Lar To Invest €145M In Leisure Complex in Sevilla

6 March 2016 – Expansión

On Thursday, the Socimi Lar announced that it is going to invest €145 million in what will become the largest retail and leisure complex in the province of Sevilla. Specifically, it will build the complex in Palmas Altas, an area to the South of the city, known for being home to Abengoa’s huge headquarters

Original story: Expansión

Translation: Carmel Drake

Investment Returns To The Residential Market

11 February 2016 – Expansion

Experts say that this trend is heterogeneous, with regions that need to dispose of their stocks and other in need of developable land.


The residential business – until recently the ugly duckling in the housing sector – emerges again as one of the values on the rise, in part thanks to the return of large reals estate companies to this activity, one of the most affected by the economic crisis. Thus, for the first time since in mid-2007 the gradual deterioration of the housing market situation began, the sector turns its attention to this business, since in 2014 it showed the first signs of improvement, although with a concentrated demand in very well located and high segment product.

Ongoing projects  

Some of the most recent examples are the Socimi Lar-Pimco España, which will soon begin “Lagasca 99 project” on the site at Juan Bravo, 3, Madrid, or Metrovacesa, with “Ciudad del Sur” in Tarifa and the study of new projects in Madrid. Likewise, Realia has residential assets in the Madrid suburb of Valdebebas and Quabit has strongly returned to this activity thanks to the capital increase undertaken last year. At the same time, developing companies like Via Célere, Pryconsa, Aelca, Inmobiliaria del Sur or Neinor Homes are making a move in this segment with the aim of becoming the first residential developer of Spain, as well as cooperatives as Momentum, Domogestora and Ibos. 
The director of the National Residential and Land area of CRBE España, Samuel Población Blanco, emphasizes the “great heterogeneity” in this trend, with differing behaviors. 
Thus Población highlights that while in Madrid there is a great need for developable land, with the risk that in one year the housing demand can be much higher than the existing supply, other regions still need to dispose of their stock. 
Likewise, Población notes that SOCIMIs and asset management companies will be increasingly interested in the residential renting area, coinciding with the change of mentality in Spanish society, the higher functional-geographical mobility and the professionalization in this activity. 
For his part, the Chairman of Armabex, Antonio Fernández, explains that there is a gap between renting demand in Spain and Europe, which tends to shorten due to the new working conditions and the lack of funding. 
”In Madrid, for example, they lack efficient product; no large blocks or buildings dedicated to renting” says Fernández.

Original story: Expansion (by Rebeca Arroyo)

Translation: Aura Ree

Merlin & Hispania Prepare To Issue Bonds In 2016

26 November 2015 – El Confidencial

(…). The new kings of the Spanish real estate sector have begun the second phase of their adventure in the markets and, after starring in the bulk of the stock exchange’s IPOs over the last 1.5 years, they are now preparing to issue bonds.

The two key players in the sector, Merlin and Hispania, have taken the lead and are already working with the main ratings agencies to receive their ratings in 2016 and, as a result, make bond placements in order to adjust their financial structures.

The Socimi led by Ismael Clemente is more advanced in this process, because it began to work with the three ratings agencys – S&P, Fitch and Moody’s – to obtain an investment grade rating as part of its process to purchase Testa for €1,800 million.

The company’s plans include registering a bond program, which would be divided into between two and four placements, through which it expects to raise between €800 million and €1,000 million. Although the company’s timings are slightly delayed with respect to its initial plans, its objective is to have everything ready during the first half of next year.

Hispania is working to a similar time frame, conscious that in an environment marked by zero and negative interest rates, fixed income securities represent the perfect way of raising capital, above all in the case of real estate companies, such as Socimis, which make significant block investments to acquire assets that have long-term business plans.

In fact, Merlin and Hispania’s interest in obtaining an investment rating is leading the way for other companies in the sector, a general move in line with the group movements that these companies have been making over the last two years.

Natural step

In this way, whilst in 2014, the general trend was towards IPOs, through which they raised their first significant capital inflows, in 2015, the major trend was towards capital increases, through which the largest players in the sector alone – Merlin, Hispania, Lar and Axiare – raised almost €2,000 million.

The next natural step, therefore, is for these entities to request investment ratings to enable them to go to the debt market. Nevertheless, this is not an unfamiliar step for some companies in the sector. Uro Property, Santander’s landlord, has already completed a €1,350 million bond issue; whilst Lar launched a €140 million bond issue at the beginning of the year.

The difference with respect to the step that Merlin and Hispania are taking is that those placements were made outside of Spain, in Luxembourg and Ireland, respectively, without first obtaining a rating. In the case of Uro, the Socimi that exclusively comprises Banco Santander branches, it managed to achieve a rating for its placement equivalent to that of its tenant, although the Socimi has no been assigned its own rating.

Meanwhile, Lar completed its placement to raise funds, unlike Merlin and Hispania, which are aiming at taking advantage of the low interest rate environment to reduce their financing costs and, moreover, adjust all of their financing to suit their vocations as long-term businesses.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

RE Experts: Spain’s RE Sector Is Back In Fashion

22 October 2015 – Cinco Días

A wave of optimism is in the air at the Barcelona Meeting Point trade fair.

Senior executives from Colonial, Merlin Properties and Grupo Lar appeared optimistic on Wednesday, regarding the growth of the real estate sector in Spain, based on the comments they made during a session entitled ‘Spain: Back in fashion’ at the real estate trade fair Barcelona Meeting Point (BMP), which is being held until Sunday at the Montjuïc de Fira centre in Barcelona.

The President of Grupo Lar, Luis Pereda and the founding partner of Merlin Properties, Ismael Clemente, were in agreement that prices in Spain are starting to increase, but that they are still below the levels seen in other European countries, which is attracting international investors.

The CEO of Colonial, Pere Viñolas, spoke about the “positive outlook” for an increase in yields associated with these price increases, although he qualified this by saying that the results of the operations that we are now beginning to see will not have an impact on income statements until 2016.

Pereda said that the decrease in rental prices in Spain has been more marked than in other countries, but that the recovery will be too, because rental contracts are shorter term here (around three or four years).

Clemente confirmed that Spain is now in a very promising phase of the real estate cycle. “We have five to seven strong years ahead of us”, although there will be risks, such as the evolution of world (economic) growth and political influences. (…).

During the event to open the trade fair, which this year brings together 280 companies from fifteen countries and almost 40 international investment funds, the Secretary of State for the Economy, Álvaro Nadal, warned that “political uncertainty” may scare off investors from Spain. (…).

With just two months to go until the general election and with the Catalan sovereign debate still raging, the Government’s representative for the Economy said that, if we can guarantee that the improvement in competitiveness, economic growth, creation of employment and consolidation of the public accounts are all going to continue in Spain “without any disruptions” then we “will be reasonably certain that investors” will continue to support the country.

By contrast, added Nadal, “if the future looks like it holds other things, then they are less likely to want to invest”.

That was the message that Nadal wanted to send to the business people in the real estate sector, who are convinced that, for the time being at least, the political tension is not affecting business and that national and international investors are clear in their desire to back Spanish real estate.

“In Barcelona, half of our buyers are from overseas and we have not detected even the slightest interest from them in political matters. It seems that people are either certain that nothing is going to happen or that whatever happens, it will not impact their investment”, explained the CEO of the Catalan property developer Vertix, Elena Massot. (…).

Other participants of BMP also agreed that the expansion of the sector is now a reality, after several years of severe crisis, but that the recovery is going to be slow and uneven. (…).

This recovery will be more intense in the major capitals, where the prices of some properties have already started to rise, but it could still take a while to reach areas where there is less demand, which means a Spanish real estate market that is moving at “two speeds”.

The Property Developers’ Association of Barcelona (APCE) estimates that construction will begin on between 6,000 and 6,500 new homes in Cataluña in 2015. That figure is notably higher than those recorded seen in recent years, but it is still a long way off the data for 2006.

The turning point happened in 2013, when construction began on just 3,036 homes across the whole autonomous region. In 2006, the peak year for construction, construction began on a whopping 126,000 homes. (…).

Original story: Cinco Días

Translation: Carmel Drake

GreenOak Buys ‘Sevilla Factory’ Shopping Centre For €15M

10 July 2015 – Expansión

The French-Dutch group Unibail Rodamco, one of the largest shopping centre owners in Europe, has closed the sale of one of its assets in Spain: the Sevilla Factory.

According to the Spanish Association of Shopping Centres, the property, which opened in the year 2000, has a constructed surface area of 20,000 m2, of which almost 16,000 m2 comprises retail space, and is spread across one floor. In addition, the shopping centre has 1,200 parking spaces.

The new owner of the centre is the fund GreenOak. That fund closed one of the largest shopping centre transactions in Spain last year, together with Baupost and the Spanish real estate company Lar, when it acquired seven properties in Madrid, Málaga, Barcelona, Burgos and Alicante. It paid €160 million to Vastned for those properties. According to real estate sources, the fund will now spend €15 million on Sevilla Factory.

Knight Frank has advised Unibail and Deloitte’s RE team has advised GreenOak. Both have declined to comment on the deal.

