Tag: residential assets

Merlin & Metrovacesa May Join Forces To Create Housing Socimi

14 June 2016 – El Confidencial

Create the largest Spanish housing Socimi. That is the plan that two giants in the sector, Merlin and Metrovacesa, are currently working on. For weeks now, they have been negotiating the creation of a joint vehicle, into which they would merge the residential assets that they currently rent out.

In total, these two giants together own almost 5,000 homes, of which, just over 1,500 would be contributed by the company chaired by Ismael Clemente, whilst the rest would come from Metrovacesa, which, in turn, has inherited most of those assets from its shareholder banks, above all the former Banif Inmobiliario fund, from Santander.

But, in addition, one of the points that they are analysing during these preliminary conversations is the possibility that both the entity chaired by Ana Botín, as well as its partner in Metrovacesa, BBVA, would benefit from this new company by injecting other homes that they currently hold on their balance sheets, which could add another 5,000 homes into the future vehicle.

If this marriage is consummated, the two parties would end up finding a solution to their respective problems. On the one hand, since it acquired Testa and inherited its residential assets, Merlin has been trying to remove them from its perimeter, given that its strategy is to focus on offices, logistics assets, retail premises and shopping centres.

On the other hand, for Metrovacesa, the main obstacle is management, given that the profound metamorphosis that the company has undergone in the last year, with the receipt of more than €1,000 million in assets and the carve out of its residential business, has converted the group into a giant that is still in the process of adapting to its own size.

Moreover, the complex times that the banking sector is experiencing, with a decrease in margins due to the low interest rate environment and the new regulations that are attacking its real estate assets, are putting pressure on the entities to put their large property portfolios on the market.

Although Rodrigo Echenique, the Chairman of Metrovacesa and a strongman at Santander in Spain, foresaw the recovery that the sector has undergone in the last two years and so decided to put a stop to his company’s asset sales and instead consolidate most of the bank’s property into his firm’s real estate arm, he is also aware that the time has now come to reap the rewards.

In fact, according to sources in the know, these conversations are being held directly between Metrovacesa’s shareholder banks, with Santander taking the lead, with the idea that Merlin’s team would take the reins in terms of the management of the new Socimi, although the entity chaired by Ana Botín would, presumably, be the major shareholder.

Santander controls Metrovacesa, with 70.27% of its share capital, followed by BBVA, which owns 20.52% and Popular, which owns 9.14%, whilst the remaining 0.007% is held by a small group of minority shareholders. By contrast, Merlin does not have a majority shareholder; most of its capital is traded freely on the stock market (free float), although several funds, including Blackrock, Fidelity, Invesco and Principal Financial Group, own significant positions. (…).

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Soros Will Inject €37M Into Hispania’s €231M Capital Increase

12 May 2016 – El Economista

Hispania has resolved to launch a capital increase amounting to €230.7 million, with the aim of raising funds to allow it to continue investing in the purchase of new real estate assets, according to reports by the Socimi.

The company’s largest shareholder, George Soros, has already expressed his attention of participating in the operation, in line with the 16% stake that he holds in the firm. That means he will inject another €37 million into the business.

By virtue of the increase, Hispania will issue 25.8 million new shares at €7.95 per share, a price that represents a 37.5% discount with respect to the closing price on the stock market on Wednesday (€12.74).

The company expects that the increase will be completed by 9 June, when the new shares should start trading. The operation will begin within the next few days, just as soon as Spain’s National Securities Market Commission (CNMV) gives the green light to the information brochure.

This is the second capital increase that Hispania has launched within the last year, following the accelerated capital increase that it completed in April 2015, through which it raised €337 million.

In this case, the Socimi is resorting to its existing shareholders once again, given that “it has already committed all of its investment capacity” and because it has already identified investment opportunities amounting to €1,500 million and is in “advanced negotiations” to complete the purchase of new real estate assets amounting to around €200 million.

In this way, the company chaired by Rafael Miranda expects to continue increasing its asset portfolio, which comprises hotels, offices and residential properties, worth €1,425 million at the end of 2015, up by 14.8% on the purchase price.

