Sareb is Selling 33 Homes Per Day but still has 55,000 Properties on its Books

12 September 2018 – Expansión

Sareb managed to sell 5,926 properties during the first half of 2018, up by 7% YoY, for a total sum of €552.7 million. In other words, 33 units per day. Of the total, 86% of the properties were homes and garages, 9% were plots of land and 5% were commercial premises.

For the last four years, the bad bank has been helping delinquent property developers to market the properties that they placed as collateral for their loans to allow them to use those funds to settle their debts. Through that channel, it has sold another 4,692 units.

If this pace continues during the second half of 2018, the entity will exceed the sales figure registered in 2017 when 18,925 units were sold and a new record was set.

The bad bank was created with 107,000 properties and during its first five years of life, it has managed to divest 68,300 units. Nevertheless, we must bear in mind that Sareb has executed the guarantee for some of the 90,000 loans that it also took on when it started out and so that has led to an increase in the number of properties on its balance sheet.

Currently, the bad bank still has 55,000 homes and 34,000 garages and storerooms left to liquidate. Sareb is the largest owner of residential homes in Spain and the largest landowner in several autonomous regions, such as Castilla-La Mancha.

During the first half of this year, Sareb recorded revenues of €2.8 million in a special land sale campaign and another €13 million from the sale of other plots. It put 500 units on the market in each case. The managers are looking for a partner to build developments on the land.

Contracts under review

The senior management team at the bad bank is considering tearing up the expensive and exclusive contracts that the entity has with four specialists (Haya, Solvia, Altamira and Servihabitat), which cost it more than €200 million per year, equivalent to 35% of its operating costs.

Sareb lost €565 million last year and since its creation, has generated cumulative losses of €1.315 billion. In reality, the operating result is now positive. Nevertheless, the financial charges are so high – it had to take out a swap to cover itself in the event of an interest rate rise – that they completely determine its income statement.

The senior management team updated Sareb’s business plan in February, which forced the shareholders to recognise new write-downs. The review resulted in the recognition of a loss equivalent to 73% of the initial investment, which amounted to €4.8 billion.

Recently, the entity’s President, Jaime Echegoyen (pictured above) went further and warned that he thinks the shareholders will “struggle” to recover their investments.

Sareb has ten years left to liquidate all of its real estate stock. In reality, it is committed to returning the €37 billion in bonds secured by the State that it used to pay for the assets of the rescued savings banks.

The largest shareholder, the FROB, with 45.9% of the share capital, lost €950 million last year due primarily to the impairment of Sareb’s accounts due to its poor performance. The banks have also been forced to make significant adjustments. Sabadell, which has published its data, confirmed that its investment has generated an accounting loss of €321 million in five years.

The Minister for the Economy, Nadia Calviño, said yesterday, during her speech at a breakfast meeting organised by the New Economy Forum, that “for the time being, the Government is supporting Sareb’s strategic plan”. Nevertheless, she reminded listeners that the Administration is an important partner that participates actively in decision-making, “but it is not the only one”. 54% of the entity’s share capital is private.

Original story: Expansión (by Raquel Lander)

Translation: Carmel Drake

Aena To Sell More Than 2,000 Ha Of Land Near Its Spanish Airports

15 November 2017 – Expansión

The state-owned group is going to sell more than 2,000 hectares of land around its airports for the construction of hotels, offices and shopping centres. The Ministry of Development is hereby launching a project that is seven times larger than Operación Chamartín.

(…) The Government has given the green light for Aena to launch what is going to be the largest ever operation involving the sale of land in Spain, according to authorised sources from the Ministry of Development speaking to El Mundo.

The new President of Aena, Jaime García-Legaz, has been given the mandate of optimising the value of the resources of the company, in which the Government holds a majority stake, and selling more than 2,000 hectares of land around the country’s main airports. Above all, the sale involves undeveloped, developable land, but it also includes some plots that are already occupied but which have a significant remaining surface area that may also be developed.

Aena’s studies, authorised by the Minister for Development, Íñigo de la Serna, involve the sale of land for the construction of hotels, offices and shopping centres, in line with those surrounding the main airports in Europe.

The land owned by Aena that has been identified as “potentially marketable” is equivalent to seven times the already gigantic Operación Chamartín, which encompasses 311 hectares to the north of Madrid and which is considered to be the largest urban development plan currently underway in the European Union.

