Merlin Properties Nears Sale of Portfolio of 26 Office Buildings

18 November 2019 – Merlin Properties is close to finalising the sale of a portfolio of 26 office buildings in Madrid and Barcelona for an estimated 200 million euros. The socimi is selling assets, with a total area of 133,000 square meters, which it considers to be non-strategic. Merlin expects to finalise the sale by the end of November and disclosed that it already has received a deposit from the presumed buyer.

The sale is taking place a few weeks after the firm managed to enter into Madrid’s Operation Chamartín as a partner. Chamartín is the largest urban development project currently underway in Europe. Merlin acquired a 14.4% stake in Distrito Castellana Norte, the owner to the development rights for Operation Chamartín from the San José construction group. The socimi agreed to pay 169 million euros for the stake, in addition to granting an €86 million loan to the construction group.

Original Story: La Información

Adaptation/Translation: Richard D. K. Turner

Merlin Properties Extends €129-Million Loan to San José

6 November 2019 – Merlin Properties has extended a €129.10 million loan to the San José construction group, part of a recent transaction which saw the Spanish socimi acquire a 14.4% stake in Operation Chamartín. The socimi agreed to pay €168 million as well as grant the loan to San José.

The loan is structured into two tranches, the first, worth 86.39 million euros, has a 20-year maturity and an interest rate of 2%.

The second, €42.72-million tranche, also pays 2%. Merlin structured the loan as a cash deposit to guarantee working capital financing that San José has until October 31. The second tranche will mature on December 2.

Original Story: Expansión

Adaptation/Translation: Richard D. K. Turner

BBVA in Negotiations to Transfer Development Rights for Operación Chamartín to Merlin Properties

30 September 2019 – BBVA is finalising negotiations to transfer its rights to the Castellana Norte District (DCN) to Merlin Properties. The sale would be potentially the largest real estate operation in Spain and Europe, according to knowledgeable sources.

The two firms have been negotiating the details of the agreement for weeks and BBVA is likely to retain a small stake, about 2%, in the new company. At the moment, BBVA controls 75% of DCN’s capital, while the construction company San José controls the remaining 25%. The project, known as Operation Chamartín, will include residential areas on 25% of the land, with offices, commercial premises and green areas on the rest.

BBVA will supervise the development until its completion, which, due to the size and complexity of the project, is expected to take 25 years.

Original Story: El País – Íñigo de Barrón

Adaptation/Translation: Richard D. K. Turner

Real Madrid to Invest €525M in the Modernisation of the Bernabéu Stadium

2 April 2019 – Eje Prime

On Tuesday, Real Madrid and the Town Hall of the Spanish capital announced the launch of a project to modernise the Santiago Bernabéu stadium, which will see a total investment of €525 million. The work will begin at the end of May and is due to be completed at the end of 2023, with no planned disruption to the fixture schedule during that period.

According to the club’s President, Florentino Pérez (pictured above, right), Real Madrid has already spent €500 million upgrading its facilities since 2000. Specifically, it has invested €256 million in several updates to the stadium and another €231 million in the construction of the Ciudad Real Madrid training ground in Valdebebas.

The latest project, designed by GMP Arquitectos/L-35/Ribas will involve a new step in the transformation of the stadium, although few details have been revealed at this stage. During the first phase, the La Esquina del Bernabéu shopping centre will be demolished to create a large square and another square will be built next to Paseo de la Castellana.

In total, 23,000 m2 of space will be freed up and distributed between stores and restaurants to complement the museum, which will also be expanded. The capacity of the stadium will also be expanded by 1,000, which will be dedicated in their entirety to people with reduced mobility or some kind of disability.

It is not yet known who will carry out the work or how the project will be financed, but a tender process for the execution of the work is scheduled to open in April. Four companies are predicted to participate: Acciona, FCC, Ferrovial and San José.

