Banesto’s former headquarters. It will share the premises with the credit ratings agency, S&P, amongst others.

After a record year for investment in offices (Socimis and large international funds spent more than €1,000 million on acquisitions in 2014), the buildings in Madrid are also beginning to observe an increase in their occupancy rates, especially those located on the city’s main thoroughfare.

That is the case of the office building located on Paseo de la Castellana, 7. The former headquarters of Banesto will soon house another well known tenant. CaixaBank had agreed to rent out 2,800 square metres in the building. The bank will pay around €70,000 per month for the space, according to real estate sources.

In the last quarter of 2014, rents in the prime office areas of Madrid amounted to around €25.50 per square metre per month, the highest figure in the last three years, according to JLL.

Tenants

CaixaBank will join companies such as the ratings agency Standard & Poor’s (S&P), the Swiss bank Julius Baer, the law firm White & Case and the firms Munich Real Estate and FTI Consulting, which already have offices in the property. Until the arrival of the entity, chaired by Isidro Fainé, the most recent addition (to the property) was the Japanese business group Mitsui, which leases 1,500 square metres over two floors.

Castellana, 7 is owned by the Aragonese group Samca, which also owns the (property) developer Ebrosa. The building offers 12,869 square metres of office space in total and for years it housed the headquarters of Banesto. In 1997, the owner of Samca, the businessman Ángel Luengo, paid the entity 8,000 million pesetas (around €48 million), after failing to reach a preliminary agreement with Telefónica.

In 2011, the building was refurbished by the team at Aguirre Newman Arquitectura. Following the deal with CaixaBank, the building will have less than 5,000 square metres unoccupied.

Transactions

The rental of 2,800 square metres of office space on the Paseo de la Castellana by CaixaBank comes just two weeks after the first major office lease agreement of 2015 was signed in Madrid.

The professional services firm KPMG has reached an agreement with Mutua Madrileña to move its corporate headquarters in Madrid to the Torre de Cristal skyscraper, in the Cuatro Torres business district. KPMG has leased 20,000 square metres in the tower.

In 2014, office space occupying a surface area of 365,000 square metres (of the total 15.1 million sqm) was leased in Madrid. The most significant transactions included the move by Havas to the building on Eloy Gonzalo, 10, which had been acquired by the real estate group GMP a month before. The multi-media group will occupy the office space, which covers around 12,000 square metres. In Barcelona, the law firm Cuatrecasas signed an agreement to lease 19,900 square metres at the end of the year.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake

‘Late’ Rental Payments Increased By 12% In 2014

6 March 2015 – Cinco Días

Late-paying tenants owed landlords €6,489, on average, in 2014.

Until the Government publishes the first official statistics about the rental market, as promised, the rental sector specialist, Alquiler Seguro, is the only firm in Spain that is able to give us a snapshot of overdue rental payments through its File on Tenants in Arrears (Fichero de Inquilinos Morosos or FIM).

Yesterday, Alquiler Seguro opened offices in Málaga and took the opportunity to announce the arrears data for 2014. Taking the number of inscriptions recorded in this list across the country as a benchmark, late payments amongst urban tenants increased by 11.91% last year.

By autonomous region, the highest increases were recorded in Madrid (with 16.87%), Aragón (16.39%), Cataluña (15.73%), País Vasco (15.33%) and Andalucía (14.95%). By contrast, the regions with the lowest increases were Ceuta and Cantabria (8.74%), Murcia (6.54%), La Rioja (6.50%) and Navarra (3.56%).

The average amount owed by tenants to landlords reached €6,489 in 2014. Nevertheless, the highest average amount was recorded in the Community of Madrid (€14,242); this figure was undoubtedly inflated by the high rental prices in that region compared with other regions around the country; in Murcia, the average overdue amount was €13,692 and in the Balearic Islands, it was €9,428.

At the opposite end of the ranking, the average amounts owed in the following regions were notably lower: Castilla y Leon with €2,500, La Rioja with €3,073, Extremadura with €3,215 and Aragón with €3,409.

The FIM is a file that is freely accessible to the public and may be consulted by both registered professionals with prior approval from the FIM Iberica S.L. and by individuals with a legitimate interest, who may log individual queries without any requirement to register.

