País Vasco is Committed to Social Housing for Rent Not Sale

25 March 2019 – El País

País Vasco is going to stop building public housing for sale. From 2020 onwards, all of the public developments will be for rental, after it was revealed to be the preferred option for 52,000 of the 64,000 applicants registered on the waiting list for social housing properties. The aim is to boost supply whereby avoiding a shortage that could lead to a bubble.

The regional Government’s commitment to the rental sector is huge. According to data from the Government itself, investment in the segment in Euskadi will amount to €1.12 billion between 2018 and 2020, which is €48 million more than the State is planning to allocate to its housing plan for Spain as a whole during the same period (€1.07 billion).

The Basque Government already owns a stock of 13,340 social housing units for rent, and it is currently building 4,600 more.

Another one of the major battles facing the Basque Government is how to get the more than 20,000 empty homes in the region onto the residential market. This year, the Government is set to approve a decree that fixes the fee for empty homes at €10/m2, which the Town Halls will then be able to apply if they so decide.

It has also launched a program of subsidies of up to 60% of the rental payment for young people aged between 23 and 35 who want to leave home.

Original story: El País (by Pedro Gorospe)

Translation/Summary: Carmel Drake

Traffic Restrictions in ‘Madrid Central’ Drive up Parking Space Prices

16 March 2019 – El País

The Town Hall of Madrid, led by Manuela Carmena, introduced new traffic restrictions in the city centre (Madrid Central) in November last year on a provisional basis. As of Saturday 16 March, fines are now being levied on vehicles that enter the area illegally.

Only those vehicles owned by people who own or lease a parking space within the designated area may access the area, regardless of the environmental label assigned to their vehicles, if they are not residents. As such, parking spaces are in demand and so their prices have soared in the last 4 months.

In fact, prices have risen by between 20% and 30% following the imposition of the traffic restrictions. For a parking space that used to cost €20,000, vendors are now asking €25,000, and for a space costing €40,000 previously, vendors are now asking between €45,000 and €48,000, according to Daniel Lucía, founder of the company ParkingYa!, created twenty years ago and which sells more than 250 parking spaces per year.

According to Pisos.com, the average price of a parking space in the Centro district is now €52,100. In the Spanish capital in general, the average price amounts to €21,300. Moreover, even though the prices of parking spaces rose by between 10% and 20% across Spain in 2018, they are still 30% cheaper than in the years before the real estate bubble, when parking spaces in Centro and Salamanca were sold for €90,000 or €100,000.

These assets generated stable returns of 6.2% across Spain in 2018, compared with 5.5% in 2017, according to Idealista. In Madrid, the yield was 3.4%, although that figure varied by district. Location is key, as that typically determines the ease with which a space can be leased. Parking spaces in the city centre are always less profitable (generating less than 4%) than those on the outskirts but they are safer investments as are rarely unoccupied.

Original story: El País (by Sandra López Letón)

Translation/Summary: Carmel Drake

Mazabi Sells Fever’s New HQ in Central Madrid for €6M

14 January 2019 – Expansión

The Spanish family office Mazabi has decided to sell an office building that it owns along the Prado-Recoletos thoroughfare in Madrid, next to the Congress of Representatives.

The property, which has a surface area of 1,400 m2, spread over the basement and six upper floors, is located on Calle Santa Catalina, 4. Mazabi acquired the property three years ago as a value-added investment, and during this period, it has renovated it and found a new tenant to now sell it for a profit.

Specifically, the property is soon going to be home to the headquarters of the US social platform Fever in Spain. The company, which has headquarters in New York, London and Madrid, has decided to relocate to these new offices in light of its major growth plans. Fever’s employees are expected to move in once the renovation and design work for the new offices has been completed, in a period of approximately nine months.

The operation, which has been brokered by the real estate consultancy Catella, has been closed for €6 million. The buyer is a Spanish family office (…).

Original story: Expansión

Translation: Carmel Drake

Mango Sells its Store on c/Corrida in Gijón & Leases it Back for €30,000/Month

28 October 2018 – El Comercio

Mango has sold the building located at number 28 Calle Corrida, in Gijón, which has housed its megastore in the city since 2015, to a domestic investor for €8 million. The Catalan multi-national textile firm acquired the iconic property, which used to house the former headquarters of Banesto, in 2014. At the time, it paid Banco Santander €6.2 million for the property. The building work for the commercial conversion of the building, which spans a surface area of 1,642 m2, spread over the ground first and attic floor, cost another almost €2 million.