Original story: Eje Prime (by M. Menchén)

Translation/Summary: Carmel Drake

Operación Chamartín’s Secret Contract: Adif Sells 1.2 million m2 of Public Land at Half its Market Value

27 December 2018 – El Diario

For 25 years, the agreement has remained a secret. It is the document that supports one of the largest urban development projects in Madrid in one of the most sought-after areas of the capital, in the north of the city, to continue the Castellana, where the financial district and the most expensive homes and offices are located, which are being sold for more than €5,000/m2. The contract is going to be signed on Friday. On the one hand, Adif, the public company that forms part of the Ministry of Development and that manages the railway infrastructure, and on the other, Distrito Castellana Norte, a property developer that has changed its name repeatedly over the last quarter of a century.

In 1993, the Ministry of Development, chaired at the time by Josep Borrell, now the Foreign Minister, signed an agreement with the construction firm San José and BBVA to develop the railway land reserved for Chamartín station. That agreement, whose term has been extended several times, has been kept under lock and key until today. The property developer filed several lawsuits to prevent it from being published.

However, eldiario.es is now exclusively publishing the latest draft of the agreement, which reveals the economic conditions of the project, which is reportedly the largest urban development project in Europe: the sale of 1.278 million m2 for homes and offices. On Friday, the definitive agreement will be signed, confirm sources at Adif, which has been blessed by the municipal planning of Manuela Carmena’s government and which will see the disposal of public buildable land for a price of €769.5/m2 in that area to the north of Madrid, the expansion area of the financial district, one of the most expensive parts of the capital.

Sources in the real estate sector claim that the agreed value represents half the market price at which other plots in the same area have been sold recently. In January, the same vendor, Adif, put another plot up for sale, further north, in San Sebastián de los Reyes, outside of the capital, which was sold for €1,500/m2 to a real estate cooperative: €16.3 million for 1,500 m2.

The gigantic plot that Adif is going to sell to Distrito Castellana Norte (DCN), formed by the construction firm San José and BBVA, groups together 1.27 million m2 of land, according to the current contract. For that space, DCN is going to pay €984.2 million, which represents a price of less than €769.5/m2 excluding the financial interest corresponding to the payment over 20 years.

Hours after eldiario.es published the contents of the agreement, Adif issued a statement confirming that the cost that the private partners (…) will pay for the operation is above market prices. To reach this conclusion, the public company (…) is taking the price of the land and adding the interest that will be paid for 20 years (3% each year), the budget for the urbanisation of the plot and even the transfer of the land that the law obliges to the property developer: 100,000 m2 for public housing that Adif estimates at €67.4 million.

In September, the Government of Manuela Carmena approved the general plan to authorise the urban development of the so-called Operación Chamartín. In the accompanying financial report, the only official estimate that exists, the Town Hall of Madrid calculates a land value that is three times higher than the figure that Adif is going to receive. In that document, Manuela Carmena’s Government establishes that the sale of the whole reclassified area (which groups together twice as much land as mentioned above and which also involves other landowners) “would amount to €3.749 billion in total”. The price established in that financial report corresponds to 2.6 million m2 of that urban development. According to those accounts, the price per m2 equates to €1,407/m2, well below the €769/m2 that Adif is going to receive (…).

Original story: El Diario (by Fátima Caballero)

Translation: Carmel Drake

Vía Célere Boosts Its Land Portfolio Ahead Of Stock Market Debut

18 July 2017 – Expansión

The property developer Vía Célere is advancing with its growth plans ahead of its stock market debut. The Madrilenian real estate company was acquired in February by six funds led by Värde Partners, which owns 51% of its share capital. Following the operation, for which they disbursed €90 million, the company has been working on increasing its size and will debut on the stock market at the beginning of 2018, with a market capitalisation of more than €1,000 million.

The first step in this process was the integration of DosPuntos, the real estate company that Värde and its partners (the funds Attestor and Marathon, as the second and third largest shareholders, respectively, as well as Barclays and Bank of America) had created from the former subsidiary of San José (Parquesol). The operation saw the incorporation of 800,000 m2 of land into Vía Célere’s portfolio (meaning that the firm will be able to build around 7,000 extra homes).

Having closed that merger in record time (less than a month) Vía Célere, led by its former owner and CEO, Juan Antonio Gómez Pintado, has since launched several land purchase operations with the aim of increasing its real estate portfolio.