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

New Investment Formula: Buy-To-Let Cooperatives

5 March 2015 – Expansión

Investing in the Spanish real estate sector has been not only an option, but almost an obligation for large investors in recent years, both Spanish and international. But, what about small savers? Do they have any options left to fall back on?

Away from the real estate companies that are listed on the stock market, there is an investment proposal that involves buying homes to let them out. Nevertheless, this model has not been operated on a professional basis in the past. Now, the Spanish company Alquiler Seguro, which specialises in the management of rental contracts for both tenants and landlords, has decided to launch a cooperative project involving homes intended for rental, which are designed precisely for that purpose from the outset. “Last year, we realised that our most frequent transactions involved clients who were owners of some properties and at the same time, tenants of others”, explains Gustavo Rossi, Chairman of Alquiler Seguro. “A change is happening in the market, whereby young people, who are accessing housing through the rental market, are becoming good savers whilst also being tenants”, adds Antonio Carroza, CEO of the company.

The executives of Alquiler Seguro propose that these tenants use their savings to purchase homes, for an average price of €120,000, which offer investment returns after 18-24 months (the time taken to construct the properties). “These are homes that are designed to be rented out; they are expected to generate returns of between 3.5% and 6% and achieve an investment return within ten years”, says Carroza.

Currently, the company has two developments underway, both located in Madrid, in the neighbourhoods of Carabanchel and López de Hoyos. “We have chosen areas where there is demand from tenants and prices (of the properties) are affordable”.

Both developments offer financial support. “Our model is 50% equity and 50% bank financing. Entities are willing to subsidise some of the land purchase since the properties have (already) been sold to the cooperative members”.

“In the case of these two projects, each investor has acquired one home, but the goal is to move towards a model that does not involve horizontal divisions, but rather one in which many investors buy the whole development. We already have several plots of land in our portfolio that we intend to develop in this way”, says Rossi.

It is not the only buy-to-let investment project that the company is working on. “We are also evaluating the possibility of creating a Socimi, where investors contribute assets instead of capital but, at the moment, that is not a profitable model, due to the expenses associated with municipal gains”.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake

Santander’s Landlord Finalises The Sale Of 400 Branches

5 March 2015 – El Confidencial

Uro Property, the name given to the company formerly known as Samos, will begin trading on the MAB (‘Mercado Alternativo Bursátil’ or Alternative Investment Market) with the minimum legal amount, given that its ultimate aim is to move onto the main stock market.

Another one of the Socimi giants is counting down the hours until its goes public. Uro Property, the name give to the company formerly known as Samos, and the company through which several investment funds advised by Oleguer Pujol purchased a one third stake in Santander’s branches, will list on the MAB within the next few days and will continue to put the pieces in place to fulfil its aim of listing on the main stock market, with a healthier financial structure.

With this challenge in mind, the company chaired by Carlos Martínez Campos and led by Simon Blaxland is finalising the sale of 400 of the 1,316 branches that it owns, a transaction that it is already negotiating with an institutional investor and that will allow it to repay some of its €1,424 million loans ahead of time. This debt was already financed last year, when Samos’s creditor entities, led by Santander and CaixaBank, took control of the company, by capitalising €424 million of mezzanine debt and creating Uro.

This transaction turned Santander into the main shareholder of the Socimi, with a 24% stake, whilst CaixaBank took ownership of 14.89%; BNP Paribas holds a 8.81% stake and Société Générale holds 3.14%. In addition, several hedge funds and other entities, including Barclays and Bayerische Landesbank were left with stakes of less than 1%; whilst the former shareholders, Sun Capital, now known as Atisha Holding and the Pearl Group, now Phoenix Life, hold 21.7% and 14.38%, respectively.

All of the shareholders have committed to retaining their stakes for a minimum period of 12 months, during which time Uro Property is confident that it will close a new financing deal that will allow it to reduce its spread from its current level of 300 basis points to closer to 200 basis points.

In fact, the listing on MAB is seen as another step in this process, given that by law, all of the Socimis are obliged to go public within a period of two years. Although Uro Property’s deadline in this sense does not expire until after 2015, it has chosen to go public as soon as possible precisely because it believes that its status as a listed company will facilitate its refinancing.

This explains why Santander’s landlord is going to limit its initial placement to the minimum established by law: two million euros, a paltry figure, considering that its assets have been valued by CB Richard Ellis to amount to €2,000 million and given that forecasts suggest its market value amounts to around €500 million.

An independent audit to separate the company from Pujol

Renta 4 has been hired as the liquidity provider, whilst EY has performed the valuation of the company ahead of the placement. Aware that all eyes are focused on it, given its historical ties with Oleguer Pujol, the company commissioned Deloitte to conduct an independent audit (the auditor of the Socimi’s accounts is PwC), which certified that the maximum investment made in the Socimi by the son of the former President of Cataluña amounted to €67,000.

The Socimi has signed a new lease agreement with Santander, which has committed to occupy the properties for a minimum period of 25 years, and it may extend that period by 14 more years for a third of the assets, which the bank, chaired by Ana Botín, has identified as more strategic for its business. In return, the company has been granted the right to review the portfolio each year, as well as the ability to exchange some branches for others, provided these exchanges do not represent more than 1% per year, under any circumstances.

Santander will pay Uro rent amounting to €125 million net, since the bank itself will bear all of the costs relating to the properties. This guaranteed income, together with the refinancing deal signed last year, allowed the Socimi to generate profits in 2014. Moreover, with the new financial structure that it is negotiating, which it is hoped will extend the current six year maturity period, the Socimi is confident that it will significantly improve its results; this is key for a vehicle such as this, whose main attraction is the fact that it is obliged to distribute the majority of its profits in the form of dividends.

Uro will be able to begin working on its plans to list on the main stock market and expand its portfolio of assets from 2016, in line with the steps being taken by its competitors, such as Merlin, which acquired BBVA’s offices.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Tecnocasa: Average Rents Reached €8.54/sqm In 2014

19 February 2015 – El Mundo

Rental prices (in 2014) were slightly higher (+0.47%) than at the end of 2013.

The market is suffering its greatest declines in Madrid (-1.57%) and Barcelona (-0.59%).

The typical landlord profile: pensioners (28%), Spanish nationals (96%) and married (70%).

The typical tenant profile: single people, with permanent employment contracts, aged between 25 and 44 years old and Spanish.

The Tecnocasa Group has presented its first report about the residential rental market in Spain (a groundbreaking study). Highlights show that the average cost of rental homes amounted to €8.54/square metre (in 2014), which is slightly higher (+0.47%) than at the end of 2013.

With these figures on the table, Tecnocasa says that “rental prices have remained stable (upwards)”, although it acknowledges that there has been a slight decline in the two largest Spanish cities. Specifically, rents became 1.57% cheaper in Madrid and 0.59% cheaper in Barcelona, where prices amount to €10/sqm in absolute terms.

One must go back to 2007 to find the last report about rental prices nationwide. The then Housing Minister, María Antonio Trujillo, presented the OEVA (the State Observatory for Rental Housing or ‘Observatorio Estatal de la Vivienda en Alquiler’), which was the first official survey about the market. It was also the last. That study reported that the average price of rental housing was €7.20/square metre.

Tecnocasa’s study shows that the profile of landlords, i.e. of the people that lease out their properties, includes a high percentage of pensioners (28%), Spanish nationals (96%) and married people (70%). In terms of the profile of tenants, they are single, with permanent employment contracts, aged between 25 and 44 and, for the most part, are Spanish.

Lázaro Cubero, Director of the Department for Analysis and Reports (Departamento de Análisis e Informes or DAI) at the Tecnocasa Group, notes that rental prices have decreased by less than purchase prices in the last year, which means that “the yield a landlord can obtain by renting out a home that he/she owns is now greater”. Specifically, this yield has increased to 7.41% on average for the whole of Spain.

These figures represent the findings of the first report about the rental market conducted by the Tecnocasa Group and the Univerisdad Pompeu Fabra (UPF), based on a study that analyses data extracted from the property rental agreements brokered by Tecnocasa’s network (of agents) in Spain between 2012 and 2014.

Original story: El Mundo

Translation: Carmel Drake