Original story: El Economista

Translation: Carmel Drake

Juan Bravo 3 Plot Worth 7% More Than 12 Months Ago

6 March 2016 – El Confidencial

The recovery of the real estate market is starting to be reflected in the income statements of real estate companies and Socimis, especially in the value of their assets. According to information submitted to Spain’s National Securities Market Commission (CNMV) by Lar España, the famous plot of land located on Calle Juan Bravo, 3, which is going to be home to the most exclusive luxury housing development in the capital, has risen in value by 7% in the last year.

The Socimi has owned 50% of the land, alongside the US manager Pimco since the beginning of 2015, when both companies joined forces to buy Eurosazor (the development company created by Rafael Ortiz and the businessman Fernando Fernández Tapias) which owned the 26,203 m2 plot on Juan Bravo, 3 and another 5,318 m2 plot on Claudio Coello, 108.

Lar and Pimco acquired both residential assets for €120 million, in such a away that the purchase amounted to €60 million for each plot. Six months later, in June 2015, the consultancy firms JLL and C&W valued the plots at €61.3 million, and by the end of last year, that figure had increased to €64.35 million, up by 7.1%. This increase in value is explained not only by the recovery of the residential market, but also the scarcity of plots of land and new homes on the market in the neighbourhood of Salamanca, the most sought-after by wealthy individuals, both domestic and international – especially Venezuelans.

This increase in value has been generalised for the whole of the Socimi’s portfolio. The value of the assets acquired between its debut on the stock exchange and 31 December 2015 amounted to €898.9 million, in other words, €46.2 million more than their combined acquisition prices, which represents an increase of 5.4%. By type of asset, besides residential, Lar’s shopping centres have increased in value by 4.4%, its office are up by 6.6% and its logistics centres are up by 11.1%.

Juan Bravo, 3 is, nevertheless, one of the most important assets in the portfolio, at least from the media’s point of view, given that the market has been waiting for work to begin there for more than a decade. (…).

The demolition work is about to begin

Now… the project is increasingly closer to becoming a reality, after it recently received the licence from the Town Hall of Madrid that will allow it to demolish the basements and consolidate the land. This is the first step to obtaining the construction permit and, therefore, the definitive launch of the project, which will be designed by the Madrilenian architecture firm Rafael de La-Hoz (see photo above).

Although the details of the project have not been revealed yet, all indications are that around one hundred homes measuring between 250 m2 and 450 m2 will be constructed on the 2,250 m2 plot of land, which has a buildable capacity of 26,000 m2. Prices could reach, on average, €10,000/m2, with the most affordable homes averaging around €8,000/m2 and the most elite averaging around €14,000/m2. (…).

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

Lar’s Assets Appreciated By 5.4% In 9 Months To Dec 15

22 January 2016 – Expansión

LAR España’s real estate assets appreciated by 5.4% between March 2015, when the Socimi debuted on the stock exchange, and year end. In this way, the value of its properties increased by €46.2 million in just nine months to reach €898.9 million.

Company sources attribute the rise in the asset values to the recovery in the real estate sector, as well as to the improvements in the management of the properties. The valuation has been performed by the consultancy firms Cushman & Wakefield and JLL.

By type of asset, it was Lar’s logistics assets that increased in value by the most (by 11%), followed by the Socimi’s residential portfolio (7.1%), then its office buildings (6.6%) and shopping centres (4.4%).

LAR’s portfolio comprises: 12 retail premises in Guipúzcoa, Palencia, Albacete, Barcelona, Alicante, Madrid, Cantabria, Lugo, León, Vizcaya, Navarra and Valencia; four office buildings in Madrid and one in Barcelona; four logistics assets in Guadalajara and one in Valencia; as well as one residential asset in Madrid.

The President of LAR España, José Luis del Valle, highlighted that “this increase carries even more weight if we consider that a third of assets (€282 million) were acquired during the second half of the year, which barely gave us any time to undertake the necessary measures to allow us to create value”. The President of the Socimi expects that the value of the assets in LAR’s portfolio will continue to increase in 2016.

Original story: Expansión (by M. A.)

