2019 Set to Be the Best Year for Residential Construction Since 2009

6 January 2020 Spanish municipal authorities issued 9,199 new construction permits new flats and houses in October of last year, an increase of 7.2% year-on-year. According to data from the Ministry of Development, those same authorities issued permits for a total of 91,156 homes from January to October 2019, 8.7% higher than in the first ten months of the year before.

Market forecasters believe that annual construction in 2019 will, therefore, exceed the total of 2018, when more than 100,000 homes were built for the first time since the real estate bubble burst.

Las autoridades municipales en España emitieron 9.199 nuevos permisos de construcción de nuevos pisos y casas en octubre del año pasado, un aumento del 7,2% interanual. Según datos del Ministerio de Desarrollo, esas mismas autoridades emitieron permisos para un total de 91.156 hogares de enero a octubre de 2019, un 8,7% más que en los primeros diez meses del año anterior.

Los pronosticadores del mercado creen que la construcción anual en 2019, por lo tanto, excederá el total de 2018, cuando se construyeron más de 100,000 casas por primera vez desde que estalló la burbuja inmobiliaria.

Original Story: El País

Translation/Summary: Richard D. Turner

BBVA Sells Most of Real Estate Business to Cerberus for €4bn

29 November 2017 – Reuters

Spain’s BBVA said on Wednesday that it had agreed to sell 80% of its real estate business to US fund Cerberus for €4 billion ($5 billion), showing how investor enthusiasm for Spanish property is reviving.

A burst property bubble in 2008 sent Spain into a downturn that lasted for nearly five years, causing mass unemployment and prompting a more than €40 billion bailout for the country’s banks.

The economy returned to growth in 2013 and has outperformed the rest of Europe since then, helping to revive residential construction as house prices pick up, which has started to attract foreign investors back into the market.

The BBVA real estate assets included in the deal have a gross book value of some €13 billion, Spain’s second-largest bank said in a statement.

BBVA said the whole portfolio was valued at €5 billion, with the price involving a discount of 61.5%, in line with the coverage ratio for its foreclosed assets.

As at the end of September, BBVA had a non-core real estate property portfolio with a gross value of around €17.8 billion, of which the bulk were foreclosed assets worth around €11.9 billion.

The deal is the largest since Santander sold control of property worth €30 billion to the US investor Blackstone Group in August.

Santander sold its portfolio at a net value of €10 billion after a discount of around 66%.

The rebound in the property market has also allowed Spanish banks to tackle toxic balance sheets faster than rivals in Italy. Banks in Europe are under pressure to reduce soured loans after new guidelines on this from the European Central Bank announced last month.

Analysts at broker Keefe, Bruyette & Woods viewed the transaction as a positive step towards reducing BBVA’s non-performing assets ratio (non-performing loans and foreclosed assets) from 7.2% to 4.5%.

BBVA’s shares were up 1.94% at 1150 GMT, compared with a rise of 1.6% on the European STOXX banking index SX7P.

At a group level, BBVA has non-performing assets worth around €33 billion on its balance sheet – of which around €25 billion are in Spain.

Since 2015, BBVA’s real estate business has generated losses of €1.37 billion.

BBVA said it would retain control of 20% of the real estate portfolio, which it said would be exclusively managed by Cerberus’s Haya Real Estate.

The bank said the deal was not expected to have a significant impact on profits and would have a slightly positive impact on the fully loaded core tier 1 capital ratio (CET1), a measure of financial strength.

It also said that once the transaction was completed in the second half of 2018, BBVA would have the lowest relative real estate exposure among the main Spanish financial institutions.

Original story: Reuters

Translation: Carmel Drake


Castlelake Buys More Land From Sareb

23 February 2015 – Expansión

Transaction / The North American firm acquires several plots of land in Madrid for €13 million and strengthens its commitment to this type of product.

Sareb has generated more cash from its portfolio of real estate assets. The Asset Management Company for Bank Restructurings (la sociedad de activos procedentes de la reestructuración bancaria) has sold a batch of four residential plots, located in the town of Boadilla del Monte, Madrid.

For the sale, the company chaired by Jaime Echegoyen organised an exclusive sales process and invited five international funds to participate, in partnership with Spanish construction and real estate groups. Then, a sealed bid auction was held and the assets were awarded to the North American fund Castlelake (formerly known as TPG Credit Management).

According to sources close to the transaction, Castlelake paid €13 million for the plots (the minimum price was €11 million). The North American fund, which is operating with a Spanish partner, plans to construct uni-familiar homes worth €44 million on this land, which has a total surface area of 76,000 square metres.

Following its successful bid, Castlelake shall bear not only the costs of construction, but also the cost of the investment required to develop the area, explain real estate sources.

Other transactions

This is not the first time that Castlelake has purchased assets from Sareb. Last year, the North American fund acquired another batch of 17 plots included in the Crossover portfolio, worth €80 million. In the end, the transaction was closed for €55 million. These plots have been placed in a Banking Activity Fund (Fondo de Actividad Bancario or FAB), a vehicle that has significant tax advantages, in which Castlelake holds a 95% stake, whilst Sareb retains a 5% stake.

Castlelake’s new transaction exemplifies the interest that has been awakened once more in the residential market. “Just as 2014 was an extraordinary year for investment in tertiary real estate, 2015 will be a key year for the recovery of the residential market”, says Patricio Paloma, Director of Alternative Investment at CBRE España.

In recent months, several residential plots have been sold. For example, Sareb sold a plot measuring 3,328 square metres close to Plaza de Castilla, in the north of the capital, to Mario Losantos, through his investment vehicle Allegra Hólding. Through this transaction, the former owner of Riofisa returned to the Spanish real estate sector to construct a development for 120 homes, together with ACR.

Months later, the cooperative manager Domo paid €136 million to acquire a plot next to the Paseo de la Castellana in Madrid to construct 355 homes.

“Land is now starting to generate a lot of interest and, in addition to the transactions that Sareb will close, we expect that some of the banks will begin to put some of the land on their balance sheets up for sale, whereby generating liquidity for them that they will use to finance new projects”, says Palomar.

More sales of large plots in Madrid are expected to take place over the next few months. For example, the Ministry of Foreign Affairs is preparing the sale of land it owns on Calle Padre Damián, measuring 15,092 square metres and with capacity for up to 250 homes.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake