Amancio Ortega’s RE Business is Worth Almost €9bn

23 July 2018 – El Mundo

Amancio Ortega is continuing to expand the perimeter of his real estate empire. Pontegadea, the investment arm of the Inditex creator, grew by 2.8% at the end of 2017, to reach almost €9 billion (€8.759 billion) and that, despite the fact that its profits decreased by 13%, to €1.475 billion due to donations made to his foundation.

Pontegadea groups together both Amancio Ortega’s stake in Inditex as well as his real estate investments. According to the accounts filed with the Mercantile Registry of La Coruña, the company closed 2017 with a net profit attributed to the parent company of €1.475 billion, 13% less than a year earlier, due to donations amounting to €350 million made to the Amancio Ortega Foundation, a large proportion of which are devoted to the fight against cancer.

Specifically, the Foundation donated €320 million to the purchase of state-of-the-art cancer equipment, which is going to be installed in public hospitals across all of the autonomous regions.

At the end of last year, the assets of the Pontegadea group were worth €29.028 billion, its net equity amounted to €21.006 billion and its business volume reached €25.721 billion.

In addition to Torre Cepsa, which it purchased for €490 million and the building at Gran Vía 32, Ortega owns several other office buildings in Madrid such as Torre Picasso and the Castellana 79 building, which houses the largest Zara store in the world.

The Zara property portfolio

Meanwhile, Pontegadea Inmobiliaria recorded revenues (primarily due to rental income) of €385 million, up by 13.6% compared to a year earlier, and the fair value of its portfolio of assets, set by an appraiser, was €8.759 billion, up by 2.8% compared to a year earlier.

51% of the real estate revenues come from European markets, 46% from America and the remaining 3% from Asia, according to the annual accounts, which reflect that Pontegadea’s real estate investments amounted to €629 million in 2017 and at the end of the year, they amounted to €6.913 billion: €1.688 billion in Spain and the remaining €5.225 billion overseas.

Of the investments outside of Spain, €2.681 billion correspond to investments in America, €2.191 billion to Europe (excluding Spain) and €353 million to Asia.

Pontegadea Inversiones, the parent company of the Pontegadea group is chaired by Amancio Ortega and its first Vice-President is his wife, Flora Pérez.

In addition, the company’s directors include José Arnau, who is also a director of Inditex, and Roberto Cibeira, in turn, the CEO of Pontegadea Inmobiliaria.

The Inditex group, owner of fashion chains such as Zara and Massimo Dutti, recorded a net profit of €3.368 billion in the last financial year (which closed in January), up by 6.7% compared to a year earlier, and its sales amounted to €25.336 billion, up by 8.7%.

Original story: El Mundo 

Translation: Carmel Drake

Insur to Invest €70M in Office Complex in South of Madrid

31 January 2018 – Eje Prime

Insur is committed to the world of work. The Andalucían group is going to invest €70 million in the south of Madrid to build an office complex that will have a total surface area of 30,000 m2. The project will involve the construction of two buildings alongside Madrid Río.

The company chaired by Ricardo Pumar plans to inaugurate the complex at the end of 2019. The Madrid Río area, where the offices are going to be built, is one of the most sought-after by the real estate sector at the moment. This is evidenced by the Operación Calderón, which will constitute one of the most important real estate operations in recent times in Madrid when it is completed in June.

Insur’s development in the Spanish capital is going to be undertaken through an alliance with two financial partners, in which the group holds a 50% stake. This investment in prime offices will also strengthen the company’s real estate arm, which is looking to diversify both by geography and by segment.

Indeed, this week, the property developer announced the segregation of its property development and real estate businesses. In this sense, Insur has opened a new line of business with its inclusion in the hotel sector, where it already owns three buildings under development, including one establishment in Zahara de los Atunes (Cádiz), which will have 500 rooms. The other two properties will be located in Córdoba and Sevilla and will be operated by Hotusa.

Moreover, the real estate company is looking for opportunities to build out-of-town retail spaces in Spain to expand its real estate portfolio, which is currently worth €294 million.

The objective of Grupo Insur for 2018 is to strengthen its real estate arm, without forgetting about the residential sector. In fact, in that segment, it is going to invest between €75 million and €80 million until 2020 buying up developable land. Currently, the property developer has 2,039 homes under construction and owns a land portfolio with the capacity to build another 2,652 more residential properties.

Original story: Eje Prime

Translation: Carmel Drake

Sabadell Creates Property Developer Subsidiary With Land Worth €600M

17 November 2017 – Eje Prime

Banco Sabadell wants to continue to form an important part of the world of real estate. Known for many aspects of the boom in the real estate sector, the financial company has decided to back the construction of homes with the creation of Solvia Desarrollos Inmobiliarias, its new subsidiary in the sector, into which it is going to gather land worth €600 million. Francisco Pérez, former CEO at Vertix, will be head up the new entity. He will have the power to eliminate Solvia, the group’s servicer, from all the work in this business area of the market.

Pérez will have 64 professionals at his disposal, all from Solvia, which currently has 84 developments underway and more than 4,000 homes for  sale, for which it is acting as the developer’s representative, according to El Confidencial.

The company’s headquarters will be located in Madrid, unlike those of the bank and servicer of the Sabadell Group, which have been relocated to Alicante after the political conflict in Cataluña destabilised the Spanish market.

This is not the first business operation of its kind that the entity chaired by Josep Oliu has carried out. In the hotel sector, the company extinguished Solvia Hotels to create HI Partners in 2015, a hotel subsidiary, whose management model differs little from the one that will be used in the group’s new real estate arm. Exactly one month ago, Sabadell sold its hotel Socimi to Blackstone for €630 million.

Original story: Eje Prime

Translation: Carmel Drake

Axa Buys Remaining 45% Of Hotel Diagonal Mar For €70M

17 November 2017 – Eje Prime

Axa Real Estate is not one to rest on its laurels and so has acquired 100% of Hotel Diagonal Mar in Barcelona. The real estate arm of the French insurance company has committed to paying Iberdrola Inmobiliaria €70 million for the remaining 45% of the establishment to become the sole owner of the property, after it paid €80 million in June of this year for the other 55%.

With just over a month to go before the end of the year, this agreement represents the most important in the hotel sector in Barcelona, and one of the most significant in Spain. According to El Economista, this second payment will have been pre-determined by the two parties in the summer, when Axa’s first investment in the asset materialised.

Hotel Diagonal Mar is a property intended for holiday and convention (business) tourism, in the area of the same name, alongside the shopping centre of the same name, which Deutsche Bank purchased last year for €495 million. The four-star establishment is just 400m from the beach, has 413 rooms and 20 suites, as well as a large banquet room with capacity for one thousand guests and fifteen meeting rooms. The hotel was constructed by Iberdrola, after that firm reached an agreement with the chain Hilton, which has operated the establishment since then.

With this purchase, Axa is strengthening its interest in the hotel real estate business in Spain. In Madrid, it acquired Cine Rex on Gran Vía through the same real estate arm with which it has purchased the hotel in Barcelona. In that operation, the insurance company disbursed around €40 million to the firm Equity Inmuebles SL, controlled by the Mazin, Calero and Briones families.

Meanwhile, Iberdrola has completely disposed of one of its real estate jewels, but still operates a real estate portfolio with a gross leasable area of more than 200,000 m2 and an asset value of more than €600 million.

Original story: Eje Prime

Translation: Carmel Drake

Liberbank Accelerates Sale Of Its RE Arm For €80M

20 July 2017 – Voz Pópuli

A defensive operation by Liberbank. The Asturian entity is accelerating the sale of its real estate company Mihabitans to strengthen its capital, according to financial sources consulted by Vozpópuli. The group led by Manuel Menéndez (pictured above), which declined to make comments, had been considering this possibility for months but has decided to fire the starting gun now, when the market’s focus has been placed on the entity. The prices being considered for this sale come in at just over €80 million.

The operation has been underway for several months under the watch of Alantra (formerly N+1). The subsidiary up for sale is Mihabitans Cartera, which Liberbank created in June last year. This company is responsible for managing the financial group’s homes and real estate debt. Liberbank has transferred some of its staff to the new entity. Its CEO is Víctor Sánchez, the Director that Menéndez entrusted to sort out the property portfolio at CCM following its purchase.

This sale, known in the market as Project Pipe, includes only the management of the real estate assets, a priori, and not their ownership. The idea is that it will take a similar form to the operation carried out by Santander with Altamira when Apollo purchased an 85% stake of that entity; as well as CaixaBank with Servihabitat, which is now controlled by TPG; and Popular with Aliseda.

According to the same sources, the process is in an advanced phase and several candidates have been selected to submit binding offers. The candidates include Lindorff, owner of Aktua; and Haya Real Estate, owned by Cerberus.

Crucial moment

These types of operations are undertaken to generate capital gains and strengthen capital. Given that they only manage properties, companies such as Mihabitans do not have any assets of their own other than their employees and the contract with the bank(s) that own(s) the properties. Depending on the contract agreed, the price may be higher or lower. In this way, Popular obtained around €700 million for Aliseda and Santander received €664 million for Altamira.

This sale comes at a key moment for Liberbank. Following the termination of CCM’s asset protection scheme (EPA), the group’s default rate soared in the last quarter and its capital decreased to 12%, above the levels required. Nevertheless, it is considering several options, such as the deal involving Mihabitans to strengthen itself and calm the market (…).

Liberbank has been compared to the entity that is now in the hands of Santander (Popular) in terms of its default rate, which in the case of the former amounted to 13% at the end of March. The objective is to bring it down below 7% within a year and a half. The entity had accumulated €2,951 million in doubtful debt and €2,414 million in foreclosed assets as at March, with a coverage (over the latter) of 40%. The sale of homes, which Mihabitans is responsible for, reached historical highs in the first quarter of €56 million (…).

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Manuel Jove Joins Forces With BBVA To Construct New Homes

8 November 2016 – La Opinión A Coruña

Inveravante, the corporation owned by the A Coruñan businessman Manuel Jove, has joined forces with Anida, the real estate arm of BBVA, to create a new firm, Avantespacia Inmobiliaria, which will focus on building new homes in Spain, according to a statement made today by the two companies.

During the initial phase, the partnership will build 850 new homes in the centre of several cities such as Madrid, Málaga and Las Palmas de Gran Canaria and, in a second phase, it will take on other new developments, also in large capital cities.

With this initiative, the Galician businessman makes a return to the residential property development business in Spain, given that it is the first project that he has undertaken in the sector in the last decade, following the sale of Fadesa to Martinsa in 2006. Nevertheless, during the intervening years, through Avantespacia, the real estate division of Inveravante, Jove has developed housing complexes in cities in the north of Africa, specifically in Casablanca and Tanger, and is considering embarking on projects in Mexico and Brazil.

Now, “given the strong outlook for the real estate sector in Spain”, Jove’s firm and the subsidiary of BBVA have decided to unite some parts of their respective buildable land portfolios in a return to house construction.

Inveravante will control 70% of the partnership, called Avantespacia Inmobiliaria, whilst Anida will own the remaining 30% stake.

The two partners have already launched their first project in Malaga, involving the development of 135 homes, which will be constructed on a plot of land formerly owned by Tabacalera, in one of the areas “with most potential” in the city, next to the new Paseo Marítimo.

The next initiatives, which have already been put on the market, will be undertaken in Madrid, on Calle Francisco Silvela and in the neighbourhood of Las Rosas.

Avantespacia will be in charge of the architecture and construction aspects of the properties, as well as the marketing, although the homes will be included on BBVA’s specific websites. Manuel Jove used to be a shareholder of Spain’s second largest bank.

Original story: La Opinión A Coruña

Translation: Carmel Drake

Ortega Acquires Torre Cepsa For €490M

3 October 2016 – La Opinión A Coruña

On Friday, the founder of Inditex, Amancio Ortega, completed the acquisition of Torre Cepsa in Madrid, for around €490 million, according to sources close to the operation. Ortega submitted his offer through his real estate company Pontegadea to IPIC, the Abu Dhabi state fund, owner of the oil and gas company Cepsa, which has leased the property, owned until now by Bankia, since 2013.

The building, one of the four towers in the north of Paseo de la Castellana, has a surface area measuring more than 109,000 sqm, including offices covering a gross leasable area of 56,250 sqm and a five-storey car park measuring 37,500 sqm.

The operation was completed in two phases. In the first phase, Khadem Al Qubaisi, the former director general of IPIC, exercised his purchase option, worth around €400 million to acquire the building. He then immediately sold the property onto Pontegadea for €490 million.

In October 2013, Bankia signed an agreement to lease the tower, designed by Norman Foster, which houses the corporate headquarters of Cepsa. The contract had an eight-year term, extendable for another seven years on a year by year basis. But it included a future purchase option, which the tenant had the right to exercise for a price to be determined at the time of the operation, on the basis of objective criteria agreed in advance.

As such, Amancio Ortega has acquired his second skyscraper on La Castellana, following his purchase of Torre Picasso, in 2011, for €400 million. The richest man in Spain and the second wealthiest man in the world also owns number 32 on Madrid’s Gran Vía, which makes him the landlord of some of Zara’s key rival brands such as Mango, H&M and Primark.

This purchase expands Ortega’s property portfolio, which used to be worth around €6,000 million – and is now worth more, if only because of the significant income that will result in terms of rental payments -. And the buildings that Pontegadea buys have a clear profile: iconic, historical buildings, dedicated to commercial and office use that can be rented to companies and institutions that are significant because of their size or solvency. The firm has a genuine real estate empire in Madrid, Barcelona and the main capital cities of Europe and the USA, but in recent months, it has also started to set its sights on Asia. (…).

Pontegadea’s bid was most favoured by IPIC even though it was not the highest – it had received others for €530 million – but the fund ruled those out because it preferred the liquidity and seriousness of Ortega’s offer.

Original story: La Opinión A Coruña

Translation: Carmel Drake

Banks Delay Property Sales & Await Higher Returns

11 August 2015 – Cinco Días

Spain’s banks are delaying their property sales and are instead waiting for conditions in the market to improve significantly before they increase their rate of sales. That was the conclusion of a report published by the ratings agency Moody’s in May about the management of the property glut still sitting on entities’ balance sheets, which now amounts to €83,000 million. And the trend has been confirmed by the (most of the) banks themselves in their recent half-year results presentations. (…).

In particular, Santander, BBVA, CaixaBank, Sabadell, Popular and Bankia sold 32,397 properties in total during the first six months of 2015, which represents a decrease of 18% with respect to the 39,241 transactions recorded during H1 2014.

However, the transactions this year have been closed with average discounts of around 35% – a significant improvement on the  60% discounts that the entities were forced to accept just a few years ago, as they desperately tried to get rid of the assets they had accumulated on their balance sheets following the burst of the real estate bubble. Some entities are now even generating profits from the sale of properties.

That is the case of BBVA, which recorded profits of €36 million from the sale of real estate assets worth €456 million during the last quarter. This turnaround enabled the entity to reduce the losses from its real estate arm to €300 million during H1 2015, which represents a decrease of 35% on the negative figures it recorded a year earlier. And it achieved this result selling half as many properties, with 5,190 transactions closed in the 6 months to June 2015, compared with 11,402 in H1 2014.

Banco Santander also reported similar success…the entity sold 5,200 properties during H1 2015, compared with 6,000 during H1 2014…it closed Q2 2015 with the “smallest quarterly loss” ever since the creation of the bank’s RE arm.

Meanwhile, Banco Sabadell reduced its sales volume by a third from 7,541 during H1 2014 to 5,190 in H1 2015, and with lower discounts – specifically, with an average reduction to gross value of 46.4%, versus 52.4% last year and 60% in 2013.

CaixaBank sold 5,907 properties in H1 2015 compared with 7,392 in H1 2014…and has also offered lower discounts this year.

However, two banks stand out as the exceptions to the rule – Bankia and Popular – which actually both increased their sales volumes during H1 2015. The former sold 3,345 properties in H1 2014 and 4,135 in H1 2015, with discounts this year of 35%…(…). Meanwhile, the latter really bucked the trend, with the sale of 1,172 properties in H1 2014, increasing to 4,135 in H1 2015, whereby doubling its revenues from asset sales…(…).

Original story: Cinco Días (by Juande Portillo)

Translation: Carmel Drake

Santander, BBVA & Sabadell Start To Build Homes Again

11 May 2015 – Expansión

Property development / The large financial institutions are constructing homes once again in light of the improved macroeconomic outlook, demand in certain areas and the aim of generating profits.

Real estate development is no longer a forbidden phrase in the world of banking. Several major banks have decided to resume the construction of new homes in light of the macroeconomic improvement and the need to capitalise on property inherited from the crisis.

Entities such as Santander, BBVA, Sabadell and Popular are now not only focusing on selling the homes that were foreclosed during the crisis, they have also started to construct new developments over the last few months. Most of these developments are located in Madrid, Barcelona and to a lesser extent, on the coast, where there is still a large stock of homes to sell.

Another catalyst of this new trend has been the reduction in the losses recorded by the real estate arms of these banks. During the first quarter, Santander’s real estate division lost €95 million, the smallest loss since it was created three years ago; and BBVA recorded a loss of €154 million, 37% lower than during the same period in 2014.

Thanks to this, the group chaired by Francisco González announced on Friday that it is studying 25 developments to construct 2,000 homes, and that it has already started another 12 developments to construct 630 million. This statement was made by Lorenzo Castilla, Commercial Director at BBVA Real Estate-Anida: “This is not about filling Spain with cranes, but rather about projects that make sense”, who spoke during Madrid’s International Real Estate Fair (Salón Inmobiliario Internacional de Madrid or SIMA).

(…)

Full balance sheets

As the BBVA director indicates, financial institutions still had more than €83,000 million foreclosed assets (on their balance sheets) at the end of 2014, of which more than €31,000 million related to land and €4,000 million to buildings under construction.

To reduce this burden, the entities are nowadopting two strategies: the sale of homes through their commercial networks, a channel that has accelerated over the last year; and the transfer of portfolios and joint ventures with institutional investors.

For the time being, the entity that has announced the most ambitious housing development plan has been Santander, which reported that it is developing 300 real estate developments, at its most recent results presentation.

Banco Sabadell is also stepping on the accelerator in this sense. Its real estate arm, Solvia, currently has 1,400 homes under construction, primarily in Madrid, Andalucía and Valencia.

Aliseda, the real estate company that renders services to Popular, has also announced an ambitious plan to enter the market for real estate development.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

The Banks Are Setting The Pace For The New Real Estate Era

4 May 2015 – ABC

Financial institutions still have 65,000 homes for sale and are developing land and housing projects.

The banks were the “stars” of the real estate crisis. And although they are now reneging on this business – “it is not our vocation”, say the senior directors in the sector – the same banks are forming the cornerstone of the recovery once more. The financial sector, ranging from banks to investment funds, is playing a leading role in the revival of the sale and purchase of homes. They are the financiers, marketers and even the developers. Currently, and after having recovered from the real estate “hangover”, the main (financial) institutions in our country still have more than 65,000 homes on their balances sheets, as well as other assets such as shops, garages and offices.

The banks are still the primary real estate companies in the country and their behaviour is determining the speed of transactions and, above all, the prices at which transactions are being closed. Sales made by the so-called bad bank, Sareb, have lost steam in 2015, although it continues to be a key player. According to a recent announcement by its Chairman, Jaime Echegoyen, the company that manages assets from the bank restructuring sold 2,800 properties during the first three months of this year, which represents around 26 units per day, versus the 32 properties it sold per day during the same period in 2014. “We are one of the top five players in the market”, said the senior executive.

Bad banks

On the other side of the majority of the sales made by the bad bank are the banks and “vulture” funds that go hand in hand with this business. CaixaBank leads the ranking of the financial entities, through its real estate company Servihabitat, which is controlled by the US fund TPG. The entity manages assets with a value of close to €60,000 million, after it was awarded some of the most substantial portfolios auctioned by Sareb and whereby gained strength. Next in the ranking is Haya Real Estate, the brand that Cerberus gave to Bankia Habitat after its purchase, which manages (assets worth) more than €52,000 million; and then Altamira (owned by the fund Apollo, which was purchased from Santander at the beginning of 2014) with €45,500 million (of AuM).

The real estate arm of Sabadell, Solvia, is also ranked among the top five most active (managers) in the market, despite having followed a different strategy from that of its peers. The bank chaired by José Oliu was the only one that did not sell its real estate arm to investment funds and its decision, to develop and make a profit for itself, has generated good results (so far). After the recent transfer of a portfolio from Sareb for €34,000 million, the managers of the company want Solvia to lead the process of consolidation that is expected to take place in the so-called “servicer” sector in the near future.

The funds seek out the “servicers”

The funds, which are experts in managing these types of assets, have found a stroke of luck in this business. However, to make it more profitable, they are looking for volume, i.e. to add more portfolios and benefit from scale. This explains the interest that many of these funds have shown in the auction processes held in recent months, including in Catalunya Banc’s portfolio of problematic mortgages, which was eventually awarded to Blackstone; (the US fund) also purchased the Catalan bank’s (real estate) platform (in a previous transaction).

Nevertheless, the experts consulted believe that it is still early days for talk of M&A activity and that no deals will take place until 2016, i.e. until the market is more saturated. Regardless, the consolidation of this new sales channel is already a reality. “The wholesale channel has consolidated as a divestment channel”, assured Francisco Gómez, the CEO of Banco Popular, last Friday, when he presented this group’s latest results.

New developers

Another way to “recover from the hangover” is through development. Banco Santander is a clear example of this: the entity chaired by Ana Botín is currently developing around 300 real estate developments across Spain. It is a formula for trying to recover the investments it made in land during the boom years. Santander is constructing on land that ended up on its balance sheet after non-payments by developers and against which the entity has had to make significant provisions. Sareb is also developing land and completing the unfinished developments acquired that it thinks may be profitable.

As the CEO of Santander, José Antonio Álvarez, explained at the presentation of the bank’s results, that to ensure that there is demand for developments, the entity is more selective in terms of the circumstances of a projects (it invests in) and it only begins construction once 30% of the properties have been sold (off-plan). Santander sold 2,500 real estate assets (during the 3 months to) March 2015, a reduction on the volumes recorded during the first quarter last year. Specifically, the entity sold 12,000 properties in 2014.

Other entities, such as BBVA and Popular, are also now selling foreclosed properties at prices that exceed the value at which they are accounted for on their (respective) balance sheets.

Original story: ABC (by María Cuesta and Moncho Veloso)

Translation: Carmel Drake