Project Formentera: Santander To Sell €170M Hotel Debt Portfolio

18 May 2015 – El Confidencial

A new portfolio of hotel debt has just come onto the market. At a time when investors’ interest in these transactions is at an all time high, Santander has put loans worth €170 million relating to 17 hotels up for sale.

A new portfolio of hotel debt has just come onto the market. At a time when investors’ interest in these transactions is at an all time high, Santander, the largest Spanish bank, has decided to pique the insatiable interest of international funds in this type of transaction through the launch of an operation known as: Project Formentera.

It involves a portfolio of loans worth €170 million, linked to 17 hotels. The majority are located in the Community of Valencia and the Canary Islands, which encourages operations with investors interested, primarily, in the holiday segment and in the (Canarian) archipelago.

The portfolio that Santander has just launched joins those being promoted by two of its main rivals, BBVA and Bankia, which have also decided to take advantage of the window of opportunity that has opened to try to offload some of their debts, which include loans that the financial entities are very keen to divest.

According to sources in the market, unlike what may happen in the residential market – a business the banks know very well, since historically they have had the best prepared teams to manage such assets when they fail – the hotel business is a very specialised segment, whose incident rate (casuística) is more difficult for financial entities to manage.

This means that their priority, in general terms, is to try and sell debt, rather than foreclose it and take ownership of assets that they are much less familiar with than residential. If we add the insatiable appetite of the large international investors for the hotel sector, fuelled by the perfect combination of low prices and a strong recovery in the tourism sector, now is the perfect time to carry out these kinds of transactions.

A string of transactions

In fact, at the end of last year, Bankia closed the sale of a batch of hotel loans to Starwood and Sankaty for €400 million (Project Amazona) and is now finalising the second part of that transaction, known as Castle, whose finalists are Apollo, Oaktree and Bank of America. BBVA has also just opened the bidding for 14 hotels it inherited from unpaid loans, a process known as Project Otelo; meanwhile Sareb has just engaged N+1 to manage the sale of a portfolio with a nominal value of €500 million, which is linked to the property developer Polaris World, in an operation known as Project Birdie.

And so the list goes on. A few weeks ago, the German bad bank FMS Wertmanagement sold the portfolio known as Gaudí to Oaktree for close to €500 million – a batch of problem loans linked to, amongst others, the iconic luxury hotel Arts de Barcelona, as well as another high-end property in Cascais (Portugal), five shopping centres, including Plaza Éboli and Heron City, several storage buildings, and residential and industrial assets.

Moreover, the large financial entities that signed the €152 million syndicated loan with the Basque property developer Urvasco, which, in turn, owns the hotel chain Silken, have spent the last few months selling their stakes both in this debt, as well as in those linked to certain establishments, including the Puerta de America hotel in Madrid; Bank of America is taking advantage of this window to enter through the ‘front door’ of what is considered to be the last great Spanish hotel chain up for sale.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Objects Of Desire: 16 Shopping Centres Up For Sale

14 May 2015 – Expansión

Between January to March (2015), funds and Socimis have invested €988 million in the purchase of large shopping establishments; and that figure that could reach €2,500 million for 2015 as a whole.

The 682 shopping centres in operation in Spain have become objects of desire for all investors interested in the Spanish real estate market. Thus, between January and March, these investors spent €988 million on the purchase of all kinds of shopping centres. “In January 2014, institutional investors did not want to purchase in Spain and now we have a very wide range of buyers: from institutions, which do not mind paying more for a good property, to opportunistic funds”, explains Vitor Pacheca, Senior Consultant of Retail Capital Markets at JLL España.

Last year, the Spanish market was the fourth favourite in Europe for investors interested in shopping centres and retail parks, with transactions as significant as Puerto Venecia in Zaragoza, which the British group Intu purchased for €451 million, having purchased Parque Principado in Asturias in 2013. Those are not the only real estate projects being pursued by the British real estate firm in Spain; it is currently developing two (shopping) centres, one in Malaga and the other in Valencia.

The most high profile case in 2015 has been Plenilunio. The Madrilenian property was acquired by the French operator Klépierre for €375 million on 17 March. The As Termas shopping centre in Lugo also changed hands; it was purchased by the Socimi Lar España. And AireSur in Sevilla was acquired by the fund CBRE Global Investors. “Last year, 28 (shopping) centres were bought and sold, representing a total investment volume of €3,200 million. In 2015, we expect that more centres will be sold but for a smaller total amount, around €2,500 million”, says Pacheco.

Although the flurry of transactions is not expected until the final quarter of the year, several shopping centres are scheduled to change owner shortly. “There are around 16 shopping centres for sale in Spain at the moment. We estimate that as many as 30 such assets may change hands between now and the end of the year”, say sources at JLL.

Doughty’s centres

That is the case of El Rosal in León and Plaza Éboli (pictured above) in Pinto (Madrid). The private equity firm Doughty Hanson is finalising the sale of those two properties, whose ownership will be transferred over the next few weeks.

The Plaza Éboli shopping centre, which was opened in 2005 and measures 62,000 m2, will be acquired by the US investor HIG for €30 million. In the case of El Rosal, which measures 151,000 m2, the new owner will be the Socimi Lar España, which has already purchased other shopping centres such as L’Anec Blau in Castelldefels (Barcelona) and Albacenter in Albacete. The Socimi will pay €90 million for El Rosal.

Another one of the 16 shopping centres up for sale is Moraleja Green in Alcobendas (Madrid). The property is on the market again after it was sold to ING by CBRE Global Investors last year. Now, the real estate division of the Dutch bank is putting it up for sale, after paying €68 million.

The Heron City shopping centre in Barcelona is also up for sale; it opened in 2011 and occupies a surface area of 101,000 m2, of which 36,358 m2 is dedicated to retail space.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

German Bad Bank Finalises Sale Of Spanish Assets To Oaktree

8 May 2015 – Cinco Días

Over the next few weeks the German bad bank is expected to sell the assets that it owns in Spain. FMS Wertmanagement expects to sell the so-called Gaudí portfolio, which contains properties in Spain and Portugal, in a single transaction to Oaktree.

“Now is the time to sell the whole portfolio”, said José Holgado yesterday, Commercial Director of FMW Wetmanagement, at the Spanish real estate market’s second investment forum, which was held yesterday as part of SIMA (Salón Inmobiliario Internacional de Madrid or Madrid International Real Estate Fair). Holgado estimated that the value of the portfolio amounts to almost €900 million, although that is the nominal value, which will be reduced during the final negotiations.

The German entity, created in 2010 with assets from the nationalised Hypo Real Estate bank, operates in the same way as Sareb, the Spanish bad bank. Although the nominal value (of the portfolio) is almost €900 million, it is understood that these non-performing loans and assets have lost value since the start of the housing crisis, therefore they will be sold at below market prices, in the same way as (the assets sold by) the Spanish Sareb. Moreover, since (the portfolio is being) sold on a wholesale basis, the cost will also decrease.

Although several funds have valued FMS Wertmanagement’s portfolio, in the end it will be the Californian fund Oaktree, owner of Panrico, which takes over the Gaudí portfolio, subject to the negotiation of the final details. One of the most significant assets in the portfolio is the luxury Hotel Arts de Barcelona, a five star property managed by Ritz-Carlton. This complex was acquired by several buyers in 2006, including one company that was linked to the Singapore fund GIC. The German bank Hypo Real Estate was one of the entities that granted loans (to it). Once HRE was nationalised, part of the unpaid, syndicated debt was transferred to FMW Wertmanagement.

Other funds

According to the specialist publication CoStar, in addition to Oaktree, the portfolio also sparked interest from other funds including Cerberus Capital Management, Orion Capital Managers and Colony Capital. That publication estimates that the final price of the transaction will amount to approximately €500 million.

The sale of the Gaudí portfolio, which is being managed by Cushman & Wakefield, comprises 16 loans in Spain and two in Portugal. According to sources close to the transaction, Oaktree would immediately acquire another five star hotel in Cascais (Portugal), five shopping centres, four office blocks, 17 industrial storerooms, as well as several other residential and industrial assets.

The shopping centres include the MegaPark in Barakaldo (Vizcaya), Heron City de Las Rozas and Plaza Éboli, both in Madrid.

According to Holgado, FMW Wertmanagement commenced operation holding debt from assets worth €175,000 million, of which €100,000 million have now been sold. The director of the German bad bank said that now is the right time to sell given the significant liquidity in the market.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Doughty Finalises The Sale Of Two Shopping Centres

23 April 2015 – Expansión

Activity continues apace in the shopping centre sector. The private equity firm Doughty Hanson is finalising the sale of two shopping centres in Spain, namely Plaza Eboli in Pinto (Madrid) and El Rosal in Ponferrada (León), which it acquired in 2011 for €120 million.

The two properties were acquired by Doughty in March 2011 and four years later, they are getting ready to change hands. The company paid the Portuguese real estate company Sonae Sierra €120 million for both assets. Now it is selling them for €115 million, according to sources close to the transaction.

For the centre in León, Doughty has received an offer from the Socimi Lar España for €85 million. In the case of Plaza Éboli, the fund is finalising its sale to the US investor HIG for around €30 million.

Plaza Éboli was opened in March 2005 and has a constructible surface area of 62,000 square metres, over four floors, of which 31,306 square metres are used for retail space. The main tenants include E. Leclerc, which has a supermarket, and a chain of cinemas, which occupies more than 2,000 square metres. Moreover, the centre has 1,004 parking spaces.

In the case of El Rosal, the property was opened in October 2007. It has a surface area of more than 151,000 square metres of which 50,851 square metres are used for retail space, according to the Spanish Association of Shopping Centres. It also has 2,450 parking spaces.

With its acquisition of El Rosal, the Socimi Lar España is continuing to increase the number of assets in its portfolio (especially retail premises and logistics warehouses), which were valued at €406 million at 31 December 2014. These include the shopping centres L’Anec Balu in Castelldefels (Barcelona) and Albacenter, in Albacete.

Socimi

Already this year, the Socimi controlled by Miguel Pereda has acquired the As Termas shopping centre in La Coruña for €67 million.

The real estate company debuted on the stock exchange in March 2014 with €400 million of capital to invest; funds it had received from large institutional investors, such as Pimco.

Meanwhile, the interest expressed by the US fund HIG Capital in the Madrid shopping centre reflects the investor frenzy between large international funds. In the case of HIG, it closed its first real estate acquisition purchase in 2013 when it acquired almost one thousand homes from Sareb, as part of the so-called portfolio Bull.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake