HardRock to Invest €2bn in Future Leisure Mega-Complex in Tarragona

25 May 2018 – Eje Prime

Hard Rock has been given the green light to build its gaming and leisure mega-complex in Tarragona. The Generalitat de Cataluña has unblocked the plans of the US group, which is going to invest €2 billion in this complex. The economic plan includes one line item amounting to €300 million for the purchase of land, located in Vila-seca, from CaixaBank.

The Ministry of Economy reported on Friday that it had awarded the US company the authorisation to install and operate a gaming casino, which will be located at the centre of the project and which is going to be called Hard Rock Entertainment World.

The next step that the group must take is to make a €10 million deposit within the next ten days, although that amount includes the €3 million that the company already paid in June last year to guarantee its involvement in the project.

Despite those assurances, Hard Rock has not had a rival in the public tender that was opened to develop the complex. The first multi-national leisure project in Spain will have a gaming area spanning 7,595 m2, as well as two large hotels with a surface area of 63,000 m2.

Similarly, the US company will promote a commercial space measuring 15,000 m2 in which 6,000 m2 will be dedicated to an extensive restaurant offering and the same amount of space will be used for the centre itself, where leisure and live entertainment spaces will also be opened.

€700 million to begin with

During the first phase of the project, Hard Rock is going to invest €700 million to purchase the land, cover the construction and financing costs and to acquire furniture, amongst other aspects.

The group expects that its multi-million euro investment to set up this mega-complex, will allow it to reach an economic impact in the tourist area of Tarragona, where it is located, on the Costa Dorada, of €1.3 billion. The Port Aventura World leisure resort is located in the vicinity of the future Hard Rock Entertainment World.

Original story: Eje Prime

Translation: Carmel Drake

Gov’t Approves New Mortgage Bill That Favours Borrowers

7 November 2017 – Inmodiario

The Government has approved the Mortgage Bill, which transposes the corresponding European Directive and seeks to increase the transparency of mortgage contracts, according to explanations provided by the Minister for the Economy, Industry and Competitiveness, Luis de Guindos (pictured below, left).

In terms of the transposition, De Guindos said that the legislation has opted for the alternatives that are most favourable for the mortgage holder in every case. In this way, commissions for the early repayment of variable rate loans will be reduced, and even cancelled from the fifth year onwards; a maximum commission (cap) will be set for fixed-rate loans, compared to the current situation where up to two commissions may be applied, one of which has no kind of limit.

Moreover, the legislation establishes the right of consumers to change the currency of a loan taken out in a foreign currency to the domestic currency or any other; plus it prohibits cross-selling – which obliges the consumer to contract a series of financial products as conditions to obtaining a mortgage – and it regulates the legal framework for mortgage brokers.

The Ministry of Economy has said that the bill is not limited to simply transposing the EU Directive, but also responds to legal rulings that have expressed the need for greater transparency in terms of mortgage regulation.

In this sense, the legislation facilitates the conversion of variable rate mortgages to fixed-rate products, for both new mortgages as well as those already underway. The commissions for making such a change will be cancelled from the third year and the notary and registration fees will be reduced.

Other changes mean that the lender must provide the client with detailed documentation about the mortgage, including the most “sensitive” clauses and scenarios showing the evolution of instalments. Moreover, the borrower will be entitled to receive free advice from the notary about the contents of the contract for seven days prior to signing.

The legislation also regulates the early repayment of loans, “in such a way that it avoids any kind of discretion when it comes to agreeing this clause”, according to Luis de Guindos. The requirement for a financial entity to be able to initiate the foreclosure of a mortgage is extended to nine unpaid monthly instalments or an amount that exceeds 2% of the capital granted during the first half of the mortgage term; and 4% or twelve unpaid instalments during the second half.

Original story: Inmodiario

Translation: Carmel Drake

US Investor Cordish Presents New Leisure Mega-Complex For Madrid

2 December 2016 – Expansión

After the fever of Eurovegas in Madrid, the fiasco of the Gran Scala macro-complex in the Los Monegros desert, the mirage of El Reino de Don Quijote in Ciudad Real, another mega leisure complex project is now being planned for Spain, in the form of Live! Resorts Madrid. The proposal has been presented by the US property developer Cordish Companies, and according to comments made by the group’s representatives yesterday, it is backed by the group’s extensive 100-year history and the rigourousness of its modus operandi. “This is a completely private initiative. We are not asking for any subsidies or regulatory changes. The regulatory framework is perfectly adequate for the project”, said Joseph Weinberg, one of the group’s partners.

Cordish plans to invest €2,200 million initially to launch this leisure and entertainment giant, although the total spend may exceed €3,000 million in subsequent phases if the plans are extended beyond the original project. According to the property developer, this initiative would create 56,433 new jobs.

The family group, founded by Louis Cordish in 1910, has four generations under its belt. It has chosen the Madrilenian municipality of Torres de Alameda, in the Corredor de Henares, as the stage for the development of the “largest integrated entertainment centre in Europe”. “We think that Madrid is the ideal location in Europe for the complex”.

To this end, Cordish has purchased a plot of land measuring 134 hectares and has registered information about the project with the Ministry of Economy, Employment and Finance. It is waiting for the Community of Madrid to study the feasibility of the plans and to open a public competition inviting other investors to submit their proposals. This process, which may take around six months, needs to happen before the first phases of the project can start, which are expected to take between “18 and 24 months”.

Weinberg wanted to differentiate his Live! Resorts from the frustrated initiative of the magnate Sheldon Adelson, who also planned to build a Eurovegas in Madrid, and he emphasised the “family nature” of the proposal. “The gambling area will only account for between 5% and 10% of the project”.

Weinberg said that the plan includes more than 100,000 m2 of space allocated to shops and leisure; four and five-star hotels, with 2,700 rooms; 275,000 m2 of space for three conference centres; and 45,000 m2 of space for offices.

Weinberg said that the group has own funds as well as experience raising financing. In addition, he appeared open to the idea of forming a joint venture with large local and international hotel chains for the management of the hotels.

The President of the Community of Madrid, Cristina Cifuentes, acknowledged yesterday that the regional government has held “some conversations” with the company and added that it is a “solvent, trustworthy and powerful group”.

According to Cifuentes, this project does not bear “any resemblance” to Eurovegas and she highlighted that, in contrast to Adelson’s project, Cordish has already officially registered the proposal and is not demanding any regulatory changes. She also said that whilst Eurovegas involved the construction of casinos, 80% of this proposal is dedicated to leisure and “only a small portion” to gambling.

Nevertheless, the Chairman of the Community of Madrid appeared “cautious” and warned that the initiative will be analysed “with the greatest care”. (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Popular’s New RE Company Will By Publicly Listed From Day 1

16 September 2016 – Expansión

The real estate company that Banco Popular wants to create from a significant portion of the foreclosed real estate assets that it has on its balance sheet, and whose shares will be distributed on a proportional basis amongst its shareholders, without any cost whatsoever to them, will be listed on the stock exchange from the day it is constituted, in such a way that its shares will have the necessary liquidity to enable their owners to do what they deem most appropriate with them.

At the moment, the heads of Banco Popular are focusing their activities on finalising the outstanding details of the design of the operation to create a real estate company, which still does not have a name, but which will incorporate real estate assets with a gross value of €6,000 million, chosen from the foreclosed assets that the bank owns, amounting to €11,140 million, and which form part of the entity’s balance sheet. And it also obtaining the necessary authorisations from the supervisors, the Bank of Spain and the National Securities and Markets Commission, as well as from the authorities at the Ministry of Economy, although the latter is not mandatory.

There is no specific timetable for completing the final phase of the process, but sources close to it indicate that it is hoped that it will become a reality during the first half of 2017, and that its launch will be announced sufficiently in advance to allow for a general shareholders’ meeting to be called, where the carve-out of the real estate company will have to be approved, along with the distribution of the shares amongst the bank’s shareholders, as if they were an extraordinary dividend.

The company will start trading on the stock market on the day of its constitution, when its shares will also be delivered to their new owners. It will have its own control and management bodies, which will operate completely independently of the bank. In this sense, a search will soon begin for a Chairman and CEO of the new company and the Board will be formed, almost in its entirety, by independent directors, with financing training and knowledge of the real estate sector.

It has not been ruled out the some of the bank’s main shareholders, who will also be main shareholders of the new company, may want to take a seat on the Board, given their shareholdings, but that is not something that is currently on the table.

The bank reported a foreclosed asset balance worth €11,140 million at the end of June, with a provisioning level that, at the end of this year, will amount to around 50% following the application of the results generated during the year and some of the recent capital increase amounting to €2,500 million, aimed at increasing the bank’s total provisioning level. This means that approximately half of these foreclosed assets (especially homes, offices and retail premises that have been completed and to a lesser extent those still in progress, and a small amount of land under development) will be included in the new company.