Aena has been a major landowner since its constitution in 1990 and in its business plan, the plots of land surrounding the airports in Madrid and Barcelona are essential. Together, they are going to account for more than 50% of the total to be developed, according to preliminary estimates.

Around Adolfo Suárez Madrid Barajas airport, the studies have analysed a gross area of 921 hectares. Taking into account that some of the space will have to be allocated to roads and green areas, it is estimated that at least 573 hectares may be used as plots for lucrative use (…).

In Barcelona, the potentially marketable land comprises 336 hectares, of which 211 hectares would correspond to net lucrative plots. The rest of the real estate operation will focus on the airports in Tenerife Sur, Jerez and Sevilla, in particular.

The sources consulted highlight that the process will be undertaken in phases and that real estate experts will be hired to optimise the transactions, which will consist of the development, rental and sale of plots of land, depending on the option considered most attractive for Aena (…).

The share price of the public airport manager has now recovered to a level not seen since before the departure of the previous President, José Manuel Vargas. It closed yesterday at €159.40 per share, which is equivalent to a market capitalisation of more than €24,000 million. On the day that Vargas resigned, 26 September, each share was worth €151.

Original story: Expansión (by Carlos Segovia)

Translation: Carmel Drake

Grosvenor Buys 3 More Residential Properties In Madrid

26 October 2017 – Eje Prime

The youngest multi-millionaire in the world has set his sights on Spain. The young Duke of Westminster, 26, has acquired three properties in Madrid, where he is going to build luxury homes. The latest project involves the transformation of a property that used to house the Philatelic Forum for many years. The plan is to build twelve properties there for wealthy tenants, according to Cinco Días.

The Spanish subsidiary of Grosvenor has also purchased a plot of land on Calle Jorge Juan, where it plans to construct seven apartments and a property on Santa Engracia, which will contain 18 homes once the building has been renovated.

To carry out this series of investments, the British company has joined forces with the holding company Amcorp, which is headquartered in Malaysia and which has funds amounting to €70 million.

In addition to the residential market, Grosvenor is looking to purchase offices for their rental, according to the company. In Spain, the firm is a partner of the Sonae Sierra joint venture, one of the main players in the shopping centre sector.

Grosvenor, led by Mark Preston, currently owns properties with a value of around €7,300 million, most of which are located in the United Kingdom, where, it is also the main landowner in London’s most exclusive neighbourhoods. These assets generated revenues of €298 million in 2016 and profits of almost €90 million.

Original story: Eje Prime

Translation: Carmel Drake

Spain’s Property Developers Accelerate Their Land Purchases

31 August 2017 – Expansión

Spain’s large real estate companies have launched ambitious investments plans with the aim of starting to build thousands of homes over the next few years, whereby benefitting from the upwards cycle that the housing market is currently enjoying.

The most active players include some of the new property developers led by investment funds such as Neinor Homes, Vía Célere and Aelca. These companies, the first of which is listed on the stock market and the latter two which have plans to make their stock market debuts within the next few months, have accelerated their land purchase plans in recent months, backed financially by their owner-shareholders and loans from the banks.

Such is the case of Neinor Homes. The property developer owned by Lone Star has invested €157.5 million so far in 2017 on the acquisition of various plots of land spread across locations such as Valencia, Málaga and Madrid. These purchases will allow it to build 1,750 homes, in addition to the around 4,000 units that it already has underway.

In the case of Vía Célere, acquired in February by Värde and five other funds, its land purchases so far in 2017 amount to €100 million, which has allowed it to increase its portfolio of land by 212,016 m2 to 2.7 million m2.

Another one of the companies that has invested a lot in land in recent months in Aelca. The company led by Värde and its founding partners, Javier Gómez and José Juan Martín, has spent €170 million so far in 2017 to increase its buildable portfolio by 362,000 m2. Following these purchases, it plans to build around 3,900 homes.

New leader

But the leader of this growth is Metrovacesa. The property developer led by Jorge Pérez de Leza has started a new phase this year, following the transfer of its rental assets to Merlin, with the ultimate aim of recovering its leading position in the sector, this time, focusing on the residential market. To this end, its main shareholders, Banco Santander and BBVA, have transferred it land worth €1,108 million, covering a buildable surface area of 3.1 million m2.

