Tag: partnership

Lidl Seeks RE Partners To Drive Growth

20 October 2016 – Expansión

Lidl is changing its expansion policy. Until now, the German chain has focused on opening supermarkets on the outskirts of urban centres. However, its new strategy will focus on identifying real estate partners to construct complexes that combine commercial and residential areas.

“We are looking for partners with whom, for example, we can open a shopping centre on the ground floor and construct apartments on the floors above”, explained David Carim, Director of Expansion at Lidl. The supermarket chain has a stand at the Barcelona Meeting Point real estate fair, which is being held from 19-23 October in the Catalan capital, to promote its strategy and look for new partners.

In this sense, the company is also offering itself as a partner to companies and funds that have unused plots of land, to develop projects together. It has not completed any of these initiatives in the Spanish market yet, but the strategy has already been applied in four shopping centres that the company manages in London. The formula will allow it to unify costs with the partners and access areas right in the heart of city centres.

Above all, Lidl is interested in plots of land measuring between 4,000 m2 and 9,000 m2, on which to build centres with a minimum surface area of 1,100 m2. The company is also looking for ground floor premises in towns with at least 16,000 inhabitants.

In addition, it is expected that this new expansion strategy will be applied to the construction of logistics centres, on plots of land measuring between 120,000 m2 and 140,000 m2.

Six hundred stores

Using this formula, the company plans to have 600 stores in less than five yers. The German chain already manages 535 supermarkets. In 2016 so far, Lidl has spent €350 million opening several new centres in Cornellà, Ripollet, Blanes, Sant Feliu and Roses (Cataluña), amongst others. The company plans to open another two new supermarkets in Badalona and Sant Boi, also in Cataluña, before February.

Lidl is not planning to create a real estate subsidiary even though it is looking to divest several of the premises and plots of land that it owns. Its owned assets include a plot of land measuring 65,815 m2 in Sant Fruitòs de Bages (Cataluña) and a 3,011 m2 farmhouse in the Catalan town of Arenys de Mar.

Lidl, which has invested €1,000 million in Spain over the last six years, is also focusing on redesigning its shopping centres. The paradigm of this new space is its centre in Ripollete, very close to the company’s central headquarters in Montcada i Reixach. The new supermarkets are characterised by their large windows, the installation of photovoltaic panels, which generate 30% of the stores’ energy, and the installation of bakeries in every supermarket.

Original story: Expansión (by Eric Galián)

Translation: Carmel Drake

Sonae Sierra Returns To Spain With €170M

19 October 2016 – Expansión

The real estate company owned by the Sonae group and the fund Sierra are going to invest in the Spanish market once again. The company, which already owns six shopping centres in Spain, and manages two more, has set itself the objective of investing at least €170 million in the country over the next five years. Of those, €115 million will be spent on the large luxury brand outlet that it is constructing in Málaga together with the US firm McArthurGlen.

“We have started to request the licences and we will begin construction at the beginning of 2017, with the aim of opening the centre in 2018”, said Alexandre Fernandes, Head of Investment for Europe. The remaining €65 million will be spent updating and expanding some of its existing shopping centres in the country. “We are not planning to sell any of our centres in Spain, but rather invest in them and look for opportunities to buy”, said Fernando Oliveira, CEO of Sonae Sierra.

In Spain, the company had decided to divest its least strategic assets. Nevertheless, its strategy has changed radically and Sonae Sierra is now focusing on growing in Spain. “The outlook has completely changed since the end of 2013, financing has returned and all of the brands want to expand their businesses”, said Oliveira.

Partnerships

In addition, the real estate company has decided to launch a new business line dedicated to the search for and management of co-investment commercial projects. “We see that international funds are expressing a lot of interest in investing in Spain, not only in shopping centres and high street premises (but also other assets). We think that there is a market for them and that we can help them with their investments and then continue with the management of those properties”, said Fernandes.

These joint companies, in which Sonae Sierra will hold a minority stake and will manage the acquired assets, will operate as Socimis, given that “that it the structure that is most attractive for investors due to the tax advantages”, say sources at the company. The first of these partnerships was closed in June, with the fund CBRE Global Investment Partners, with which it jointly purchased two shopping centres in Portgual and another one in Spain.