New portfolio

In total, Vía Célere has invested almost €100 million in nine plots of land through three operations. The land, located in several different provinces, will allow the property developer to increase its buildability by 212,016 m2 and construct 1,907 new homes (…).

Following the contribution of funds from the new shareholders, Vía Célere set itself the goal of investing between €200 million and €250 million per year between now and 2023 in order to maintain a construction rate of around 3,000 homes per year. This year, it plans to start building around 1,800 units: “Our intention is to continue identifying new opportunities and to expand our portfolio of land and projects over the next few months”.

Before these purchases, the property developer’s real estate portfolio contained land covering 1 million m2, making it one of the largest land owners in the country, exceeded only by Metrovacesa, which, following the contribution of €1,108 million from its shareholder banks, now owns land spanning 6 million m2; Neinor Homes, which, following investment of €147 million this year now owns 1.2 million m2 of land on which to build homes; Aedas, the property developer backed by Castlelake, which owns 1.35 million m2 of land.

In total, Vía Célere’s assets are worth €704 million and it currently has 10,054 homes in progress or under construction. Before the integration with DosPuntos, the property developer recorded revenues of €75.4 million in its most recent full year.

Stock market

The property developer led by Värde Partners plans to debut on the stock market next year. In this way, Vía Célere will follow in the footsteps of Neinor Homes, the first real estate developer to debut on the stock market in almost a decade, with a value of €1,340 million. The market capitalisation of that firm currently amounts to around €1,498 million.

Aedas, the company backed by the fund Castlelake, is another of the property developers that has set its sights on the stock market; it plans to make its debut before the end of the year.

Meanwhile, the new Metrovacesa, led by Santander and BBVA, has already met with several investment banks to manage its return to the stock market, which it exited in 2013 after 72 years of trading (….).

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Carmena & DCN Revive Operación Chamartín

6 February 2017 – El Confidencial

After a year and a half of misunderstandings, the Town Hall of Madrid and Distrito Castellana Norte (DCN), the property developer behind Operación Chamartín, have managed to see eye to eye. And in this vein, the two parties are now working to finalise an agreement that should allow the plans to be unblocked this year.

According to several sources familiar with the talks, the Town Hall led by Manuela Carmena, the Ministry of Development and the shareholders of DCN (BBVA and San José) are convinced that the long-awaited plan to develop the area in the north of the capital will have received all of their blessings by the end of this year.

The intermediary role played by the new Minister for Development, Íñigo de la Serna, has reportedly been key in arriving at this point. Since taking office last November, his priority has been to unblock this project, which is crucial for Adif (…), which owns the majority of the land on which Operación Chamartín will be developed.

In fact, one of the first points of the agreement has been to restore the project’s initial dimensions, in other words, the land covering more than 3.1 million m2 upon which DCN had planned to construct 16,000 homes and which the Town Hall of Madrid cut in half with its proposal for Puerta Norte. (…).

The second major agreement involves maintaining the average buildability ratio of 1.05, which will be achieved by concentrating the tallest buildings in one area: the main financial district. This will allow the heights of the buildings in other areas to be reduced, such as in the residential areas. It also means that there will be hardly any buildings in the northern most area of the plot, on the land bordering the neighbourhood of Fuencarral, where large green areas are planned.

First agreement and next steps

The next meeting will be held (…) on 16 February to firm up the broad outline of the agreement. Once this meeting has been held, the Town Hall believes that it will be able to draw the sketches for Operación Chamartín, or, at least, complete them after one more meeting.

Nevertheless, it is important to remember that this will be a preliminary agreement and all of the parties will have to negotiate further to determine the details (…).

If the conversations progress as planned, they may give rise to a set of revised plans by the middle of the year. From that moment on, the whole administrative process will come into play: and in order to accelerate it, the idea is to conduct it through a series of modifications to the Partial Plan and General Town Planning Plan, which means that all of the blessings should have been given by the end of 2017 or beginning of 2018.

The councillor for Sustainable Urban Development, José Manuel Calvo, said that concentrating the development’s tertiary activity (offices, hotels and retail) between Chamartín station and the M-30 will still form a fundamental part of the plan. That is where a major business centre will be constructed, which will be connected to the Cuatro Torres complex – an idea that was included in Calvo’s proposal for Madrid Puerta Norte. (…).

Meanwhile, BBVA and San José maintained that construction work will begin on the plots of land that are closest to Chamartín station, given that the development of that whole area will take two decades and will be completed in various phases (…).

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Operación Chamartín Negotiations: First Agreements Reached

26 January 2017 – Expansión

The Town Hall of Madrid and the Ministry of Development have reached their first agreements regarding the re-development of the north of the city, which will be divided into three different areas. There will be a dedicated financial district and the residential buildings will be six-storeys tall on average.

The first advances have been made in the negotiations between the new Minister for Development, Íñigo de la Serna, the mayoress of Madrid, Manuela Carmena and her councillor for Sustainable Urban Planning, José Manuel Calvo. (…). The points agreed include the division of the area into three sections: south of Calle 30, north of Calle 30 and Chamartín station, which the Town Hall insists must be renovated.

Each one of the developments will “be approached and managed independently”, according to the agreements reached. In the southern section, most of the space will be allocated to economic activities involving tertiary services, in other words, the new financial district, which will be called the Central Business District. It will be located in the Chamartín area and its construction will have to take into account the renovation of the train station.

In the northern section, most of the space will be used for residential purposes, with the presence of “mixed economic activity” as well. The general idea is that the buildings in this area will be six-storeys tall on average (…) although there may be exceptions. (…).

What has not been agreed yet is whether the new Operación Chamartín will include the construction of the tallest skyscraper in the European Union, with 70 floors and another five towers of a similar height to those already at the top of the Castellana, per the plans presented by BBVA and the real estate company San José. (…).

A priori, it seems that the criteria put forward by the Town Hall of Madrid will prevail in terms of the reduction in the number of homes compared the number initially planned. In the version prepared by Manuela Carmena’s government, the figure decreased from 17,700 homes to 4,600. The fact that according to the agreement reached, the residential blocks will be six storeys tall on average, appears to be in line with the height of five and six-storeys proposed by the Sustainable Urban Planning Department for this area. (…)

The parties will hold their next meeting on Friday, when they plan to address “the definition of the basic criteria” for the development of the new financial district, such as the distribution of urban charges and the connection with Calle Agustín de Foxá and Avenida de San Luis. (…).

The aim of the Sustainable Urban Planning Department is to have “a project that has been agreed between all the players” ready by between March and June. Then, the planning instruments will be processed to allow construction to begin”.

Original plan

17,700 homes, of which 1,700 would be subsidised (VPO).

Five office skyscrapers, including the tallest tower in the European Union, with 70 floors.

80% of the land would be dedicated to public spaces. The remaining 20% would be reserved for residential developments, the financial district and businesses.

Carmena’s proposal

4,600 homes. The alternative proposed by Carmena’s Government proposed 1,000 VPO homes and another 3,600 private properties.

Two unique buildings. They would be located in the business district, would be 40-storeys tall and would be accompanied by another two 20-storey towers.

274,000 m2 of green space and plans to increase the surface area dedicated to public services to 254,000 m2.

Original story: Expansión (by R. Bécares and M. Belver)

Translation: Carmel Drake

Värde – One Of The Largest RE Developers In Spain

24 August 2016 – Expansión

The US fund Värde has been one of the most active investors in the Spanish real estate sector in recent years.

It made its last purchase in June here, when it bought the real estate group Aelca. Specifically, Värde signed an agreement with the Avintia Group to purchase the company for around €50 million.

The US fund is also a major shareholder in Dospuntos – the former real estate division of the Sanjosé group, the result of the integration of Parquesol within the construction group – . The fund acquired 51% of Sanjosé Desarrollos Inmobiliarios in August 2015 after acquiring a 25% stake from Popular for approximately €90 million.

Dospuntos has launched a plan for the promotion and development of homes that includes an investment amounting to €2,000 million over six years and it is, alongside Neinor Homes – the real estate arm of the fund Lone Star – one of the main residential property developers in Spain.