Metrovacesa’s plans for these plots, which have capacity for 24,000 homes, include the sale of some of the asset to competitors, which are eager to expand their portfolios. Currently, the property developer owned by Santander and BBVA is the second largest landowner in the country, with land spanning 6 million m2, exceeded only by Sareb.

Meanwhile, the ACR group (which has invested in some projects together with Allegra, the investment arm of Mario Losantos, the former owner of Riofisa) has purchased land worth €43 million, with a buildable surface area of 88,000 m2, where it plans to build 810 homes. (…).

Amenabar has a similar investment policy. The Basque real estate company, the current leader house building ranking in Spain, with more than 4,000 units underway, has acquired land covering more than 352,000 m2 this year, which will allow it to build another 2,976 homes. (…).

Another of the classic property developers, Quabit, has undertaken 13 operations involving buildable land in just two months, allowing it to incorporate almost 120,000 m2 into its portfolio. (…) The listed company will build 1,097 homes with a forecast revenue of €196 million.

Meanwhile, the Inbisa group has invested more than €80 million in the residential market over the last 18 months and plans to spend another €30 million before the end of the year.

Another fund that has made a significant commitment to the housing market in Spain in ASG. That firm, which also invests in commercial properties, has spent €200 million this year on the acquisition of 16 urban plots of land.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

British Groups Invest Heavily In Spain’s RE Sector

9 May 2017 – Expansión

The Grosvenor group is embarking on its first residential project in Spain, developing luxury homes in Madrid. It is following in the footsteps of other compatriot companies such as Intu, Taylor Wimpey and Benson Elliot.

One of the latest real estate companies to show its commitment to Spain has a history that spans 340 years. The firm in question is Grosvenor, the centuries-old British firm, which closed its first investment in the Spanish residential sector about two months ago.

The project chosen by Grosvenor for its arrival in Spain is a luxury residential development on the Golden Mile of Madrid. To this end, Grosvenor, through its subsidiary Grosvenor Europe, completed the purchase of a plot of land measuring around 820 m2, located at number 53 on Calle Jorge Juan, for the development of six exclusive apartments and one penthouse with views over the Retiro Park. (…).

Grosvenor’s operation on Jorge Juan forms part of a joint venture signed by the Asian firm Amcorp in July 2016, whereby it undertook to invest €70 million during the first phase. “We hope to build a significant real estate portfolio in Spain during 2017”, said sources at the British group, which was founded in 1677 by Sir Thomas Grosvenor, and which is nowadays one of the largest landowners in the United Kingdom.

In light of this commitment to Spain, Grosvenor, which has four divisions through which it operates in Europe, Asia, America and the United Kingdom, has strengthened its office in Madrid, led by Fátima Sáez del Cano, by hiring Miguel Silmi, who formerly served in interim roles at firms such as Altamira, owned by Banco Santander. (…).

Investment

Grosvenor’s commitment to Spain is not a unique case amongst the large British groups. “Investors from the United Kingdom have always liked the Spanish real estate market and they have invested throughout the economic cycle. For example, Heron International, which is known today for the shopping centres that it built in Madrid, Barcelona and Valencia, used to hold a significant portfolio of office buildings in Madrid, in the 1990s”, said Javier García-Mateo, Partner in Financial Advisory at Deloitte. (…).

Meanwhile, Benson Elliot has been present since 2011. That fund has just closed the purchase of the Hotel Silken Diagonal, together with the joint venture between Walton Street and Highgate. Previously, BE had purchased two other assets in Barcelona, which it has now sold. “Another British firm, London Regional, has purchased hotels and offices in Spain and has also taken advantage of the cycle to sell them at a profit”, said Rafael Bou, Partner in Real Estate at PwC.

“Having invested more than €2,147 million since 2011, British funds are the second most significant international investor in the Spanish real estate market, after the United States (…)”, according to Savills. During the first quarter of 2017, British firms have already made real estate purchases amounting to €550 million, according to Deloitte.

One example of this commitment is the return of British Land to Spain, which last year purchased the Nueva Condomina shopping centre in Murcia, and the more than €120 million that has been invested by the UK & European Investment group in operations in Madrid, Barcelona and Marbella. (…).

In addition to real estate companies and investment funds, some of the large British insurance companies are also placing their focus on the Spanish real estate sector, such as the case of Prudential and Aviva, which just closed the purchase of the Tormes shopping centre in Salamanca.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake