Madrid Earns €360M From The Sale Of Public Properties

25 March 2015 – El Confidencial

The Community of Madrid sold around thirty real estate assets between 2012 and 2014, including an entire housing development and a number of buildings on Gran Via.

The sale of public properties generated income of more than €360 million between 2012 and 2014. In total, during this period, around thirty real estate assets of all types were sold, ranging from an entire housing development, to a number of buildings in the heart of Gran Via, as well as flats, plots of land and commercial premises.

The starting gun for “property” sell-off began in the summer of 2012, with the sale of a plot of land for tertiary use in Pozuelo de Alarcón for €5 million. In the same year – when Spain was on the black list of all investors – Metro de Madrid sold another plot of land that it owned on Calle Cardenal Cisneros for €2.1 million.

However, the largest transaction signed to date by the Community of Madrid did not take place until July 2013. Then, it sold a 32 home development, owned by Ivima, to Azora and Goldman Sachs for €200 million, whereby the buyers paid almost 20% more than the initial asking price (€168.9 million).

At the end of 2013, two further transactions were signed that “fattened up” the public coffers by more than €26.5 million. These involved the sale of Gran Via 18 for €18.6 million to Iberia Project Management, although the Texas Pacific Group (TPG) was actually behind the bid – that fund purchased 51% of Servihabitat Gestión Inmobiliaria from CaixaBank in September of the same year. The second sale was of Gran Via 3, which the Community sold for €8 million to Baech Bienes Inmuebles.

Then in 2014, when real estate investment in Spain really took off, more than a dozen transactions were signed; the most noteworthy was the sale of a building measuring more than 9,000 square metres for €40.2 million to Línea Directa, the insurance arm of Bankinter. Last year, Gran Via 20 was also sold to the real estate company of Caja Rural de Almendralejo, which paid almost €20 million for the property.

The final two transactions last year were closed in December: a building on the Carretera de San Jerónimo, measuring 4,500 square metres for €14.1 million and another measuring almost 3,000 square metres on Los Madrazo for €3 million; both were owned by Arproma.

The plans to sell off public assets are on-going. The Community of Madrid has placed a “for sale” sign above another 22 assets that is owns. Office buildings, residential properties, commercial premises, plots of lands, flats and individual buildings. Through these, it hopes to “fatten up” the public coffers by around €56 million, taking advantage of investors’ renewed appetite for Spain.

Nevertheless, the jewels in the real estate crown have been sold already. By price, the following assets are up for sale: an office building on General Díaz Porlier, which has been on the market since October 2013 and for which the Community of Madrid is asking €11.1 million. In terms of land, there is a plot for sale in Tres Cantos for €5.8 million and there is also a flat for sale measuring 170 square metres on Calle Fernando el Católico for €467,000.

The Community is organising public auctions to sell these assets as well as direct sales. To give more visibility to its properties, like in the past, the Community has is making use of specialist websites, such as addmeet.com, which lists the assets sold to date, as well as the buildings for sale and the real estate auctions that are underway.

The sale of the building next to Puerta del Sol is on standby for the moment; the Community of Madrid is asking €10.7 million for that property.

Original story: El Confidencial (by Elena Sanz)

Translation: Carmel Drake

Cooperatives Queue Up To Buy A Plot That The Treasury Purchased 30 Years Ago

16 February 2015 – El Confidencial

All eyes are focused on one plot of land in Madrid. A plot of land, which the Treasury purchased from a group of nuns for 800 million pesetas in 1985, could now, three decades later, be sold for several million euros. It is one of the largest and rarest gems left in Madrid and many of the large housing cooperatives have already expressed interest. These same cooperatives were responsible for some of the most talked about transactions in the country last year; and this deal would allow them to offer hundreds of low cost homes in the centre of Madrid, just a few metres from the Paseo de la Castellana, something that was unthinkable a few years ago.

The plot measures just over 15,000 square metres and is located at the intersection of Calles Padre Damián and Fray Bernardino Sahagún, very close to the Castellana and ten minutes away from the Santiago Bernabeu stadium and the Torres KIO. It is owned by State Heritage (Patrimonio del Estado), which in turn reports to the Treasury (Ministerio de Hacienda). The land has its own history…it used to house a convent, which was demolished shortly after the plot was acquired by the Government. Three decades later…., the plot may come back onto the market in a perfect transaction for the public coffers, thanks to the increase in land values during the intervening period.

Nevertheless, before the plot is auctioned, some administrative hurdles will need to be overcome to change its intended use. The State Heritage department has proposed a one-off amendment to the General Urban Plan for Madrid because, for this land to be attractive in the market, and for the Treasury to obtain the maximum price for its sale, its use must be residential; currently it may only be used for the collective services of the Public Administration. (…)

This one-off amendment is awaiting provisional approval by the Town Hall of Madrid and definitive approval by the Community of Madrid, according to sources from the Treasury who say that until this happens, the plot will not be put up for sale. (…)

(…)

Under the spotlight of the management cooperatives

“The size of the plot, its location, its environment, its intended suitability for construction, its scope, the potential appeal of the project that could be developed makes this plot of land a clear target that is going to generate a lot of interest”, said Leopoldo Morena, the CEO of the Ibosa Group, the cooperative manager that was responsible for one of the most important land transactions in the capital last year, when it was awarded ownership of Metro de Madrid’s depots in Cuatro Caminos for €88 million. That project, Residencial Metropolitan, which will bring more than 400 homes onto the market, with prices upwards of €2,600 per square metre, has almost all been sold (95%).

Nevertheless, the operation of the year was, without a doubt, the sale of a plot of land on Calle Raimundo Fernández Villaverde by the Ministry of Defence in a bid that was won by the cooperative manager Domo. Its offer for €111 million exceeded those made by Ferrovial, Pryconsa and Construcciones Amenabar; all of the homes in the development have already been sold. The sales price of the 355 homes was expected to start at €3,300 per square mete.

These two transactions boosted the market in 2014. According to data from the real estate consultant Irea, transactions involving land in Spain amounted to €346 million last year, which represented just 4% of the total investment in the market. A low percentage, however, in 2013, there weren’t any transactions involving land above five million euro, the threshold that Irea uses to prepare its analysis of investment in Spain (and so the deals closed in 2014 did represent a move in the right direction).

“Transactions such as the one in Calle Raimundo Fernández Villaverde, the Metro de Madrid and more recently, Amenabar’s purchase of various plots of land from Sareb, without financing, were unthinkable a few years ago”, explains Mikel Echavarren, the CEO at Irea.

In his opinion, the main players that may sign land-related transactions in Spain this year will continue to be domestic companies, developers and cooperatives, which are capable of financing their land purchases with their own funds: “There are scarcely six companies in Spain at the moment with sufficient financial capacity to finance land purchases”….

The role of international investment funds in the direct purchase of land will be practically zero, but they will be involved in the acquisition of portfolios of debt that contain land or residential developments as underlying collateral.

The plot of land in Madrid has also attracted interest from prospective house buyers, as evidenced by the fact that some managers have received requests from more than 2,000 interested parties. And it is no wonder: if the land falls back into the hands of cooperatives, they may build homes right in the centre of Madrid at very competitive prices, especially compared with those in private developments, such as the one that will start soon in Calle Juan Bravo, 3, where the prices of the luxury homes that are going to be built on the site may reach €9,000 per square metre, significantly higher than the less than €4,000 per sqm being charged by both the Ibosa Group and Domo Gestora for their recent acquisitions in Madrid.

Original story: El Confidencial (by Elena Sanz)

Translation: Carmel Drake