Mastercard & Commerzbank Move Into Torre de Cristal

13 September 2016 – El Confidencial

The Cuatro Torres district is the new “City” in Madrid and is one of the areas where the leading real estate players have been operating with the most intensity over the last two years. The company chaired by Ignacio Garralda, Mutua Madrileña, fired the starting gun in February 2015, when it signed an agreement with KPMG to lease 18 floors in the Torre de Cristal, a third of the entire building, in an operation that allowed it to boost its occupancy rate from 42% to 70%.

Just four months later, Grupo Villar Mir put Torre Espacio up for sale, which the Philippine Group Emperador ended up buying for €558 million. By then, the skyscraper where PwC has its headquarters – the black tower that is also home to the Eurostars Hotel – had already changed hands, thanks to Merlin’s acquisition of Testa, and the sheikh Khadem al Qubaisi had already started putting the feelers out to sell Torre Cepsa, the skyscraper for which Amancio Ortega has offered to pay €490 million, according to El Confidencial.

Amidst this game of Monopoly being played out at the north of Paseo de la Castellana, two overseas financial entities, Mastercard and Commerzbank, have decided to transfer their offices to Torre de Cristal, the highest building in Spain, which measures 250m tall and contains 52 floors.

The credit card company has already moved into the skyscraper, whilst the German bank is currently undertaking refurbishment work ahead of its move before the end of the year.

But these two entities are not the only ones who have decided to move into the building owned by Mutua Madrileña. In recent months, following the arrival of KPMG with its 1,900 professionals, Torre de Cristial has seen a significant increase in the number of itstenants, after sealing several agreements with companies such as Red Hat, Cerner and Gesternova, which has allowed it to increase its occupancy rate to more than 82% and lease out a further 5,000 sqm.

Hardly any free floors left

The direct impact of the appetite for these skyscrapers from tenants and owners alike means that there are hardly any free floors left in the Cuatro Torres district (…).

Tower Sacyr (now owned by Merlin) is the only fully occupied tower, but it had to drastically reduce its rental prices to reach an agreement with PwC in 2011, during the worst years of the crisis, in order to acheive that.

Bankia also demanded that Cepsa occupy 100% of Torre Foster, but the oil company has now decided to put eight vacant floors up for rent. Those floors have a surface area of 13,000 sqm, a figure that is slightly higher than the 10,200 sqm that is also being marketed in Torre Espacio, the skyscraper where the main tenant is Grupo Villar Mir, which occupies half of the building.

These numbers show that the average occupancy figure for the Cuatro Torres district now exceeds 80%, a ratio that it has reached at a time when Azca, the traditional financial district in Madrid, is seeing a significant number of its properties undergo profound transformations.

The Cuatro Torres area will be further consolidated as a business centre with the upcoming construction of the so-called Fifth Tower, a skyscraper being developed by Grupo Villar Mir, in partnership with the fund Corestate, which Instituto de Empresa will occupy along with the health group Quirón, according to experts.

Original story: El Confidencial (by Ruth Ugalde)

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.

Purchases

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

Mutua Madrileña Buys Office Building In Madrid For €30.8M

27 July 2016 – Expansión

The insurance company Mutua Madrileña has acquired the former headquarters of Fórum Filatélico from Credit Suisse’s real estate fund for €30.8 million. The operation has been performed entirely using its own funds.

The property in question is an office building in the heart of Madrid’s financial district. Located at number 51 on Calle José Abascal, next to Paseo de la Castellana, the building has a surface area of 3,600 sqm spread over seven floors, and 62 parking spaces.

According to the company, the operation forms part of its strategy to dynamically manage its assets, which also includes the possibility of making acquisitions as and when attractive opportunities arise. On the buy side, Mutua Madrileña has been advised by the law firm Pérez-Llorca and, on the sell side, Credit Suisse has worked with CBRE as real estate advisor and Eversheds Nicea as legal advisor.

The real estate market

The building will be rented out in its entirety and, in order to increase its value, the company will undertake renovation work, to equip it with the latest technology in terms of efficiency and sustainability.

Mutua Inmobiliaria , which includes the company’s property investment area, considers that the office rental market in Madrid is in full recovery.

The insurance company has not acquired any new properties for almost 10 years. The last purchases it made for its real estate portfolio were the so-called Pirámide and the Torre de Cristal, also on Paseo de la Castellana. (…).

