Property Developers are Building 18,000+ Homes in Andalucía

18 March 2019 – ABC Sevilla

The real estate market in Andalucía is booming, and in a good way. According to the latest figures from the Ministry of Development, 12,363 permits were granted in 2017 for the construction of new homes, compared with the record before the burst of the bubble of 156,483 in 2006. Construction activity is responding to real demand in the market and is featuring some new players that are planning to build thousands of new homes in the region over the next three years.

Two markets

The investors, which include international funds and local property developers alike, differentiate between two markets – the eastern (Málaga) and the western (Sevilla) – the former accounts for 70% of new developments.

Aedas Homes currently leads the regional ranking by number of homes planned and investments forecast in the autonomous region. The property developer controlled by the US fund Castlelake plans to invest almost €1.3 billion in the region in the construction of 5,150 homes, primarily in the provinces of Málaga (2,600 homes) and Sevilla (1,800).

It is followed by Neinor Homes, which owns a portfolio of 29 plots for the construction of 3,628 homes; Metrovacesa, which has 2,300 homes in its Andalucían portfolio at various stages of completion; and Vía Célere, controlled by another US fund Värde, which is building 1,975 homes across 21 developments.

Meanwhile, ASG Homes has buildable land in Andalucía for the construction of 1,700 homes; Habitat Inmobiliaria, owned by the US investment fund Bain Capital, is working on the construction of 15 developments containing 1,621 homes; and the Sevillan property developer Insur is working on 17 residential developments comprising 1,136 homes at various stages of completion.

Finally, Q21 Real Estate, the property developer created from the alliance of the US fund Baupost and the owners of the former Pinar group, is also constructing almost 500 homes in the region, bringing the total number of homes under construction to more than 18,000.

Original story: ABC Sevilla (by Encarna Freire)

Translation: Carmel Drake

Bain and Cerberus Vying to Take Over Hercesa

27 April 2018

The company, which has more than forty years of experience in the sector, has already attracted the interest of the two investment funds, which would take over a business structure that has a presence in all market sectors.

A long time player in the Spanish real estate market has put itself up for sale. The Hercesa Inmobiliaria group, which has more than forty years of experience in the sector and which has a presence in all market sectors, has received offers for the company starting at 150 million euros. Up to five investment funds have already expressed an interest in the compan. Bain and Cerberus are considered the two principal contenders, industry sources told EjePrime.

The group, of which the Cercadillo family is the majority shareholder, set a deadline for the submission of applications that ended today. That will be followed by analyses of the company, due diligence and negotiations. The company commissioned KPMG for its valuation prospectus. The group declined to comment on the sale.

Hercesa’s real estate activity is primarily focused on the residential sector, although it also has industrial, tertiary and management assets in its portfolio. Also, the company has had a presence outside of Spain since 2004, having carried out projects in Portugal, Romania, Bulgaria, the Czech Republic, Poland, Morocco, Ecuador, Mexico and Panama.

In the residential market, the holding also owns the manager Hi! Real Estate. Created in 2014, it is the base of the group, which in its forty years of experience has delivered more than 21,000 homes and, at present, is selling 2,600 properties in developments distributed between the Community of Madrid, Malaga, Valladolid and Guadalajara, where its headquarters are located.

However, one of the company’s assets that may of the greatest interest for the funds who want to develop in Spain is their portfolio of land mortgaged with banks. Hercesa has land holdings throughout the Spanish Levant, Andalusia, Madrid and Guadalajara.

In addition to the manager, the group has a developer, Hi! Projects, as well as with the construction company Hi! Works and Services. The last known audit of the group, from 2016, shows revenues of 63.6 million euros and assets of €132 million. Also, the prospectus prepared by KPMG highlights a financial debt of fifty million euros, much of it related to the land mortgaged with banks, with which it has recently reached agreements for the creation of developments on the lands, due to the rebound of construction in the residential sector.

As EjePrime has learned, the company’s intention with this valuation prospectus is to sell the company by taking advantage of the upward cycle that the sector is experiencing and from which the investment funds want to take advantage. It would be, therefore, a new corporate operation in which, just as happened with Via Célere, which received an injection of funds from Värde, the future buyer could keep the current management team.

There have been other such agreements, such as the purchase of Aelca, also by Värde and Cerberus’ acquisition of Inmoglaciar. Also, Bain recently paid 220 million euros for Habitat and Baupost entered the prime residential sector with its purchase of Levitt, through Q21.

Original Story: EjePrime – J. Izquierdo

Translation: Richard Turner

 

CBRE: Valencia Is Running Out of Urban Land

28 February 2018 – El Confidencial

Valencia is running out of urban land that’s ready to develop. The municipal area is running out of batches of “finalist” land after several years of paralysis in the development of new urban planning spaces. The recovery in demand and the credit granted to the sector over the last year have attracted investors and property developers interested in positioning themselves in an urban market. And that of the third capital city of Spain is proving appealing, since prices there are still well below the saturation point that they are experiencing in Barcelona and, above all, in Madrid. Many of the local real estate businessmen from the boom era have filed for liquidation, and so now it is listed property companies, managers backed by large international and domestic funds and new industrial firms with surplus cash, that have taken over the batten to launch new residential projects.

In total, the city has 60 new build projects in process and being marketed, and the forecast is for another 15-20 developments to come onto the market during the course of the year, according to a sector report compiled by the consultancy firm CBRE, which was presented by the Director of the office in Valencia, José Ángel Sospedra, and the Director of New Build properties in Spain, Carlos de Almeida. Interest from property developers has been concentrated in the few neighbourhoods in which there is “finalist” land to be completed: Patraix, Nou Campanar, Malilla Norte and Quatre Carreres. They are areas that were processed during the real estate boom whose development was cut short by the economic crisis and whose plots ended up in the hands of the banks, for the most part, which, in turn, have been placing them with third parties and which have now ended up in the hands of companies such as Neinor, Aedas, Aelca and Q21.

Almost all of the plots are being processed, which is why CBRE expects that within three to five years, the buildable plots for new build properties will have run out. “Due to the current scarcity of available urban land in the city of Valencia, house prices are expected to increase in the medium term. During 2018, demand will focus on developments located inside the city where land is still available, such as Benicalap, Patraix and Moreres. And for the first time since 2008, we will see interest return to the city’s natural areas of expansion and its metropolitan areas, given that the stock of urban land in the city of Valencia will run out within the next 3 or 4 years”, said the bulletin.

Last year alone, the number of transactions increased by 26%, with more than 8,000 homes sold. That figure will grow over the next two years because that is when the new build flats and houses that property developers started to market and promote last year are going to be notarised (…).

The consequence of this phenomenon, in addition to greater interest in areas that are further away from the old town, in settlements in the metropolitan area, is that property developers are starting to become interested in non-finalist areas pending development, such as the PAI del Grao (…) and the undeveloped plots of Fuente de San Luis, close to the new Hospital La Fe (…).

Original story: El Confidencial (by Víctor Romero)

Translation: Carmel Drake

Grupo Pinar & Baupost Agree Purchase of Levitt & Create New Property Developer Giant

19 February 2018 – El Confidencial

The most coveted property developer of recent times may change hands within the next few days. Levitt is holding advanced talks with Q21 Real Estate, a company created by the joining of forces between the former Grupo Pinar and the US fund Baupost, to close its sale this week and, in any case, before the end of February, according to several sources familiar with the operation.

The agreement will put an end to almost two years of to-ing and fro-ing with different interested parties in acquiring the property developer, a reference player in the market for premium homes, and will also create a new giant in the sector within the convulsive Spanish residential market.

As El Confidencial revealed, it was in 2016 when Levitt first started to listen to offers as a formula for dealing with its problem of generational succession, following the death of the group’s founder and alma mater, José María Bosch Aymerich, without any direct descendants.

Owner of one of the best land portfolios in Madrid, with land in locations such as Alcobendas, Las Rozas, Pozuelo and Boadilla del Monte, Levitt has proved tempting over the past two years for giants such as Goldman Sachs, Apollo, Värde and even the fund Baupost itself, which was on the verge of acquiring the property developer last year.

But on the home straight, those negotiations were called off due to differences over price, as well as over the continuity of the project and Levitt’s team. After closing that door, the fund found another window open through Q21, the property developer that has placed a better offer on the table than the one put forward by the US fund, and one that ensures the survival of Levitt.

Who is Q21?

Constituted in July 2014, Q21 Real Estate has a brand that is still new and a workforce of just 17 employees – both features have facilitated its agreement with Levitt, with which it shares its vision of high-quality developments.

Currently, Q21 has nine developments underway, mostly in the Community of Madrid (Boadilla del Monte, Valdebebas, Getafe and Mostoles), but also in Málaga and Valencia. Altogether, the firm is working on 1,500 homes.

With assets worth €6.3 million and net equity of €3.58 million in 2016 (the last year for which audited figures are available), Q21 generated revenues of €5.27 million, an operating profit of €3.5 million and a profit of €2.76 million.

Its numbers are well below those recorded by Levitt, whose turnover amounted to €62 million and net profit €6.3 million. Moreover, Levitt owns a portfolio worth €200 million, its brand is recognised in the market and its history spans almost fifty years in Spain after it arrived in 1971 to introduce the US residential urbanisation model.

Original story: El Confidencial (by R. Ugalde)

Translation: Carmel Drake

No Buildable Land Left in ‘Sevilla Este’ After Fund Shopping Spree

16 January 2018 – Sevilla ABC

The supply of land in Sevilla Este has almost run out. And that milestone represents more than just a symbolic fact. It is a clear sign that a new cycle of real estate expansion is underway, characterised by significant interest from property developers in neighbourhoods and towns on the outskirts of Sevilla. It also provides evidence of the shortage of buildable land that exists in the municipality of the provincial capital, which has caused the few plots of buildable land that have come onto the market to spark a great deal of interest amongst investors.

Whilst the property sector started its rebirth in certain parts of the city centre in 2015, interest in other areas of the city has been increasing significantly over the last two years to meet the new demand that is being generated by the growth of the economy. The result of this trend is that in just three months, almost all of the residential plots in the Sevilla Este area have been sold.

“With just a few exceptions, everything that was on the market has now been purchased”, along with plots that still need to be developed for public and social services, explains Juan Aguilera, Manager at Gaesco, speaking to ABC.

And this investor boom in that area of the city is due to the fact that “Sevilla is running out of buildable land for new developments, since vital infrastructures such as the SE-35 ring-road have not been built, which is the main artery that ought to be boosting all of the new areas of metropolitan expansion”, says Aguilera (…).

Q21’s investment

The most recent large land operation in Sevilla Este was carried out by Q21 Real Estate, the property developer that emerged from the merger between the US investment fund Baupost and the Spanish company Grupo Pinar (one of the most recognised firms in the former property sector). That company has acquired a plot measuring 5,400 m2 at the end of Avenida Emilio Lemos, opposite the Aleste Plaza shopping centre, where it will build around 164 homes. The company is currently processing the permits it requires to start the building work and, once it has received the green light, will complete the construction of the properties within a period of 26 months. The plot that Q21 has acquired belonged to another company in the sector that filed for bankruptcy.

That purchase operation took place at the same time as two other large investments in Sevilla Este, also made by companies that are partly owned by large investment funds. One of them was led by Vía Célere, in which Värde Partners owns a majority stake; it acquired a plot for the construction of 1,700 homes that had belonged to BBVA. And in parallel, the fund Activum purchased plots for the construction of more than 1,000 homes (…).

In Aguilera’s opinion, the interest from these investment funds in Sevilla Este has arisen because several factors have converged. “There is significant built-up demand in Sevilla from families who chose to rent during the crisis and who are now interested in buying a home, plus the years of recovery are now creating new families who can also afford to buy one of these new homes”. This demand, combined with the shortage of buildable land in Sevilla, is what has caused the interest in Sevilla Este to soar, which is exactly what already happened with Hacienda Rosario (which used to belong to Gabriel Rojas and which was acquired by Aedas Homes).

Interest in Entrenúcleos

In these circumstances, Aguilera considers that future real estate investments will not be made directly in Sevilla, but rather in the some of the population nuclei of the metropolitan area, especially in Dos Hermanos (which has made the effort to develop an area like Entrenúcleos).

Aguilera thinks that, unfortunately, time has proved him right. “If we had done our homework, we would now be enjoying a great period for the reactivation of large residential projects: demand and the economy are growing, financing is available at very reasonable prices…but none of the areas that require the SE-35, like Higuerón Norte, Buen Aire, San Nicolás Oeste and Villanueva del Pìtamo, have the infrastructure they need to capitalise on this new construction boom” (…).

Original story: Sevilla ABC (by Luis Montoto)

Translation: Carmel Drake