The FROB Recorded a €382M Provision Against its Stake in Sareb in 2018

20 May 2019 – El Confidencial

The Spanish Fund for Orderly Banking Restructuring (FROB) presented its accounts for 2018 this week revealing that it decided to recognise a €382 million provision against its stake in Sareb last year.

In this way, the FROB has now written off 92.3% of its initial investment in the entity chaired by Jaime Echegoyen (pictured above), up from 75% in 2017. If the rest of the investor entities, namely all of the large Spanish banks with the exception of BBVA, do the same, then they will have to recognise losses of around €450 million.

In absolute terms, the FROB’s stake in Sareb is now worth €169 million compared with its initial investment of €2.192 billion. The FROB is Sareb’s largest shareholder with a 45.9% stake, followed by Santander (22.3%), CaixaBank (12.2%), Sabadell (6.6%) and Kutxabank (2.5%).

As the bad bank’s largest shareholder, the FROB typically sets the tone of the provisions for the other entities. Last year, after the FROB increased its cumulative provision to 75%, other shareholders such as CaixaBank and Sabadell recognised extraordinary provisions in their accounts for Q2. This year, the average provisioning rate is expected to increase from around 70% to 90%.

Sareb closed 2018 with losses of €878 million (up by 55%) due to the strong competition in the institutional market and the real estate crisis that still affects much of the country. The bad bank sold 21,152 properties last year and its income from property management soared by 19% to €1.4 billion, but its income from the loan portfolio fell by 16% to €2.2 billion and so total income fell by 5% to €3.7 billion.

The outlook for the bad bank for the next few years is not great and many experts forecast that not even a single euro will be recovered from Sareb.

Original story: El Confidencial (by Jorge Zuloaga)

Translation/Summary: Carmel Drake

Neinor Wants Sabadell’s Land & so is Competing with the Large Funds to Buy SDIN Desarrollo Inmobiliario

17 December 2018 – Voz Pópuli

The bidding for the land owned by Sabadell’s property developer, SDIN Desarrollo Inmobiliario, is going to start in a matter of days and none of the funds wants to miss the party. Everyone has their own interest, but there are some who may bid more strongly than others due to their close relationship with the bank. But this time, they will not be alone.

Neinor Homes wants to take a seat at the negotiating table, according to sources familiar with the operation speaking to Voz Pópuli. The property developer led by Juan Velayos is interested in obtaining the land that Sabadell owns in Madrid and Barcelona. The market classifies the plots as very good. Neinor has not made any comments in this regard.

Oaktree is also going to join the bidding – it has been a familiar face in Sabadell’s recent operations. The fund is very interested in acquiring SDIN Desarrollo Inmobiliario’s land. The plots have been valued at €1.3 billion, according to reports by El Confidencial, which have been confirmed by this newspaper.

Sources familiar with the operation have explained that the fund has a lot of interest after the joint venture that it formed with the group this summer to buy land from Iberdrola.

Cerberus

The third candidate in discord is another old hand: Cerberus. The giant also wants its share of the pie. The acquisition of the property developer Inmoglacier could be related. If it is successful with this operation, the fund could create a new “giant”, which would fulfil all of the requirements to debut on the stock market.

The bidding is expected to begin before the end of the year. It could even start this week but could also be delayed due to technical reasons (…). The intention is for this operation to be closed by the end of the first quarter of 2019 or the beginning of the second.

This operation will begin after Sabadell sold its servicer for €300 million to Intrum on Friday. Solvia has more than €30 billion in assets under management and has sold more than 94,000 properties in recent years.

Original story: Voz Pópuli (by David Cabrera)

Translation: Carmel Drake

Hayfin & Atitlán Buy Land from Sareb to Lock Down Plan for Valencia’s Former Formula 1 Circuit

21 August 2018 – El Confidencial

The British fund Hayfin Capital and the Valencian investor Atitlán Grupo Empresarial are continuing to take steps to launch the most iconic urban development project and the one still pending execution in the city of Valencia with the greatest chances of generating gains.

At the end of July, a joint venture held by the two investment specialists completed the purchase of plots still owned by Sareb in the so-called PAI del Grao, a developable sector that occupies land on the former Formula 1 urban circuit in the regional capital. Hayfin and Atitlán acquired 14,000 m2 of land in total, with 8,100 m2 corresponding to residential use and 2,700 m2 to commercial use, according to market sources speaking to El Confidencial. The buildability is defined by the current urban plan of the Town Hall of Valencia, although it is finalising a new plan that will modify the distribution of that buildability. The expectation is that the final use of this land will amount to around 16,000 m2.

The investors paid €4 million in an operation that appears to have a low economic value but significant strategic potential. The sale of the assets by the bad bank chaired by Jaime Echegoyen (…) will allow the Spanish-British consortium to increase its percentage stake in the plan as a whole, which occupies a surface area of more than 300,000 m2 and will involve the construction of a new neighbourhood that will connect the Ciudad de las Ciencias and Avenida de Francia with Valencia’s maritime seafront. The area is set to become one of the most sought-after parts of the city if its developers decide to build high-quality residential properties (…).

Nevertheless, it will be a while before the new Valencian neighbourhood takes shape. As a result of the administrative and bureaucratic processes still pending, the real estate sector estimates that it will take between three and five years before developments in the PAI del Grao can start to be marketed. Nevertheless, if Hayfin and Atitlán are patient and manage to overcome the pitfalls, they may obtain juicy profits from an urban planning operation in which they have already invested more than €30 million but which could generate up to €300 million in property sales, according to the most optimistic estimates.

The plan for the former Valencia Street Circuit is the most ambitious project to be launched by the Atitlan Grupo Empresarial’s real estate division, which according to its own official data already has 100 homes under development, 200,000 m2 of surface area for rent and 1.5 million m2 of land under management, including its operations in Portugal.

With its olive-growing subsidiary Elaia the largest generator of current income, an aquaculture division (Sea8) and the service and construction company Mosaiq (formerly Obinesa-Lubasa), Atitlán generated sales amounting to €437 million last year and an EBITDA of €92 million. According to official figures, it employs 2,500 people across the group (…).

Original story: El Confidencial (by Víctor Romero)

Translation: Carmel Drake

Renta Corporación’s Profits Tripled in 2017 to €12.5M

1 March 2018 – Eje Prime

Renta Corporación multiplied its profits three-fold in 2017. The Spanish real estate company earned €12.5 million last year and recorded revenues of €45.8 million, up by 71.5%, according to a report filed by the company with Spain’s National Securities and Exchange Commission (CNMV).

Last year, the company improved on the €4 million profit it recorded in 2016, due, in part, to an increase in its property sales line of business, which recorded turnover of €29.7 million, and its project management line of business, which recorded revenues of €13.1 million.

The company’s gross operating result (EBITDA) amounted to €11.4 million in 2017, which represented a three-fold increase. Moreover, Renta’s operating margin amounted to €18.3 million at year-end, double the figure recorded in 2016.

The company’s net financial debt almost doubled in 2017 to €31.1 million. In 2018, the real estate company led by David Vila expects to increase its profits by 28% to reach €16 million. Moreover, Renta’s strategic plan for the next few years forecasts that the company will earn €21.1 million in 2019 and €21.9 million in 2020.

Original story: Eje Prime

Translation: Carmel Drake

Sareb Sold 13,796 Properties Between Jan & Sept, Up By 55% YoY

15 November 2017 – Expansión

Yesterday, the bad bank reported updated figures for its commercial business. Between January and September, it sold 13,796 properties, up by 55% compared to the same period last year, boosted by commercial campaigns and the change in the real estate cycle. These figures imply a drop in the growth rate compared to the previous quarter, most likely influenced by the lower activity typically seen in August. Note, the data relates to the first 9 months of the year until 30 September and therefore does not reflect the suspension of real estate activity in Cataluña since that date.

The sale of residential properties grew by 50% YoY, whilst the sale of warehouses, retail premises, hotels and offices rose by 99%. The bad bank also sold 710 plots of land, up by 31% compared to the previous year.

Sareb is also involved in property development activity. This year, the company has sold eleven developments that it received when they were unfinished.

The bad bank’s total revenues grew by 3.6% during the 9 months to September – after increasing by 21% during the first 6 months of the year – to €2,394 million.

Sareb has never made any money. Its cumulative losses amount to €781 million. Since its creation, it has reduced its toxic asset balance by 23% and has repaid 19% of the debt it issued initially.

Renewal of the board

Sareb is going to subject the renewal of its Board of Directors to the General Shareholders Meeting for approval. The former minister and former President of Endesa, Rodolfo Martín Villa, who represents the Frob, will depart for reasons of age. He will be substituted by Eduardo Aguilar, former CEO of Seguros. The representative of Popular will resign from the board to make way for Jaime Rodríguez Andrade, Director General of Problem assets, restructurings and corporate investments at Santander. And the representatives of CaixaBank will be replaced: Jorge Mondéjar and Antonio Cayuela will take over from José Ramón Montserrat and Antonio Massanell.

Original story: Expansión

Translation: Carmel Drake

Realia’s Profits Drop By 91% To €5.2M In Q1

9 May 2017 – Expansión

Realia closed the first quarter of the year with a net profit of €5.2 million, which represents a decrease of 91%, due to a sharp drop in the firm’s extraordinary income.

The real estate company controlled by the businessman Carlos Slim said to the CNMV that, during the first quarter of 2016, its profits were favoured by the positive financial result of €51.2 million, due to discounts on its first three payments of residential debt.

As such, if we exclude the positive impact recorded in 2016, the recurring net profit would have increased during the first quarter of this year by 16.9%.

The company obtained turnover of €23.3 million, down by 8.6%, due to a 20.8% decrease in property sales in the residential segment. The company completed 21 units during the quarter for a total amount of €4 million, compared with 27 for €5 million during the same period last year.

By contrast, rental income from the real estate business increased by 4.5% during the period, to €14.9 million.

In terms of indebtedness, Realia decreased its net financial debt by €187 million during the last year, to reach €738 million as at 31 March 2017.

Moreover, following the end of the quarter, Realia Patrimonio signed a new syndicated loan with the banks amounting to €582 million and cancelled its previous syndicated loan signed in 2007, as Expansión revealed on 27 April.

Original story: Expansión (by R. Arroyo)

Translation: Carmel Drake

BBVA: House Sales Will Rise By 7% In 2017

11 April 2017 – Ok Diario

According to BBVA, the recovery in the real estate sector in Spain “is really taking hold”. The entity forecasts a 7% increase in property sales in 2017 and that investment in homes will grow by 3.2% during the same period. Meanwhile, it predicts that house prices will rise by 2.5%.

These are the most recent forecasts about the sector for 2017 from BBVA, which highlights that the “positive evolution” of the real estate market in 2016 displayed significant geographical heterogeneity, with Madrid, a large part of the Mediterranean Coast and the two island regions leading the recovery.

The entity said that 2017 will be marked by more moderate economic growth forecasts, of 2.7%, compared with 3.2% in 2016, and positive expectations in terms of property price rises.

In this way, the entity expects residential sales to grow by around 7% this year, and for prices to continue their recovery, with an increase of 2.5% YoY.

The revival of the mortgage market in recent years is helping to fuel growth in residential demand, says BBVA. In fact, new loan operations to households to finance the acquisition of a home increased again in 2016 to reach €37,500 million, up by 5% compared to the previous year.

Similarly, construction is continuing to respond positively to the growth in demand and prices, which is why the real estate sector is expected to generate growth for the economy once again. Investment in housing is expected to increase by 3.2%.

Growth with uncertainty

Nevertheless, BBVA warns that a number of risk factors have been building up in recent months, which could limit the scope and speed of the recovery.

Firstly, it warns that uncertainty persists relating to the outcome of Brexit. In addition to this geopolitical factor in Europe, the potential effects of decisions taken by the new administration in the USA and the increase in energy costs should also be taken into account.

Meanwhile, the increase in inflation in the Eurozone may lead to a change in monetary policy. During 2017, the ECB’s stimuli are expected to decrease, which could lead to an increase in interest rates at the end of 2018. “This increase in financial costs represents a risk for the Spanish economy”, said the entity.

In any case, BBVA highlighted that positive financing conditions, and the strong economic outlook, mean that the real estate sector closed 2016 with 460,000 transactions, up by 13.5% compared to 2016 (…).

Last year, the stock of finished housing continued to decline and prices grew by 1.9% on average, which shows that “the industry responded once again to the boost in demand”. Similarly, the number of building permits grew by almost 30% in 2016 to reach 64,000 permits, to record the third consecutive year of recovery. (…).

Original story: Ok Diario

Translation: Carmel Drake

INE: House Sales Rose By 17.3% YoY In Nov 2016

16 January 2017 – El Economista

House sales rose by 17.3% in November 2016 compared to the same month in 2015, to reach 33,806 operations, according to data published on Thursday by Spain’s National Institute for Statistics (INE).

This increase, which represents the tenth month of consecutive YoY increases, exceeds the rise recorded in October 2016, when those operations rose by 6.5% YoY.

Transactions involving second-hand homes rose by 19.8% with respect to November 2015, to reach 27,996 operations, whilst sales of new homes rose by 6.8% YoY to reach 5,810 transactions.

90.3% of the homes sold during the eleventh month of the year were unsubsidised and 9.7% were protected (unsubsidised). Sales of unsubsidised homes rose by 17.4% YoY in November, to reach 30,514 transactions, meanwhile operations involving protected (subsidised) homes increased by 16.5% to 3,292 transactions.

During the first eleven months of 2016, house sales recorded a cumulative increase of 14.2% compared with the same period in 2015, thanks to an increase of 18.5% in terms of second-hand house sales, whereas new build house sales declined by 1.4%.

In monthly terms (November 2016 compared with October 2015), house sales rose by 15.1%, their highest MoM increase in more than five years.

Andalucía leads the house sales ranking

In November 2016, the highest number of house sales per 100,000 inhabitants was recorded in the Balearic Islands (138), the Community of Valencia (133) and Andalucía and the Canary Islands (99 in both cases).

Andalucía was the region that saw the most absolute house sales during the eleventh month of the year, with 6,541 sales, followed by Cataluña (5,476), the Community of Valencia (5,216) and Madrid (4,563).

The autonomous regions that saw the lowest absolute number of house sales were La Rioja (233), Navarra (363) and Cantabria (440).

In relative terms, the regions that saw the highest YoY variations in the number of house sales were the Balearic Islands (+32.8%), the Canary Islands (+26.3%) and Aragón (+25.8%). YoY increases were recorded in every single autonomous region.

Increase in the total number of properties sold

If we look at rural and urban (homes plus other properties of an urban nature) properties, then property sales in November amounted to 143,470 in total, up by 6.8% compared to the same month in 2015, to reach the highest absolute figure since June. (…).

In November 2016, the highest number of property sales registered per 100,000 inhabitants was recorded in Aragón (628), Castilla y León (604) and La Rioja (577).

Original story: El Economista

Translation: Carmel Drake

INE: House Sales In Balearics Rose By 32.8% In Nov 2016

16 January 2017 – Diario de Ibiza

House sales rose by 32.8% YoY in November in the Balearic Islands, as 1,258 operations were closed, representing the highest increase of all of the autonomous regions.

Of the homes sold, 1,234 were unsubsidised and 24 were protected (subsidised); meanwhile, 232 were new homes, compared with 1,026 second hand, according to data published on Thursday by Spain’s National Institute of Statistics (INE).

The total number of properties sold on the islands in November 2016 amounted to 4,208, up by 2.9% compared to the same month a year earlier.

Overall in Spain, house sales rose by 17.3% in November with respect to the same month in 2015, with 33,806 operations recorded in the property registries, to complete ten consecutive months of increases.

According to the data from INE, house sales grew by 15.1% between October and November 2016.

This monthly rate is 10.6 basis points higher than that registered during the same period a year ago, when the increase amounted to 4.5%, and is the highest monthly variation since 2012.

Second-hand homes

The increase in sales in November was due yet again to the second-hand market, which increased by 19.8% to reach 27,996 transactions, whereby accounting for 82.8% of the house sales registered.

The number of operations involving new homes also rose although to a lesser extent, by 6.8%. 90.3% of all homes sold were unsubsidised compared with just 9.7% that were protected (subsidised).

By autonomous region, the sale of homes grew by 32.8% YoY in the Balearic Islands; by 26.3% in the Canary Islands; and by 25.8% in Aragón, which saw the highest increases. By contrast, La Rioja, País Vasco and Galicia recorded the lowest increases.

In total, the number of properties (rural and urban) registered as sold in the property registries during the month of November stood at 143,470, up by 6.8% compared to the same month in 2015.

In the case of property sales recorded, the increase amounted to 15.6%.

Original story: Diario de Ibiza

Translation: Carmel Drake