Acciona Rules Out Socimi Creation & Replaces Walter de Luna As CEO

17 November 2016 – Expansión

Acciona has revised its real estate strategy after spending the last year working on its stock market debut and searching for a partner for its real estate division, which is worth more than €1,000 million.

The rethink has resulted in the departure of Acciona Inmobiliaria’s CEO, Walter de Luna (pictured above), the star recruit from Sareb, who joined the group owned by the Entrecanales family in 2014, with the aim of listing the company on the stock exchange, whereby taking advantage of the recovery in the market.

After 18 months working on a possible IPO and being advised by Morgan Stanley, Acciona has decided to cancel its stock market plans, due to an increase in the uncertainties and volatility surrounding such markets. That same uncertainty also put pay to its plans to list its renewable assets on an overseas stock market, through a yield (high dividend) vehicle in the USA.

The company has now redefined its strategy, which, in principle, sets aside the real estate activity and focuses on development. This change means that its rental portfolio (1,382 homes, 36 premises, two hotels, several office buildings and 155,000 m2 of land) will be moved into the main portfolio, as assets available for sale.

Acciona has just executed one divestment, with the sale to the Socimi Merlin of its 50% stake in the Arturo Soria Plaza shopping centre, for €44 million. Sources in the sector indicate that the construction company chaired by José Manuel Entrecanales is holding conversations with Merlin to sell other assets to the Socimi, such as Urbanizadora el Coto, which other investors have also expressed interest in.

The revenues obtained from the sale of Acciona’s rental assets will be used to invest in new developments. Acciona currently has a stock of around 300 homes, of which around one hundred are located in Mexico and Poland.

In 2015, Acciona carved out its pure property development business from its real estate business. Its rental homes, buildings and land were transferred into a new company called Acciona Real Estate, whose most recent valuation, according to the company, amounted to €630 million. In total, the division is worth €1,200 million.

The real estate company was born with a debt of €199 million. An important part of the subsidiary is Urbanizadora del Coto (rental homes and premises in Madrid), which Acciona purchased from the Cavero family in 2006.

According to the accounts for 2015, the real estate division saw its turnover fall by 45% to €51 million and its EBITDA decrease by €3 million to €6 million, compared with the previous year. Acciona’s share price closed down 1.2% yesterday at €63.80 per share.

Original story: Expansión (by C. Morán and R. Arroyo)

Translation: Carmel Drake

Catella Asset Management Buys 4 Properties For €84M

3 November 2016 – Expansión

The fund manager Catella Asset Management has just completed its first transactions in Spain. In a period of just one month, the Swedish firm has carried out four investment operations to put the perfect finishing touches to its first year in the Spanish market.

Specifically, Catella AM has purchased a retail park in Vinaroz (Castellón) and three residential buildings in Madrid and Barcelona for a total investment of €84 million. “In the last month, we have closed four residential and retail operations, involving the type of assets that we are particularly focusing on”, explained Javier Hortelano, Partner-Director at Catella Asset Management for Spain and Portugal.

In the first operation, Catella has purchased two residential buildings located in Barajas (Madrid) and Rambla de Poblenou (Barcelona), containing almost 150 homes in total. “The building in Barcelona has a 97% occupancy rate and the building in Madrid has a 95% occupancy rate”. In addition, the properties have 66 and 82 parking spaces, respectively.

Subsequently, the Swedish management company acquired a third property, measuring 4,500 m2, on Calle Génova in Madrid. The building, which contains 24 homes, 29 parking spaces and a retail outlet, has an 85% occupancy rate.

The fourth operation has involved the acquisition of the Portal Mediterráneo retail park in Castellón; this purchase has been performed on behalf of a third party, the Belgian company Mitiska Reim.

Last year, the listed Swedish group Catella launched a new investment platform for the Spanish market. The group’s consultancy arm, Catella Property, has been operating in the country since 2008, and at the end of 2015, the company opened an office for its investment manager, which has now made its first purchases. “Catella AM’s approach is to invest using the funds that the management company has raised or to invest on behalf of investors with whom we usually work and who come from Europe, as well as Asia and America”, said Hortelano. The Director, who joined Catella from PwC, has extensive experience in the retail sector, having previously served as the President of the Spanish Shopping Centre Association and COO at Redevco.

Fund

The residential buildings that Catella has acquired will be placed in a pan-European investment fund called Catella Wohnen Europa, which Catella created this year. “This fund began operating six months ago and already has €250 million under management. It also has another €500 million of operations in the due diligence phase and it is planning to continue at a very intense pace next year”, said Hortelano. “It is not the typical fund that buys assets to sell them off piecemeal, rather its objective is to buy properties, and then manage and maintain them through long term lease contracts”, said Eduardo Guardiola, Partner at Catella AM Iberia.

Following the completion of these purchases, the Swedish management company hopes to be very active in Spain: “We hope to close one or two more operations this year to reach a total investment of €100 million and then exceed that figure next year”.

When it was launched, Catella AM set itself an investment target of between €500 million and €1,000 million over a couple of years in Spain and Portugal. Its purchases are focused on large tertiary assets (both shopping centres and retail parks), requiring management, as well as on residential rental properties in good locations.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Sareb Launches 4 New Commercial Campaigns

2 November 2016 – Cinco Días

Sareb is looking to capitalise on the final quarter of the year, typically a very busy time for real estate transactions and likely to be even more so in 2016, now that a Government has finally been formed after months of political deadlock and uncertainty.

Whilst a few weeks ago, the so-called bad bank launched Project Eloise, the sale of its largest asset portfolio to date, the firm is now preparing four new promotional campaigns to encourage the sale of its properties, focusing on: new homes, plots of land, rental properties and low priced assets.

The new commercial campaigns have been baptised as follows: “Casas de estreno”, “Suelo”, “Alquileres” and “Rebajas”, and their aim is “to complement the commercial and marketing initiatives” that Sareb has been carrying out through the four other commercial campaigns that it launched during the first six months of the year, according to a half yearly report that the company has just published.

Specifically, between January and June, Sareb launched the following campaigns: “Grandes rebajas”, through which it has generated sales of €15.6 million; “Casa Sareb”, containing residential homes, which has generated sales of €15.4 million; “Tu casa a toda costa”, focused on secondary residences, which was extended in July after it exceeded its sales target of €25 million; and “Madrid-Barcelona”, designed to offer exclusive homes for sale in Spain’s two largest capital cities, which has also exceeded its sales target, of €16 million.

The report about Sareb’s half yearly activity also highlights the commercial agreement that the bad bank has reached with the real estate portal Idealista to offer all of the properties that Sareb sells through the real estate platforms Haya Real Estate, Altamira, Servihabitat and Solvia, on a single website. By the end of June, the website was already displaying 90% of its supply.

Sareb has sold 8,930 properties during the first nine months of the year, up by 12% compared to the same period last year, although its revenues from those sales amount to just €2,270 million during YTD Sept 2016, down by 9.7% YoY. Following the blow dealt by the Bank of Spain’s new accounting circular, Sareb has just launched its largest portfolio for institutional clients: a package of loans secured by properties amounting to €1,000 million.

Original story: Cinco Días (by J. P. C.)

Translation: Carmel Drake

Carmena Is Set To Build 1,000 Rental Homes For €60M

19 September 2016 – Voz Populi

The rebirth of the real estate market will soon have a new, unusual, player in its midst: the Town Hall of Madrid. The capital’s Town Hall is getting ready to fire the starting gun for the construction of the first rental homes that it plans to build during its legislature. For the time being, it will put out to tender the construction of almost 1,000 homes, with an initial investment of more than €60 million.

Social housing was one of the key pillars of Ahora Madrid’s election campaign during the municipal elections to govern the largest town hall in Spain, which were held in 2015. For the first few months, the municipality’s new team focused on getting to know the financial circumstances of the ‘Empresa Municipal de la Vivienda y el Suelo’ (EMVS), which starred in spectacular asset sales during Ana Botella’s reign at the Town Hall, all intended to alleviate the city’s economic difficulties.

The Town Hall’s plans now include constructing 4,000 new social housing homes in Madrid before the end of its legislature. Work will begin on a quarter of them within the next few months, once the ten contracts that the mayoress’ team is currently preparing have been awarded (…).

The Town Hall’s property development activity will be launched once the role of the EMVS to contract and put homes on the market has been activated again, following the restrictions imposed on it in recent years. Previously, the company was in a very delicate financial situation due to the collapse in value of the large volumes of land that it had acquired at the end of the real estate bubble and, therefore, at exorbitant prices.