On this occasion, the sale operation has been undertaken as a sale&leaseback deal (…). In other words, Mango has sold the asset on the city’s main high street but will remain there as the tenant, paying a sizeable rent to the new owner: more than €30,000 per month (…).

That is not the only change happening on Calle Corrida over the coming months. The Inditex Group is looking to relocate some of its brands onto the Golden Mile of Gijón despite the shortage of available units (…).

In terms of prices, according to Alejandro López, lawyer and director of the real estate consultancy firm Noxtrum Novotec, “the average rental price is €62/m2/month, with variations ranging from €50/m2/month to €70/m2/month”.

Original story: El Comercio (by M. Moro)

Translation: Carmel Drake

Who are Spain’s Largest Residential Landlords?

11 October 2018 – El País

Every month, they receive rent from thousands of tenants who live in the thousands of flats that they own. They are the large landlords of Spain, although it is worth noting one important point: even though between them, they own more than 120,000 residential rental assets, that figure accounts for just 5% of all of the homes on the rental market. In Spain, the stock of rental housing – which exceeds 2.3 million properties, according to calculations from the Ministry of Development – is still dominated by individuals above all. At the other end of the spectrum, that of companies, it is not easy to draw a clear map of who’s who in the Spanish market. There are banks, investment funds, Socimis, real estate companies, servicers, managers…the difference is substantial: some are owners of houses whilst others specialise only in administering the properties.

The properties intersect between these two larges groups. The homes of a bank may belong to a real estate company owned by the entity itself and be administrated by its manager, which in turn, may be responsible for the houses of other companies. Or a fund may own several servicers, the name given to the platforms that, since the crisis, have absorbed a large proportion of the toxic assets (both properties and mortgages) owned by the banks, and that in turn, may be entrusted with the administration of some of the homes by the banks. The examples are simpler if we look at specific cases. What follows is a portrait of the main protagonists of the residential rental market in Spain. Seven companies that control portfolios that come close to or exceed 10,000 assets each, according to figures facilitated by them and by other sources in the sector.

Blackstone. This real estate investment fund is well on its way to becoming the largest owner of rental housing in Spain. It entered the market in 2013 with the purchase of a portfolio of social housing properties that the Town Hall of Madrid, led at the time by Ana Botella, put up for sale. Those 1,860 homes were just the start of a portfolio that now contains around 32,000 properties. Since then, Blackstone has acquired thousands of toxic assets from entities such as Banco Popular and Catalunya Caixa. From the real estate arm of the latter, CX Inmobiliaria, a subsidiary of the US fund emerged, which is now responsible for managing most of its rental homes. Anticipa is a specialist servicer in what is known as “fragmented management”. Its 15,000 homes do not form part of blocks of buildings, but rather they are scattered all over the country. In addition to that portfolio, Fidere manages 6,200 properties. That Socimi (…) was created specifically after the operation was closed with the Town Hall of Madrid and then continued to add other residential assets to its portfolio, which unlike Anticipa’s form part of blocks and urbanisations. The latest blow, in terms of the effect on the market, came last month, with Blackstone’s agreement to purchase 70.01% of Testa. With the control of that Socimi – which until then belonged to Santander, BBVA, Acciona and Merlin – around 32,000 rental assets are now under the orbit of the US fund, making it the largest landlord in Spain.

CaixaBank. Until recently, the Catalan entity was the largest owner of rental homes and it is still in the top three. Unlike the other banks, which succumbed to the pressure to sell to interested investors, the former Caixa owns 27,557 residential rental assets through its real estate arm Building Center. The entity’s own manager, Servihabitat, is responsible for managing those assets, and its portfolio also includes assets entrusted by other owners, taking its total to 42,163 assets. Of those 28,549 are homes (and the remainder are storerooms and parking spaces).

Banco Sabadell. A very similar example to CaixaBank. In this case, the entity’s own servicer, Solvia, is responsible for managing its residential rental assets. Its rental portfolio comprises around 32,000 residential assets and, of those, 74% belong to Sabadell, making it the third largest landlord in Spain with around 23,600 assets.

