Real Estate Companies Cut In Debt by 23% to €12.57 Bn in H1

10/09/2014 – El Economista

There have been six years already since the real estate bubble burst and the first traces of recovery begin to appear in the balance sheets of the main property managers of the sector. Namely, they achieved trimming the total amount due to banks by 23.4%.

Six largest realtors: Colonial, Quabit, Testa, Martinsa, Reyal Urbis, Renta Corporacion, Realia and Montebalito, closed the first half of the year with €12.57 billion in the red. To compare, in H1 2013, the figure was reaching €16.42 billion.

To achieve that, the companies had to go through debt restructuring and shed their best assets via sales or in lieu payments. Although their joint indebtness still hits high, there is a hope for their balances as economic indicators show promising numbers and foreign investors eye the market in search of opportunities.

Quabit has made a U-turn in its revenues in the last year. Specifically, the company chaired by Felix Abanades has managed to trim its indebtness by €242.19 million, 41.23%, in just 12 months.

After four financial restructurings, Quabit may surely state it is a balanced firm without any economic stress in the short term, the group reports.

With clean books, net value of €65.6 million and €44.88 million in assets, the company plans to launch a Socimi on the stock market which is expected to debut still before the end of the year. Mr Abadanes hopes to raise between €300 and 500 million in shape of real estate assets, mainly residential, commercial, offices and, to less extent, logistics.

In turn, Renta Corporacion that in 2013 was pulled down to insolvency process by a €161 million financial and €27.5 million property indebtness, today celebrates crawling out of the jeopardy. To be precise, the firm beated the red down by 62% in one year. At the moment, it owes €60.32 million.

The assets repossessed from us have a book value of €93.7 million, while the repaid debt represents €98.6 million and therefore we registered a €4.9 million revenue, the group explains.

Colonial has been the first to show that it was possible to overcome the crisis. The company cut in its debt by 35.68% to €1.66 billion.

Now the firm is controlled by such big-name investors as the Villar Mir group and the Qatar Sovereign Wealth Fund. Together with them, Colonial submitted a €650 million bid for a part of Realias property division Patrimonio.

On the other hand, Realia, Reyal Urbis and Martinsa are still up to their ears in debt.

Moreover, Realias main shareholders (Bankia and FCC) have been seeking to sell their stakes since long. Before summer, the real estate company received several offers for a part of its indebtness from Fortress acting on behalf of funds King Street, Orion Capital and AEW.

In the middle of that process, Realia transferred its stake in French branch SIIC de Paris for €560 million. The operation helped it to beat the red down by 40.36% to €995.32 million.

When it comes to Reyal Urbis, this firm has been struggling in the voluntary bankruptcy declaration for over a year. In spite of that, the company managed to trim the debt by 23.62% to €3.55 billion.

Both Reyal and Martinsa, which reduced its debt by 14% to €4.18 billion, will be able to benefit from the new bankruptcy law.


Original article: El Economista (by Alba Brualla)

Translation: AURA REE

Property Managers Look Forward to the End of the Recession

22/08/2014 – El Pais

The majority of large developers that escaped the unforgiving financial crisis are trapped in vagueness which prevents them from confirming the recovery peeping into the real estate market. They no longer owe the terrific €35 billion of 2008, but they still have a €20 billion debt, crippling them from resuming their activities.

After the first five years of the recession, marked by many refinancing agreements, all the measures turned out to be insufficient as the firms still had no capacity of paying the debts. In 2013, the dinamics changed.

Only Catalonian Fergo Aisa has not survived the tough process, liquidated fast and quietly.

The undisputable master in staying afloat is Colonial. In May this year, the company enlarged its capital with a €1.263 million amount and gained such promintent investors as Juan Miguel Villar Mir (the president of OHL) and the Sovereign Wealth Fund of Qatar. Furthermore, the realtor shed the troublesome assets and earned €559 million in the first half of the ongoing year.

The business was faring so well, that Colonial decided to take part in the bidding for a 62% stake of Realia put up for sale by FCC and Bankia. Colonial has taken everyone aback by outbidding sure-bet Fortress and King Street with its €650 million offer submitted exclusively for a real estate affiliate of Realia.

However, before the best bidder acquires the branch, it must meet several requirements, like selling 9 shopping malls of Realia. Then, the real negotiations on buying 20 offices in Madrid, the Fira tower in Barcelona and the Kansas City business center in Seville will commence.

At present, after selling the stake at SIIC de Paris for €1.51 million, the real estate assets of Realia represent a value of €830 million, whereas the developer activity and the land together barely cross €520 million.

Sacyr also successfully overcame the black days of the recession, although finally it sold its arm Vallehermoso, allowing the firm to redeem a €1.2 billion indebtness.

Principally, the company had to deal with too many plots, a very common problem among property managers, such as Reyal Urbis, Martinsa-Fadesa or Metrovacesa.

When the crisis came around, banks realized they had lent nearly €15o billion to developers for purchase of 200 million square meters of land in total. As the borrowers progressively failed to pay-off their debt, six years later, the entites owned over 100 million square meters of land.

Apart from banks, the magnitude landed in balance sheets of Spain‘s ‘bad bank’ (Sareb) or was sold to investment funds with up to 60% discount. The remaining 95 square meters stay in hands of the property managers who hurry to sell them out to pay the debts.

Other companies like Martinsa-Fadesa, Reyal Urbis and Renta Corporación found themselves at the risk of being auctioned. The two first still struggle to crawl out of the insolvency process, whereas the last had managed to do so but was then hit by an unexpected €10 million debt owed to the Tax Office.


Original article: El País (by Juan Carlos Martínez)

Translation: AURA REE

Alfredo Coto Buys a Building on Castellana St. For €20 Mn

29/07/2014 – El Confidencial

Alfredo Coto, a butcher´s son who owns the largest supermarket chain in Argentina called Coto Supermercados, decided to invest in the Spanish real estate.

Last week, he bought a building in Madrid, situated at 16 Paseo de la Castellana street and rented by ICEX as its main headquarters. The businessman paid around €20 million for it to Renta Corporación led by Luis Hernández. The firm will now manage the building assigned for triple use (office, commercial and hotel) and prepare it for repositioning.

This way, the Coto family joins other South American investors who arrived at Spain to enjoy bargain property prices in regard to exchange for their currency. So far, Mexicans (IBM´s premises), Chileans (2, Plaza de la Lealtad square) and Venezuelans (the M-40 shopping mall) have courageously bet on Spain.


Orginal article: El Confidencial (by Carlos Hernanz)

Translation: AURA REE