Santander Will Sell 4% of Metrovacesa to Blackstone

11 December 2017 – Eje Prime

The real estate sector promises to end the year in style. As part of the sale of the €30 billion in toxic assets to the US fund Blackstone, Santander is also going to sell a 4% stake in Metrovacesa, the property developer set that is set to star in the major IPO of 2018, according to sources close to the operation.

Specifically, the US fund has acquired 51% of the share capital of the new company to which Santander is going to transfer all of those toxic assets, whilst the entity chaired by Ana Botín will retain control over the remaining 49%, according to El Confidencial. The agreements signed to this effect include one to transfer a stake in Metrovacesa to the new vehicle.

The property developer led by Jorge Pérez de Leza plans to make its debut on the stock market in February, with assets worth around €2.6 billion. This move will be subjected to a vote at the General Shareholders’ Meeting on 19 December.

Moreover, the company has just signed a €275 million loan to boost its property development plan. With this financing, the property developer is seeking to optimise its capital structure and give viability to its business plan for the next few years, which forecasts the delivery of around 5,000 homes per year from 2020 onwards. Moreover, the plan aims to position Metrovacesa with a land portfolio worth €2.6 billion.

This new financing arrangement has a five-year term, according to the company, which plans to launch around 4,000 housing units in 2018. Metrovacesa will primarily use the loan to ensure the urban development of some of its land portfolio and the launch of certain residential projects.

Original story: Eje Prime

Translation: Carmel Drake

Spain’s Largest Banks Compete to Grant Property Developer Loans in Benidorm & Dénia

26 November 2017 – El Confidencial

The appearance of new housing developments in areas of high demand, as well as those targeting a premium public, has opened a battle between the large Spanish banks to position themselves as lenders once again. CaixaBank, Santander, Sabadell and BBVA have gone from recoiling at the mere sight of real estate projects unrelated to their own portfolios and stocks, to fighting it out with each other to grant loans to private property developers for certain initiatives linked to luxury and super-luxury projects.

That is what El Confidencial has been able to confirm with financial sources from two of the most powerful property developers that have fired the starting gun on the Alicante Costa Blanca, namely, the Delfin Tower in Benidorm and Amare in Dénia. The former is a 22-storey luxury skyscraper, measuring 100 m tall, on one of a handful of beachfront plots in the well-known mecca of Spanish tourism. It boasts location, high quality, architectural design and environmental sustainability. So much so that the prices of its apartments range from €700,000 to €1.56 million.

The money to carry out this project will not come from international entities or investors. CaixaBank, Sabadell and BBVA have taken a step forward and entered the final round in the process to negotiate the financing. The process is being led by independent consultants and the entity led by Jordi Gual (CaixaBank) is leading the race in an operation that will exceed €30 million.

The same level of competition, or more, and with the same players, has happened in the case of the Amare development in Dénia. The real estate project is backed by a company called AB Living, owned by the founder of SHA Wellness Clinic, Alfredo Bataller (…).

The businessman, originally from Argentina, who has lived in Altea since 1989, is known together with his wife, Graciela Pineda, for his hotel activity, but he has also launched himself into luxury real estate development. He manages properties on the Costa Blanca, is building an events space in the heart of Madrid’s Salamanca neighbourhood (SHA Loft) and has just put on the market the largest luxury beachfront development in Dénia, where very few free undeveloped plots remain. The residential project comprises 68 homes with terraces, infinity pools and more than 5,000 m2 of gardens, plus swimming pools, a children’s club, gym and events room. Prices per apartment range between €350,000 and €500,000.

Bateller purchased the plot several years ago. The project is being marketed by Olivares Consultores and has already been granted the corresponding licences by the Town Hall of Dénia, and so the construction work could start shortly. With almost 30% of the properties reserved, AB Living has started negotiations to obtain the bank financing it needs to carry out the construction work. And it has no shortage of offers. According to market sources, CaixaBank, Santander, Sabadell and Bankinter have all entered the bidding and are fighting to grant Amare’s property developer loan. That operation will amount to around €25 million.