Haya. In fourth place on the list is the servicer owned by Cerberus. The investment fund created it after acquiring some of Bankia’s real estate portfolio. Then it increased it with purchases from other banks such as Santander. At the end of 2017, based on the most recent data provided by the company, it managed around 14,100 assets.

Azora. This manager administers around 11,000 homes on behalf of other companies and Socimis. Its main clients include Lazora, a company recently recapitalised by CBRE GIP and Madison, which owns 6,800 assets, and Encasa Cibeles, which has 2,500 assets and is owned by the investment bank Goldman Sachs.

Sareb. The (…) bad bank concentrated more than €50 billion in toxic assets during the crisis, including both mortgages and properties. Its objective was, and still is, to divest them, but in the meantime, it has been capitalising what it can. One of the ways is placing some of its properties up for rent. It has more than 10,000 in its portfolio, but it does not manage them directly: it has distributed the management of 5,223 units between Altamira, Haya, Servihabitat and Solvia. The 1,383 that form part of Témpore, a Socimi owned by Sareb, are administered by Azora. Finally, it has around 4,000 that it is reserving for social housing rentals and that it is handing over on a piecemeal basis as one-off agreements are reached with autonomous regions and large town Halls.

Altamira. Another servicer, which belongs to Apollo and Banco Santander. Its rental portfolio comprises 12,500 properties including tertiary assets. Most, around 9,700, are residential assets and belong to Santander or Sareb.

Original story: El País (by José Luis Aranda)

Translation: Carmel Drake

Capgemini Moves its Spanish HQ to the Oxxeo Building in Madrid

9 July 2018 – Efe Empresas

The building where Capgemini is going to move more than 800 of its employees has been constructed by the real estate group GMP and designed by the architect Rafael de la Hoz, according to explanations provided by the company in a statement.

The company, which provides consultancy, technology and digital transformation services, is going to be the first tenant to occupy the building which spans a surface area of 9,365 m2.

Through these new offices, the firm is seeking to encourage collaboration between its employees in an “open, multi-disciplinary and occupational well-being work environment”. This idea will be developed both through the furniture, as well as through the common area services, digital resources and the design itself.

At the same time, the new headquarters will have a co-innovation centre in such a way that clients and partners will be able to connect with universities, emerging companies and business schools to evaluate new business models and assist with digitalisation processes.

The CEO of Capgemini in Spain, Francisco Bermúdez, explained that the change of headquarters seeks to “respond to the company’s innovation strategy at the global level”, which is why “we are backing new organisational structures that prioritise models of collaboration and experimentation.

The CEO confirmed that the Oxxeo building “will provide us with the facilities and resources that we need, and will embody the company’s identity in terms of vanguard and innovation”. Most importantly, it will offer “a renovated and well-equipped workspace with more resources for the well-being of our professionals”.

Sustainable headquarters

The building chosen by the corporation stands out due to its sustainability, given that it is the first office building in Las Tablas to be awarded the Leed Platinum pre-certificate, the highest possible distinction granted by the US Green Building Council (USGBC).

It is also one of the most pioneering buildings in Europe, the first of its kind in Madrid and the second in Spain, to be included in the WELL Building Standard certification process, the leading global certification for buildings that focuses solely on human health and well-being.

Original story: Efe Empresas

Translation: Carmel Drake

CBRE: Logistics Investment in Valencia Doubled to €60M+ in 2017

18 April 2018 – Las Provincias

The logistics business in the Community of Valencia skyrocketed last year. Logistics investment in Valencia doubled to exceed €60 million in 2017. The increase was driven primarily by large operations such as the purchase by TH Real Estate of Carrefour’s platform in Ribarroja and the acquisition by P3 Logistics of another platform that had formed part of GreenOak’s logistics portfolio.

That is according to a report compiled by the real estate consultancy CBRE, which places Valencia behind Madrid and Barcelona in the ranking of cities based on interest from funds in investing in logistics. On the other hand, leasing of logistics space also reached a new record in Valencia in 2017 with more than 220,000 m2 of space transacted.