Translation: Carmel Drake

Aliseda Sold 1,300 Assets In ‘Eastern Andalucía’ In H1 2015

4 December 2015 – La Opinión de Málaga

Aliseda Inmobiliaria, the company that manages Banco Popular’s RE business, sold 1,300 assets in the region of Eastern Andalucía during the first half of 2015, for €250 million. 40% of that volume was concentrated in the province of Málaga, according to comments made yesterday by the Regional Director, Silvia Sánchez, who indicated that the forecast for the year as a whole is almost double those figures. Sánchez said that the region of Eastern Andalucía, spurred on by the Costa del Sol, accounts for 20% of Aliseda’s total national business, which sold 6,500 assets across Spain worth €1,200 million during the first half of this year. The objective at the national level is to close the year with asset sales worth €2,000 million.

In Eastern Andalucía, the stock held by Aliseda Imobiliaria includes more than 4,500 assets worth €700 million (43% are located in Málaga) not including land, work-in-progress developments or unique assets. The portfolio of land in this region amounts to a further €1,200 million.

The head of Aliseda said that the improvement in the market is “in no doubt” with areas such as the Costa del Sol leading the way. 80% of the assets sold during the first half of the year were homes (and more than half of those were new builds) and the remaining 20% were industrial warehouses, commercial premises and other types of rental assets, land and even hotels.

Sánchez announced that in 2016, Aliseda – which is jointly owned by Popular (49%) and by Värde Partners and Kennedy Wilson (51%) – will pursue a nationwide strategy that includes, in addition to sales, real estate development and the management of assets and land. In the case of the province of Málaga, the intention is to initiate the development of around 220 homes in Mijas, with plans also afoot in the Marbella-Benahavís-Estepone triangle and in Málaga city. “The stock is running low. It will run out within 18 months and so now is the time to launch new projects, they are going to receive a very warm welcome”, said the head of Aliseda. On the Costa del Sol, there is more demand from overseas customers, whilst in Málaga capital, demand comes mainly from Spaniards, although Sánchez said that foreigners are increasingly interested in homes located in the city centre and surrounding areas. By way of example, she mentioned the Félix Sáenz building and an apartment project that is going to be developed in Soho.

In terms of house prices, Sánchez said that sales and purchases are now “much more considered” with “more reasonable” values that those seen during the economic boom. “There is an upwards trend, but not at the rates seen in the past. Prices are not going to over-inflate. But buyers no longer have as much bargaining power, above all in the areas where prices are clearly on the rise”, she said.

Original story: La Opinión del Málaga (by José Vicente Rodríguez)

Translation: Carmel Drake

Investment Funds & Socimis Revolutionise RE Sector

26 October 2015 – Expansión

The real estate sector is recovering well. During the first nine months of 2015, purchases of offices, commercial and logistics assets, hotels and residential properties amounted to €10,800 million, representing an increase of 57% compared with the same period last year. After more than five years of severe economic difficulties, the return of investment, at the hands of investment funds and Socimis has breathed a new wave of optimism into the sector.

“After a really tough economic crisis, we were almost in a coma and the arrival of these funds is invigorating the market”, said Juan Antonio Gómez-Pintado, President of the Association for Real Estate Developers in Madrid (‘Asociación de Promotores Inmobiliarios de Madrid’ or Asprima), who together with Rafael González-Cobos, President of Grupo Inmobiliario Ferrocarril and Gecopi; Alberto Fernández-Aller, Corporate Director of Prinex Real Estate; and Manuel del Pozo, Assistant Director of Expansión, were responsible for opening the forum ‘The New Era of the Real Estate Sector in Spain: Investment funds and Socimis’.

The event, organised by the newspaper Expansión, in collaboration with Drago Capital, Gómez-Acebo & Pombo, JLL, Neinor Homes and Merlin Properties, and with Prinex as the technological partner, served to highlight the evolution of the market in recent years and the impact the Socimis have had on the strong investment figures recorded in the sector.

46% of the capital invested in Spain so far this year has come from Socimis, an investment vehicle inspired by the REITs in the USA, first launched in the 1960s, which did not arrive in Spain until 2009. As the Corporate Director of Prinex Real Estate explained, they are “a mechanism that allow us to hold much more open asset portfolios, without any major legal or regulatory obligations and with great tax advantages”.

Partnerships

Moreover, the entry of international capital is also helping to professionalise the sector, as well as to support the recovery of Spanish property developers and real estate companies, hit hard by years of paralysis and lack of investment. “All of the funds coming into Spain are looking for support from companies that already know the environment. They are using their capital to undertake operations with Spanish developers”, said Fernández-Aller. “They generate capital movement, investment and jobs. The Socimis are helping to create a professionalised stock of homes for rent”, added the President of Grupo Inmobiliario Ferrocarril. (…).

Meanwhile, the participants highlighted the threat that political instability poses to the recovery of the real estate sector. One example, they indicated, is Madrid, where all of the major urban planning operations (Canalejas, Chamartín and Edificio España) are currently on hold.

Large cities

The recovery of the real estate market is happening in a very uneven way and, for the time being, is limited to the major cities only, such as Madrid and Barcelona, and some coastal regions. (…).

Meanwhile, Juan Velayos, CEO of Neinor Homes, emphasised the profound transformation that the Spanish real estate market has experienced over the last 18 months and said that he was convinced that the mistakes that led this sector – which accounted for 25% of the country’s GDP at its height – to the brink of disaster, will not be repeated.

“What we are seeing in Spain is an absolute transformation of the industry. I do not think that the banks will let what happened before with the RE bubble happen again. We are not going to see any projects without equity. It is going to be a sector that, for the first time, builds what customers actually want. If we do not understand that (basic premise), then customers are not going to buy homes from us”, concluded Velayos.

Original story: Expansión (by Javier G. Fernández)

Translation: Carmel Drake

Sareb Expects To Complete 22 Housing Developments In 2015

11 May 2015 – El Economista

The Asset Management Company for Bank Restructurings (Sareb) expects to finalise (the construction of) 22 housing developments during the course of the year; in the meantime it will study the selection of 60 other construction works with a view to their completion.

Sources at the so-called ‘bad bank’ have explained to Europa Press that the developments that will be completed this year are located in (the autonomous communities of) Cataluña, Valencia, Galicia, Castilla y León, Extremadura, Madrid and Cantabria, and they have indicated that “in theory” they will be available for sale.

In 2014, the company approved the launch of 52 housing developments and 30 of those obtained their First Occupancy Licence during the year. Investments in real estate assets during the year amounted to €35.6 million, primarily focused on the urbanisation of land and plots (of land) and on the progression and finalisation of work in progress.

Specifically, 19 developments were approved in Cataluña, 17 in Valencia, four in Galicia, three in Cantabria, three in Castilla y León, two in Castilla-La Mancha, two in Madrid, one in Extremadura and one in La Rioja. Of those, it is expected that the following developments will be completed this year: nine in Cataluña, five in Valencia, two in Galicia, two in Castilla y León, one in Extremadura, one in Madrid and two in Cantabria.

Maintain the rate of property sales

Sareb has set itself the objective of maintaining the rate of property sales at close to 15,000 in 2015 and retaining its position amongst the five largest players in the market. It is also seeking to increase the quality of services through its new “servicers”.

The ‘bad bank’ is looking to intensify its offer to those investors that specialise in adding value, as well as to sell a “wide range” of portfolios to institutional investors during the year.

The company generated income of €1,115 million during 2014, thanks to sales to specialist investors. It also closed eleven major transactions, primarily involving loans, which accounted for 84% of its wholesale transactions (during the year).

In this way, Sareb closed the sale of the following portfolios: ‘Kaplan’ (loans to SMEs secured by residential property and land); ‘Crossover’ (land in Alicante, Baleares, Barcelona and Madrid); ‘Dorian’ (rental housing); ‘Klaus’ (loans to SMEs); and ‘Pamela’ (loans secured by buildings in Madrid).

Other transactions included the sale of ‘Agatha’ (loans and rental property); ‘Aneto’ (loans secured by residential property and land); ‘Olivia’ (loans secured by residential and commercial property); ‘Meridian’ (loans secured by tourist assets); and ‘Corona’ (offices leased in Madrid).

