Tag: mortgages

Unicaja Sells Problem Assets to Cerberus & AnaCap for €120M

23 January 2019 – Eje Prime

Unicaja is divesting its toxic assets. The Málaga-based entity sold two portfolios of problem assets amounting to €330 million to Cerberus and AnaCap at the end of 2018. In this way, it managed to clean up its balance sheet and improve its accounts for last year, ahead of the merger with Liberbank, reports El Confidencial.

The problem assets consisted of one portfolio of mortgages amounting to €230 million, which were sold to Cerberus and another portfolio containing property developer loans amounting to €100 million, which was acquired by AnaCap.

According to the latest published accounts, Unicaja held €3.9 billion in problem assets (flats, land and unpaid loans) as at September 2018, and so the two portfolios sold account for more than 8% of the total. In the market, it is estimated at the Málaga-based bank obtained proceeds of around €120 million in exchange for the sale of the two portfolios.

Original story: Eje Prime

Translation: Carmel Drake

New Legislation Stipulates that Residential Rental Contracts will Last for 5 or 7 Years

15 December 2018 – Expansión

On Friday, the Council of Ministers gave the green light to a royal decree of urgent measures relating to housing and the rental sector. The Minister for Development, José Luis Ábalos, highlighted that the majority of evictions occur due to a failure to pay the rent, whilst the number of mortgage foreclosures has decreased.

The main measures with respect to rental are: extending the term for the extension of leases, from three to five years – or up to seven years if the lessor is a legal entity – and increasing the term for tacit renewals from one to three years. Also, limiting the deposit to two months as a guarantee, facilitating agreements between tenants and owners to improve housing, management expenses shall be borne by the lessor when that is a legal entity, improving the remission of tourist rental contracts and horizontal ownership so that three fifths of the residents can limit tourist apartments, amongst other measures.

Nevertheless, the minister highlighted that this decree does not include measures aimed at intervening in rental prices, as had been agreed with Unidos Podemos in the budget agreement. However, he did not rule out that they may be included within the framework of the budget negotiations for next year.

For the time being, and precisely due to the absence of these measures in terms of prices, Pablo Iglesias has warned that the vote of his party to approve this decree-law will be “unfavourable”.

“We had agreed something else with them in the budgets, that the housing measures had to include controls over rental prices to decrease rental prices”, he said when the measures in the decree were made public.

“We hope that they are rectified so that we can go ahead with this decree, provided that it has the same content that we agreed”, added Iglesias, who also declared in a tweet that “the Government’s decree does not contain the most important measure from the agreement: that of prohibiting abusive increases in rental prices”.

Original story: Expansión

Translation: Carmel Drake

Blackstone Publicly Criticises the Government’s Rental Housing Plan

13 November 2018 – Voz Pópuli

The company that has invested the most money in the Spanish real estate sector over the last five years, Blackstone, has publicly criticised the Government regarding its rental housing plan, which includes several measures that will directly impact the US company’s business in Spain.

Blackstone’s most senior representative in Spain, Claudio Boada, has warned that he views with “concern” the plans unveiled by Pedro Sánchez’s Government in this regard. Boada was speaking at a breakfast meeting this morning organised by the United States Chamber of Commerce in Spain (Amcham Spain) with the Minister for the Economy, Nadia Calviño, in attendance, at the Villa Magna Hotel in Madrid.

Claudio Boada, Senior Adviser at Blackstone for Spain and Portugal, was speaking after Calviño’s presentation, at a symposium led by Jaime Malet, President of Amcham Spain, and attended by more than fifty representatives of US companies in Spain. He warned that the US group regards with “concern” the plans unveiled by the Government for rental housing, and he pointed out that his company has invested €25 billion in the country in recent years “backing Spain during the worst years of the crisis”.

In particular, Boada referred to the project to return the duration of rental contracts to five years, versus their current duration of three years (as a result of the Urban Rental Law, dated June 2013), which will be applicable for physical persons. In those cases where the lessor is a legal entity, the minimum duration will be seven years.

The most senior representative of Blackstone in Spain, who attended the meeting together with Eduard Mendiluce, who leads the investment firm’s real estate business, requested channels of dialogue with the Minister for the Economy to address the matters.

The plan from the Government regarding rental homes affects the buoyancy of Blackstone’s core business in Spain. The company chaired by Stephen Schwarzman has been purchasing large packages of mortgages corresponding to more than 100,000 rental homes from Spanish banks over the last five years (…).

The group has taken advantage of the financial and real estate crisis to acquire those homes and mortgages at significant discounts, but it has taken the risk of making the operations profitable by trying to improve the management of those properties.

For Blackstone, whose motto is “buy, fix and sell”, its business involves renting out homes purchased at the most profitable prices possible taking into account the large discounts that it typically obtains upon acquisition. It also gets rid of tenants who do not pay their rent.

For this reason, the plans announced by the Government regarding rental homes affect the US group so much, given that far from making the rental sector more flexible, they would actually slow it down. Problem tenants, those who refuse to pay or leave a rental home, will presumably be given more time to dig their heels in (…).

Royal Decree on the horizon

“Blackstone has not threatened to stop investing in Spain”, said sources close to the investment company consulted by this newspaper at the end of the symposium organised by Amcham Spain. They added that the firm’s intention is very much to continue investing.

Nevertheless, the same sources indicated that Blackstone does require the possibility of entering into talks with the Administration to express its view regarding the rental policy, and that they believe that the Government will approve the new measures in this regard by Royal Decree this month. The company considers that there could be several alternatives reflected in the parliamentary procedure for the new regulation.

Original story: Voz Pópuli (by Alberto Ortín)

Translation: Carmel Drake

Congress Agrees that the Banks will Pay All Mortgage Costs, Except the Appraisal

13 November 2018 – Expansión

The political parties today agreed by majority that the new Mortgage Law will establish that notary expenses linked to the signing of mortgages will be paid by the banks and that the appraisal costs will be paid by customers.

Moreover, the notaries will carry out a questionnaire with each borrower to ensure that he/she understands all of the clauses in the mortgage contract, at no additional cost.

The Mortgage Law was presented again today at the Congress’s Economy Committee after the Government approved a royal decree law which stipulates that the Documentation Registration Tax (AJD) will be paid by the banks and not by customers.

The new Mortgage Law reflects that decision and makes it clear that the financial institution will pay for the first copy of the notary deeds; the customer will cover the cost of any copies he/she requests. Meanwhile, the registry costs will also be paid for by the bank; and the borrower will pay the appraisal expenses since he/she will be able to choose the appraisal company freely.

Nevertheless, several other important issues still need to be agreed, such as those relating to early repayment fees, late payment interest and the early termination clause of mortgages and which allows the foreclosure of homes depending on the debt that has been acquired by the borrowers (…).

On the other hand, the political parties will also have to decide about the entry into force of the new standards, given that the financial sector is asking for a margin of 6 months versus the 15 days that the draft bill is proposing.

The Mortgage Law, which is a transposition of a European directive, seeks to provide greater protection for consumers and promote transparency in the granting of mortgages, which is why the political parties have agreed that appraisal companies can be independent physical persons or legal entities (…).

Original story: Expansión

Translation: Carmel Drake

INE: The Number of Mortgage Signings Soared by 34% YoY in April

27 June 2018 – Expansión

The number of mortgages constituted over homes in Spain amounted to 28,724 in April 2018, which represents an increase of 34.2% compared to the same month in 2017.

According to data published today by Spain’s National Institute of Statistics (INE), the increase with respect to the month of March was 9%. In terms of the cumulative numbers so far this year, the increase amounts to 11.6%.

Meanwhile, the capital loaned rose by 46.5% in April 2018, compared to April last year, to €3.5 billion. Moreover, the average amount loaned in April of this year amounted to €123,256, up by 9.1% in YoY terms.

By nature of property, mortgages constituted over homes accounted for 64.7% of all the capital lent in April.

For mortgages constituted over homes, the average interest rate in April 2018 was 2.67% (16.7% lower than in April 2017) and the average term was 24 years. 60.6% of mortgages over homes were constituted at floating rates and 39.4% at fixed rates. Fixed rate mortgages experienced a 30.7% increase in YoY terms.

The average interest rate at the beginning of a mortgage term is 2.42% for floating rate mortgages over homes (a decrease of 22.3%) and 3.15% for fixed rate mortgages (6.1% lower).

Fernando Encinar, Head of Research at Idealista, considers that the “significant increase in the volume of mortgages registered in April with respect to last year should be adjusted for the effect of Easter, although even taking the sum of March and April in both years, the increase is still a healthy 12%”.

According to him, “the banks are still willing to grant mortgages, they are opening their hands slightly, but they are not the motors behind the rise in house sales. Fixed rate products are rising slightly with respect to floating rates, and so are the prices of them, undoubtedly the result of more expensive financing. Even so, more mortgages are still being repaid than registered”.

For Ferran Font, Head of Research at pisos.com, these data confirm “that in March, we were not looking at a change in trend, but rather the effect of Easter, which fell in April in 2017. That percentage strengthens the growing trend in recent months, after a month of negative YoY growth”.

By region, the autonomous regions with the highest number of mortgages constituted over homes in April was the Community of Madrid (6,018), Andalucía (5,154) and Cataluña (4,700).

Meanwhile, the highest YoY variation rates were recorded in the Balearic Islands (66.7%), the Community of Madrid (62.4%) and Castilla-La Mancha (54.2%).

The autonomous regions where the most capital has been loaned for the constitution of mortgages were the Community of Madrid (€997.9 million), Cataluña (€708.1 million) and Andalucía (€531.8 million).

In total, 40,005 mortgages over properties were signed in April, up by 36.5% with respect to a year earlier. Of the total, 1,350 corresponded to rural properties (+21.4%) and 38,655 to urban assets (+37.1%).

Original story: Expansión 

Translation: Carmel Drake

Who are the Key Players in the Spanish Real Estate Market?

4 May 2018 – El Mundo

House sales are on the rise, as are house prices and rentals. Mortgages are also continuing their upward trend. Moreover, the resurgence of real estate activity is now a reality that can be seen in the increase in the number of new construction and real estate companies.

A recent report published by Gedesco, a firm specialising in financing for companies, says that one in four of the businesses created in Spain during the first quarter of 2018 belonged to the construction or property development sectors.

That represented a volume of almost 6,000 companies, 1.75% more than during the same quarter in 2017. With respect to the last three months of last year, the increase amounts to 21.9%.

Some good news to help us try to forget the fact that 142,576 construction companies disappeared between 2008 and January 2017 – both building firms and property developers -, according to the latest data from Spain’s National Institute of Statistics (INE).

In eight years, the sector went from having almost 360,000 companies to having just 216,987, a reduction of 39%. If we take the look at real estate companies, there were 106,375 in 2008, whereas there were just 67,812 by 2017, almost half.

The data compiled by INE reveals another interesting fact: the construction companies that had more than 5,000 employees in 2008 have disappeared. Although there were actually only three (including building firms and property developers), by 2017, there were just nine companies with 500 or more workers.

Names such as Martinsa Fadesa – created by the businessman Fernando Martín-, Astroc (chaired by Enrique Bañuelos) and Nozar went into the history books of the Spanish real estate sector, after failing to survive the impact of the recession.

Good health

Now, the outlook for the sector is looking healthy, in line with the increase in construction activity, which last year recorded a 28.9% increase in new build permits, to 80,786. According to the latest data from the Ministry of Development, corresponding to the first two months of this year, new home permits rose by 17.4% to 8,035 in February. Estimates in the sector indicate an output of 150,000 homes p.a. for the next few years.

For Elisa Valero, Marketing Director at Gedesco, “the construction sector is back in business”. Nevertheless, the director adds that “the creation of businesses has never gone away, if we look back a few years, the property developers were still there, but the volume of business creation was much lower”.

Whereas 5,000 companies are now being created, in 2011 – at the height of the crisis – just 2,000 were being constituted (…).

Success stories

Another report published in recent weeks by the College of Registrars in Spain also shows that real estate activity in the country is gaining momentum. In 2017, the weight of construction companies and property developers over the total number of businesses constituted rose to 20%, and the rate of growth in relation to 2016 was 14%.

But, looking beyond the figures and back to specific cases (…) we see, for example, that two of the largest property developers of the current cycle were created less than three years ago. The firms in question: Neinor Homes and Aedas, which were created in 2015 and 2016, respectively.

The origins of Vía Célere, another of the important property developers these days, dates back to 2007, at the height of the crisis. The firm emerged after Juan Antonio Gómez-Pintado sold the company that he had chaired, Agofer, and created Vía Célere.

In all three cases, the presence of funds in the shareholding of the companies has stimulated their rates of investment to purchase land on which to build new homes.

Second chances

On the list of property developers that have been created recently, highlights include Kronos Homes, Stoneweg and Q21 Real Estate.

There is another noteworthy name on the current panorama, which, although it cannot be considered a new company, is a clear example of the resurgence of a business after the crisis. The company in question is Metrovacesa. Following a facelift by its creditor banks, it returned to the stock market at the beginning of this year, after abandoning it in 2013.

The firm, controlled by BBVA and Santander, stands out since it is the largest landowner in Spain, amongst the listed property developers, with 6.1 million m2 of land spread over the whole country, with the capacity to build 37,500 homes.

Business transformations such as the one involving Metrovacesa were commonplace during the crisis and resulted in the appearance of new players on the real estate stage.

Another illustrative example has been the birth of the so-called servicers. These companies have emerged in recent years from the former real estate subsidiaries of the banks.

Altamira (whose origins are found in Banco Santander), Servihabitat (La Caixa), and Solvia (Banco Sabadell), amongst others, are fulfilling the mission entrusted to them: to take on the bank’s property, enabling them to complete their clean-ups and to divest the assets by taking advantage of the current boom in activity.

The servicers, whose main activity is located in the Community of Madrid, are also responsible for selling the properties of another one of the stars created in recent years: Sareb, commonly known as the bad bank.

In 2018, that company celebrates its 5th birthday, and during its short life, it has taken over the properties of the entities that have been intervened as a result of the bank restructuring (…).

In recent months, Sareb has also started to market its first new build developments constructed on own land that it holds in its portfolio. In addition, last week, it launched a campaign to sell 3,314 homes along the coast, 95% of which will be lived in for the first time by their new owners.

The Socimis

If there is one group of players that stands out above all of the other newly created real estate companies it is the Socimis.

The real estate investment companies started to trade on the Spanish stock exchange in 2012 as a result of a regulatory change introduced by the Government that gave them free reign to do so.

The Socimis Entrecampos and Promorent were the first to make their debuts. Six years on, there are 51 such companies and, according to some estimates, that number may reach 100 in the future. Merlin, Axiare, Hispania, Lar España, Testa and Colonial – the largest by volume – have all been created in the last four years and are now competing with property developers, such as Neinor and Aedas, on the real estate stage and on the stock market.

In April, one of the newest faces, Sareb’s Socimi Témpore, made its debut. In its first month on the Alternative Investment Market (MAB), it has seen its share price appreciate by 3.85%. When it made its stock market debut, the company’s valuation amounted to €152 million (…).

Original story: El Mundo (by María José Gómez-Serranillos)

Translation: Carmel Drake

Sabadell Evaluates the Sale of its RE Arm Solvia

26 April 2018 – Intereconomía

Banco Sabadell is evaluating the sale of Solvia, its real estate subsidiary. There has been no shortage of offers given that Blackstone, Cerberus and Lone Star have all expressed their interest. The value of the company was €900 million in 2015, but that figure could now be higher due to the rise in market prices.

The CEO of Banco Sabadell, Jaime Guardiola, said during the presentation of results for the first quarter, where he announced that Sabadell had earned €259.3 million, up by 32.7%, that the entity has no “vocation” to dedicate itself to the real estate sector, but rather the banking sector, and so “when the time is right and an opportunity arises to create value”, the possibility of divesting Solvia will be assessed.