The study reports that the logistics stock in Valencia amounts to 2,244,000 m2, of which just 20% may be considered as prime or maximum quality product. This increase is due both to the construction of new logistics warehouses and the renovation and adaptation of old industrial warehouses for this new use.

Lack of supply

Despite the delivery of more than 65,000 m2 of newly-built logistics warehouses, the availability rate decreased to 4.3% in 2017. The data shows the increase in demand for large spaces (measuring more than 10,000 m2, which accounted for 50% of the space leased last year). By area, the region to the north of Valencia accounts for the highest percentage of available industrial space with 13,200 m2 (6.4%), followed by the central area with 53,100 m2 (9.7%) and finally the south with 30,500 m2 (5.1%).

Ribarroja is still the most sought-after area with the highest leasing volumes. In fact, 15 of the 27 operations recorded in 2017, which together saw 125,000 m2 of the surface area contracted and which represented 60% of the total space leased (were located there). The continuous increase in demand and the scarce supply of quality products has caused prime rents to increase by 25% to €51/m2/year.

The centre of Valencia saw the highest price rises for both land, between €150/m2 and 225/m2, and rent, between €3/m2/month and €4.25/m2/month. The north and south regions recorded similar rental prices, between €2.75/m2/month and €3.90/m2/month, although the southern region was slightly more expensive than the north with prices of around €200/m2.

Original story: Las Provincias (by Á. Mohorte)

Translation: Carmel Drake

Lennar’s Socimi Al Breck Sells 14 More Assets for €11M

19 April 2018 – Eje Prime

Whilst last year was marked by investments on the part of the Socimis, this year is being marked by divestments. Lennar Corporation is divesting in Spain again and has closed fourteen operations to sell properties through one of its Spanish Socimis, Al Breck, for €11 million, according to a statement from the company.

The company has carried out the transactions through the company Rialto Capital Management, an investment vehicle headquartered in Luxembourg, which Lennar uses to carry out its real estate operations in Europe and the only one that has a stable structure in Spain.

The company divested the properties between 16 February and 12 April, generating a gain for the company of €5 million. This divestment follows another carried out in January when it sold four assets for €3.5 million.

Lennar Corporation made its debut on the Alternative Investment Market (MAB) with Al Breck at the end of November 2016 (although it commenced activity in Spain in December 2014), with a stock of around 639 rental homes located in the centre of Madrid. The Socimi created its asset portfolio through the purchase of a portfolio from Segurfondo Investion in December 2014.

Specifically, the Socimi’s assets are located in the centre of the Spanish capital (in the Centro, Salamanca, Chamberí and Chueca districts), as well as in La Moraleja and in towns close to Alcobendas and Torrejón de Ardoz. The portfolio also contains retail premises and offices. According to the IPO prospectus, the market value of the asset portfolio at the time of its stock market debut was €110.52 million.

The Socimi made its stock market debut with a business plan that involved generating value from its portfolio, in other words, selling all of its homes within a 5-year period, ending in December 2020. The company has now initiated this divestment process with the sale of these first assets.

Al Breck’s strategy

Specifically, the company’s plan involves investing in improvements in homes “to increase their yields and increase their occupancy rates to stable levels, and then implementing an aggressive rental strategy that includes, where necessary, reducing the rents and making concessions to tenants to improve the cash flow conditions”.

Subsequently, according to the group’s IPO prospectus, “after improving the occupancy rate, the objective is to keep it stable and start to progressively increase the rents in accordance with the improvements made to the properties and market prices”.

Finally, the Socimi plans “to optimise the value of its portfolio by selling assets individually or in batches, when the demand and price so dictate, and once the minimum ownership term of three years has passed in each case”, according to the firm in its brochure.

In addition, the company launched a second Socimi, Ceres Real Estate Socimi, at the end of last year. Although for the time being, that entity’s activity has been very limited (it does not hold any assets in its portfolio), the sole administrator of the company is Rialto Capital.

This new Socimi is, in turn, the heir of Clearfield Invest, a firm constituted just over two months ago and whose administrators form part of the TMF Group’s team in Spain, a company specialising in the provision of services for all kinds of companies.