Original story: El Economista

Translation: Carmel Drake

German Bad Bank Finalises Sale Of Spanish Assets To Oaktree

8 May 2015 – Cinco Días

Over the next few weeks the German bad bank is expected to sell the assets that it owns in Spain. FMS Wertmanagement expects to sell the so-called Gaudí portfolio, which contains properties in Spain and Portugal, in a single transaction to Oaktree.

“Now is the time to sell the whole portfolio”, said José Holgado yesterday, Commercial Director of FMW Wetmanagement, at the Spanish real estate market’s second investment forum, which was held yesterday as part of SIMA (Salón Inmobiliario Internacional de Madrid or Madrid International Real Estate Fair). Holgado estimated that the value of the portfolio amounts to almost €900 million, although that is the nominal value, which will be reduced during the final negotiations.

The German entity, created in 2010 with assets from the nationalised Hypo Real Estate bank, operates in the same way as Sareb, the Spanish bad bank. Although the nominal value (of the portfolio) is almost €900 million, it is understood that these non-performing loans and assets have lost value since the start of the housing crisis, therefore they will be sold at below market prices, in the same way as (the assets sold by) the Spanish Sareb. Moreover, since (the portfolio is being) sold on a wholesale basis, the cost will also decrease.

Although several funds have valued FMS Wertmanagement’s portfolio, in the end it will be the Californian fund Oaktree, owner of Panrico, which takes over the Gaudí portfolio, subject to the negotiation of the final details. One of the most significant assets in the portfolio is the luxury Hotel Arts de Barcelona, a five star property managed by Ritz-Carlton. This complex was acquired by several buyers in 2006, including one company that was linked to the Singapore fund GIC. The German bank Hypo Real Estate was one of the entities that granted loans (to it). Once HRE was nationalised, part of the unpaid, syndicated debt was transferred to FMW Wertmanagement.

Other funds

According to the specialist publication CoStar, in addition to Oaktree, the portfolio also sparked interest from other funds including Cerberus Capital Management, Orion Capital Managers and Colony Capital. That publication estimates that the final price of the transaction will amount to approximately €500 million.

The sale of the Gaudí portfolio, which is being managed by Cushman & Wakefield, comprises 16 loans in Spain and two in Portugal. According to sources close to the transaction, Oaktree would immediately acquire another five star hotel in Cascais (Portugal), five shopping centres, four office blocks, 17 industrial storerooms, as well as several other residential and industrial assets.

The shopping centres include the MegaPark in Barakaldo (Vizcaya), Heron City de Las Rozas and Plaza Éboli, both in Madrid.

According to Holgado, FMW Wertmanagement commenced operation holding debt from assets worth €175,000 million, of which €100,000 million have now been sold. The director of the German bad bank said that now is the right time to sell given the significant liquidity in the market.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Bankia Puts Property Worth €4,800M Up For Sale

6 May 2015 – Expansión

Project Big Bang / The financial entity has put a batch of homes, land and commercial buildings up for sale, with the objective of disposing of all of the foreclosed assets left on its balance sheet.

Bankia has decided to accelerate the process to divest its real estate assets with a ‘macro-transaction’ involving a large block sale. The financial institution has launched so-called Project Big Bang, which includes a portfolio of residential and commercial assets (including offices and shops), as well as land, worth €4,800 million.

The transaction is still in its very early stages, involving initial meetings with investors, but it will represent the largest asset sale process seen to date (excluding transfers of debt with real estate collateral).

The properties up for sale include assets that Bankia did not transfer to Sareb following its nationalisation, as well as foreclosed assets resulting from subsequent defaulted payments. Most of the portfolio corresponds to residential assets. Thus, of the €4,800 million assets that Bankia has included in the batch, €3,300 million related to residential properties at 31 March 2015. In total, the bank will transfer 38,545 residential units (flats, chalets, parking spaces and storage rooms), with a total constructed surface area of 3.6 million square metres.

Along with the €3,300 million of residential assets, Bankia is selling 4,938 commercial units worth €1,100 million.

Land at zero cost

The portfolio also includes 2,589 plots of land with a total surface area of 4.6 million square metres. This land has a value of zero, according to Bankia, having been fully provisioned.

The sale is being coordinated by Credit Suisse and KPMG. The transaction may be closed as a single deal or through the sale of several blocks. The sale value may also decrease from €4,800 million to a smaller amount, say sources close to the process.

Many of the large funds, including Blackstone, Lone Star and Apollo, have already expressed their interest in the portfolio. These investors will have to compete with Cerberus, which has a preferential right to examine Bankia’s real estate portfolio. This “preferential” arrangement forms part of the negotiations that the US fund has held with the Spanish entity in recent years. In 2014, Bankia transferred its Bankia Habitat business unit to Cerberus for a consideration of between €40 million and €90 million, together with the 400 professionals who work for the platform.

Last September, Cerberus joined forces with the Norwegian fund Lindorff to acquire some of the doubtful and substandard loans, plus those that had doubtful or substandard outlooks, worth €900 million, which the entity chaired by José Ignacio Goirigolzarri (pictured above) was selling, as part of the Somo transaction. In February, Bankia launched a campaign to accelerate the sale of its remaining properties.

The clean up

Project Big Bang represents the largest divestment initiated by Bankia to date in the foreclosed asset and doubtful debt segment. The entity chaired by José Ignacio Goirigolzarri has been one of the most active in this market, having transferred almost 80 portfolios containing problematic loans since 2013, with a nominal value of €10,000 million.

Initially, Bankia undertook these types of transactions due to necessity, since the restructuring plan agreed with Brussels compelled it to divest non-strategic assets amounting to €50,000 million.

Although it has now almost completed this plan, the entity has decided to ‘step on the divestment accelerator’ in 2015 in order to reduce its default rate and focus its resources on new productive assets that improve its financial results. As well as the foreclosed assets, Bankia is also currently negotiating the sale of problematic mortgages, property developer loans and hotel debt.

If it closes all of these transactions, the nationalised group would become the first entity to withdraw from the segments considered by the market as a burden to the sector.

Original story: Expansión (by R. Ruiz and J. Zuloaga)

Translation: Carmel Drake

Hispania Completes €337M Capital Increase

28 April 2015 – Hispania Press Release

Hispania has completed the investment of the funds raised in its IPO in March 2014, including its leveraging capacity.

Investors placed orders for shares amounting to more than €844 million at the offer price of €12.25 per share, which implied an excess over demand of 2.5 times vs. the number of shares offered.

Hispania Activos Inmobiliarios, S.A. has successfully closed the €337 million capital increase it announced yesterday, which was aimed at institutional investors. The capital increase was carried out by means of an accelerated private placement and the strong demand allowed the Socimi to close the deal in just 3 hours.

Total demand surpassed €844 million at the offer price of €12.25 per share, which represents a 4.7% discount vs. yesterday’s closing price of €12.86 per share.

The new shares represent 50% of the company’s share capital before the capital increase and 33% of its share capital after the capital increase.

“The excellent response from investors to our capital increase shows how much the market trusts Hispania and its capacity to generate more value within its asset portfolio. Hispania is currently analysing a pipeline of opportunities worth around €2,400 million. For this reason, it is vital that we have equity available so as to be able to take advantage of the opportunities in the market”, said Concha Osácar (pictured above), Board Member of Hispania.

Hispania is the first of the so-called Socimis in the Spanish market to have completed the investment of almost all of the equity raised through its IPO, as well as its leveraging capacity, reaching a total committed investment of c.€880 million. Its asset portfolio comprises 46 assets (including the assets that Bay will acquire by virtue of the Investment Agreement signed with the Grupo Barceló). It is expected that, after the acquisition of the assets by Bay and once the repositioning capex has been invested in the current portfolio and in the assets to be acquired by Bay, 57% of the value of the assets in the portfolio will correspond to hotel assets, 27% to office assets and the remaining 16% to residential assets. These figures include the capex investment expected for 2015.

Hispania foresees significant investments to improve and reposition the assets that currently form part of the portfolio, including Bay, amounting to c.€50 million in 2015- on a consolidated basis.

Original press release: Hispania

Edited by: Carmel Drake