Those circumstances meant that the company had to divest assets, including packages of homes sold to vulture funds, which generated a lot of controversy, which has now been declared void in the courts and by the investigation committee created to try to determine the legal nature of the operation.

In April 2016, the Town Hall injected €17 million into the EMVS, through a capital increase, an amount that was intended to allow it to continue cancelling its debt but which, at the same time, allowed it to relaunch the public company’s construction activity. The developments are located in the district of Vallecas and in the areas of Rosilla and Nuestra Señora de los Ángeles, although the Town Hall’s also plans to construct homes in other areas of the capital too.

This is undoubtedly an unprecedented move and not only in the public sphere, but also in the private. Many real estate companies have cancelled their development plans due to the collapse of the market and the lack of demand, together with the problems generated by the large volume of empty homes in Madrid. The contracts that the Town Hall will put out to tender mean that almost 1,000 new homes will be constructed within two years of them being awarded.

Original story: Voz Populi (by Raúl Pozo)

Translation: Carmel Drake

Merlin Merges With Metrovacesa To Create RE Giant

22 June 2016 – El Economista

The Socimi Merlin Properties has informed Spain’s National Securities Market Commission (CNMV) that it has reached an agreement with Banco Santander, BBVA and Banco Popular to integrate Metrovacesa into its share capital and whereby create the largest Spanish real estate group in terms of assets and residential rental properties.

Under the terms of the agreement, the current Metrovacesa company will be split into three parts: one unit will hold the tertiary property business, which will be integrated directly into Merlin (including the employees); one residential arm, which will include all of the residential assets and which will be integrated into Testa, a subsidiary of Merlin; and a third structure, which will group together all of the land and developments under construction into a newly-created company.

After completing the integration, Merlin will, in turn, be split into two companies. One entity will hold the portfolio of tertiary assets (offices, shopping centres and logistics properties), which will begin life with a total surface area of 3 million sqm, an asset value of €9,317 million and the capacity to generate rental income of €450 million (p.a.). The other firm will hold all of the rental homes of the two companies, worth €980 million, which will generate revenues of around €35 million.

Santander will own 21.95% of Merlin

As a result of the integration, Santander, the current majority shareholder of Metrovacesa with a 70% stake, will hold 21.95% of Merlin’s share capital, as well as a 46.21% stake in Testa Residencial, the firm that will bring together all of the rental homes.

The agreement will give rise to the leading Spanish real estate group and one of the largest RE firms in Europe, given that it will hold assets worth €10,297 million in total, according to announcements from the two companies. The integration of the two companies comes just a day after Merlin completed its purchase of Testa from Sacyr and a few months after Metrovacesa, which is currently controlled by Santander, completed its own restructuring.

The operation is subject to approval by the respective General Shareholders’ Meetings of Merlin and Metrovacesa, which will likely take place in September, and will be executed in several phases through carve-outs and capital increases. (…).

Original story: El Economista

Translation: Carmel Drake

Acciona Delays IPO Of RE Subsidiary Due To Political Uncertainty

11 May 2016 – El Confidencial

Acciona has decided to delay the decision regarding the possible IPO of its real estate subsidiary on the basis that the current “political uncertainty does not favour” the operation, according to the Chairman of the company, José Manuel Entrecanales (pictured above).

“We will wait for a reasonable period of time or we will proceed with the most viable alternative”, he said with respect to the different options that the company is analysing for its new company Acciona Real Estate, the subsidiary into which it has segregated all of its real estate assets, worth around €630 million and primarily comprising homes for rent in Madrid.

The group was weighing up the partial sale of this new company, either by opening it up to a new partner or by listing it on the stock exchange, but “the current political uncertainty does not seem to favour the latter option”, said Entrecanales in a speech to Acciona’s General Shareholders’ Meeting. Nevertheless, the group will push ahead with its goal of reducing the debt linked to these assets.

The group completed the constitution of this real estate subsidiary at the beginning of the year. It was created with assets worth €60 million and debt amounting to €190 million.

63% of the assets comprise 1,382 homes for rent, most of which (73%) are located in Madrid, as well as several retail premises associated with those homes.

Another 22% of Acciona Real Estate’s portfolio comprises tertiary assets, such as four office buildings that it owns in Madrid and Barcelona, two hotels in Marbella and Barcelona, respectively, a 50% stake in the Arturo Soria Plaza shopping centre in Madrid and 54 retail outlets. The portfolio is completed with a batch of 16 plots of land, which are ready to develop, covering a surface area of around 155,000 sqm.

Original story: El Confidencial

Translation: Carmel Drake

Carmena Halts The Sale Of 2,000+ EMVS Homes

29 July 2015 – Cinco Días

Manuela Carmena, the mayoress of Madrid has announced that the Town Hall of Madrid will not sell any of the 2,086 rented homes, owned by the EMVS (Municipal Company for Land and Housing or ‘Empresa Municipal de la Vivienda y Suelo’), to vulture funds and that it will put a stop to 70 planned eviction processes. Her statement came after a meeting on Tuesday with the “Yo no me voy” platform, supported by more than 220 residents in five of the affected buildings in the ‘Centro’ neighbourhood of the city.

The beneficiaries of the social housing rental properties owned by the EMVS across the city started to receive notifications and visits in 2012, informing them that their contracts would not be renewed. Previously that was something that had happened automatically, every two years, provided two requirements were fulfilled, in accordance with Decree 100/86: the household income must not exceed a certain level and the tenants must not own any property in the Community of Madrid. In total, 2,086 contracts of this type are currently in place across the city’s 21 districts.

The EMVS started proceedings against tenants who refused to leave their rented homes. “To date, there are 70 processes underway, but these families have now recovered their homes. No-one is going to be kicked out on the street. The Town Hall of Madrid is going to withdraw all of those processes. For us, the right to housing, as recognised by the Constitution, is fundamental”, said Carmena. The EMVS’s commitment extends to 2,086 homes. (…).

Manuela Carmena said that the Town Hall is now “making contact” with residents who are currently “confused” because they think that their social housing contracts are going to be terminated and that their homes are going to be sold. We will explain to them that the contract “is valid and that they will not lose their homes”.

The councillor has not denied the “immense distress” that these tenants have gone through, after finding out that they had to leave the homes they had lived in for more than 20 years. (…).

Original story: Cinco Días

Translation: Carmel Drake

New Investment Formula: Buy-To-Let Cooperatives

5 March 2015 – Expansión

Investing in the Spanish real estate sector has been not only an option, but almost an obligation for large investors in recent years, both Spanish and international. But, what about small savers? Do they have any options left to fall back on?

Away from the real estate companies that are listed on the stock market, there is an investment proposal that involves buying homes to let them out. Nevertheless, this model has not been operated on a professional basis in the past. Now, the Spanish company Alquiler Seguro, which specialises in the management of rental contracts for both tenants and landlords, has decided to launch a cooperative project involving homes intended for rental, which are designed precisely for that purpose from the outset. “Last year, we realised that our most frequent transactions involved clients who were owners of some properties and at the same time, tenants of others”, explains Gustavo Rossi, Chairman of Alquiler Seguro. “A change is happening in the market, whereby young people, who are accessing housing through the rental market, are becoming good savers whilst also being tenants”, adds Antonio Carroza, CEO of the company.

The executives of Alquiler Seguro propose that these tenants use their savings to purchase homes, for an average price of €120,000, which offer investment returns after 18-24 months (the time taken to construct the properties). “These are homes that are designed to be rented out; they are expected to generate returns of between 3.5% and 6% and achieve an investment return within ten years”, says Carroza.

Currently, the company has two developments underway, both located in Madrid, in the neighbourhoods of Carabanchel and López de Hoyos. “We have chosen areas where there is demand from tenants and prices (of the properties) are affordable”.

Both developments offer financial support. “Our model is 50% equity and 50% bank financing. Entities are willing to subsidise some of the land purchase since the properties have (already) been sold to the cooperative members”.

“In the case of these two projects, each investor has acquired one home, but the goal is to move towards a model that does not involve horizontal divisions, but rather one in which many investors buy the whole development. We already have several plots of land in our portfolio that we intend to develop in this way”, says Rossi.

It is not the only buy-to-let investment project that the company is working on. “We are also evaluating the possibility of creating a Socimi, where investors contribute assets instead of capital but, at the moment, that is not a profitable model, due to the expenses associated with municipal gains”.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake