Testa Suspends the Rental of its Homes Following Approval of New Rental Act

24 April 2019 – El Boletín

Blackstone, the fund that has invested the most in the Spanish real estate sector over the last five years, has reportedly suspended the rental of hundreds of homes managed by its Socimi Testa following the approval of the new Rental Act by Pedro Sánchez’s government on 1 March.

The new decree lengthens rental contracts, giving tenants the right to remain in properties for seven years in those cases in which the landlord is a company, and prohibits rent increases above CPI.

Testa has more than 11,000 properties under management and Blackstone has owned a majority stake in the Socimi since last year after acquiring shares from banks and other groups.

According to professionals from intermediary companies that work for Blackstone, a decision was taken to suspend Testa’s activity following the approval of the decree, in light of the uncertainty generated. Activity is expected to resume in May, following the general election.

Blackstone already warned a couple of months ago that the new Rental Act is discriminatory and would only serve to increase rental prices.

Original story: El Boletín

Translation/Summary: Carmel Drake

PSOE & Podemos to Save the Rental Reform without Price Limits

27 February 2019 – Cinco Días

Despite the initial disagreements and failures, all indications are that the Government and Podemos are going to end up rescuing the Rental Act. The Executive is expected to present new text to the Council of Ministers on Friday, which will not include limitations on rental prices, but which will reflect significant changes with respect to the text that was toppled a month ago. Those changes include: the compilation of an official price index in large cities; updates to rents subject to CPI; and greater guarantees against evictions, according to reports from El País yesterday.

The draft being finalised by the Executive does not include any measures regarding limits on rental price increases, but it does propose compiling some official price indices to serve as a tool for autonomous regions to establish their own housing policies, since they have the authority in this regard.

Podemos, a key partner to enable the validation of the Act regards this measure as insufficient but sources in the party acknowledge that they would have to concede to save the other improvements proposed by the text and reverse the harmful measures introduced by the PP in 2013. One option being considered is an 80% discount on the IBI charge for those owners who comply with the price index (…).

Another feature of the new text is that the update to rental prices during the term of a contract may only be subject to CPI, something that used to be included in the Urban Rental Act until the PP eliminated it in 2013.

The Act also recovers the increase in the duration of contracts from three to five years, or seven in those cases where the owner is a company, but also adds that all contracts will be valid, regardless of whether they are registered in the Property Registry (…). Another initiative included in the draft text, to provide greater security to tenants, are the notice periods for the non-renewal of contracts, which increase from one to four months in the case of owners and from one to two months for tenants.

The new regulation will also include enhanced guarantees against evictions (…).

Original story: Cinco Días (by E.C.)

Translation: Carmel Drake

Ores Signs a €35M Loan to Finance New Purchases

11 October 2018 – Eje Prime

Ores is obtaining more fuel to continuing buying Spanish real estate. The Socimi, controlled by Bankinter, has signed a mortgage loan amounting to €35 million, which will facilitate “the execution of the company’s business plan with respect to future acquisitions”, according to a statement filed by the real estate manager with the Alternative Investment Market (MAB).

The company has formalised with a loan with a Spanish bank, whose identity the company declined to disclose. The loan term expires on 11 October 2023 and the principal will be returned with a single bullet payment. The loan has been structured in the following way: €28.1 million at a fixed rate of 1.79% and €6.9 million at a rate of 3-month Euribor with a floor of 0%, plus a spread of 1.35%.

The capital inflow to Ores arrives just in time. At the end of the first half of the year, the Socimi had already achieved more than 90% of its total investment target and it only had €30 million left for purchases.

Between January and June 2018, Bankinter’s Socimi obtained net income of €8 million and a gross operating profit (EBITDA) of €6.3 million. Nevertheless, the company saw its net profit fall during the first six months of the year, with losses amounting to €3.9 million.

During the first half of the year alone, Ores completed the acquisition of thirteen new assets in Spain and Portugal. The company disbursed €117.5 million for those properties, exceeding its forecast investment target by 10%. Similarly, the group, together with Sonae Sierra, purchased the Millenium de Madrid retail park for €31 million in July.

Ores currently has thirty assets in its portfolio, worth €328 million, which generates a gross annual income of €19.4 million. With these latest operations, the Socimi is on track towards the target established when it was created in December 2017 of investing €400 million in high street retail premises, supermarkets, retail parks (up to 20,000 m2), bank branches and unique assets with long-lasting rental contracts and solvent tenants.

Original story: Eje Prime

Translation: Carmel Drake

Azaria Rental Debuts on the MAB with a €125M Investment Plan

25 September 2018 – Eje Prime

Azaria Rental made its debut on the stock market today with the clear intention of expanding its asset portfolio. The Socimi, specialising in the rental market and managed by Drago Capital, started trading at a price of €5.40 per share, which means that its valuation amounts to €45 million, according to a statement filed by the company with the Alternative Investment Market (MAB).

On its first day on the MAB, the Socimi confirmed its plan to search for new investment opportunities to increase returns for its shareholders. Specifically, according to Mayte Medina, CEO of Drago Capital, the firm’s future acquisitions are expected “to amount to €125 million in total”.

Currently, Azaria Rental owns just one asset: a 100% stake in Bifur Investments, the owner of the industrial and office complex located at number 40 Calle Miguel Yuste in Madrid, which houses the headquarters of the El País newspaperThe property spans a surface area of 46,480 m2 and comprises five buildings, leased to the Prisa group until 2033 for €4.9 million per year, according to Expansión.

Azaria Rental is the 19th Socimi to debut on the MAB so far this year. The objective of the company is to create a real estate investment vehicle to generate returns of between 4% and 5%, “from rental contracts with a net triple income profile over the long-term”.

Meanwhile, Drago Capital is a real estate asset management company that operates in the Spanish market as well as in the United States of America. Founded in 2001 by a group of professionals from the sector, it has offices in Madrid, Lisbon and Miami.

Original story: Eje Prime

Translation: Carmel Drake

Sánchez Reveals that the Housing Law will Extend Rentals to 5 Years

12 September 2018 – El Diario

The President of the Government, Pedro Sánchez (pictured below), has demanded agreement from the political groups this afternoon regarding the next Housing Law, which will include, amongst other measures, an increase in the terms of rental contracts, and their subsequent extensions, to 5 years from their current duration of 3 years.

Sánchez posted the request on his Facebook account, with a link to Twitter, where he indicated that he was “appealing to all political forces to reach a pact that will convert housing into a right for citizens, far removed from speculation”.

The President of the Government highlighted that he wants to “shield” the “social function” of housing and he revealed several aspects in this regard.

Besides the increase in the duration of rental contracts and their subsequent extensions to five years, Sánchez highlighted “a shock plan for 20,000 rental homes to increase supply and whereby reduce the pressure on prices”.

Similarly, he promised an “improvement in the fiscal framework to stimulate supply and moderate prices”, a “review of the aid programs for young people”, and the “regulation of tourist apartments”.

Sánchez also mentioned an “improvement in the financing of housing developments through the ICO”, the Official Credit Institute, as well as a “reorientation of the State Housing Plan to promote and protect a public housing stock that is sufficient and affordable, and which allows us to attend, in particular, to the needs of the most vulnerable people in society”.

As the Head of the Government concluded, “Achieving social progress that will change the lives of thousands of people is in our hands”.

The Minister for Development, José Luis Ábalos, reported last week that an inter-ministerial group was working on specific proposals for housing, and he said that in terms of addressing the rise in rental prices, they are studying legal reforms regarding rental contract terms and extensions, amongst other measures (…).

Original story: El Diario 

Translation: Carmel Drake

Testa Completes Acquisition of 1,329 Homes from CaixaBank’s RE Arm for €207M

25 May 2018 – ABC

The listed real estate investment company (Socimi) Testa Residencial has today completed the acquisition of 1,329 homes from BuildingCenter, the real estate subsidiary of the CaixaBank group for €207 million.

The sale agreement was reached in March and accounts for more than 90% of BuildingCenter’s assets, according to a statement issued by Testa. The remaining 129 homes included in the agreement will be acquired for €21 million over the coming months, as certain conditions are fulfilled, added Testa.

On the basis of its existing rental contracts, the Socimi estimates that the homes acquired now will generate annual revenues of €8.5 million from 1 June onwards.

Once Testa has acquired the remaining homes, that figure will increase to €9.3 million per annum. The homes currently have an occupancy rate of 92%.

CaixaBank’s portfolio has a “prominent presence” in the main Spanish cities, including Madrid, Palma de Mallorca, Barcelona and Valencia, and together account for 66% of the total acquired portfolio, explains Testa.

In terms of the financing of the operation, Testa says that it has today signed a bank loan amounting to €92 million, with a seven-year bullet maturity (repayment of the initial capital on the maturity date) and an interest cost of approximately 1.6%, covered at 100%.

The Socimi Testa Residencial plans to go public either before or after the summer through a public sale offer (OPV) of the existing shares and a public subscription offer (OPS) through a capital increase.

Original story: ABC

Translation: Carmel Drake

Rental Prices Rose by 9.48% In Barcelona in 2017

15 February 2018 – Eje Prime

Rental prices are continuing to rise in Barcelona. The average price of the new contracts signed in 2017 amounted to €877.20, up by 9.48% compared to a year earlier. In this way, the Catalan capital has now recorded four consecutive years of price increases.

Last year, 49,953 new residential rental contracts were formalised in Barcelona, almost 8,000 more than in 2016, according to data published today by the Chamber of Urban Property in Barcelona.

The neighbourhood of Eixample accounted for the highest market share, with 21%, followed by Sant Martí, with 12%, Ciutat Vella, with 11%, and Sants-Monjuïc, Sarrià-Sant Gervasi and Gràcia, with 10% each.

This data contrasts with the forecasts made by the Chamber at the end of last year, which predicted a containment of prices in the city. The districts that saw the highest price rises were Sants-Montjuïc (12.43%) and Ciutat Vella (12.11%), followed by Nou Barris (11.48%) and Horta-Guinardó (10.38%). The lowest price rises were seen in Les Corts (6.73%) and Sarrià Sant-Gervasi (7.27%).

Original story: Eje Prime 

Translation: Carmel Drake

Eurofund & Patron Spend €15M On Dolce Vita Odeón Shopping Centre Renovation

20 July 2017 – Eje Prime

The European investment funds Eurofund Capital Partners and Patron Capital are giving the Dolce Vita Odeon shopping centre a facelift. Work to renovate the inside and outside of the complex, which is located in Narón (A Coruña), will begin in September and the two funds will invest €15 million on the project in total.

The work will take six months and will transform the design of the external façades, as well as the common areas, the main entrances, the daytime and night-time lighting and the decoration of the squares, amongst many other elements. The joint investment, combined with the improvements already carried out at the centre since its acquisition in July 2015 by Eurofund Capital Partners and Patron Capital, amounts to around €15 million.

The investment in the aesthetic transformation of Dolce Vita Odeón, entrusted to the British architecture and interior design studio Broadway Alyan, is another step forward in the revitalisation of this centre (…).

Since July 2015, eight operators have opened stores in the centre, including Lefties, from the Inditex group, and H&M. Moreover, other firms such as Bershka, Oysho, Springfield and Pull&Bear have expanded and renovated their store concepts.

The opening of the new stores has generated employment for 70 people, in addition to the 150 new jobs associated with the construction work. The shopping centre has a gross leasable area of 25,000 m2 and 1,250 parking spaces.

Original story: Eje Prime

Translation: Carmel Drake

M&G Real Estate Buys 16 Santander Branches For €56.2M

25 May 2017 – El Economista

The fund manager M&G Real Estate has signed another deal in Spain, this time to become Banco Santander’s new landlord. Specifically, the firm has just signed an agreement with the Socimi Uro Property to acquire 16 of the financial institution’s branches for which it has paid €56.2 million.

The operation, which was closed at a premium with respect to the most recent valuation of the transferred portfolio, also includes the granting of a call option over another branch, which may be executed in the short term.

According to the Socimi, which owns approximately one-third of Banco Santander’s branches, the portfolio that M&G has purchased generates annual rental income of €3.04 million and comprises seven branches from the so-called Blue portfolio and nine from the Green portfolio.

The classification of the branches into these portfolios reflects the maturity dates of the corresponding rental contracts. Thus, in the first case (Blue portfolio), the lease contracts are due to terminate in 2045, 2046 and 2047, and may be extended for another seven years. In the case of the assets included in the Green portfolio, the lease contracts are due to mature between 2036 and 2038.

These terms of 30 and 20 years, respectively, match the British manager’s investment strategy, given that it seeks safe, long-term operations. In this way, the firm’s first operation in Spain was closed in 2015, when it acquired Telefónica’s former headquarters in Madrid, located in the heart of the city on Calle Ríos Rosas. It paid €175 million for that property, which is now the headquarters of WPP.

Following the sale, Uro will continue to own a portfolio of bank branches whose approximate value amounts to €1,893 million. When the Socimi debuted on the stock market, in March 2015, it managed 1,136 Santander branches, nevertheless, in April 2015, it sold a portfolio of 381 branches to Axa Real Estate for €308 million, leaving 755 branches, which cover a surface area of more than 340,000 m2.

Original story: El Economista (by Alba Brualla and Javier Mesones)

Translation: Carmel Drake

RE Experts: Spain’s RE Sector Is Back In Fashion

22 October 2015 – Cinco Días

A wave of optimism is in the air at the Barcelona Meeting Point trade fair.

Senior executives from Colonial, Merlin Properties and Grupo Lar appeared optimistic on Wednesday, regarding the growth of the real estate sector in Spain, based on the comments they made during a session entitled ‘Spain: Back in fashion’ at the real estate trade fair Barcelona Meeting Point (BMP), which is being held until Sunday at the Montjuïc de Fira centre in Barcelona.

The President of Grupo Lar, Luis Pereda and the founding partner of Merlin Properties, Ismael Clemente, were in agreement that prices in Spain are starting to increase, but that they are still below the levels seen in other European countries, which is attracting international investors.

The CEO of Colonial, Pere Viñolas, spoke about the “positive outlook” for an increase in yields associated with these price increases, although he qualified this by saying that the results of the operations that we are now beginning to see will not have an impact on income statements until 2016.

Pereda said that the decrease in rental prices in Spain has been more marked than in other countries, but that the recovery will be too, because rental contracts are shorter term here (around three or four years).

Clemente confirmed that Spain is now in a very promising phase of the real estate cycle. “We have five to seven strong years ahead of us”, although there will be risks, such as the evolution of world (economic) growth and political influences. (…).

During the event to open the trade fair, which this year brings together 280 companies from fifteen countries and almost 40 international investment funds, the Secretary of State for the Economy, Álvaro Nadal, warned that “political uncertainty” may scare off investors from Spain. (…).

With just two months to go until the general election and with the Catalan sovereign debate still raging, the Government’s representative for the Economy said that, if we can guarantee that the improvement in competitiveness, economic growth, creation of employment and consolidation of the public accounts are all going to continue in Spain “without any disruptions” then we “will be reasonably certain that investors” will continue to support the country.

By contrast, added Nadal, “if the future looks like it holds other things, then they are less likely to want to invest”.

That was the message that Nadal wanted to send to the business people in the real estate sector, who are convinced that, for the time being at least, the political tension is not affecting business and that national and international investors are clear in their desire to back Spanish real estate.

“In Barcelona, half of our buyers are from overseas and we have not detected even the slightest interest from them in political matters. It seems that people are either certain that nothing is going to happen or that whatever happens, it will not impact their investment”, explained the CEO of the Catalan property developer Vertix, Elena Massot. (…).

Other participants of BMP also agreed that the expansion of the sector is now a reality, after several years of severe crisis, but that the recovery is going to be slow and uneven. (…).

This recovery will be more intense in the major capitals, where the prices of some properties have already started to rise, but it could still take a while to reach areas where there is less demand, which means a Spanish real estate market that is moving at “two speeds”.

The Property Developers’ Association of Barcelona (APCE) estimates that construction will begin on between 6,000 and 6,500 new homes in Cataluña in 2015. That figure is notably higher than those recorded seen in recent years, but it is still a long way off the data for 2006.

The turning point happened in 2013, when construction began on just 3,036 homes across the whole autonomous region. In 2006, the peak year for construction, construction began on a whopping 126,000 homes. (…).

Original story: Cinco Días

Translation: Carmel Drake