According to sources in the sector, the premium nature of these kinds of developments allows them to demand additional guarantees from their buyers in the pre-sales contracts (…). And with those conditions, the financial entities are drooling over the prospect of becoming the lender to enable the execution of the building work. Moreover, their loans may subsequently be subrogated to the individual homeowners, normally wealthy people and families, who automatically become clients (…). The bank financing will cover around 60%-70% of the cost of the building work. The property developer contributes its own funds and the pre-sales contracts.

Original story: El Confidencial (by Víctor Romero)

Translation: Carmel Drake

Baraka To Build Nursing Home In Barcelona For €300M

18 July 2017 – Eje Prime

Baraka is setting its sights on the healthcare market. At the beginning of July, the real estate investment company completed the purchase of 600,000 m2 of land and a roof spanning 300,000 m2 for €300 million in Montcada i Reixac (Barcelona), where it will build a complex for the elderly.

The area acquired is located in Can Cabanyes, a zone that borders Barberà and Santa Perpètua de Mogoda. According to Manuel Abadía (pictured above, right), the representative in Cataluña of Trabis (the group’s construction company) (…) once the sale has been signed, work will begin to define the project in more detail.

The company does not have any experience managing these kinds of facilities, and so it will have to team up with a partner specialising in hospital care and management, according to Expansión.

“We intend to create a complex for the elderly, with villa-type homes and garden areas, which will be accompanied by personal care and also, one or two hospitals”, explained Manual Abadía. The representative for Trabis in Cataluña said that the construction phase alone will provide work for 400 people and that when the complex begins operating, “we think that it will sustain at least 200 permanent jobs”, he added. For the time being, no dates have been set for the opening of the facilities.

Baraka set up shop in Cataluña a year and a half ago with the intention of becoming a leading company in the real estate market, especially in the industrial and logistics sector. One of its most recent operations was the purchase, in June, of Edificio España from Wanda. The firm wants to grow its residential projects, amongst other initiatives.

Original story: Eje Prime

Translation: Carmel Drake

Large Overseas RE Funds Are Building Homes In Spain

10 April 2017 – Expansión

Large international funds such as Invesco, Harbert, Activum SG and Stoneweg are developing residential projects in Spain in search of high returns.

Following their arrival in Spain at the end of 2013, the international investment funds have become the players to watch in the Spanish real estate market. Attracted by the decrease in prices following the burst of the bubble, the funds entered the market looking for opportunities in the tertiary sector (primarily, in the office and commercial segments). Nevertheless, the price rises of these properties and the improvement in the macroeconomic situation in the country have led them to place their focus on a new type of investment: residential assets.

“The main advantage of investing in residential assets is the return. Currently, the returns on residential investments is greater – by between 13% and 20% – than those generated by other assets (be they commercial, logistics, etc.), which have been cut recently, as the upwards trends have been reduced by increasingly higher competition, due to the shortage of products in good locations and the rise in land prices”, said Gonzalo Gallego, Partner in Financial Advisory at Deloitte.

“We have seen many international funds and players investing in the residential sector: Kennedy Wilson, Lone Star, Greenoak, Grosvenor, Autonomy Capital, Invesco, as well as family offices and representatives of large equity firms such as Shaftesbury, the Capriles family, Stoneweg and Dazia, amongst others. In general, they promote to sell, but we are also awaiting the imminent arrival of international giants such as Greystar and Round Hill and Allianz, in the residential rental business, where they see an important niche for the professionalisation and institutionalisation of this sector”, explains Humphrey White, CEO at Knight Frank in Spain.

One of the most active funds is the German fund Activum SG Capital Management. Currently, that investor, through its Spanish subsidiary ASG Iberia, is working on the construction of 2,000 homes in six developments, such as in San Juan (Alicante), Alcalá de Henares (Madrid) and Málaga.

Another international fund that has decided to back the residential sector in Spain is Invesco. “We are trying to avoid or assume urban planning risk in our residential investments, with the aim of not exceeding our investment schedule. For this reason, we only invest in buildable land and in properties that do not need special urban planning procedures to change their use or buildability”, explain sources from the fund’s residential department in Spain. Its projects include the development of 30 homes on Paseo de la Habana in Madrid, another one on c/Serrano, also in the capital, and the transformation of an office building into 58 homes close to Calle Colón in Valencia.

Meanwhile, Harbert Management Corporation (HMC) has decided to invest in the Spanish residential sector through a local partner, the management company Momentum. “In 2008, partners that have experience working with funds founded Momentum. In 2012, we started to see opportunities for those investors in the residential sector and, in 2014, we purchased our first plot of land in Aravaca from La Caixa”, explained Gabriel Fernández de Gamboa, Founding Partner at Momentum. Alongside this management company, HMC has invested in six plots of land in Madrid and another one in Málaga for the development of more than 600 homes and is searching for new opportunities in the market.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Quabit Will Build 1,700 Homes With Funding From Avenue

30 December 2016 – Expansión

Yesterday, the listed real estate company Quabit signed an agreement with Avenue Europe International Management, whereby the fund will provide a line of credit amounting to €60 million, which Quabit will use to increase its portfolio of residential projects.

Specifically, the funds obtained through this line of credit will be used to acquire buildable urban land for the development of 1,700 homes next year, in Madrid and surrounding areas.

The funds from Avenue will finance 70% of the land acquisitions, whilst the remaining 30% will be financed by own funds from Quabit. Moreover, the real estate company may increase the amount of the credit line to €85 million.

Business plan

This agreement forms part of the business plan that the real estate company chaired by Félix Abánades set for the period 2015 to 2020, which includes returning to residential development, after years focusing on the sale of finished stock and on its financial restructuring.

To this end, during the first nine months of 2016, the listed real estate company has acquired plots of land in Boadilla del Monte (Madrid) and Guadalajara, and has launched five new developments, containing 304 homes in total. Under this plan, Quabit expects to hand over more than 3,000 homes, including assets from its own portfolio as well as those coming from new investments, with a forecast turnover of more than €950 million.

During the first nine months of 2016, Quabit recorded sales of €25.7 million and losses of €10 million, down by 23% compared to the same period a year earlier. Its EBITDA was negative (-€6.9 million), although it improved by 9.1% compared to the third quarter of 2015.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake

Quabit Joins Forces With US Fund Avenue Capital

15 December 2016 – Valencia Plaza

Quabit Inmobiliaria and the US investment firm Avenue Capital have signed a binding framework agreement for a financing line amounting to €60 million from funds advised by Avenue Europe International Management, L.P.

The available funds under this credit line will be used to acquire buildable urban plots of land in the Community of Madrid and the surrounding area, as well as in other regions with high potential for demand.

After successfully completing a capital increase last year, the company chaired by Félix Abánades, has been holding intensive negotiations with different investment funds for the last few months. It has now closed this agreement with Avenue Capital, given the professionalism of the investment firm and its certainty for the great potential for growth and profitability in the Spanish real estate sector.

With the signing of this agreement, Quabit Inmobiliaria is continuing to fulfil the objectives set out in its strategic plan to 2020. Specifically, it means that it is fulfilling another one of the most significant milestones in its business plan regarding the raising of financing to undertake new investments and develop new residential projects.

“The strategic agreement with Avenue is a perfect symbiosis for generating value. On the one hand, Quabit has more than 20 years of experience, an expert team in the management of land and real estate developments, sensitivity and market knowledge, an established financial structure and a healthy equity position. All of this, combined with Avenue’s investment capacity, gives us the capability to start growing again and to become one of the key players in the consolidation of the real estate business in Spain once more”.

The most important terms of the agreement are:

– The funds from this credit line will be used to finance 70% of all land acquisitions. The remaining 30% will be financed by Quabit.

– The funds must be drawn down during the first year of the contract, and repaid when the credit line matures (after 4 years).

– Quabit may make early repayments from month 18 onwards and it may reuse the funds to make new investments in land.

– A new company will be constituted for each one of the plots of land that are financed. Each company will be owned 100% indirectly by Quabit.

– Moreover, Quabit will provide Avenue with warrants over its shares, which will allow the investment firm to own up to 6% of the real estate company’s share capital if it subscribes to new share issues in several tranches. During the first two years of the agreement, the average subscription price will be €3.25/share; and during the last two years, it will be €3.75/share. The use of the different warrant tranches will depend on how much of the credit line is drawn down.

Quabit and Avenue have set a deadline of 28 December for signing all of the documents that form part of this agreement, which will also be the start date for the line of credit’s term.

Original story: Valencia Plaza

Translation: Carmel Drake