Original story: Expansión (by Inma Benedito)

Translation: Carmel Drake

Rental Prices Will Rise On La Castellana After The Summer

6 July 2016 – Expansión

Madrid’s financial district is refreshing its image and prices are set to rise in the area after the summer. The Spanish capital’s La Castellana thoroughfare is aiming to attract tenants who are willing to prioritise the quality of space over rental costs.

Whilst investors remain attentive to the course of events unfolding in the City (London), following Brexit’s victory in the EU referendum held on 23 June, and the formation of a new Government in Spain after the election on 26 June, business is continuing as usual and the capital’s financial district is getting ready to open its doors to some new tenants. Some of the countries in the Eurozone may, over time, attract some of the activity that has been performed in the United Kingdom until now, and if this becomes a reality, Madrid’s financial district could represent a good option for companies currently headquartered in London.

Torre Europa is preparing itself to this end. Grupo Infinorsa has launched a process to renovate the property following KPMG’s departure and will allocate €20 million to the modernisation of its facilities. In the same way, GMP is in the middle of renovating the Castellana 77 skyscraper, known as Torre Ederra – the former headquarters of Saint Gobain – as well as Castellana 81 – Torre BBVA – to adapt them both to the new demands of the market. Another building that is looking for new tenants is Torre Picasso following EY’s move to Torre Titania. (…).

Sources at Cushman & Wakefield explain that demand is not growing in Madrid at the moment. “GDP levels are similar to during the years before the crisis, and so around 200,000 sqm of space is being leased out per year. The main explanation is uncertainty”. Moreover, it seems like the slowdown is more acute in the financial district, due to the quality of available stock and the cost. (…).

José Miguel Setién, Director of the Office Business at JLL, explains that renting in Madrid has been cheap until now and the price ratio is still very attractive when compared with other major European cities; this means that there is still a lot of potential in the Spanish capital. “Provided there are no political or structural macroeconomic problems, the figure trend is that the market will continue to rise”, he added.

The CEO of Aguirre Newman, Jaime Pascual-Sanchiz de la Serna, explained that offices in prime areas, as well as in the market in general, have been very static in terms of renovations and new projects. Pascual-Sanchiz says that several projects launched within the last 12 months will come onto the market within the next year. In his opinion, they will be a good indicator for measuring the evolution of offices. “The owners of those properties, including Pontegadea, Mutua Madrileña and the Consorcio de Compensación de Seguros do not have financial problems, and are not desperate to lease their properties at any price”. For the expert, although we are seeing small and medium-sized operations in the area, the large moves, which are more dependent on the domestic and international political situation, will have to be unblocked after the summer.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

EQT To Sell Parkia To First State For €300M+

24 June 2016 – Expansión

The Nordic fund EQT has brought forward the process to select offers for the purchase of its 66.8% stake in Parkia, one of the leaders in the Spanish car park market. According to sources, the likely buyer is the Australian fund First State. The consideration paid could amount to more than €300 million for 100% of the company.

EQT, advised by BBVA, may announce the completion of the operation today. Parkia’s other shareholder is Mutua Madrileña, which controls 33.2% of the car park company. The Spanish insurance company may also sell its stake to First State if it considers the price to be attractive enough. According to the terms of the bid, interested parties must submit two offers: one for the shares owned by EQT and another for 100% of the company.

After undertaking a preliminary process to select certain bids a few weeks ago, several groups passed through to the final round. As well as First State, the other finalists included Saba, Empark, Indigo (controlled by the fund Ardian) and Interparking. Provided there are no last minute changes, EQT will opt to award the shares to the Australian fund. In theory, the definitive deadline for the receipt of offers had been extended until the middle of July, but EQT decided to bring forward the transaction.

Valuation

Throughout the sales process, interested investors have indicated a valuation range for the whole company of between €300 and €350 million, which represents between 15x and 17x of forecast EBITDA for 2016 (c. €20 million).

First State is known in Spain because it acquired a stake in the Galician regasification firm Reganosa which had belonged to the savings banks. First State is the asset management arm of the Commonwealth Bank of Australia, one of the largest banks in Australia. The sale of Parkia represents a turning point in the car park sector, which has received renewed interest from investors thanks to improvements in activity.

Original story: Expansión (by C. M. / D. B. / M. P. L.)

Translation: Carmel Drake

Saba & Ardian Bid For Spain’s 3rd Largest Car Park Group

17 May 2016 – Expansión

A dozen “Spanish and international” candidates have submitted bids for the purchase of Parkia, the third largest car park group in Spain, owned by the Nordic fund EQT. Market sources say that the candidates include major companies in the sector, such as Saba, Indigo (controlled by the investment fund Ardian), Interparking and Empark, as well as financial groups specialising in infrastructures, such as Infravía.

Some sources also include Globalvía on the list of interested parties, but a spokesperson for the concessionaire said yesterday that they are not going to submit a bid for Parkia. Sabadell is also expected to submit a bit, thanks to its partnership with the funds Altamar and Firmium, through which it plans to invest more than €150 million in car parks in Spain.

The exact amount of the bids has not been revealed, but sources state that the perceived competitiveness and facilities available to investors to leverage the transaction have helped to boost the price. Sources in the know indicate a valuation range for the whole company of between €300 million and €350 million, which would represent between 15x and 17x of the forecast EBITDA for 2016, which is expected to amount to €20 million.

EQT must decide “in the next few days”, say the sources, which bidders will make the cut and proceed to the next phase of the process, which will involve a period of due diligence (audit of the assets), in which the potential buyers will analyse the company in detail so as to prepare their binding offers.

The plan is to select between “three and five” investors from the initial interested parties, who will participate in the definitive bid. The aim is to complete the process by the end of July.

Although the operation is moving ahead, the role of Mutua Madrilña – the co-owner of Parkia with 33.2% of the capital – is still uncertain. In theory, the Spanish insurance company plans to retain its stake in the car park manager, but that will depend on the conditions that EQT ends up agreeing, say sources. Mutua declined to comment on the deal. (…).

Parkia owns 58 car parks, with a total supply of 27,000 parking spaces and an average concession life of 30 years. The company’s revenues amounted to €33 million last year. (…).

Original story: Expansión (by M. Ponce de León, D. Badía and C. Morán)

Translation: Carmel Drake

Office Buildings Will Have A Rating On Their Quality

2 February 2016 – Cinco Días

The real estate sector gets ready for a big novelty. Similarly to the debt rating of companies and countries, the office buildings will have a rating to ensure constructive and technical quality to potential investors.

The seal is called Office buildings technical rating. It is driven by the Spanish Association Offices (AEO, in its Spanish acronym), where large landowners, intermediaries and investors are integrated, and it will be voluntary. Although in this entity they believe it will be imposed thanks to the driving companies and because it will become the only guarantee of reference for the real estate market.

The aim of the AEO is to provide all stakeholders an objective and only measure of the quality of buildings. This optional rating system will be approved in two months, as final details are currently being closed. “We are finishing a standard for the technical rating of office buildings, which will be voluntary and will serve to increase confidence and transparency in the Spanish market from the perspective of investment, rental or portfolio analysis” José María Álvarez, AEO Chairman explains.

The first consequence will be knowing the condition of the buildings. Given it is a voluntary act, it is likely that the newest and highest quality buildings will promptly submit to be eligible for this qualification. This organization states that there are 30 million square meters of office space in Spain, with a value of EUR 65,000 million in assets, which generate about 4,300 million in income from leases.

AEO partners

The AEO is composed of more than 60 companies. Among them, large listed companies as BBVA, Iberdrola, Indra, Repsol and Telefonica, which in turn are usually owners of major buildings where their headquarters are installed. Property management companies as Torre Rioja (Angel Soria), Colonial and Pontegadea – family office of Inditex founder Amancio Ortega, also participate.

Listed real estate investment companies as Merlin Properties (of Ibex 35) and Lar España are also partners, as well as intermediaries including JLL, Knight Frank, Savills, CBRE, Cushman & Wakefield or BNP Paribas Real Estate. Mutua Madrileña and Mapfre insurance companies are also members.

The objective of this real estate agents group is to give transparency to the sector. Thanks to this seal, an international fund or a company will know what they face when acquiring a property. There will even be investors that will be suspicious of the buildings which do not have the rating. “It will contribute to transparency in the decision-making process,” says Alvarez on how companies will welcome this rating system.

“It will contribute to transparency in decision making,” the AEO states.

With some final details to be confirmed, the rating will have five sections. Outstanding, for those excellent, will be A+ rating. From there, going down, ratings will be A, B+, B y C.

Appraisal criteria

This certificate will be awarded by AEO in order to have a character of neutrality, but different companies and engineering companies will be responsible for the technical work, opening a new market of professional services for rating companies. Once these consultants rate the offices, the association will review the report and confirm the rating. “The AEO will review and audit all assessments by carried out by external companies,” Alvarez confirms. In addition, the certification will be renewed after a given period to assess for deterioration. This revalidation will take place every three or four years, a term not defined yet.

The concepts considered for the report focus on the architecture and facilities of the buildings Evaluators will consider distribution plants and clearances, common areas, exterior envelope and energy facilities, climate system or control. The unique provisions, seniority and energy and sustainability certifications will also be taken into account. Neither location nor aesthetics will be considered.

This association is of the opinion that this audit will also be useful for an owner to know what works and measures they must take, in addition to how much it can cost in order to improve the rating of their property.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Aura Ree

CaixaBank Sells The ‘Torre Norte’ To SegurCaixa

15 April 2015 – Expansión

Barcelona / SegurCaixa has acquired the ‘Torre Norte’, valued at €14.5 million, as part of the strategic alliance between the bank and the insurance company.

SegurCaixa Adeslas, owned by CaixaBank and controlled by Mutua Madrileña, has purchased the Torre Norte (one of the three Nissan Towers in Barcelona) from CaixaBank. The transaction was valued at €14.5 million.

The sale forms part of the insurance sector alliance between Mutua and CaixaBank. The agreement made resulted in the segregation of the business between VidaCaixa, a fully owned subsidiary of CaixaBank, and SegurCaixa Adeslas. The latter was granted the option to buy the building, which it has (now) decided to exercise.

Following this transaction, the employees of SegurCaixa will occupy the Torre Norte and those of VidaCaixa will be housed in the Torre Sur. Microbank, another subsidiary of CaixaBank will occupy the top floor of the Torre Centro.

Mutua Madrileña hereby adds another building to its growing list of properties, worth €1.2 billion, which generated unrealised gains of €357 million last year.

The flagship building of the company, chaired by Ignacio Garralda, is the Torre de Cristal in Madrid, which has an appraisal value of €504 million, and therefore accounted for 41% of the insurance company’s total property portfolio at the end of 2014. The unrealised gain on that property amounted to €59 million. Then, the building located on Paseo de la Castellana, 33 in Madrid, where Mutua has its headquarters, is the second largest in the company’s portfolio by value. It has an appraisal value of €115 million, compared with a book value of €69.8 million.

The third building in the ranking is the Alfredo Mahou property in Madrid, which has a market value of €104 million and a book value of €29 million, i.e. has unrealised gains of €75 million.

Investment plan

Last year, Mutua Madrileña completed the investment plan it launched in 2008, which sought to modernise its properties to “convert them into flagship properties in the market. Through this, we created the distinctive Mutua Building”, explains the company in its annual accounts for 2014. The company also sought to reduce operating expenses (through this plan) to increase the appeal (of its properties) to clients.

The leased buildings generated revenues of €32.8 million for Mutua in 2014 and the company made investments amounting to €13.6 million during the year. Its occupancy rate last year was 90%, up from 88% in 2013.

Real estate investments accounted for 20% of the company’s total investments during the year, which had a market value of €6,654 million.

Original story: Expansión (by E. del Pozo)

Translation: Carmel Drake

Mutua Owns Prime RE Assets Worth €1,200M

9 April 2015 – Expansión

The real estate subsidiary of the insurance company owns more than twenty assets, including 15 (properties) on the Paseo de la Castellana, Madrid’s prime (real estate) axis.

Mutua Madrileña is not only one of the largest insurance companies in the Spanish market, it is also one of the largest owners of office buildings. Through its real estate subsidiary, led by Emilio Colomina, Mutua manages a portfolio of more than twenty real estate assets, with a (combined) surface area of around 200,000 square metres.

Fifteen of the buildings in the portfolio are particularly noteworthy; they have a (combined) surface area of approximately 175,000 square metres and include several properties located on the prime axis (the most sought after area) of Madrid. Mutua Inmobiliaria owns numbers 31, 36, 50 and 110 on the capital’s main thoroughfare, the Paseo de la Castellana, as well as the Torre de Cristal, located in the Cuatro Torres complex, at number 259.

And just a stone’s throw away from La Castellana, in the heart of the capital’s financial district, the company also owns the Alfredo Mahou building (pictured), which has a surface area of around 24,000 square metres; as well as the Torres de Colón.

At the end of 2014, these fifteen buildings had an appraisal value of €1,200 million, representing a slight increase on the previous year, with unrealised gains of €356 million.

In 2014, the real estate company recorded turnover of €46.8 million from rental payments, and (its buildings) had an occupancy rate of 90%, i.e. 2% higher than last year.

“The favourable development of Mutua Inmobiliaria’s business is due, to a large extent, to the investment plan that the company launched in 2008 and completed in 2014. As a result, the company modernised its (portfolio of) buildings”, explains the insurance company.

During this period, Mutua invested around €150 million in upgrading (its buildings, including) the Torres de Colón, for example – work there began in late 2011 and involved a budget of around €25 million. “The investments made have allowed us to build loyalty and retain customers, sign new rental contracts, at maximum prices, and reduce operating costs, which has increased the attractiveness and efficiency of our properties”, says Colomina.

The new (rental) contracts include: the move of the law firm Hogan Lovells to Castellana 36-38 late last year, where it leases 4,608 square metres, and KPMG’s upcoming move to Mutua’s skyscraper in the Cuatro Torres, which has a surface area of 20,000 square metres.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Madrid Gov’t Wants To Sell Its Land Next To The Cuatro Torres

24 March 2015 – Expansión

Plans / Tomorrow (Wednesday) is the deadline for bidders to submit alternative plans to the Town Hall for the land where a convention centre was initially proposed.

The Town Hall of Madrid has decided to take advantage of the momentum in the Spanish real estate sector and make a profit from the plot of land it owns next to the Cuatro Torres, land that was severely hit by the crisis.

The site, located just behind the four skyscrapers owned by Bankia, Sacyr, Mutua Madrileña and Grupo Villar Mir, was designed to house Madrid’s International Convention Centre. However, in 2010, once construction work had already begun, Madrid’s Government got into financial difficulties, which put a stop to the project that was going to cost €300 million.

Five years later, the Town Hall of Madrid has launched a tender for the development of this plot and the transfer of the right to use this land for a 75-year period. The deadline for the receipt of offers ends tomorrow, according to the initial plan. However, sources in the real estate sector believe that this date may be extended, since interested parties have barely had a month to evaluate the land’s characteristics and its possible uses.

The land measures 33,325 square metres, with a maximum buildable area of 70,000 square metres. Around 53,000 m2 of this space must be devoted to public use. The remainder, around 17,500 square metres, may be used as a commercial area, but not a large shopping centre. “The special plan classifies the land as a single premises and, as an alternative use, it includes the possibility of devoting the land to the public administrations. Moreover, it establishes a regime of compatible uses, such as recreation and leisure, small and medium sized shops and other tertiary uses besides offices”, say sources at the Town Hall.

The possibilities include the construction of a large educational centre or a hospital. To this end, several investment funds have made contact with companies, Spanish and international, to offer them a turn-key project. That is, they buy the land and construct a building for a company, which then commits to rent it under a long-term contract.

In its award of the land, the Town Hall will take into account not only the financial offer, but also the requirement for the buildings be energy efficient, both during their construction and their subsequent use, and that the architectural appearance contributes “a singular piece to the urban landscape”. The successful bidder will pay an annual fee of €1.935 million.

KPMG

KPMG’s recent move to the Cuatro Torres makes it the latest tenant to occupy offices in the complex. Opened between 2008 and 2009, the Madrid skyscrapers suffered when the (real estate) bubble burst, as its rate of uptake slowed down. Following KPMG’s move, Mutua’s property (Torre de Cristal), which until now had the most space available, will reach an occupancy rate of 70%. Torre Foster, owned by Bankia, is mostly occupied by Cepsa, although the bank itself also uses several floors. Sacyr’s skyscraper is entirely rented out to PwC and the Eurostars hotel, whilst the Torre Espacio has an occupancy rate of close to 90%.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake