Tag: real estate investment

Hispania Records Net Profit Of €17.5m In Its First 9 Months

25 February 2015 – Hispania Press Release

GAV as of year-end amounted to €422M, with an EPRA NAV of €555M

CBRE’s valuation has recognised capital gains in the acquired assets of €14 M, 5.5% above purchase price and 3.4% over its book value

As of 31 December 2014, €433M for investment had been committed

With the hotel investment announced earlier today (c. €368M total investment in a resort hotel REIT along with Grupo Barceló), Hispania will have invested fully the proceeds raised in its IPO and reaches committed investments for c.€800M, equivalent to 90% of its full investment firepower

Hispania Activos Inmobiliarios, S.A., (hereinafter, Hispania) closes its first year of activity with Net Profit amounting to 17.5 million euro. As of 31 December, 25 assets had been acquired, 55% in offices, 23% in residential and 22% in hotel assets.

In just 9 months, Hispania has implemented the strategy announced in its IPO and has fulfilled the commitments acquired with its investors. As of year-end, according to CBRE’s valuations, consolidated GAV amounted to 422 million euro. This implies the recognition of capital gains amounting to 14 million euro, which represent a revaluation of 5.5% on purchase prices and of 3.4% on book value.

NAV according to EPRA’s recommendations amounted to 555 million euro, implying an NAV of €10.08 per share (vs. NAV of €9.77 per share as of 30 September 2014).

It is remarkable that 76% of these acquisitions have been executed as a result of off-market negotiations with a relevant degree of complexity. This has allowed Hispania to access high-quality assets, with important repositioning possibilities and at exceptionally attractive entry prices.

Outlook for 2015

Considering the hotel investment announced today, Hispania will have committed total investments amounting to c.800 million euro in hotels (60%), offices (22%) and residential (12%). Moreover, Hispania still has an abundant pipeline of opportunities which perfectly fit the strategy and return targets of its business plan.

Regarding the assets which currently conform Hispania’s portfolio, the company foresees a relevant total capex investment of 27 million euro for its improvement and repositioning to be implemented in 2015 and a further 12 million euro over subsequent years.

“2014 has been a very fruitful year in terms of our investment activity, thanks to the abilities of the management team when it comes to identifying and executing the acquisition of assets with a clear revaluation potential, as it is already becoming evident”, highlighted Concha Osácar, Board Member of Hispania. “2015 has started with the announcement of the Barceló transaction, which will represent a total investment for Hispania of c. 368 million euro. During the rest of this year it will be equally important for Hispania to continue with an intense investment activity as to go on managing, repositioning and financing the assets which already conform our portfolio”, she added.

Original press release: Hispania

Edited by: Carmel Drake

RE Investment Returns To Pre-Crisis Levels: €10,200m In 2014

20 February 2015 – El Economista

Spain became the second largest real estate market in terms of investment in 2014, behind Sweden. Specifically, investment in real estate in Spain amounted to €10,200 million during the year, a record surpassed only in 2007, just before the start of the crsis.

CBRE explains that the transactions closed during the last quarter of the year boosted this strong result. Between September and December 2014 alone, real estate investment in Spain amounted to €3,396 million, i.e. 50% more than in the same period in 2013.

These figures are in line with the trend across Europe, where investment in real estate assets increased by 32% in 2014, to €218,000 million. In the last quarter alone, investment reached €78,000 million, the highest quarterly investment recorded since 2006.

Spain was ranked as the sixth country in terms of inwards investment during the last quarter, above countries such as Norway, Denmark and Italy.

What about in terms of debt?

In terms of real estate debt, the total stock across the European continent increased by almost €23,000 million in 2014, to €978,000 million, primary due to the entry of new credit. According to CBRE, the amount of new debt issued rose by 47% in 2014 with respect to 2013, although in absolute terms this figure was less than half of the volume of debt issued in 2007.

The consultancy explains that this increase in new debt was due to the growth in the size of the real estate investment market. And the total value of investment transactions in Europe increased by 32% last year, to reach €218,000 million.

Moreover, the number of investors with an appetite for risk increased, especially in Spain; these investors tend to make more use of leverage, both to increase their purchasing power and improve their returns.

Real estate loan portfolios

In terms of the sale of non-performing real estate loan portfolios, CBRE says that the transaction volume amounted to €49,200 million in Europe in 2014, more than twice the figure recorded in the previous year.

This growth was particularly significant in Spain, where a rise of 103% was recorded, up from €3,200 million in 2013 to €6,500 million in 2014.

Looking ahead to 2015, CBRE expects the sale of real estate loan portfolios to continue and to expand into new markets, although it does also expect the pace of sale of these portfolios to decline.

“This is because of the time that the market needs to overcome a number of structural obstacles that currently stand in the way of a liquid market for loan sales in Europe”, it adds.

Original story: El Economista

Translation: Carmel Drake

Eurohotel Group Buys Hotel Solvasa In Barcelona

20 February 2015 – Hosteltur

The French hotel group Eurohotel has acquired the Hotel Solvasa in Barcelona, its second property in the city, in a transaction that forms part of the chain’s expansion process.

The hotel will become the Eurohotel Barcelona Granvia Fira. It has 116 rooms, a restaurant, snack bar, gym, heated pool and spa. It has a 4 star rating and is located at the entrance to Feria 2.

Sources at Eurohotel have explained that the chain plans to operate all of the hotel’s services, even though the wellness centre and gym have not been operational until now. In addition, it will expand the gastronomic offering and strengthen its corporate and meeting facilities.

Following this acquisition, Eurohotel now owns 231 hotel rooms in Barcelona, located in two of the major business districts – Barcelona’s International Convention Centre and the Ferial venue on Granvia 2. The chain is based in Paris.

The group also owns the following hotels: the Eurohotel Castello in Castellón, a 4 star hotel with 146 rooms; the Eurohotel Barcelona Diagonal Port in Barcelona, a 4 star hotel with 115 rooms; and the Eurohotel Orly, Eurohotel Saint Denis and Eurohotel Creteil, all 3 star hotels in Paris, with 320 rooms in total.

Meanwhile, the Solvasa Hotel group owns properties in the Balearic Islands, Canary Islands and Valencia.

Horwath HTL and GMA Advisors were the advisors to the transaction. The former is a broker that specialises in hotel transactions. According to sources at Horwath HTL, “Barcelona is a favourite destination for international investors and operators, which have decided that they definitely want a presence in the city. Transactions such as the W Barcelona, which was advised from the start by Howarth HTL, represented a clear commitment to the sector by the city of Barcelona”.

According to the company, 18% of the transactions involving (operational) hotels in 2014 were closed in Barcelona, along with other transactions, amounting to €182 million, for properties to be converted into hotels and large transactions involving debt portfolios.

Original story: Hosteltur

Translation: Carmel Drake

Student Halls In Spain: A Wise Alternative Investment?

17 February 2015 – Idealista

When we talk about real estate investment in Spain, we tend to mean the purchase of offices, hotels and shopping centres. Nevertheless, there is another type of property that may also generate high returns: student halls of residences. However, unlike in other European countries, this accommodation does not totally convince investors looking for assets in Spain. The lack of companies that know how to optimise them, and the shortage of the ideal product are some of the reasons why no transactions are being closed in this segment, despite considerable interest.

Spain had around 1.41 million students enrolled in universities during the academic year 2013-2014, according to the Ministry for Education, Culture and Sport. That is, a little over 3% of the Spanish population were university students. This percentage places Spain ahead of other countries such as Germany and France. The majority of these students (77%) studied courses in their home province, but 20% moved to another province to study and around 3% were from overseas.

Delving more deeply into their lifestyle: approximately 64% of university students live at home with their parents or other family members. At the other extreme, those who live away from home only have two options: rent (either in a shared house or on their own) or live in halls of residence. Specifically, only 2.8% choose to stay there.

In the opinion of the experts consulted, these figures are justified by the “very low” availability of public university halls. “Although there are significant cultural differences, certain aspects indicate that the market for university halls of residence in Spain will have to converge with that of the rest of Europe”, says a report published by JLL.

The consultancy firm is convinced by its analysis that the implementation of the Bologna education reforms will promote cross-border studying between European universities, “which tend to have much high percentages of students living in halls”. In Spain, it is normal for students to opt for this type of accommodation during the first and second years only.

“The flow of students travelling to study in other countries will increase over the coming years and not only in relation to Erasmus placements”, says Patricio Palomar, Director of Office Advisory and Alternative Investment at CBRE. In his opinion, issues such as the language (Spanish), the lifestyle and the affordable prices in comparison with neighbouring countries, are just a few of the attractions that draw many foreign students to choose Spain as their destination.

The main drawbacks

Unnim, the entity created from the merger of Cajas de Manlleu, Sabadell and Terrassa, is active in this market. The bank, which was acquired by BBVA in 2011, inherited this line of business from Caixa Terrassa. The former caja constructed its first hall of residence on the Avenida Parallel, 101, in the Poble Sec neighbourhood of Barcelona back in 2007.

According to the latest data available for Unnim, this business line generated a return of 7%. Sources in the sector explain that the net return on these types of assets can reach 10%, well above the rates offered by offices, hotels and shopping centres. In countries such as the UK and USA, this business generates returns of between 11% and 15%.

Juan Manuel Ortega, Director of Investment Offices at JLL, recognises that British firms are over-valuing these types of assets in Spain. These investors are looking for halls of residences that are larger than 5,000 m2 and that have between 60 and 150 rooms. Palomar also acknowledges this trend “the same funds that operate in the UK for example are looking (for opportunities) in Spain. The problem is that the same product is not available in other countries”.

Palomar maintains that student halls in Spain are obsolete and that many of them are stuck in the 1960s. That does not happen in cities such as Amsterdam where student accommodation is modern, hotel-like and less than 10 years old.

Another one of the pitfalls that affects this business is the ownership of these spaces. Most belong to the public universities, many of which have serious financial problems and cannot afford to finance the investment needed to optimise the assets. At the same time, they cannot sell the land and allow private companies to enter the sector.

This has a very direct effect on competition; it is low, which does not lead to an improvement in the facilities either. Similarly, experts recognise that the administration of these complexes is not simple, they require professional management.

Nevertheless, Palomar states that new student halls of residence are appearing in the outskirts of cities and near private business schools. “I think Spain should focus on other kinds of tourism, beyond the holiday market; educational and health tourism (have significant potential)”.

A trickle of transactions

The lethargy in this market is such that transactions are very scarce. The last known deal involved the purchase of the Galdós halls of residence in Madrid in 2012. The British firm, Knightsbridge Student Housing paid €20 million for the property, it was the first acquisition made by the company outside of the UK. Knightsbridge Student Housing was created in 2010 with the backing of Oaktree Capital Management.

Another of the most talked about transactions involved Lazora (Concha Osácar) when it acquired the Resa Group in 2011. Resa was created in 1994 and currently manages more than 8,000 beds in 32 halls of residence. The construction company Acciona also has give halls of residence (in Albacete, Cádiz, Castellón, Lleida and Murcia), which it has tried to sell in the past.

Further proof that this branch of real estate activity in Spain is still light years away from what is happening in other countries, is that Socimis dedicated to student accommodation already exist overseas. In 2013, GCP Student Living constituted the first REIT (Real Estate Investment Trust) in the UK.

Original story: Idealista (by Estefania Fonseca)

Housing: Rental Yields Now Exceed 5%

3 February 2015 – El País

Property has become a safe haven again for savers and retirees.

Rental properties offer returns of between 5% and 7%. After almost seven years of falling prices, credit constraints and low yields on bank deposits, property “has become a safe haven again for savers and retirees” said Jesús Duque, Vice-President of Alfa Inmobiliaria.

Buy-to-lets have become a good investment option once more, as they provide much higher returns than those offered by financial institutions. Furthermore, prices continue to fall, although that trend is now slowing. The price of second-hand homes in Spain decreased by 0.1% during the month of January to reach €1,592 per square metre, according to the latest real estate price index published by Idealista. The year-on-year decrease was 5.1%. Nevertheless, the outlook is set to change as prices in five autonomous regions (Murcia, Valencia, Cataluña, Madrid and the Balearic Islands) increased.

To generate income, one cannot buy just any house. When looking to invest, one should focus on homes that have permanent demand, i.e. those with a central location. The most stable investments are properties located in middle class neighbourhoods, since they have risk-reward relationships that offer more stability over the long-term.

“It is much more worthwhile to invest in a neighbourhood in any city, rather than in a house on the beach, where the possibility of renting is usually limited to the summer months”, explains Duque. The greater the rate of rotation, the lower the profit. Several months may pass between tenants during which time the owner receives no income and also has to upgrade and repair the property. “Whenever possible, if you are looking for a stable investment, you should try to rent out your property for long periods”, said the expert.

Family homes amd those with space for at least two adults are better than one-person studios, for one-income households. And, almost more importantly, you must ensure that the rent will be collected and that it will cover the investment. This can be done through an objective analysis of the tenant’s ability to pay, but can also be supplemented by non-payment protection insurance, which although decreases the profitability of the operation, does provide security.

One should keep in mind that from the expected yield of 5% to 7%, an owner should deduct 1% to cover the payment of IBI, community costs, garbage collection, insurance and the repair and maintenance of the property.

Original story: El País (by Sandra López Letón)

Translation: Carmel Drake

Mexican Investor Buys Gran Vía 14 For €21m

3 February 2015 – Expansión

A private Mexican investor has acquired the building located at number 14, Gran Vía, Madrid for €21 million. The property currently houses the Madrid Institute of Family and Children.

The property consultant CBRE advised on the transaction for the sale of the property, which is currently leased to the Community of Madrid and has a surface area of 4,600 square metres.

According to Miguel Fuster, CBRE’s Investment Director, this acquisition reflects the strategy being adopted by investors of acquiring assets in strategic locations that have clear potential for rental growth and the possible repositioning of the assets.

In fact, the pressure on prices is generating a clear, positive expectation in terms of rental growth and a recovery in the rental sector, he added.

This transaction consolidates last year’s trend in terms of investment, which reached record levels, and was the third deal that CBRE advised on in January; it also advised on the sales of BMW’s headquarters and Castellana, 77, also known as the Torre Saint Gobain.

Ortega acquired Gran Vía, 32

Recently, Amancio Ortega, bought the landmark building on Gran Via, 32, through his investment vehicle, Pontegadea. The property, which will house Primark’s future flagship store in Spain is currently leased to retail brands such as H&M, Mango and Lefties (Inditex Group), as well as companies such as the Prisa Group.

Original story: Expansión

Translation: Carmel Drake

Lar España Comes To The Rescue At Juan Bravo 3

2 February 2015 – Cinco Días

The largest luxury residential project in the neighbourhood of Salamanca had previously filed for bankruptcy.

The Spanish Socimi Lar has teamed up with the Luxembourg fund LVS II LUX XIII to re-launch the luxury housing project on Calle Juan Bravo, 3. After its acquisition of the developer’s shares , construction at Juan Bravo Plaza will commence within days.

On Friday, the real estate company reported to the CNMV that it has invested €120 million in the acquisition of this building and another one on Calle Claudio Coello. As a result of the deal, Juan Bravo Plaza will exit from its bankruptcy proceedings, in light of its commitment to pay all of its creditors. The developer Eurosazor will also emerge from its state of insolvency, according to the agency EFR.

Juan Bravo Plaza was led by the developer Eurosazor (owned by Rafael Ortiz) and owned by Fernando Fernández-Tapias and Paloma Mateo. The real estate project in the neighbourhood of Salamanca was destined to be a landmark development in the European luxury housing market, inspired by the British skyscraper One Hyde Park, in London.

Located on a plot of land on Calle Juan Bravo, on the corner with Calle Lagasca, the complex was to due to comprise 60 luxury homes (flats worth more than €2.5 million). The plans were developed during the “boom” years (2006) but were paralysed by the burst of the housing crisis.

The initial project included 19,400 square metres of constructible surface area, spread across two-, three- and four-bedroom flats.

It was being led by the prestigious architect Rafael de la Hoz and the best interior designers. To carry out the Juan Bravo Plaza project, better known as Juan Bravo 3, the real estate company spent €131 million in 2002 to acquire the two buildings that were located on the site: Juan Bravo B and Juan Bravo C.

In 2009, the initiative was resumed following the presentation of a special plan for the change of the use of the property, but it was paralysed again in mid-2012. Eurosazor has been advised through the process by Bazarra Abogados and Cuatrecasas, whilst Lar España has been advised by Freshfields.

Original story: Cinco Días

Translation: Carmel Drake