The Government Puts the Eurocis Complex in Central Madrid up for Sale for c. €196M

16 March 2019 – Crónica Global

The Spanish Government has authorised the sale by public auction of a set of offices, storerooms and garages in central Madrid, known as the Eurocis complex. The complex, which comprises 94 registered assets spanning an office surface area of 45,937 m2, plus 396 parking spaces, 1 commercial premise and seven underground storerooms, is located in the Salamanca district in the block bordered by Calles María de Molina, Núñez de Balboa, General Oraá and Castelló.

The asking price is €196 million and candidates have two months to submit their offers in closed envelopes. Until last year, the complex used to house several departments of the Ministry of Finance, but its urban planning classification means that it could be used for private purposes in the future. The future buyer is expected to completely renovate the building and convert it into modern offices or a large shopping centre.

Original story: Crónica Global 

Translation/Summary: Carmel Drake

CBRE: Office Leasing in Madrid Records Best Third Quarter for a Decade

17 October 2018 – Real Estate Press

The office market in Madrid recorded its best quarter of the year between July and September with almost 142,000 m2 of office space leased. That figure makes it the sector’s best third quarter for a decade, according to the latest data published by the real estate consultancy CBRE.

“Leasing figures during the third quarter are traditionally characterised by less activity due to the holiday period, so this latest data highlights the strength of the office market in Madrid”, says José Mittelbrum, National Director of A&T Investor Leasing Offices at CBRE España. “Looking ahead to the end of the year, it is very likely that, if some of the large deals currently active in the market are closed, then 2018 will see office leasing figures in Madrid very similar to those of 2017, which amounted to more than 600,000 m2, figures that have not been seen since 2007”, added Mittelbrum. Since January, almost 400,000 m2 of office space has been leased, the best figure since 2008.

Increase in rents

The increase in demand, boosted by demanding occupants with respect to the quality of the properties, and the reduction of the available supply, especially in renovated buildings and new properties in the central business district (CBD), led to a YoY increase of 9% in prime rents during the third quarter of the year to around €33/m2/month.

Empty space in high-quality Grade A buildings has decreased by 26% over the last year, which has led to situations of competition between several candidates for the same building.

Since the lowest point of the previous cycle, prime rents have grown by 35%. Other submarkets are also rising: average rents, calculated on the basis of actual operations, between July and September, increased in all submarkets with increases of more than 30% in the CBD and Secondary Centre (inside the M-30) and of between 15-20% on the Northern (A-1) and Eastern (A-2) axes of Madrid. Rising rents and the prospect that this trend will continue is one of the reasons why the office market in Madrid is the priority objective for a large number of domestic and international investors.

Notable operations

Madrid Norte saw significant activity in the last quarter, with two high-profile operations: the rental of the Oxxeo building in Las Tablas to Cap Gemini (9,300 m) and the rental of 7,000 m2 in Torre Chamartín by Deloitte; both new build properties.

The Public Sector reaffirmed its return to the Madrilenian office market, by closing two of the ten largest operations in the third quarter, namely, the rental of 4,200 m2 in the Agustín de Foxá, 25 building by the Ministry of Finance and of 2,400 m2 in Fray Luis de León, 11 by the Community of Madrid.

Finally, the flexible space operators continued their expansion: WeWork moved into Castellana, 77 to occupy more than 4,600 m2 in that building, the first to obtain the WELL Qualification in Spain. It is worth highlighting that so far this year, 10% of the office space leased in Madrid was taken up by flex-space companies, compared with 4% in the third quarter last year.

Available supply

At the end of September, the available surface area in the Madrilenian office market amounted to around 1.22 million m2, equivalent to 9.7% of the total stock of offices in the capital, compared to 11.7% a year earlier.

Over the coming months, investors’ commitment to reposition existing offices means that iconic buildings are going to come onto the market such as the Los Cubos building in Plaza de España and the Axis building in the heart of Plaza de Colón (…).