The company’s liabilities will be comprised of its capital, which the bank will disburse and transfer to the new shareholders; subordinated debt which Popular will purchase; and external financing for which, according to market sources, there is currently high potential demand, which will be determined on the basis of the return on the bonds issued and the relationship between capital, subordinated debt and the other financing. (…).

Original story: Expansión (by Salvador Arancibia)

Translation: Carmel Drake

Popular Plans To Create Its Own Bad Bank

7 October 2015 – El Confidencial

Banco Popular is trying to shed weight in leaps and bounds given its enormous exposure to property. To this end, it has made contact with the Ministry of Economy and the Bank of Spain with a view to creating its own real estate bad bank, as a prelude to carving out (and transferring) a portfolio of its own assets worth no less than €5,000 million. The operation would represent a significant easing of pressure in the face of the new capital requirements imposed by the European Central Bank, since it would allow an effective reduction in the volume of risk-weighted assets (RWA) on the institution’s balance sheet.

The creation of the future bank bad aims to establish a clear dividing line between the activities of the financial business and those relating to unexpected operations that Banco Popular has had to assume as a result of the crisis. The entity has accumulated property amounting to more than €16,000 million and wants to take advantage of the current recovery in the market to launch an independent company that would be managed by renowned experts and would be completely detached from the bank led by Ángel Ron (pictured above).

Initially, Banco Popular’s shareholders will be the owners of the new real estate subsidiary, but the project involves a carve-out plan and the external financing of the eventual bad bank, which would ultimately ensure that the majority of its financial liabilities were placed in the hands of external investors. In recent weeks, the operation has been presented to the various supervisory bodies, including the Bank of Spain and the ECB. The decision by the Ministry of Economy will be instrumental when it comes to the approval of any agreement, which in any case, would have to be endorsed by Banco Popular’s Board of Directors and General Shareholders’ Meeting in the coming months.

The release of assets worth €5,000 million would allow the entity to reduce its risk profiles with a view to future stress tests and would diminish the volume of debt it holds, at the same time as increasing its profitability. Banco Popular hopes that it would also improve its rating in the market, which would help to reduce its financing costs at a particularly critical time for the banking sector, in the context of the dramatic fall in interest margins. The operation would also guarantee that the bank could maintain the new capital ratios required by the ECB; these have now been established for Banco Popular at 10.6%, including 1.4 points of deferred tax assets (DTA).

The definition of a new business structure in the real estate segment, with its own independent and specialised governing bodies, would provide a different way of managing the business with its own distribution channels that would not be affected by the restrictions imposed on financial activities. At the end of 2013, Banco Popular transferred most of the share capital it held in Aliseda, its real estate manager, to the US firms Värde Partners and Kennedy Wilson, in an operation that generated profits of more than €700 million for the bank. Soon after, it also sold 51% of its credit card business to Värde for a profit of €400 million.

The proposal now on the table is much more ambitious for the bank from a strategic point of view, given that it is seeking to permanently deconsolidate some of its least liquid assets. The entity has not ruled out the option of constituting a Socimi…but that is not its preferred choice. (…). The aim is to ensure a project that is financially neutral for Banco Popular, at least in the beginning, and that eventually reduces the clean-up requirements left over from the property crisis. (…).

Original story: El Confidencial (by José Antonio Navas)

Translation: Carmel Drake

Popular Extends Suspension Period For Home Evictions To Four Years

16 February 2015 – Expansión

Grupo Popular has approved an amendment to increase the suspension period for the eviction of vulnerable people, from two years to four years, and to extend the right to Social Housing Fund access to include those evicted for the non-payment of non-mortgage loans; until now, only those evicted for the non-payment of mortgages were allowed to access social housing properties.

The agreement for the establishment of the Social Housing Fund was signed on 17 January 2013 by the Ministries of the Economy, Health, Development, the Bank of Spain, the Spanish Federation of Towns and Provinces (FEMP), the Platform of the Third Sector, the bankers’ trade association and 33 credit institutions. The rental cost of these homes ranges between €150 and €400 per month.

The following requirements must be fulfilled to access the Fund, amongst others: the family must have been evicted after 1 January 2008; the joint monthly income of the members of the family unit (household) may not exceed a limit of three times the Multiplier for Public Income Index (Indicador Público de Rentas de Efectos Múltiples or IPREM) or €1,597; and the family must not own its own home.

Original story: Expansión

Translation: Carmel Drake