Tag: political uncertainty

Political Uncertainty In Cataluña Scares Off Investors

17 September 2015 – Expansión

The political uncertainty (in Cataluña) is deterring large real estate investors. “It is not because they are left wing or right wing”, but rather because “they need to know what to expect”, and in the meantime they are having to wait and see (which is not good). Those were the views of Fernando Rodríguez de Acuña, Project Director at the consultancy RR de Acuña y Asociados.

The major international funds are waiting for the general election and are therefore postponing their operations. “The capital is waiting for the results (of the general election) because a political change would cause them to delay their investments”, added Rodríguez de Acuña.

The change in government at the Town Halls in Madrid and Barcelona, following the 24 May elections, has already generated considerable fear amongst the large investment firms. However, this slowdown is being felt mainly in the non-residential real estate market, since the housing sector is enjoying a bullish period in the large capital cities.

In Barcelona, the uncertainty surrounding Catalunya’s sovereign process and Ada Colau’s hotel moratorium have generated the perfect storm to scare away investors from the hotel sector. The founding partners of the consultancy Magma HC, Albert Grau and Bruno Hallé, said that “hotel investments have come to a complete standstill” and they acknowledge that some projects “have already been diverted to other destinations”. Hallé specified that “they are not only worried about the lack of legal certainty”, in the case of the Barcelona market, they are also concerned by the uncertainty about “whether we will continue to remain in the euro or not”.

Yesterday, at a debate organised by Magma HC, the Head of Innovat Hoteles, Ignasi Uñó, acknowledged that his chain had been affected by Colau’s moratorium; he also said that it had been “impossible” for them to make contact with the Town Hall. Two days ago, the Head of the Mobile World Conference (MWC), John Hoffman, asked hoteliers in Barcelona whether the moratorium risked leaving the mobile telephone conference, which gets bigger each year, without enough beds.

And in Madrid? “A handful of funds have decided to retreat, but right now there is a considerable degree of calm in Madrid”, explains Carlos Smerdou, CEO of Foro Consultores.

Original story: Expansión (by Marisa Anglés and Juanma Lamet)

Translation: Carmel Drake

GS & Cerberus Exit ‘Project Elcano’ Due To Political Uncertainty

24 June 2015 – El Confidencial

Banco Popular, led by Ángel Ron (pictured above), is seeking to divest real estate assets worth €500 million (Project Elcano), but the political uncertainty in Spain is making investors nervous.

According to sources close to proceedings, the main candidates in the running to take over Popular’s portfolio – namely, the private equity fund Cerberus and Goldman Sachs – have decided to postpone investment until after the general election in November, by which time the current uncertain outlook in the country should have cleared.

The same sources add that these two candidates have indicated to Popular that, given the situation in the country following the results of the municipal and regional elections and the subsequent (political) agreements being made, they are not willing to pay the price demanded by the bank; i.e. if the entity really wants to sell, then it will have to lower its (price) expectations.

Ron’s response has been negative because he is not willing to assume additional losses over and above the provisions already recognised against this portfolio. Moreover, other parties are interested in the operation, which means that it could still go ahead before the elections. A spokesman for Popular declined to comment on this information.

This withdrawal is not an isolated case. The uncertainty generated following 24-M (the municipal and regional elections held on 24 May) has had a dual effect amongst the large international investors: firstly, it has made them cautious and slam down on the breaks, whereby delaying numerous deals. Secondly, it has made them reduce their bids, which has punctured the emerging bubble that was forming in the Spanish market, particularly with respect to high quality assets. (…).

Nervousness in the market

Thus, Popular is the latest victim of this new environment in the Spanish market. However, investors and asset managers consider that the case of this bank in particular in more concerning. They are worried about Popular’s sizeable exposure to real estate (it holds around €11,000 million of RE on its books, net of provisions), because they consider that it is not sufficiently provisioned and its latent losses may require new capital contributions. As a result, the announcement that it was going to divest an initial package of €500 million assets generated relief in the market.

For this reason, these latest problems around closing the sale have made some players in the market very nervous. Yesterday, that resulted in decreases of 1.16% on the stock exchange on a day of increases for the Ibex. Popular’s share price has increased by around 15% this year, i.e. by more than the rest of the sector, with the exception of BBVA and Sabadell, however its valuation still falls below those of the major players in the sector at 0.76 times its book value. (…).

Original story: El Confidencial (by Eduardo Segovia)

Translation: Carmel Drake