Original story: Real Estate Press

Translation: Carmel Drake

Ministry of Finance Prepares an IBI Hike that will Affect 1,200 Town Halls in 2019

1 October 2018 – El Independiente

The Ministry of Finance has already prepared the list of town halls that will review the cadastral values of their urban properties in 2019. That list includes almost 1,200 town halls, equivalent to 15% of the total. That is according to an Order published in the Official State Gazette (BOE) on Saturday, which also reveals that the update coefficients will be established in next year’s Budget Law, which the Government has not presented yet.

Therefore, despite not having published its annual accounts yet and with the threat that, once they are published, it may have to adopt a more restrictive public deficit path, thanks to the situation it inherited from the previous PP Government, the ministry led by María Jesús Montero has published the mandatory order proposed in the Law to apply possible cadastral value rises that will impact the amount raised by Town Halls through taxes such as the Property Tax (also known as the ‘Impuesto sobre Bienes Inmuebles’ or IBI).

The town halls affected include Badalona (Barcelona), Cádiz, Santander, Guadalajara, Avilés (Asturias), Granada, Huesca, Lorca (Murcia), Coslada (Madrid), Las Rozas (Madrid) and Valencia.

The State’s annual accounts for 2019 are incognito and so it remains to be seen how this review of cadastral values is going to be instrumented.

Moreover, by virtue of the coefficient that is applied, the cadastral value of any given home may increase or decrease. The reason is that the coefficients are established on the basis of the year of entry into force of the last presentation of municipal values, which is basically the document that contains the criteria that are used to carry out the most recent valuations in the region.

Currently, the price per metre squared of private homes amounts to €1,587.9, the highest value since the second quarter of 2012, according to data from the Ministry of Development, which bases its figures on appraisal values.

From this perspective, in general terms, homes valued since that date will have increased in value, whilst those valued between 2008 and 2012, will have decreased. On the basis of the years of entry into force of the values, around one third of the municipalities included on this list belong to the latter group.

A decrease in the number of reviews

The cadastral value of a home is the reference value on which taxes are paid on it at a municipal level for purpose of the Property Tax (IBI), which is one of the main sources of financing for Town Halls.

In this way, unless town halls decide to introduce changes in the tax, bonuses or exemptions, increases in the cadastral value of properties typically mean a heavier burden on the pockets of citizens and, in parallel, more revenues for the town halls.

In order to carry out this review, the interested town halls must make a request each year to apply the coefficients that they establish. To do that, three requirements must be fulfilled: at least five years must have passed since the entry into force of the cadastral values resulting from the previous valuation; there must be substantial differences between the market value and those that serve as the basis for determining the cadastral values; and the town hall must file its request by 31 May.

Having fulfilled those criteria, 1,200 town halls have requested a cadastral review next year, which represents a 14% decrease compared to the number recorded last year. Moreover, that figure equals almost half the number recorded in 2007, when up to a third of all town halls, around 2,500, proceeded to apply new coefficients (…).

Original story: El Independiente (by David García-Maroto)

Translation: Carmel Drake

Grupo Ibosa Acquires 10,000m2 Plot on Paseo de la Habana for c. €70M

24 July 2018 – El Confidencial

It has undoubtedly become the most expensive land operation since the start of the real estate recovery. Paseo de la Habana, 147 has smashed all records, given that almost €70 million has been put on the table for its 10,000 m2, which represents a repercussion price of between €6,500/m2 and €7,000/m2. That figure is significantly higher than the expectations of the plot’s vendors, which had set a sales price range of between €60 million and €65 million.

Since the real estate bubble burst, no one has paid such a high repercussion price for a plot of land. The figure comfortably exceeds the €5,000/m2 that the builder Rafael Ortiz and the popular shipping entrepreneur Fernando Fernández Tapias paid in 2007, at the height of the boom for a plot located on Juan Bravo 3, where the Spanish capital’s largest luxury development is currently being constructed, Lagasca 99.

Since coming onto the market just three months ago, the plots have passed through the offices of more than a dozen property developers and private investors and, although many of them agree on the high price of the operation, the fact is that the plot has had half a dozen suitors in the end.

The companies that placed an offer on the table include Nozar, Grosvenor, Domo and Pryconsa, although the successful bidder in the end was Grupo Ibosa, according to some of the candidates that have been left out of the process, speaking to El Confidencial. Both JLL, the consultancy firm advising the sales process, and Ibosa declined to comment in this regard.

The plot in question is located in the heart of Madrid, opposite the Cuban consulate, just 700 m from Paseo de la Castellana and 1km away from the Santiago Bernabéu stadium, where the supply of buildable land for sale is very scarce. In fact, the vast majority of the projects in the area are being built in renovated properties.

Five detached homes are currently being constructed on the acquired plot, with surface areas of between 300 m2 and 400 m2 each, which will have to be demolished to make way for the buyer’s future project. All indications are that a luxury apartment development will be built on the plot, which will be added to the high-end projects that Ibosa currently has underway in Valdemarín – on some plots it acquired from Blackstone – and in Aravaca, and marketing of which has just been launched.

The lack of new build product in the area and the high demand explain this pressure on prices. The development will be built in the Chamartín district, which is home to some of the most sought-after residential areas in the centre of the city, such as El Viso, where the Venezuelan investors Miguel Ángel and Áxel Capriles arrived in April last year to purchase Villa San José on Pablo Aranda 3, just opposite Florentino Pérez’s real estate bunker.

In terms of benchmark prices, one example is the 11 homes that are being built on the plots of the former headquarters of RTVE. The Ministry of Finance put that plot up for auction at the end of 2015 and it was awarded to Martell Investment for €10.8 million, which represents a repercussion price of €4,800/m2. Construction of those homes has now begun and the prices fluctuate around €7,000/m2.

Boom in prices

In just two years, the prices in the most sought-after neighbourhoods of the Spanish capital have soared by more than 20% (…).

According to a recent report from Engel & Völkers, maximum prices in this Madrilenian neighbourhood amount to €6,000/m2, although, as sources specialising in the sale of luxury homes at the agency explain, “there are no new build properties in the area, and so the final prices depend a lot on the features of each project”.

In terms of the area, like in the most trendy areas of Madrid, prices have risen sharply over the last year. According to Engel & Völkers, prices have risen by 10% since 2017, “although, at the moment, more operations are being closed than last year because there is greater access to credit, but, nevertheless, prices are barely rising”.

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

BBVA & Sabadell Finalise Negotiations with the FGD to Sell their ‘Protected’ Toxic Assets

17 July 2018 – Expansión

The two banks are looking to remove their remaining damaged assets from their balance sheets. Sources in the sector calculate that the FGD will have to assume a cost of around €3.5 billion.

The Deposit Guarantee Fund (FGD) and BBVA and Sabadell are on the verge of reaching a definitive agreement that will allow the two banks to sell the majority of their damaged real estate assets that are protected by the FGD in order to clean up their balance sheets.

The fund will know exactly what the cost of the protection is and, in exchange, the banks will assume a greater percentage of the potential losses. Calculations from experts in the sector indicate that the cost that the FGD will have to bear amounts to around €3.5 billion.

The negotiations that have been going on for months between the heads of the FGD, led by Javier Alonso as the Chairman and Deputy Governor of the Bank of Spain, and BBVA and Sabadell, as well as the Ministry of Finance and the other financial institutions, are on the verge of reaching an agreement that will enable the two banks to get rid of the majority of their damaged real estate assets in operations similar to the ones undertaken by both Santander with Popular’s assets and more recently by CaixaBank.

The formula is the same: the two banks group together in a new company, or several new companies, the damaged assets and they sell the majority of the share capital in those companies to an investment fund, holding onto a minority stake that typically amounts to between 10% and 20%. In this way, the banks deconsolidate their real estate positions and their balance sheets look clean.

The problem that BBVA and Sabadell have had is that a large part of their assets to be sold are protected by a guarantee until 2021 whereby the FGD committed to bear the cost of 80% of any losses incurred, on the book value of those assets, when they were sold. This has been the case for the last few years (Sabadell has already sent three annual invoices to the FGD for losses over the last three years and BBVA has done the same for the last two years). And so that will continue until the end of the guarantee period.