Original story: Eje Prime (by C. Pareja)

Translation: Carmel Drake

Carmena’s New Plan Prevents Construction of 50,000 Social Housing Units in Madrid

10 April 2018 – El Mundo

The Compensation Boards of Valdecarros, Berrocales and Los Cerros have filed a contentious-administrative appeal requesting the precautionary suspension of the Master Plan approved by the Town Hall of Madrid in January, which prevents the construction of more than 50,000 social housing units in the southeast of Madrid.

The representatives of the three developments in the southeast of the capital have received public support from Madrid’s Association of Property Developers (Asprima), which considers that “the application of the Master Plan would have very negative consequences for Madrilenians by making house prices more expensive, in both the rental and purchase markets; it would cause serious harm to the municipal coffers due to the large number of compensation claims that the Town Hall would have to pay out”, say sources at the entity.

On the other hand, Asprima warns that the aforementioned plan “would prevent the construction of more than 50,000 social housing units and the development of important public housing construction plans for rental properties, and as a result, would lead to an increase in house prices, placing further pressure on demand in towns on the outskirts, and further congesting the access roads to the capital”.

The appeal highlights that the legal nature of the Master Plan is uncertain since it is not provided for in the Community of Madrid’s governing Land Law and that it should be considered as a binding directive or as a legal planning instrument, which may be appealed and suspended in a precautionary way.

Moreover, “the Master Plan has been built as a figure with regulatory strength, but it was approved by the Government of the Town Hall of Madrid without a prior report from the General Intervention or any report from the municipal legal services. Similarly, it was not subjected to any public consultation to allow citizens to express their opinions”, say sources at Asprima.

It is for this reason that Madrid’s Association of Property Developers considers that the Compensation Boards of Valdecarros, Berrocales and Los Cerros have sufficient legal grounds to request the suspension of the Plan and, in addition to the legal grounds, all of the economic and environmental data available to draw the conclusion that the developments in the southeast are absolutely necessary for the city.

Original story: El Mundo (by S. V.)

Translation: Carmel Drake

Cerberus Puts 2 of Bankia’s Prime Branches Up For Sale

12 March 2018 – El Confidencial

Cerberus wants to take advantage of the appetite that exists for retail premises on Spain’s main high streets at the moment and to this end, has opened a process to sell two of Bankia’s star branches, located on Plaza de Catalunya in Barcelona and at number 1 Calle Alcalá in Madrid, according to sources familiar with proceedings.

The operation has been instrumented through Haya Real Estate, the real estate servicer of Cerberus, which is in charge of managing the assets thanks to the contract signed with the entity, and has been organised as a closed process, rather than through the website, like it does with other assets when it puts them on the market.

In both cases, the bank chaired by José Ignacio Goirrigolzarri is planning to vacate the premises, so that the buyers can let them to a new tenant and whereby obtain more attractive offers.

The establishment located on Alcalá 1, a historical building dating back to the 19th century, has a surface area of 900 m2 spread over the ground floor and basement. The process, which was launched last month, has received interest from several parties looking to acquire the empty space.

On the plus side, it is located right next to the entrance of the well-known Puerta del Sol, and it is very close to Calle Preciados, the most expensive shopping street in Madrid, with an average rent of €3,180/m2, according to Cushman & Wakefield (C&W). On the downside, its shop window overlooking Calle Alcalá is very reduced.

Meanwhile, in Plaza de Cataluna, the 1,000 m2 branch that Bankia owns is homes to its headquarters in the Catalan capital. Haya already identified it at the end of last year as a serious candidate for sale, a decision that it took in the end boosted by the record retail investment figures.

According to figures from Savills-Aguirre Newman, investor interest in the commercial segment in 2017 allowed it to break records, reaching €3.5 billion, levels that the real estate consultancy expects will be maintained this year thanks to the strong outlook that still exists for tourism, amongst other factors.

Plaza de Catalunya is also one of the most commercial areas in Spain, with rents exceeding €1,200/m2, and with the added bonus that it is a genuine magnet for large fashion firms.

In fact, Uniqlo was on the verge of acquiring the 3,000 m2 that Fundación Montemadrid used to own next door to Bankia’s branch, a property that ended up being sold to Desigual to house its new flagship store. El Corte Inglés, Apple, Zara and Fnac are just some of the distinguished neighbours on this sought-after square.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake