The Aragonese Group Bancalé Acquires 1,220 hectares of Land in Zaragoza

13 January 2020 – Heraldo

Bancalé has acquired the rural plots of land associated with the failed urban operation linked to the Plaza Logistics Platform in Zaragoza. The Aragonese investment group plans to use the plots for the development of a new agricultural line of business, as well as to grow its renewable energy division with the construction of a large photovoltaic solar plant on the site.

The plots are located between the La Peñaza golf course, the A2 motorway, the Centrovía industrial estate and the AVE railway tracks, and span 1,220 hectares in total.

The family office has reportedly paid more than €10 million for the land, which was previously owned by the US investment giant Blackstone.

Original story: Heraldo (by Jorge Alonso)

Translation/Summary: Carmel Drake

Castilla & León Reclassifies 28,315 hectares of Buildable Land Back to Rural Use

6 October 2018 – El Confidencial

Torquemada in Palencia has 989 inhabitants and sufficient buildable land on which to construct 162,000 homes. Coca in Segovia has 1,863 inhabitants and sufficient buildable land on which to construct 114,000 homes. Valladolid capital has 299,715 inhabitants and sufficient land on which to construct 217,293 new homes. They are just three simple examples of the urban planning absurdity seen in recent decades that is still present in almost every municipality in Spain.

Since the 1980s, and especially since the beginning of this century, town halls, in particular those in rural areas, have reclassified thousands of hectares of rural land to buildable land, on mass, in the hope that, during the boom times there would be a bureaucracy saving for the property developers, which would encourage them to invest, in both homes and industry. But the bubble burst (…) and thousands of buildable hectares were left over, converted today in a kind of weird joke.

Now, the Junta de Castilla y León wants to recover all of that land to return it to what it always was, agricultural and forestry land without any pretensions of being home to long rows of terraced houses or enormous industrial estates. The regional government has established three phases for the change of its land uses on mass.

It undertook the first phase in 2016, converting 10,000 hectares, and on 18 October this year, it will undertake the second phase, affecting 28,315 hectares, equivalent to half of the island of Ibiza or more than half of La Rioja. In total, 87 municipalities including several provincial capitals with capacity for one million potential homes that will now never see the light. The final mass change is planned for 2022. Goodbye then to the reckless optimism of the past; hello to a different future, one characterised by depopulation, which threatens to erase thousands of towns from the map (…).

“This is not Marbella, it was never realistic to think that large companies or property developers were going to come here to build homes. We have an industrial estate with five companies and we have lost 100 inhabitants in the last five years. A town cannot work miracles”, explains Jorge Domingo González, mayor of Torquemada, the rural municipality most affected by this second wave, which will modify 208 areas in Castilla y León (only 45 of them are industrial plots of land) on the basis of the urban planning law approved in 2014. “All of that land was reclassified not to build homes but to facilitate investment (…)”, explains the mayor of Torquemada.

Even so, many mayors did take advantage of the change to approve large residential developments, always under the suspicion, and sometimes rightly so, that they were going to be built with the sole objective of speculation and receiving an illegal bonus. That is where hundreds of ghost urbanisations in the middle of nowhere stemmed from; many are half-built, some even lack roads, but all have now been converted into a burden for municipalities, which do not have enough money to demolish them (…).

The town halls will not see any great benefits from this measure, but the owners of the land will do, since they will save a decent amount by no longer having to pay IBI (property tax) on urban land but having to do so on rural land, which is much cheaper. “In this way, we avoid uncertainties that have no sense in being maintained”, said Marinero…..

There is no record of any owner submitting claims against this change of use, although they have had four years to do so. That in itself is a clear sign that times have changed and that no one in the towns expects to win the lottery. If anything, they now just dream of not disappearing, to avoid being dragged away by the rural exodus.

Original story: El Confidencial (by David Brunat)

Translation: Carmel Drake

Property Developer Urbas Records a Loss of €354k in Q1

15 May 2018 – Eje Prime

The Urbas Financial Group is in the red. The company recorded a negative net consolidated result of €354,000 during Q1, which represented a decrease from the profit of €1.05 million that it recorded in the first quarter of 2017, according to Spain’s National Securities and Exchange Commission (CNMV).

The Group’s total debt with banks decreased by 2.4% in March to €122.6 million. Urbas’s land portfolio spanned 18 million m2 at the end of the first quarter. Of the real estate company’s total surface area, 73% corresponds to rural land, 25% to buildable land and 2% to urban land.

Most of the land bank that the Group owns is located in the Community of Valencia, which accounts for 34.8% of the company’s portfolio. That region is followed by Madrid with 20.5% of the total; Andalucía with 17%; and Castilla La Mancha with 14%, which are the other three regions where the company’s land is concentrated. It also owns plots in Murcia, Castilla y León and several other autonomous regions.

In 2017, Urbas increased its profit by 8.8% to exceed €5 million. The group recorded revenues of €4.2 million, which represented an increase of 40% with respect to 2016, and also generated positive EBITDA.

Original story: Eje Prime

Translation: Carmel Drake

Land Expropriations Will Be Cheaper After Latest Law Reform

3 February 2016 – Cinco Días

After everything that has happened in the real estate sector since property prices and the production of housing came crashing down, perhaps few will remember the major impact that resulted from the approval of the Land Law (8/2007 and RDL 2/2008). The new legislation was created with the aim of stopping judges from using their discretion in administrative litigation cases, so as to prevent them, in certain cases, from assigning fair values to plots of land subject to expropriation, on the basis that, spurred on by strong demand during the boom times, the values being assigned were leading to a speculative phenomenon that was having serious repercussions on the accounts and financial viability of numerous companies.

In this way, the legislator reduced the categories into which land had been divided historically and established the existence of just two classes: urban (plots) and rural (all others). As such, if land that had been used for agricultural production until that time, was going to be expropriated for the construction of a highway, then it would be valued as rural land (…) and not on the basis of the value of the asset to be constructed on it. (…).

In October last year, the new revised draft of the Land Law was approved, which is going to have an even greater influence of the original objective (to lower the cost of expropriations) and which is going to govern the conditions surrounding urban land in a more specific way. In terms of the valuation framework, it is based on a ruling issued by the Constitutional Court in 2014, which declared that setting the location coefficient (correction factor) at a maximum of two was null and unconstitutional.

In other words, the original law established that rural plots could be assigned a location coefficient to correct the value obtained by capitalising the income from the land. In these cases a correction coefficient (up to a maximum of two) could be applied, if the plots were located near to an urban centre or a centre of production or had certain environmental characteristics…. This represented a relief, in the event of an expropriation valuation, for those plots of land that many developers had stockpiled in outlying metropolitan areas of large cities in the hope of obtaining huge profits and which saw their value fall sharply as a result of the new legislation in 2008.

Nevertheless, the high court declared that the coefficient limit of two was unconstitutional and argued…that “it was not justified by the Law or by the preamble and could end up being whimsical, and prevent the real value of the land from being obtained. The court considers that…this limit is contrary to article 33.3 of the Constitution”. That article refers to the fact that “nobody can be deprived of their assets or rights, except on justified grounds for the public good or in social interest, provided proper compensation is paid and in accordance with the provisions of the law”. (…) .

According to Andrés Lorente, Director of Land at Tinsa, the method for valuing rural land involves dividing the land yield (calculated by capitalising the income from the land) by a capitalisation rate and applying that correction factor based on location to the result, where appropriate, where the correction factor may not exceed two.

“The provisions established in the new revised draft reflect higher rates, which means that the resulting land valuations could be significantly lower than those calculated under the previous legislation. Whereas before, the internal yield of the secondary market for public debt with a term of between two and six years was taken as the reference rate, now the average interest rate over the last three years on the State’s debt over 30 years is taken (3.663%)”, say sources at Tinsa.

As such, since the applicable rates have risen significantly, so the resulting land valuations are significantly lower. There are even cases in which expropriations now, under these new rules, result in a cost for the Administrations that is between five and six times lower than it would have been under the legal framework in force in 2008, says Lorente.

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

Sankaty Finalises Purchase Of 40 Large Loans From Bankia

6 May 2015 – Expansión

During 2015, Bankia has become an important focus point for international funds. Along with the sale of properties amounting to €4,800 million, the nationalised entity has launched three other large sales processes to divest non-strategic assets: one contains hotel debt – Project Castle; another involves problem mortgages – Project Wind; and the third includes large loans to real estate companies – Project Commander. The last of these is likely to close first, since the US fund Sankaty, a subsidiary of Bain Capital, is now in exclusive negotiations to seal the purchase and may sign an agreement in the next few days.

If the agreement comes to fruition, the investor will acquire 170 loans granted to 39 companies linked to the property sector. Of those, 31 are property developers that have filed for bankruptcy or liquidation. The portfolio include several loans granted to companies such as the Catalan firm Promociones Habitat.

Most of the loans are syndicated and bilateral, secured by rural land and industrial warehouses. The nominal value of the portfolio amounts to €500 million. Sankaty already acquired one portfolio from Bankia last year, together with the hotel investment giant Starwood. They paid the bank €400 million for hotel and real estate loans.

Original story: Expansión

Translation: Carmel Drake