Metrovacesa To Carve Out Property Development Business

28 December 2015 – El Economista

Metrovacesa will hold an extraordinary shareholders meeting on Tuesday (29 December) to approve its division into two companies, so that it can segregate its entire land, development and house sale business, currently controlled by Santander, into a separate company.

This development activity will be transferred into a newly created company, called Metrovacesa Suelo y Promoción, which will take on assets and liabilities with a net value of €1,000 million.

This new company will have the same shareholders, with the same percentage stakes as Metrovacesa’s currently ownership structure. Therefore, in addition to Santander, which will control 72% of Metrovacesa, the other shareholders with be BBVA with a 19.4% stake and Banco Popular, with a 8% stake.

Meanwhile, the current Metrovacesa company will retain the the real estate business, in other words, it will continue to hold the portfolio of properties (with a combined surface area of 1.1 million m2) comprising office buildings, shopping centres and hotels, mainly located in Madrid and Barcelona, which are operated under lease agreements.

This operation to separate the businesses into different companies forms part of the debt restructuring programme that the real estate company is working on ahead of the “significant maturity” of its liabilities, primary linked to the real estate developer business, which fall due in the third quarter of 2016.

The ultimate goal is to capitalise this debt, strengthen the company’s equity and thereby guarantee the future viability and profitability of the two businesses, according to the company’s comments in its carve-out plan.

Segregation process

The division of the current Metrovacesa entity into two companies will take place through a process involving three successive capital increases, which will be approved at the shareholders’ meeting on Tuesday.

The first increase will be non-monetary, but will involve the shareholder banks contributing certain real estate assets to the company. The second increase will involve the capitalisation of the debt held by these entities for conversion into new shares.

Meanwhile, the third increase will be monetary and will be aimed at the minority shareholders who still hold shares representing 0.073% of Metrovacesa’s share capital, so that their stakes are not diluted.

Once these capital increases have been completed, the new Metrovacesa Promoción y Suelo company will proceed make a block acquisition of all of the assets relating to this business from Metrovacesa.

This final carve-out step will be ratified at another extraordinary shareholders’ meeting, scheduled for 12 January, when the board of the new company will also be appointed.

In this way, Metrovacesa is embarking upon a new phase in its history, years after Santander and other banks took control of the real estate company, by foreclosing the debt held by its former owners, and excluded it from the stock exchange.

Original story: El Economista

Translation: Carmel Drake

Servihabitat: Sales Of €212M For Spain’s Largest Servicer

18 March 2015 – Expansión

Servihabitat increased its real estate sales by 38.8% in 2014, selling 21,163 assets in total. The real estate company, which is controlled by the fund TPG (51%) and part-owned by Caixabank (49%) also signed 14,873 lease agreements, and so, in total, it successfully marketed 36,036 units.

Thanks to these transactions, the platform led by Julián Cabanillas generated turnover of €212.64 million, which represents an increase of 24.9%. “We are very pleased with the results obtained in a particularly difficult year”, said Cabanillas, the CEO (of Servihabitat) yesterday.

When it was founded, Servihabitat was dedicated solely to the sale of property that had been repossessed by the La Caixa group. Nevertheless, it has now adopted a multi-client strategy and it was one of the real estate companies to be awarded the management of some of Sareb’s assets, which are now being migrated across. Specifically, it took over the management of 33,000 properties and loans from Novacaixagalicia, Liberbank and Banco de Valencia worth €9,200 million. In this way, Servihabitat’s portfolio has grown by 26% and now includes 194,156 units. According to market sources, this volume of properties is worth around €59,000 million, which makes Servihabitat the largest servicer in the sector with a market share (by value) of 22%, ahead of Haya Real Estate, Altamira, Solvia, Anida and Aliseda.

44,207 properties in the entity’s portfolio are currently rented out, which represents an increase of 47%.

Original story: Expansión (by S. Saborit)

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