Neinor Starts Buying “Non-Finalist” Land

23 February 2018 – Expansión

With its first birthday as a listed company just around the corner, Neinor is making a strategic shift. It is negotiating the acquisition of “non-finalist” land (plots that require urban planning management to become developable) to maintain its pace of development once it has reached its cruising speed in 2020. Specifically, the property developer, which has plots of land on its radar worth €500 million, is holding negotiations with banks, private investors and institutional funds regarding the possible completion of three land purchase operations involving “non-finalist” plots for around €200 million. They will allow for the construction of around 1,000 homes spread over various cities, including Madrid and Barcelona.

Under the framework of the negotiations, Neinor plans to make an initial payment of almost 10% of the total price to take control of the “non-finalist” land and to pay the remaining balance once the plots have been granted their corresponding urban planning permits, within a period of between three and five years. “My concern now focuses on acquiring a land bank to put into production from 2022 onwards”, explains the CEO of the company, Juan Velayos (pictured above).

The real estate firm, which announced results yesterday, closed last year with losses of €4.6 million but expects to become profitable in 2018. If we take into account the incentive plan for directors amounting to €19 million – of which €10.6 million corresponded to the CEO – paid in its entirety by the fund Lone Star, and the costs associated with the stock market debut,  then the property developer lost €25.9 million last year.

In 2017, Neinor generated revenues of €225 million, of which €77 million proceeded from its property developer business. It also recorded cumulative pre-sales of €746 million. The company, which delivered 313 homes in 2017, expects to hand over 1,000 units in 2018. It then plans to double that figure in 2019, to 2,000 units; and reach its cruising speed from 2020 onwards with 4,000 units. That would represent the high end of the range announced initially, although it will do so with an evolution in “more conservative phases to protect margins, improve the quality of revenues and deliveries”, he said.

Neinor owns 1.5 million m2 of developable land with capacity for the construction of 12,500 homes and a gross asset value (GAV) of €1.7 billion. The company, which invested €286 million in land in 2017 for the development of 3,100 units, plans to disburse another €200 million on purchases this year. Neinor’s share price closed trading down by 4% yesterday at €16.66.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Spain’s Listed Property Developers Will Be Worth More Than €6.5bn in 2018

1 January 2018 – La Vanguardia

The market capitalisation of Spain’s property developers will exceed €6.5 billion in 2018, after a year of recovery in a sector whose activity was “almost paralysed” following the burst of the real estate bubble, according to forecasts from investors and financial analysts shared with Europa Press.

Analysts consider that the two large property developers that began their stock market lives in 2017, Neinor and Aedas Homes, will consolidate their businesses this year. Moreover, Metrovacesa and Vía Célere will make their stock market debuts, and Aelca may debut too.

The current market capitalisation of the property developers that have listed on the market exceeds €3 billion. With the new joiners, the financial analysts expect that figure to more than double in 2018, to reach €6.5 billion.

In terms of the debutants expected in 2018, Metrovacesa, which wants to be the first to make the leap onto the stock market, will do so as a “completely transformed” company. In this way, the analysts agree that it will likely be the largest stock market debut of the year and will become the largest listed property developer, with a portfolio worth €2.6 billion.

Moreover, the analysts state that Neinor and Aedas Homes have upside potential of around 20% and solid shareholders, and so they present them as “clear buy recommendations”, whereby reinforcing the strength of the sector. The experts also highlight that both companies represent “an opportunity” to join the first stages of recovery of the Spanish real estate market, an assessment that will be extended to the new companies that plan to make their stock market debuts this year.

Specifically, the analysts highlight the quality of Aedas Homes’ land portfolio, which has potential for the construction more than 13,000 homes and which is located in the provinces that have seen the greatest recovery in the real estate market and a positive evolution in terms of prices (Madrid and Barcelona, according to the most recent report from Tinsa).

On the other hand, Neinor stands out due to the “discipline” of its balance sheet, which has meant that the company is in a strong position to purchase plots of land with attractive margins. Moreover, its EBITDA is expected to grow from €19 million in 2016 to €320 million in 2021.

Original story: La Vanguardia

Translation: Carmel Drake

Sabadell Seeks Investors to Develop More Than 2 million m2 of Land

28 December 2017 – Expansión

The bank, through Solvia, has spun off the management of assets worth €600 million into a new company, which will be headquartered in Madrid.

Solvia, the real estate management company of Sabadell, wants to replicate the operation that it carried out in the hotel sector earlier this year, when it sold its hotel business to Blackstone for €630 million, generating profits of €55 million.

As such, the entity has decided to carve out its activity relating to the development of land into a new company called Solvia Desarrollos Inmobiliarios. That company will manage 2.22 million m2 of land in total, equivalent to almost 300 football pitches. The construction of 4,000 homes, across more than 84 developments, is already underway.

The portfolio of assets under management amounts to €600 million, equivalent to approximately 15% of Solvia’s total income. That size places it in the second division in the sector, just behind the listed real estate companies, led by Metrovacesa, Neinor, Aedas and Vía Célere. The largest owner of land in Spain is Sareb.

This new company will be headquartered in Madrid and will be led by Francisco Pérez, former CEO of the Catalan property developer Vertix. “The idea is to grow hand in hand with the large overseas investors that are looking for high returns in Span, but which do not have any structure here. Most of the funding will come from outside of the country”, explains Javier García del Río, CEO of Solvia (pictured above).

The plans

Solvia Desarrollos will develop not only Sabadell’s land – the bank owns 83% of the portfolio – but also plots owned by family offices that the bank manages and the developments that Sareb is granting it. Solvia was one of the four entities chosen by the bad bank in 2014 to help it sell its homes to the general public. Specifically, it took over the problem loans proceeding from Bankia, Ceiss and Banco Gallego.

Sabadell has been developing land since 2013 and has grown a considerable business in that time. It was the first bank to get back on the horse after the real estate bubble burst. “Land is behaving magnificently, although we do not expect to see any abrupt growth. Areas that were very risky in 2013, such as Huelva, are no longer”, said García del Río.

The experts in the sector endorse his opinion. “The turning point in this market came in 2015 and 2016. This year has been exceptional, with more than 20,000 transactions involving land”, explains Samuel Población, National Director of Residential and Land at the consultancy firm CBRE. He calculates that property developers are capable of generating margins of between 18% and 22% from the construction of private housing blocks in Spain.

“The funds that left Spain have returned and investors are interested in buying land”, says José García Montalvo, Professor of Economics at the Universidad Pompeu Fabra and an expert in the real estate sector.

Solvia manages a portfolio of 148,000 real estate assets, whose value exceeds €31 billion. Last year, it generated a gross profit of €57.8 million and brokered the sale of 20,321 properties. Between 2011 and 2016, it sold more than 91,000 assets.

Sabadell granted new financing of €1.35 billion to property developers in 2016, up by 56%. Last year, it started granting property developer loans again in CAM’s area of influence after four years of restrictions imposed by Brussels.

Original story: Expansión (by R. Lander)

Translation: Carmel Drake

Neinor Buys 2 Buildable Plots For 650 Homes For €68.5M

30 June 2017 – Observatorio Inmobiliario

Neinor Homes has completed the purchase of 2 plots of buildable land, in Las Rozas (Madrid) and Estepona (Málaga), for €68.5 million. The transaction consists of one plot in Las Rozas, Madrid, with a buildable surface area of more than 40,000 m2, suitable for the construction of more than 300 homes, and another plot in Estepona (Málaga), measuring more than 30,000 m2, where more than 300 homes will be built.

This purchase follows the announcement made by the company last week that it is investing €27 million in the construction of more than 400 homes opposite the Hospital La Fe in Valencia.

The investment in land made by the company during the second quarter of this year amounts to €95.5 million, bringing the total investment for the year to date to €147.1 million, which represents 74% of its annual objective.

Juan Velayos (pictured above), CEO of Neinor Homes, stated that “this transaction reflects that the company is continuing to acquire high-quality buildable land, even in highly competitive areas of Madrid, above the property developer margin sought. This will allow us to reach a total volume of investment for the year of almost €200 million, as established in our objectives. The team will continue to work to identify acquisitions that add value to the company’s land bank”.

Original story: Observatorio Inmobiliario

Translation: Carmel Drake

Santander Considers Repurchasing 85% Of Altamira From Apollo

27 July 2016 – Expansión

The financial institution is considering taking back control of its real estate platform to improve its margins and create a large global firm to provide services in other countries.

The sale of Altamira could turn full circle. Santander and the US fund Apollo have held meetings in recent weeks to discuss the possibility of the Spanish bank repurchasing 85% of the real estate platform, according to financial sources consulted by Expansión.

These negotiations come just two and a half years after the financial institution decided to get rid of its controlling stake in the real estate platform. Then, Apollo fought off other funds in a competitive process in which it paid €664 million for 85% of the company, generating a gross profit of €550 million for the bank.

According to financial sources consulted, Santander’s new approach has arisen for three main reasons: the aim of creating a new area for the management of doubtful assets at the global level, ahead of the forecast increase in default rates in countries such as Brazil; to improve its margins, given that the current agreement forces the bank to pay commission to Altamira; and to take advantage of the financial improvement that Altamira is enjoying.

For the time being, the plans are in a very preliminary phase and both Santander and Apollo have explored other options for Altamira. One of the options would involve a movement in the opposite direction from the 85% repurchase: namely, to extend Apolllo’s agreement to other countries.

New management

Since Apollo took control of Altamira, changes have been introduced in the management of the platform with the aim of maximising sales. One of the new administrators’ great successes came when the company was awarded one of the four management contracts that Sareb put up for tender at the end of 2013.

Specifically, Altamira Asset Management took over the second largest contract on offer, comprising 44,000 properties and loans to doubtful property developers that had been originated by Catalunya Ciaxa, BMN and Caja 3, worth €14,000 million initially. To win this tender, the platform controlled by Apollo paid out €174 million as a deposit for this contract, which it will recover as it achieves its objectives.

In addition to these assets, Altamira administers foreclosed properties and loans linked to properties from Santander and from its main shareholder Apollo. Nevertheless, the Spanish bank will reduce the perimeter of the assets that it holds on its balance sheet as a result of the merger between Metrovacesa and Merlin Properties.

According to its accounts for 2015, Altamira Asset Management Holdings, the company in which Altamira holds a 85% stake, recorded profits of €25.2 million last year, down by 11% compared to the previous year. Part of that decrease was due to the costs of migrating Sareb’s portfolio of assets. Its turnover amounted to €267 million and the operating profit stood at €81 million. The company forecasts that its profits will increase this year thanks to the sales it will generate from Sareb: “In 2016, we will manage Sareb’s portfolio for the whole year, which is expected to increase the group’s turnover”, according to last year’s annual accounts.

Original story: Expansión (J. Zuloaga)

Translation: Carmel Drake

Idealista: Yields On Residential Investments Reach 6.1%

19 July 2016 – El Economista

Yields on residential investments amounted to 6.1% in the second quarter of 2016, compared with 5.5% a year ago. Moreover, this percentage is significantly higher than the margin offered on 10-year bonds, which has hovered around 1.5% in recent placements.

Those are the findings from a study conducted by Idealista, which compares the relationship between the sale and lease of different real estate products to calculate their gross yields.

According to this analysis, commercial premises retain their position as the most profitable real estate investment. As such, buying or leasing a retail property generates a return of 7.7%, in line with the yield reported a year ago. Meanwhile, offices offer a return of 7.3%, i.e. one percentage point more than twelve months ago, and yields on garages have soared to 5.6%, from 4.6%.

Regional differences

Lleida is the most profitable of Spain’s regional capital cities, with average returns of 7.7%, followed by Palma de Mallorca (6.7%), Las Palmas de Gran Canaria (6.5%), Alicante (6.4%) and Huelva (6.3%). The yield in the cities of Madrid and Barcelona is 5.5% in both cases.

Nevertheless, the lowest returns in Spain are those obtained by homeowners that lease their properties out in San Sebastián (3.7%), Ourense (3.7%), A Coruña (3.9%) and Zamora (4.3%).

Original story: El Economista

Translation: Carmel Drake