At the global level, the company aims to invest €2,300 million in the development of new real estate projects over the next five years and to continue growing its service offering to third parties.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Villar Mir Negotiates Partial Sale Of Fifth Tower To Hispania

29 September 2016 – Expansión

According to the businessman Juan Miguel Villar Mir, the Villar Mir Group has begun negotiations with the Socimi Hispania to join forces for the development of the fifth tower, the new skyscraper in the north of Madrid, next to the Cuatro Torres Business Area complex.

It is one of the most important buildings in the capital in terms of investment, given that the developers will need around €500 million to cover the construction and rental costs – an initial lease has been granted for a period of 75 years.

Sources at the family holding company have confirmed that preliminary conversations have begun, aimed at Hispania’s entry into the project “as a minority shareholder”. Other sources state that the Socimi, managed by the Azora group and in which George Soros holds a stake, may be interested in acquiring 100% of the building, which will be leased in its entirety. Nevertheless, the Villar Mir Group assures that it will maintain the majority stake.

The fifth tower project, which Villar Mir won at the end of 2014 in a tender organised by the Town Hall of Madrid, has already selected its tenants. Earlier this year, the IE Business School agreed to lease 50,000 sqm of the building for its campus. The bottom part of the complex, measuring 12,000 sqm, will house leisure areas, a shopping arcade and a health centre, which will, in theory, be operated by the Quirón Group. The project, promoted by the Villar Mir family, still needs to obtain the definitive permits from the mayoress of Madrid, Manuela Carmena.

Partners

In September 2015, the Swiss investment fund Corestate announced that it had agreed to form a joint venture with the Villar Mir Group to jointly develop the fifth tower. Six months later, in March 2016, Juan Miguel Villar Mir qualified that announcement by stating that the agreement with Corestate had not been signed yet. With or without Corestate, the negotiations with Hispania are happening at a time of peak activity for Spain’s listed Socimis. Hispania reached the final round of the tender to acquire the building, after it partnered up with Ferrovial, but Villar Mir won the 75-year lease by offering to pay an annual fee of €4 million, equivalent to twice the bid price. (…).

Divestments

The search for partners forms part of the strategy being pursued by the Villar Mir’s holding company to finance its multi-million investment commitments through Espacio and OHL, without increasing its debt, which amounts to €14,000 million. The other source of extraordinary income comes from the sale of its assets. (…).

The group needs funds to tackle its three major real estate projects (the fifth tower, the Canalejas Complex and the War Office in London), as well as several toll roads in Latin America.

Original story: Expansión (by C. Morán and R. Ruiz)

Translation: Carmel Drake

Värde Creates A New RE Company: Dospuntos

21 June 2016 – Cinco Días

One of the real estate firms that suffered during the real estate crisis has been reborn under a new name and with new owners. Värde Partners has created a new property developer, Dospuntos, out of the San José Desarrollo Imobiliarios structure, which it acquired from the San José Group last year. The US fund has an ambitious plan to turn the company into one of the major players in the sector as the incipient recovery starts to heat up.

“Värde and the rest of our shareholders believe in the recovery of Spain and in the growth of the real estate sector”, said Javier Eguidazu (pictured above), CEO of Dospuntos, who joined the firm in September from the Valdebebas urban development in Madrid. According to the Director, Värde and its partners paid more than €1,000 million to purchase the real estate company from San José, basically the amount equivalent to the value of its debt, and the debt clock was reset when the agreement was signed.

The company now owns land from the former subsidiary of San José, as well as from Várde, which was a dynamic and discrete purchaser of land during the recession in Spain. “We now have 800,000 sqm of land, on which we will build 7,000 homes”, said Eguidazu. “Värde is a very active operator in the market and is always studying deals. It is our majority shareholder, but that does not mean that it constructs all of its developments through our entity, nevertheless, it is likely that it will”, said the Director.

The major shareholder of this new real estate company is the US fund, with a stake of more than 50%; it manages assets worth more than €10,000 million all over the world. Värde has been particularly active in Spain in recent years, with the acquisition of Popular’s credit card bsiness, as well as half of the real estate firm Aliseda, from the same bank, in an operation that it entered into together with the fund Kennedy Wilson. Moreover, it is currently holding negotiations to acquire a stake in Procisa’s office business.

Värde (which means “value” in Swedish) is accompanied in its shareholder capacity in Dospuntos by the funds Marathon and Attestor, as well as banks such as Bank of America and Barclays.

The shareholders plan to invest €2,000 million between 2016 and 2012, at an average rate of €400 million per annum, of which €800 million will be allocated to continuing to acquire land on which to build homes. Over the long term, 30% or 40% of the company’s resources will come from bank financing. “Our aim is to create the best land bank in the country and to be the most profitable property developer in Spain”, said Eguidazu. The firm has already invested €100 million in land and another €55 million launching developments. (…).

The new property developer plans to put its first 1,300 homes up for sale in 2018, given that it is already starting to construct its first properties in Madrid, Málaga, Sevilla and A Coruña. Its other target locations include Pamplona, Valladolid, Zaragoza, Sevilla, Barcelona and Tenerife. From 2019, it plans to reach a cruising speed of 2,000 homes per year on average. By then, the company also expects to be generating revenues of between €500 million and €600 million.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Ilunion and Vincci Launch A €500M Hotel Socimi

21 June 2016 – Expansión

Vincci Hoteles and Ilunion have launched a Socimi called Plaza Hotel Assets.

The agreement between the two companies forecasts an ambitious growth plan, through acquisitions and contributions of hotel assets in urban and vacation locations.

The establishments will be situated in Madrid, Barcelona, the Balearic Islands, the Canary Islands, the Costa del Sol, as well as in certain international destinations.

This Socimi has been created with the objective of facilitating the growth of these two groups in the Spanish tourism sector and consolidating their growth plans as operators.

According to the CEO of Vincci Hoteles, Carlos Calero, the opportunity for multi-management within the same Socimi means that a lot of value has been placed on the versatility that this new form of growth offers. The hotel chain, which has been operating in the sector for fifteen years, has forty hotels in its portfolio and owns properties in Spain, Portugal and Tunisia.

Meanwhile, the CEO of the Ilunion group, Alejando Oñoro, thinks that this agreement is good news for his company, as it represents another step in the consolidation of the group launched just over a year ago.

Similarly, he is convinced that the project will help to create quality jobs for people with disabilities in a strategic sector for the country, such as tourism; and will continue to expand accessibility and design for everyone in hotels.

Original story: Expansión

Translation: Carmel Drake

The RE Sector Attracts Overseas Investors Once More

12 April 2016 – Cinco Días

(…) Overseas capital is focusing on the property market once again. And Spain is one of the main European markets for offices, hotels and logistics. Madrid and Barcelona are leading the charge and the Socimis at the forefront of the revitalisation of the market. (…)

According to data from the Foreign Investment Register, published by the Ministry of Finance, the construction sector and real estate-related activities secured almost €7,700 million of direct foreign investment in 2015, i.e. 34.5% of the total. As such, one out of every three euros of international funds received by the Spanish economy last year was invested in the property sector.

Productive foreign investment (that which generates activity and employment) grew for the third consecutive year, to close 2015 with an increase of 11%, to €21,724 million. Of that amount, €4,706 million, i.e. 21.7%, was allocated to the construction of residential buildings and property development, compared with €1,762 million in 2014….Meanwhile, real estate-related activities (sales, purchases and rentals) accounted for 13.8% of the total, i.e. €2,992 million. (…).

In the context of this new activity, the Socimis have emerged as the main supporters of the market. The large Socimis experienced a real boom in 2015, when they flooded the MAB with their stock exchange debuts and came close to tripling their profits, which rose from €89.5 million in 2014 to €251.2 million last year, according to data from the CNMV.

Within the last year, the four largest Socimis (Merlin Properties – which has been listed on the Ibex 35 since December -, Hispania – thanks to its partnership with Barceló -, Lar España and Axiare Patrimonio) have doubled the value of the properties they own, to more than €9,200 million in total. (…).

The Socimis accounted for 41% of all funds invested in the purchase of real estate assets in 2015 – they spent €5,237 million on asset transactions. In this way, the increase in the volume of their investments amounted to 129%, in particular due to Merlin’s purchase of Testa for almost €1,800 million.

Wealthy individuals and several international funds have invested fully in these investment vehicles, attracted by the low prices in the sector and the tax advantages on offer (Socimis are exempt from paying corporation tax). The Qatar sovereign fund is trying to become the largest shareholder in Colonial; it now owns almost 30% of the Catalan real estate company.

George Soros has strengthened his commitment to Hispania, in which the millionaire John Paulson holds a stake of almost 10%. Carlos Slim controls Realia…Amancio Ortega, with his investment arm Pontegadea, now manages a very interesting and diverse asset portfolio.

The experts agree that the sector has left behind the turbulent times that it experienced following the burst of the real estate bubble. It is undergoing a period of normalisation and stabilisation – albeit a long way from its pre-crisis levels – and it is facing a new environment, with sustainable growth, in a market that is more mature and more professional.

Original story: Cinco Días (by Pablo Pico)

Translation: Carmel Drake

Developers & Funds Team Up To Construct Homes

7 March 2016 – Finanzas

The crisis that has affected the real estate sector since 2007 has given rise to new alliances between the main players in the market, such as the unions between international funds and domestic property developers that have proliferated, particularly in last two years.

With the return of credit to the real estate sector….alliances have started form between international funds who want to expand beyond the tertiary sector and move their money into the segment for residential development, in the hope that the economic recovery will consolidate and demand will increase, and traditional developers, which have the know-how about the residential sector.

The President of the trade association for construction developers in Spain (APCE), Juan Antonio Gómez-Pintado, admits that the information available about these alliances is vague because the sector is still “not very transparent” and figures are scarce.

Data from the Ministry of Development indicates that the number of permits requested for the construction of new homes shot up by 42.5% last year, to reach 49,695 certificates in November. Nevertheless, although the data from 2015 is the best figure in the last five year, it still falls well short of the maximum reached in 2006, when 865,561 permits were requested.

In the midst of this opacity, Gómez-Pintado explains that all of this began when the funds, which manage “a lot money but have few employees”, decided to construct homes and “sought out developers with extensive knowledge of the area where they wanted to invest and with sophisticated (internal) structures”, to allow them to report on the status of expense accounts and construction work on a weekly basis and, above all, to work with players that display good practices and regulatory compliance.

Medium-sized and large developers

Thus, Gómez-Pintado says that the funds are interested in medium-sized and large development companies, whilst the CEO of Aelca, José Juan Martín, says that they are also keeping their eyes on those developers that have knowledge of micro-markets.

When it comes to launching an operation, the funds prefer to invest in new developments with their partner, right from the start. Again, the aversion to risk is there and so they prefer to team up with a developer from the get-go, i.e. to buy the plot of land. (…).

In terms of location, Mikel Echavarren, CEO of the financial consulting firm Irea, points to destinations such as Madrid, the Costa del Sol and the city of Málaga, the Balearic Islands, Barcelona and the surrounding area, and the Mediterranean Coast, as the most attractive areas for this type of partnership.

Great opportunity

The sources consulted agree that these partnerships represent a good opportunity for developers, especially those players that decreased in size during the crisis and now want to grow again.

To this end, the President of APCE believes that this is “a model that is here to stay”. “The funds have a time horizon of 5 to 7 years, over which they have to recover their investment, and if things go well then they will stay”, he adds.

In Martín’s opinion, “there are no long-term relationships at the moment, but that is something that is improving every day” because “bank financing is continuing to provide support, but there is an initial investment for projects that the banks will never finance”.

Henceforth, the CEO of Aleca believes that “long-lasting relationships” will also arise between property developers and funds, but he thinks that they will only happen in the case of those developers that have a vision of all or almost all of the domestic market. (…).

Original story: Finanzas

Translation: Carmel Drake

Sareb To Invest €5.2M On Completion Of 337 New Homes

26 October 2015 – Expansión

During the six months to June, the so-called ‘bad bank’ has completed six real estate developments that were started last year, adding to the total already completed of 24, which means that the company has now completed and put up for sale 618 new homes in the last few years.

Sareb will invest €5.2 million to complete the construction of 11 developments, reactivated during the first half of the year, which will enable it to put 337 new homes on the market. The construction work is expected to begin within the next few months.

At the moment, the company is analysing the feasibility of reviving other suspended projects during the remainder of 2015, according to its activity report for the first half of the year.

Meanwhile, during the first half of the year, the company approved the development of 13 plots of land, involving 780 homes in total, in the autonomous regions of Andalucía, Valencia, Cataluña, Galicia and Madrid. Whilst the pre-sale phase started in September, construction is expected to begin at the end of this year.

To identify the development alternatives, Sareb will have to take into account the ownership of the land, the level of investment required and its own role or level of involvement in each initiative. In this sense, the company has recently signed joint venture agreements with several property developers. Moreover, it is working on a set of plots in Madrid, where it intends to construct developments through similar partnerships.

During the first half of the year, the company sold 5,345 properties to retail clients, at a rate of 30 homes per day, compared with the average rate of 42 recorded in 2014.

Moreover, it has experienced an increase in the level of interest for plots of land, whose sales have increased by 3.6x, “however, the economic volume is not significant yet” in terms of the company’s total turnover.

Original story: Expansión

Translation: Carmel Drake

Popular To Put 15,000 More Properties Up For Sale

16 July 2015 – Expansión

Popular is strengthening its strategy to achieve one of the main objectives it has set itself for the coming years, namely to accelerate the divestment of its non-productive assets. This mainly relates to its real estate portfolio, which includes €15,000 million of problem loans to developers, SMEs and individual borrowers, and a further €14,600 million of foreclosed assets.

One of the initiatives that the bank has set for 2015 is to increase the number of finished properties available for immediate sale through its web channel, by 15,000. It is looking to boost its web channel and thinks that it has great potential. This increase of 15,000 assets represents an increase of almost 50% to the portfolio that the bank currently has available for sale (taking the total to around 30,000 properties).

Channels

Currently, Popular sells 73% of its assets through its network of branches, another 21% through commercial agents and only 6% online. In the rest of the sector, digital channels account for 50% of such sales.

The entity, in turn, is accelerating the sale of large portfolios to wholesale investors. In the last two quarters, Popular has closed four such transactions amounting to €333 million, with a 9% discount on the net book value. These operations have included various assets, from residential land to commercial properties and garages.

As a result, the bank has doubled its volume of property sales in the last year. During the first quarter, Popular closed divestments amounting to €534 million, compared with €249 million recorded between January and March 2014, an increase of 115%. In this way and in just one quarter, Popular sold assets with a value very similar to the total amount sold in the whole of 2013, when sales amounted to around €700 million.

Popular’s strategy to dispose of its problem assets has been boosted in the last year and a half, following the partnership agreed in 2013 with the funds Värde Partners and Kennedy Wilson. That transaction, structured through the joint venture known as Aliseda, is not only generating capital to strengthen the bank’s balance sheet, but is also seeking to take advantage of the funds’ extensive experience in this business to accelerate the sale of assets, reduce the length of the recovery process and maximise divestment prices. Kennedy Wilson and Värde Partners, which control 51% of Aliseda, have almost €25,000 million in assets under management. (…)

Original story: Expansión (by M. Martínez)

Translation: Carmel Drake

Santander & Costain End Their RE Partnership In Sotogrande

2 July 2015 – Expansión

The Spanish bank and the British company are sharing out Alcaidesa’s assets – the development is worth around €90 million.

According to the agreement reached between the two partners, Santander will retain the majority of the land owned by Alcaidesa Holding for residential development, whilst Costain will keep two small plots of land and the operational management of golf courses and the marina, which are already in operation.

To complete the transaction, Costain will pay Santander €37.3 million for its 50% stake in Alcaidesa and will take on €8.5 million of the debt that the property developer owes to the bank. The bank, through its subsidiary Altamira, will hold onto the majority of the property developer’s land, worth €45.8 million.

Santander inherited its stake in Alcaidesa from Banesto, which in turn formed an alliance with Costain in the 1990s, to undertake this residential and leisure project in the Cadiz town of La Línea, near Sotogrande. The crisis that began in 2008 caused a slow down in the construction of more homes in Alcaidesa, which left several unbuilt plots of land that will now pass into Santander’s hands.

The parties expect to complete the transaction in September, once all of the administrative and tax formalities have been completed.

At the end of 2014, the funds Cerberus and Orion Capital paid NH Hotels Group €225 million for the assets (for development), golf course and hotels in Sotogrande.

Original story: Expansión (by Roberto Casado)

Translation: Carmel Drake