Original story: Expansión (by Salvador Arancibia)

Translation: Carmel Drake

Sareb Holds Talks With Cooperatives To Accelerate Land Sales

25 January 2017 – El Independiente

Sareb is exploring ways of selling off millions of square metres of land that are currently sitting on its balance sheet. Whilst sales of properties by Sareb, the largest property developer in Spain, accounted for 97% of its portfolio in 2016, operations involving land accounted for just 3%.

One of the bad bank’s options for changing this trend in 2017 is to meet with cooperatives, one of the groups that most specialises in managing land, according to several institutional sources consulted.

Sareb, whose dissolution is scheduled for 2027, generated €1,500 million from the sale of real estate assets last year, primarily residential properties, but the sale of land by the so-called bad bank was purely symbolic, forming part of larger operations in many cases. For this reason, Sareb and several sector associations have begun a round of contact, confirm both parties. The first meeting was held last Friday.

“Officially, we are not doing anything with Sareb”, responded a spokesperson for Concovi, the cooperatives’ trade association, surprised that details of the meeting had been revealed. “We have not defined a model of cooperation”. The cooperatives point out that they account for approximately 10% of the housing sector and that they provide much more security than traditional housing developments. Sareb is calling for another meeting with the Community of Madrid’s Federation of Housing Cooperatives and Renovations

Sareb, created at the end of 2012, at the request of the Ministry of Finance to group together damaged assets from the banks – whereby avoiding their collapse – with the aim of subsequently selling them at aggressive discounts, owned 13 million m2 of land before its birth. Although this newspaper has not obtained updated data about the stock of land currently owned by this company, it is clear that it still has a lot to get rid of over the next ten years. One example is this website, where Sareb is selling off a huge volume of land.

The cooperatives are starting to get their strength back, one step at a time. Until now, they have had a very limited presence in the property developer sphere, primarily due to a lack of knowledge about their operations and due to the poor image that they are still struggling to shake following the scandals of the 1990s, such as the one involving the PSV cooperative.

Nevertheless, this method of collection development is set to record its first year of growth since 2012, in terms of the number of finished projects. Whilst in 2012, 700 buildings were certified, the following year that figure plummeted to 283. The number of certifications then fell further still to 217 in 2014 and 214 in 2015.

But, with the economic recovery and upturn in employment in 2014, new cooperative projects were launched and it is those that are now starting to bear fruit. 205 buildings were constructed through this method during the ten months to October 2016, a rate that, if maintained until December, would have given rise to around 250 finished buildings in 2016.

In parallel, the budget allocated to the construction of these properties rose by 62%in 2015 to €348 million. The cumulative figure as at October last year (€350 million) had already exceeded that amount. This means that 2016 looks set to be the year in which the cooperatives move the most money since 2011.

Original story: El Independiente (by David García-Maroto)

Translation: Carmel Drake

Tax Authorities Seize Assets From Marina D’Or’s Owner

4 January 2017 – Expansión

The Tax Agency (Aeat), one of the largest creditors of the real estate group created around the holiday resort Marina D’Or, has decided to take action. The Ministry of Finance has approved the precautionary seizure of assets from several companies owned by the founder and owner of the Castellón complex, Jesús Ger (pictured above), amounting to €49 million.

The measure is based on the fact that the Tax Agency considers that the Castellón group performed an “asset emptying” operation of its largest company in 2010, to stop the possible collection of debt that it held by carving out its activity into several companies.

The debt originally corresponded to the company Comercializadora Mediterránea de Viviendas (Comervi), the property developer and construction company that suspended its payments in 2014 and which appears on the tax authority’s list of largest debtors. Months before the insolvency, it changed what had been its historical name, Marina D’Or-Loger, under which it had promoted and constructed the popular holiday resort.

In 2010, Ger restructured the group’s parent company and divided its activity into four companies to prevent the real estate crisis from dragging down its hotels and the tourist business at the complex next to the beach in Oropesa del Mar (Castellón).

Controversial carve-out

That operation is what has caused the Central Taxpayers Office to claim the amount owed by Comervia (€57.48 million) from two other companies owned by Ger: Gestión Cartera Castellón – which was the owner of the shares in Marina D’Or-Loger until the segregation and which assumed ownership of the hotels and other businesses – and Golf Playas Castellón – owner of the macro-urban Marina D’Or Golf project, which Wanda expressed an interest in -.

In June 2016, the Administration approved an agreement whereby Gestión Cartera and Golf Playas assumed “joint and several liability” for the debt, taking responsibility for €47.9 million and €1 million, respectively.

A few months earlier, in March, the Ministry of Finance had already notified both entities that it had seized their shares in the companies “in a provisional and precautionary way” and “100% of the full ownership and usufruct of the real estate assets, homes, apartments, parking spaces and land” registered in Castellón, Benidorm and Oropesa.

Failed appeals

The two companies and the businessman himself then filed special appeals with the Superior Court of Justice (TSJ) of Madrid. In the three appeals, the plaintiffs contended that their fundamental rights had been violated as they were not guaranteed any right of defence or access to a hearing. The three cases were dismissed by the court.

According to the list of events included in the rulings, Aeat considers that as a result of the carve-outs and company operations of the former Marina D’Or-Loger, €327 million of net assets were removed from the company. That meant that it was left with negative equity of €140 million at the end of 2010, which was one of the factors that led to its subsequent bankruptcy. Moreover, the most recent appraisal reports from the Ministry of Finance value the properties that Comervi used to guarantee its tax debts to delay and split the payment at just €19.47 million, which is “well below the total tax debt of almost €58 million”. The properties were initially assigned a value of €96 million.

Sources at Marina D’Or indicated yesterday that they had achieved an agreement with the Tax Authorities “whereby their precautionary seizures will be rendered ineffective” and that they have not been carried out “and so they would not have any affect on the activity” of its companies.

Original story: Expansión (by A.C.A)

Translation: Carmel Drake

Sareb Unlikely To Distribute Any Profits To Its Shareholders

30 December 2016 – Expansión

Accounting circular / The Ministry of Finance has softened its demands on Sareb. In exchange, the bad bank’s owners, namely, the State and Spain’s largest banks, will not receive anything for their investments in the bad bank, for at least the next few years.

The Ministry of Finance has softened the situation facing the shareholders of Sareb (the most important of which is the State, through the Frob), by not forcing it to recognise latent losses in its income statement, like it has been obliged to do until now. In exchange, the Ministry has shut down the possibility that these shareholders will receive any results from their investment, even if the company does manage to generate profits at some point.

The harsh situation created by the accounting circular that the Bank of Spain designed for Sareb has barely lasted a year. According to that legislation, Sareb was obliged, within a period of two years, to reappraise all of the assets on its balance sheet (which proceeded from the real estate portfolios of the former savings banks that received public aid) and recognise the latent losses in the income statement each year, given that the price at which it bought those assets was significantly higher than their market prices.

The reality of all of this was seen last year when, in order to avoid near bankruptcy, the bad bank reduced its capital to zero and converted a substantial part of its subordinated debt (€2,171 million) into capital, to offset some of the losses for the year and restore the equity balance. Sareb recognised provisions amounting to €3,900 million in 2015 and recorded capital of €953 million (2% of the balance sheet) and subordinated debt of €1,429 million.

It was expected that something similar would happen this year, although with a less intense effect, given that most of the assets were reappraised in 2015, and that the capital balance would again be reduced and more subordinated debt would be converted into capital.

But to avoid this, the Ministry of Finance has made two significant changes. The first is that Sareb must continue valuing its assets at market prices, but if those values result in the creation of latent losses, then rather than recognise them in the income statement, they should be recorded in the equity statement, whereby reducing the company’s share capital. In parallel, and to avoid the company having to file for insolvency due to an excessive reduction of its capital, Sareb may also benefit from the exception afforded to real estate companies at the height of the crisis, which exempted them from having to comply with a certain relationship between the value of their assets and their own funds. (…).

Two conditions

In exchange for these concessions, which will undoubtedly give Sareb some much needed breathing room, the new legislation from the Ministry of Finance establishes two conditions. The first is that when an asset is sold for below its acquisition price, the real loss must be recognised in the income statement; and the second is that if Sareb generates profits in the future, then whilst the equity account exists in which the latent losses are being reflected, then all of the profits earned must be applied to that account. That means that, in all likelihood, Sareb’s shareholders (…) will not receive anything for their investments in the company over the next few years. And it is reasonable to think that they will never receive anything, given Sareb’s asset composition.

This is the first time that this fact has ever been acknowledged, more or less explicitly. (…).

Original story: Expansión (by Salvador Arancibia)

Translation: Carmel Drake

Adif & Repsol Sell Residential Plot In Madrid To Vía Célere

14 November 2016 – Expansión

The Madrilenian real estate company Vía Célere has been awarded a plot of land, with a buildable surface area of 14,859 m2, for €29.15 million, which the railway manager and the oil company put up for sale in Méndez Álvaro (Madrid).

Specifically, Vía Célere will pay €29,157,830 for the plot, located in the Méndez Álvaro area, next to Repsol’s headquarters in Madrid.

The plot, which has a surface area of 2,107 m2 and a buildable surface area of almost 15,000 m2, was put on the market in July for €27 million. The deadline for the presentation of offers closed on 2 November and on Friday, the vendors announced the winning candidate.

Until now, the plot of land was owned jointly by Adif (42%), Repsol (21.5%) and the Compensation Board of Méndez Álvaro (36.5%).

This is the second operation that the real estate company Vía Célere has completed in just a week. On 5 November, the company chaired by Juan Antonio Gómez-Pintado was awarded a plot of land located in the district of Moncloa-Arava, which the Directorate General of Heritage, which forms part of the Ministry of Finance, put up for auction.

For that plot, which has a buildable surface area of 11,230 m2, the real estate company paid €19.6 million.

Vía Célere is one of the most active property developers in the residential market. Created in 2010 by Juan Antonio Gómez-Pintado, it owns two other plots in the centre of Madrid, which it acquired in April, and has several projects underway in Barcelona. It is also marketing six developments in Brazil, in the capital and in several other cities.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Ministry Of Finance Sells Plot Of Land In Madrid To Vía Célere

7 November 2016 – Expansión

The Directorate General of Heritage, which forms part of the Ministry of Finance, has sold a plot of land with a buildable surface area of 11,230 m2 in the district of Moncloa-Aravaca in the north of Madrid, to the real estate company Vía Célere.

This plot was the most sought after (and most expensive) asset in a batch of 34 properties and plots of land that the Ministry led by Cristóbal Montoro put up for sale at the end of August.

The urban plot, which has been approved for residential use, is one of the few available spaces in Madrid that can be developed, at a time when there are hardly any new build properties on the market. With a surface area of 3,173 m2, the plot of land has a buildable surface area of 11,230 m2.

The Ministry of Finance put the plot of land on the market for €17.19 million. In the end, it has been sold to Vía Célere for €19 million.

The mechanism used by the Public Authorities to divest these properties is a standard auction procedure, governed by Royal Decree 1371/2009. They also have the option of executing a direct sale in the event that any of its auctions prove unsuccessful. In this case, the real estate company chaired by Juan Antonio Gómez-Pintado was awarded the plot in an auction held on 20 October.

New owner

Vía Célere was founded in 2010 by Juan Antonio Gómez-Pintado, following the sale of his family real estate company Agofer to the Sando group for €220 million. Since then, the company has not stopped growing and it currently has several residential projects underway in Madrid, as well as in Barcelona and Brazil.

Last year, Vía Célere recorded revenues of €103 million.

In April, the property developer acquired two other plots of land in Madrid for €10 million and it is also developing three projects in Barcelona. In addition, it is marketing another six developments in the capital. “We are continuing to make progress in our domestic market, following the path that we have set out for ourselves, which is, ultimately, to become the market leaders in our sector”, said Juan Antonio Gómez-Pintado, Chairman of Vía Célere.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake