BBVA Sells its Last Large Problem Portfolio to CPPIB

17 December 2018 – El Confidencial

The Canadian fund CPPIB has been awarded BBVA’s last major portfolio of problem assets. The investor, which manages the money of the public pensions in the North American country, is negotiating the final details of its purchase of €2.5 billion in unpaid real estate loans from the Spanish entity, according to financial sources consulted by El Confidencial. BBVA declined to comment.

The sale, framed as Project Ánfora, is going to close within the next few days.

CPPIB has won the bid, fighting off competition from two major US investors: Cerberus and Lone Star. The auction has been coordinated by Alantra and, according to average market prices, must have been closed for a price of around €1 billion.

For BBVA, this same represents almost the conclusion of the clean up of its real estate inheritance. Together with Project Ánfora, the entity, which is still chaired by Francisco González, agreed to sell €12-13 billion in property to Cerberus (Project Marina) a year ago. The final details of that operation are still being closed with the Deposit Guarantee Fund (FGD).

Before the sale of Ánfora and Marina, BBVA had a net real estate exposure of €5.5 billion, based on data as at September 2018. The aim is for the real estate inheritance to be reduced to almost zero by the end of the year.

The Ánfora portfolio also contains refinanced loans amounting to €900 million, a new type of asset in this type of process.

For CPPIB, this is the second batch of problem assets that it has purchased from BBVA this year. It already acquired Project Sintra, containing €1 billion in unpaid loans to property developers.

The Canadian fund broke into Spain a few years ago with the acquisition of Altamira, together with Apollo and the ADIA sovereign fund, the main investor vehicle of Abu Dhabi. CPPIB’s interest in Spanish real estate means that it cannot be ruled out that it will end up being the buyer of Altamira following the current sales process. Large vehicles such as the Canadian one use alternative assets such as properties to diversify their portfolios and reduce their dependence on stock market and bonds.

Original story: El Confidencial (by Jorge Zuloaga)

Translation: Carmel Drake

Regional Property Taxes Will Rise in 74 Municipalities in Málaga From 2019

11 September 2018 – Diario Sur

The autonomic coefficients that are applied to cadastral values to adjust them to market prices for the purpose of calculating Property Transfer and Property Succession taxes are going to be updated from 2019.

If you are planning to buy a property next year or if you acquire one as a result of inheritance or a donation, then it is quite likely that you will be hit by an increase in the two autonomic taxes linked to the real estate market (the Property Transfer tax and the Property Succession tax) given that the index that the Junta de Andalucía uses to set the charge is going to increase in 74 of the 103 municipalities in the province of Málaga. With the recovery of the real estate market as the main justification, the multiplying coefficients that are applied to cadastral values to adjust them to market prices (to reflect the performance of the sector) will increase by an average of 12.05% in the Andalucían province with respect to the values in 2017, according to plans compiled by the Ministry of Finance (…).

Málaga province leads the rise

According to the corresponding economic report, Málaga and Almería are the only two provinces where increases are expected to be seen in global terms (of 12.05% and 10.83%, respectively). Many of the other provinces in the autonomous region will be moving in the opposite direction, with decreases expected in Huelva (-13.19%), Granada (-12.41%), Córdoba (-8.32%) and Sevilla (-7.26%) (…).

Original story: Diario Sur (by Francisco Jiménez)

Translation: Carmel Drake

Tauro Real Estate Buys Torre Ámbar in Madrid

3 July 2018 – Eje Prime

The new Tauro Real Estate is rearing its head in the Spanish residential market. The fund, which is now under the mandate of Globe Invest, the Israeli company that acquired the firm in April by paying €180 million to its former shareholders, has recently purchased Torre Ámbar in the centre of Madrid.

In the middle of May, Globe Invest, owned by the multi-millionaire Teddy Sagi, acquired the rights to purchase the residential block from the Inveriplus group. The tower comprises 64 prime homes very close to Paseo de la Castellana, according to confirmation from sources involved in the operation. The amount of the transaction has not been revealed. The vendor in this operation, Inveriplus, is a group dedicated to investment in real estate assets for their subsequent management and value generation. The company, which is headquartered in Madrid, is led by Óscar Bellette.

The asset has been acquired after the clean-up that Inveriplus conducted of the tower. It, in turn, had purchased the homes during the crisis from several merchants of the Proinlasa real estate group. For the last few years, the manager has succeeded in leasing the block in its entirety.

Torre Ámbar is one of the skyscrapers that comprises the residential area of Isla Chamartín, located to the north of Madrid. The building, whose first homes were handed over in 2009, was designed for sale, but the change in economic cycle forced a change in the objectives and it was put up for rent in 2014.

The sale was signed “at market price”, according to sources close to the operation speaking to Eje Prime. “The returns that the property could generate are of much greater interest than the purchase opportunity”, say the same sources.

Torre Ámbar comprises luxury one and two bedroom homes, as well as several studios. The urbanisation is private and has security gates, a swimming pool, garages and storerooms, a padel court and private green spaces, according to Proinlasa’s corporate website.

The owner of the property has real estate assets for sale and rent in Madrid, Valladolid, Palma and Córdoba. In its property development plan, the group says that, in addition to residential land, it is also backing the tertiary and industrial market.

The owner of Camden Market’s commitment to Spain

Teddy Sagi is an Israeli multimillionaire and owner of the renowned Camden Market in London. The businessman, through Tauro Real Estate, has acquired 600 homes spread between Madrid and Barcelona.

Tauro has fattened up its portfolio in less than four years with the purchase of assets, primarily from banks, involving the investment of up to €160 million. In Madrid, it owns 350 homes and in Barcelona, it has another 250 properties. In the Catalan capital, it owns tourist apartments, which comprise 30% of the assets that Tauro owns in the city (…).

Original story: Eje Prime (by J. Izquierdo & P. Riaño)

Translation: Carmel Drake

The EBA Lobbies For The Creation Of A European Bad Bank

31 January 2017 – El Economista

On Monday, the European Banking Authority (EBA) urged the European Union (EU) authorities to establish an alternative investment fund to acquire delinquent loans from the European financial sector, with the aim of stimulating economic growth in the region.

In a speech in Luxembourg, the President of the EBA, Andrea Ernie, highlighted that tackling the high level of delinquent debt in the EU – which stands at approximately €1 billion – is an “urgent and viable” issue, according to Reuters.

In this sense, Enria indicated that EU banks may sell some of their non-performing loans to an EU “asset management” company.

Enria proposes assigning an agreed “real economic value” to the non-performing loans sold and for the investment fund that buys them to act as a “bad bank”, given that it would have the obligation to dispose of the assets within three years at their real economic value, rather than at market price.

“If that value is not achieved, the bank must bear the impact at the market price and a public recapitalization must be carried out with all the conditions that accompany the process”, said the President of the EBA.

In this regard, the Managing Director of the European Stability Mechanism (MEDE), Klaus Regling, welcomed the EBA’s initiative and added that the proposal does not involve sharing banking risks between member states, which is something that Germany has firmly opposed in recent years.

“It is likely that the public sector will have to play a role”, said Regling at the event, where he also said that the “bad bank” should aim to acquire up to €250,000 million of non-performing loans.

Original story: El Economista

Translation: Carmel Drake

Sareb & The Banks’ RE Arms Commission 3x More Appraisals

2 November 2016 – Cinco Días

During the first half of this year, Sareb and the real estate subsidiaries controlled by the banks commissioned appraisals for 845 properties per day. That figure represents a threefold increase compared to the same period last year. In other words, a real boom in the number of appraisals being performed for real estate portfolios in the sector. This sharp increase has been driven by the Bank of Spain, in its quest to ensure that asset prices reflect the reality of the market, with the dual aim of facilitating their sale and preventing deceptive quantifications in the value of assets on the balance sheets of entities in the industry.

Two specific pieces of regulation have been developed to acheive these aims. Firstly, new accounting regulations for Sareb, which was notified last October that it must reappraise its entire portfolio at market prices in just a few months: at least 50% of its properties had to be reappraised in 2015 and the remainder this year.

Secondly, the Circular 4/2016, whereby the institution governed by Luis María Linde strengthened the coverage and provisions that the financial institutions have to make and which requires them to perform an updated valuation of the real estate collateral securing their loans.

Although the financial institutions have already started to review the value of their balance sheets, for the time being, the regulations have had more impact on the field of appraisals involving Sareb. That is according to the Spanish Association of Value Analysis (AEV), which groups together the main appraisal companies in Spain, which are responsible for performing 90% of the appraisals conducted in the country. According to the association, during the first half of the year, Sareb and the asset management subsidiaries of the major Spanish banks commissioned 152,166 appraisals in total.

That figure far exceeds the 47,256 appraisals that the same group of companies requested during the first half of 2015. The rate has tripled in just one year, with the intermediate step taken during the second half of last year, when 119,942 appraisals were requested, after the so called bad bank was notified about the contents of the Bank of Spain’s new accounting legislation and the short calendar for its implementation.

From the appraisals carried out for Sareb and the banks’ real estate companies during the first half of this year, 46,895 correspond to full appraisals, which are those that include a visual inspection of the property (even if internal access is not possible) as well as the performance of the typical checks for mortgage valuation purposes (such as checking that the property exists, ensuring that the urban planning situation is up to date, etc.), say sources at AEV.

Another 16,676 valuations were performed using automatic templates. Sources at the AEV explain that this type of appraisal tends to be used to carry out valuation updates for large groups of properties using statistical methods.

Finally, another 88,525 appraisals were performed using other, automated, mass-valuation methods, including mathematical models, online valuations and the so-called desktop valuations, which are performed remotely using photographs and street views such as those supplied by Google Street, for example. (…).

The figures published by AEV show that the analysis of these portfolios has resulted in low valuations this year: the 47,000 properties valued during the first half of 2015 had a combined appraisal value of €11,380 million, whereas the 150,000 properties valued during the same period in 2016 have a combined appraisal value of €21,654 million. In other words, triple the number of assets correspond to just twice the appraisal value.

Original story: Cinco Días (by Juande Portillo)

Translation: Carmel Drake

Insurance Companies Have Unrealised Gains Of €2,400M From RE

26 August 2016 – Expansión

Mapfre, Mutua Madrileña and Catalana Occidente own the majority of the real estate in the insurance sector, whose total portfolio amounts to €4,475 million.

Insurance companies in Spain are accumulating a cushion of unrealised gains in their real estate investments amounting to €2,433 million, according to data from the Director General of Insurance and Pensions.

This amount is the difference between the value that the companies assigns these assets on their balance sheets and the market price of these assets, according to the mandatory appraisals that have to be performed periodically by independent appraisers.

These latest gains in the insurance sector are still well below the threshold of €4,226 million achieved in 2009, at the beginning of the burst of the real estate bubble.

Unrealised gains are recognised in the accounts of entities if the properties are sold at a profit. They are also included in the calculation to measure the solvency margin of the entities, which measures the firms’ strength to deal with unforeseen events using their uncommitted assets.

Insurance companies have traditionally invested in properties, given that they are a particularly appropriate asset for the long term over which they conduct their activity. They also generate regular income in the form of rental payments.

In addition, insurance companies have had to diversify their portfolios following the decrease in interest rates in recent months, which makes the investment strategy of these entities more complicated; they have traditionally focused on public debt, primarily in Spain.


Insurance companies are risk averse in their investments and in the face of this new panorama, they have made several purchases that have increased their real estate portfolios, particularly important for the Spanish capital firms Mapfre, Mutua Madrileña and Catalana Occidente, which own the majority of the sector’s total portfolio of €4,475 million, according to data from the Director General of Insurance and Pensions. In recent months, these three entities have been involved in several real estate purchases amounting to more than €250 million. (…).

The Mapfre Group, which has a presence in fifty countries, reported latent gains of €975 million in its accounts for 2015 on the basis of the book value of its total real estate portfolio (€2,267 million) and the market price (€3,242 million). Most (56% or €1,835 million) correspond to real estate investments, whilst the rest (44% or €1,406 million) are properties used by Mapfre. (…).

Meanwhile, Mutua has accumulated a piggy bank of unrealised real estate gains amounting to €462 million, with total assets worth €1,443 million at market prices and €981 million on the balance sheet. Its assets are concentrated in Madrid, where historically it has owned a handful of individual buildings on Paseo de la Castellana. (…).

Grupo Catalana Occidente’s investment in real estate amounts to €1,024 million, which includes unrealised gains amounting to €465 million. The insurance company, which has a presence in more than fifty countries, acquired a building measuring almost 4,000 sqm in the 22@ district in Barcelona in July.

Original story: Expansión (by E. del Pozo)

Translation: Carmel Drake

2015 Tax Year: Treasury Raises Tax Rate On Second Homes

18 April 2016 – Cinco Días

The owners of second homes must pay tax on them in their annual income tax returns and many will incur a tax increase this year. The tax percentage on second home properties was fixed at 1.1% until now for homes whose cadastral values have been reviewed since 1994 and at 2% for homes reviewed before that date. The reference date now has been set as 2005, which means that more taxpayers will have to pay 2%.

The campaign for the filing of tax returns for 2015, which began last week, incorporates the new features of the tax reform approved by the Government, which mainly resulted in reductions in tax rates and tax brackets. Nevertheless, as a study published on Thursday by the Registry of Tax Advisors (REAF), an independent body formed by the General Council of Economists, shows there are also some changes that will harm the taxpayer. One of those affects the owners of second homes.

The legislation establishes that taxpayers who own second homes must pay a real estate tax on the basis of the general tax base. Until now, if taxpayers owned homes whose most recent cadastral review took place after 1994, they reported a tax charge in their tax returns equivalent to 1.1% of the cadastral value of their properties. For reviews before that date, the tax rate was 2%. For example, the owner of a second home with a cadastral value of €300,000, which was last updated in 1998, used to have to pay €3,300 (i.e. 1.1% of €300,000). From this year onwards, only homes whose cadastral reviews have been reviewed since 2005 may apply the 1.1% rate; all others have to apply 2%. This means that the owners of homes with valuation updates between 1994 and 2005 will incur a tax increase. In the case of the example described above, the owner of the €300,000 home will have to pay €6,000 from this year, compared with €3,300 that he previously recorded in his tax return.

Town halls are responsible for approving cadastral reviews. In theory, the more time that has elapsed since the last update, the larger the difference between a property’s cadastral value and its market price. For this reason, the Treasury has established a higher tax rate for homes with older cadastral values. In fact, the tax reform establishes that the 1.1% rate will apply to homes whose cadastral values have been reviewed within the last ten years. In other words, for the tax year 2016, the date for determining the application of the different rates (1.1% vs 2%) will be 2006. (…).

Original story: Cinco Días (by Jaume Vías)

Translation: Carmel Drake