“Given the current coverage levels and the appetite that exists in the market, it is feasible to analyse an operation of this kind”, said Guardiola, who stressed, however, that “the time has not arrived yet”.

In fact, Banco Sabadell is immersed in a process to sell several portfolios of toxic real estate assets amounting to €10.8 billion in total, which will allow it, if expectations are met, to divest almost all of its problematic real estate inheritance, worth close to €14 billion at the end of 2017.

To remove these toxic assets from its balance sheet, most of which it inherited from Caja de Ahorros del Mediterráneo (CAM), the entity chaired by Josep Oliu has placed two portfolios of foreclosed assets on the market worth €7.5 billion.

Those portfolios join two others launched at the beginning of the year, worth €3.3 billion (one worth €900 million and the other worth €2.4 billion), and so Banco Sabadell is already sounding out the market to place packages worth €10.8 billion in total.

Jaime Guardiola, meanwhile, considers that the Spanish mortgage business “is very healthy” and that the delinquency levels “have been very well managed”. He adds that the new pipeline is being carried out in an optimal way, and so he rules out the possibility of the mistakes of the past that triggered the crisis being made again.

Original story: Intereconomía

Translation: Carmel Drake

Registrars: Mortgage Lending Increased by 10.9% in 2017

23 April 2018 – Eje Prime

The number of mortgages signed to buy homes in Spain during 2017 rose by 10.9% with respect to 2016. According to the Real Estate Yearbook 2017 from the College of Registrars, 310,640 mortgage loans were signed, a figure that represents an increase of 56% compared to the minimum level recorded in 2013. But, despite that significant gain, the figure is still well below the 1.3 million mortgages signed in 2006.

The study reveals that the number of residential mortgages increased in every autonomous region last year, with double-digit growth rates in eight of them. The largest increases were recorded in the Community of Madrid (17.8%), La Rioja (17.8%), Asturias (16.5%), Andalucía (11.7%), Cantabria (11.5%) and the Community of Valencia (11.3%). The regions where the greatest volume of mortgages were signed included Andalucía (60,026), the Community of Madrid (56,866), Cataluña (50,848) and the Community of Valencia (32,408).

In addition to domestic buyers, international purchasers also become more active. In fact, 6.9% of the residential mortgages signed last year were formalised by foreigners, exceeding 21,000 contracts in absolute terms, although three times as many overseas buyers purchased a home in Spain without any financing at all.

The nationalities with the highest percentage weight in terms of residential mortgages signed over the total number of mortgages formalised by foreigners were Romanian (11.6%), British (9.3%), Chinese (8.4%), Italian (5.8%), French (4.6%), Moroccan (4.2%) and German (4%).

Original story: Eje Prime 

Translation: Carmel Drake

BBVA, the First Bank on the Iberian Peninsula to Return to Financing 100% of Property Values

2 April 2018

BBVA recently began advertising mortgages that will cover 100% of a property’s value, or even more than 100% of the bank’s valuation should the selling price exceed that figure. The Spanish bank’s move is a part of its strategy to attract clients.

Spain’s BBVA has taken another step in its strategy of attracting customers and in recent weeks has offered mortgages that cover 100% of a property’s value, or even more, than 100% of the bank’s valuation should the selling price exceed that figure. It has thus become the first bank on the Iberian Peninsula to offer such conditions, which until now has only been offered, on a very limited basis, to specific clients who were acquiring foreclosed properties from the banks themselves, a major burden on the banking system, El Economista reported.

In Portugal, to date, there is no bank that is returning to these practices, very common before the financial crisis.

This type of mortgages, which central banks consider high risk, were granted by all credit institutions at the time of the credit boom and was one of the causes that led to the collapse of the sector, with the housing bubble (in Spain).

The recovery of the economy and construction, coupled with the need for the bank to increase profitability through an increase in business, led BBVA to give up its commercial policy.

Until now, the bank offered differentiated prices on its mortgages based on the clients’ monthly income, that is, based on their ability to pay (effort rate). Currently, this segmentation is focused on the financing request, known as Loan to Value (LTV), that is, the money that the client receives over the assessed value when acquiring any type of property for first address, says El Economista.

This differentiation applies to both variable rate and fixed-rate mortgages. In the first case, which is encouraged by the expectations of an increase in the price of money from 2019, BBVA offers Euribor plus a spread of 0.99%, except in the first year if the so-called LTV is less than 80%. If this percentage is higher, the spread increases to 1.25%. The bank also admits that solutions can be found if the client needs a larger loan to buy a home, which could be instrumented through the signing of a consumer credit or personal loan.

This greater flexibility in the lending policy leads, however, to more demanding conditions of association. Customers, in order to access the advantages of the loan, must have contracted not only the direct debit of the payroll or pension but must have a life insurance, a home insurance and a pension plan with a minimum annual contribution of 600 euros. In case the LTV exceeds 100%, the bank may require additional guarantees to the mortgaged apartment, in order to guarantee the recovery of the value granted, reports El Economista.

Original Story: Jornal Econômico – Maria Teixeira Alves

Photo: Susana Vera / Reuters

Translation: Richard Turner

 

 

 

 

Sareb Gets Tough & Demands €9bn through c.3,800 Creditor Bankruptcies

26 March 2018 – Voz Pópuli

Spain’s bad bank Sareb has run out of patience. After spending more than four years negotiating extrajudicial agreements with debtors and putting into order its presence in thousands of real estate bankruptcies in Spain, the semi-public body is getting tough. “When you have been negotiating with a debtor for years and you know he’s not going to pay you…he doesn’t want to pay you, you are left with no other option than to go to court”, says the President of Sareb, Jaime Echegoyen.

Sareb is present in approximately 3,800 real estate bankruptcies, declared since 2008, when the property bubble burst and the Spanish economy entered the worst crisis of its young democracy. According to sources at the organisation, Sareb is demanding a total debt of €9 billion through these bankruptcy proceedings.

The company has a portfolio of loans worth €26 billion and is present in 12,200 legal processes in total, all of which involve loans to property developers (there are no mortgages to individuals). Of that total amount, 7,500 are for mortgages and 3,800 are creditor bankruptcies.

“We cannot give our blessing to people who don’t pay”, warns Echegoyen, who presented Sareb’s results for 2017 last Friday. The company has started a legal offensive on two fronts to accelerate the sale of its loan portfolio: it will boost the bankruptcy processes in which it is present as a creditor; and it will go to court to request payments from those companies that still have not responded to the debt demanded.

“We have spoken with the debtors and we will continue to do so”, said the President of Sareb. “We prefer to find an amicable solution rather than play hardball, but if we have to resort to other means, we will go to court”, he said, admitting that it is probable that the number of litigation cases involving Sareb will increase in the near future.

In recent months, a more decided approach from Sareb has been noted in certain bankruptcy processes. Like in the case of the bankruptcy of Reyal Urbis, one of the largest corporate failures in Spain’s history, where, after years of negotiation to reach an agreement, which seemed unfeasible from the beginning, Sareb’s proposal to continue reassessing the matter resulted in the liquidation of the company last September. The debt of Reyal Urbis with Sareb alone exceeds €800 million.

Sareb’s presence has also been felt in the bankruptcy of the company that used to own the In Tempo skyscraper in Benidorm, the tallest residential building in Europe, which was sold to a fund last year. And in the case of the bankruptcy of Nozar, where Sareb recently requested greater agility in the process, almost ten years after the bankruptcy was declared.

“Sareb is involved in the bankruptcies of the most well-known real estate companies; but also in thousands of other much smaller bankruptcies, each one in its own province, judged by its own bankruptcy administrators and its own idiosyncrasies”, say sources at the organisation. “Over the last few years, we have had to put in order our positions in all of these processes”, they add.

During Sareb’s five-year life, the entity, known increasingly less as the bad bank, has liquidated 27% (around €13.6 billion) of the portfolio that it was created with. The management and divestment of loans and properties has generated €20.7 billion of revenues. During the same period, the entity has paid off 25.4% of its debt, €12.9 billion. Last year, it recorded losses of €565 million, down by 15%.

Original story: Voz Pópuli (by Alberto Ortín)

Translation: Carmel Drake