Background

Through this transaction, Unibail Rodamco continues with its plans to divest its shopping centres in Spain that have lower footfalls. Sevilla Factory receives an average of 1.9 million visitors per year.

To this end, in recent months, the company has sold several shopping centres and has been preparing new deals. In December, Unibail sold the Habaneras shopping centre in Alicante to the US fund Harber for €65 million. Whilst a few months earlier, it sold Albacenter to the Socimi Lar España for €28.4 million.

Now, the French-Dutch real estate company is considering selling Equinoccio in Majadahonda (Madrid) and Barnasud in Barcelona. Unibail Rodamco is also the owner of other shopping centres in Spain, such as La Vaguada and Parquesur in Madrid and Splau in Barcelona.

Meanwhile, GreenOak is one of the funds that is backing Spain most heavily at the moment. Since its creation in 2010, it has invested around $2,500 million. Now it is focused on four key markets: USA, Japan, England and Spain.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Santander To List 2% Of Its Socimi And Whereby Avoid CIT

6 February 2015 – El Confidencial

Desperate times call for desperate measures. That is the proverb that Banco Santander is going to apply to a problem that has arisen after it sold a network of 1,152 bank branches bearing the red flame to a group of investment funds in 2007. The entity, which had to take the branches back when the investment company that had taken ownership of them filed for bankruptcy, is going to float that company on the stock exchange as a Socimi, and whereby avoid paying Corporation Tax. Oleguer Pujol, amongst others, was involved with the original investment company.

The main objective of the transaction that Santander and the other creditors that seized control of Samos Servicios for the non-payment of a €2,000 million loan is to float the newly named Uro Properties on the Alternative Investment Market (Mercado Alternativo Bursátil or MAB). In fact, none of the current shareholders, which includes Santander itself – the largest, with a stake of almost 25% – as well as Caixabank, which entered through the back door and BNP Paribas, all primary lenders, are planning to sell or reduce their stakes in the Socimi.

The transaction will involve listing the company with the placement of a maximum of 2% of its capital, the minimum requirement. With such a small amount of floating capital or free floating capital, Uro Properties is only allowed to list on the MAB, even though its total assets are worth €1,600 million. As such, it will become the largest real estate company on the Spanish stock market. None of the other Socimis that followed the same path in 2013, such as Hispania, Lar, Axia or Merlin Properties, are equal in size.

Since the shareholders are not going to sell their old shares or proceed to offer new ones, like the other Socimis mentioned above have done, the only apparent purpose for listing Uro Properties is to benefit from the tax regimes offered to these kinds of companies. According to Law 11/2009, dated 29 October 2009, these real estate companies pay Corporation Tax at a rate of 0%.

To maximise the tax savings even further, the shareholders of Uro Properties Holding SA have created a parent company in Luxembourg, under the name Ziloti Holding SARL. The shareholders have already asked the MAB for permission to list their shares, as soon as possible, specifically, before the end of February.

From success to failure

The background to Uro Properties dates back to 2007, when Emilio Botín invented a transaction, which other large multinationals later went onto to make fashionable in Spain: the sale of properties to investment funds to obtain sizeable gains in exchange for staying as tenants and paying rent. It is what is called sale and leaseback. The purchasers of Santander’s 1,152 branches were Pearl Insurance, Sun Capital and Drago Real Estate, which were advised by Oleguer Pujol, now accused of crimes against the Treasury, and Luis Iglesias, who was arrested after his home was search, but not charged, according to an official spokesman.

The three funds paid €2,040 million and Santander generated profits of €850 million. But the collapse in the valuation of the real estate assets themselves and the loss of the bank’s credit rating led to an adjustment in the appraisal value of the branches – which were guaranteeing the loan – of more than €400 million. This meant that the purchasers were no longer able to service the loans they had taken out to finance the purchase.

Following the bankruptcy of Samos Servicers, Santander, which had borne most of the financing risk by granting mezzanine debt, had to convert that loan into capital. This meant that it went from being a creditor of the company to a shareholder in the renamed Uro Properties. BNP Paribas, Caixabank, Société General, Royal Bank of Scotland, Barclays and a group of German and Austrian banks, including Bayerische and Raiffessen, did the same thing.

Original story: El Confidencial (by Agustín Marco)

Translation: Carmel Drake

TIAA Henderson Acquires the Islazul Retail Park For €230 Mn

27/10/2014 – Expansion

TH Real estate, management company created as a fusion of Tiaa Creff and Henderson Global Investors, has been negotiating on the purchase with fund Ivanhoe Cambridge since late summer.

Finally, its offer outbid other proposals submitted by bidders like Hines or the fund of HSBC.

The Islazul shopping center has 265.000 square meters of built area and 90.000 square meters of GLA (gross lettable area). This is the second largest retail park in Madrid and one of the most popular as it generates 12-15 million euros annually.

Together with the purchase, TH Real Estate manages a €900 million worth of assets on the Iberian Peninsula. Among its commercial properties in Spain, notable are the Nervion Plaza in Sevilla and the Espacio in La Coruña. Besides, the firm owns two shopping parks in Fuengirola and Vigo, a hotel in Malaga and a logistics hub in Alovera (Guadalajara).

Quebec & Lar

Opened in 2008, the property has been included in the portfolio developed jointly by Ivanhoe Cambridge (belonging to bank Caisse de Dépôt et Placement du Québec) and Spanish real estate firm Lar. To set the ball rolling, the partners put €350 million in total.

Earlier this year, first attempt to sell the shopping center ended up in fiasco as the maximum price obtained was €185 million, submitted by Orion, an amount that was rejected by Ivanhoe expecting at least €200 million for the unit.

The operation is a sampling of the huge interest of investors in real estate assets for rent and, above all, in shopping malls.

Thus, out of the total of €5.67 billion invested in the property market during the first nine months of 2014, more than €2.7 billion was spent on Commercial Real Estate (CRE), as per data of advisor CBRE.

Big foreign investment funds and Socimis (Spanish counterparts of REIT vehicles) lead in the year-to-date acquisition volume. In fact, one of the listed trusts, Merlin Properties, has conducted the 2014 largest transaction on the Marineda shopping park in La Coruña, paying €260 million for the property. Furthermore, Socimi Lar España has spent €148 million on three shopping centers.

 

Original article: Expansión (by R. Ruiz)

Translation: AURA REE

Axia Has Acquired An Office And 5 Warehouses For €69.33m

1 August 2014 – Estrategias de Inversión

The largest investment was in Alcobendas (Madrid), where it acquired an office building for €28.75 million.

This is proving to be a busy week for the Socimis – on Thursday, Hispania, Merlin and Lar all reported that they have made a number of investments, amounting to €377.1 million, and these companies are continuing to close transactions on Friday. In addition, Axia has invested €69.33 million buying a number of buildings.

Specifically, the company has announced the purchase of an office building in Alcobendas (Madrid) from IVG Institutional Funds for €28.75 million. The building has a gross leasable area (GLA) of 17,266 square metres, plus 396 parking spaces.

It has also acquired three logistics warehouses located in Cabanillas del Campo (Guadalajara), with a GLA of almost 37,877 square metres, for €16.68 million. Two of the warehouses belonged to Parques Industrialises Nuevas Áreas de Actividad Gran Europa and the other one was owned by Altamira Santander Real Estate.

Finally, Axia has also purchased a warehouse in Azqueca de Henares (Guadalajara) with a GLA of approximately 35,781 square metres and another in Dos Hermanas (Sevilla), with a total GLA of 42,466 square metres, for a total price of €23.90 million.

Original story: Estrategias de Inversión

Translation: Carmel Drake

The Bad Bank Transfers a Thousand Assets Valued at 146 Million Euros

The bad bank which has absorbed 50.449 million Euros in the real estate assets from banks and local cash offices with public aid, continues to shed weight. Sareb has transferred the portfolio “Teide”, consisting of residential houses, garages, storage rooms, trade premises, buildings under construction and land, valued at 146 million Euros, as the bad bank informed today.

The operation will be conducted via creation of the banking assets fund (FAB), a tool for collective investment designed under Sareb´s guidance in search for more opportunities of indirect asset sales to the investors. Thus, the fund shares will be hold in minority by Sareb and also by the Lar real estate group and the Fortress fund.

FAB, the new fund, has been already registered with the National Stock Market Commission (CNMV). By holding a part of shares of the fund, the entity chaired by Belen Romana “may derive benefit from any future sale of the mentioned real estate assets”. The awarded property is situated in Andalusia, Catalonia, Castilla and Leon, Galicia and Madrid and the Lar group will manage them.

6.400 Properties Sold

By mid November, Sareb has sold 6.400 properties, while its business plan had been established at 34.000 units sold by 2016. What is more, the bad bank has sold Metrovacesa´s debt worth 115.5 million Euros in last months, all the syndicated loans of Colonial for 245 millions and two other portfolios inherited from the banking institutions for 323 millions.

The company assures that the sales rythm is speeding up and it has already got a few initiated operations bound to complete in the following months, such as the Harvest Project, including 22 rustic properties  and the Operation Corona, consisting of 600 offices in the Community of Madrid. In the first year of its activity, Sareb earned more than 2.000 million Euros, althought probably it will close the exercise with losses.

Source: ABC.es