Dospuntos’ plan involves starting the construction of homes this year and completing around 800 homes in 2018 and almost 1,500 in 2019. With this roadmap, the group hopes to reach its cruising speed in 2019, with the completion of 2,000 homes per year.

In addition to Värde, the property developer is also partially owned by the funds Marathon and Attestor, as well as Bank of America Merrill Lynch (BofA), JPMorgan and Barclays.

The US fund also controls Bancopopular-e (Banco Popular’s card business). Värde purchased 51% of the business from the financial institution in October 2015. In addition, Värde acquired, together with Kennedy Wilson, the real estate arm of Popular, Aliseda, for approximately €800 million.

At the global level, the fund, founded in 1993 in Minnesota (USA) manages more than $40,000 million and has 200 employees, of which 65 are professional investors with more than twelve years experience.

Original story: Expansión (by R. Arroyo)

Translation: Carmel Drake

International Funds Reactivate Residential Development Market

7 July 2016 – El Economista

After several years away, cranes are appearing on Spain’s landscape once again. Their return has come thanks to several large international funds, which have managed to reactivate the property developer market in record time and just at the right moment. Thanks to their presence, property developer activity in Spain grew by 30% last year, with 50,000 new construction permits; and the experts are certain that the residential business is now unstoppable.

The financial capacity of the new players is overwhelming in some cases. They have liquidity surpluses that the historical property developers would have envied, but, nevertheless, they do not know the ‘ins and outs’ of the local market, and their experience in terms of land is practically non-existent. For this reason, their entry into the Spanish market has been undertaken through the purchase of property developer platforms and through partnerships with local companies (…).

In light of the high profile partnerships that have been signed in the last two years, involving players such as Lone Star, Värde and Kennedy Wilson, the experts predict that the high level of activity will continue this year with the purchase of plots of land. In fact, they confirm that sales of non-developable land are starting to accelerate and that demand for land purchases will increase, especially those in the final stages of development, due to the high level of competition that has been generated between the key players in the sector – property developers, investment funds and cooperatives.

All of these players have realised that the opportunities that the residential development business is now offering “have yields that are considerably higher than those of other investments”, according to Solvia’s Market View report, which states that transactions have grown by 8.6% and prices have risen by around 4.5%. With these positive indicators, the development figures being talked about now include 150,000 new homes and 50,000 secondary residences per year until 2020.

Most of these homes will come onto the market thanks to Neinor Homes, which is looking to become the largest property developer in Spain. This company will be one of the most active over the next few years, given that according to its own forecasts, it expects to build between 2,500 and 3,000 homes per year. The firm, led by Juan Velayos – the former CEO of Renta Corporación – is the largest residential real estate company created in Spain following seven years of recession.

Its potential was proven last year, since between its creation, in May 2015, and the end of the year, it invested own funds amounting to €800 million on the purchase of land, on which it plans to construct 10,000 homes over the next few years, bringing together the largest bank of high-quality developable land in Spain (…).

But Lone Star is not the only fund that has made a long-term commitment to the Spanish residential market. The US fund has had a major competitor for several weeks now, in the form of Värde, which after acquiring 25% of the real estate arm of San José from Banco Popular, has now created a new property developer.

The company is called dospuntos and its Business Plan for 2016-2012 forecasts an investment of almost €2,000 million in the Spanish real estate market over the next six years, to complete the construction of 2,000 homes per year on average from 2019 onwards. For the time being, the group already owns a sizeable bank of land for the construction of more than 7,000 homes across Spain.

Inmobiliaria Habitat is another company with history in the sector, which in 2015, after finding itself in a very delicate financial situation and incapable of paying its debt, ended up in the hands of a group of funds – Bank of America Merril Lynch, SP101 Finance Ireland, Capstone and Goldman Sachs, amongst others. In this case, although the commitment by the funds has been key, it is nonetheless a temporary measure, given that they plan to exit the group within two or three years.

The latest residential report from the consultancy firm CBRE highlights other partnerships between international funds and domestic developers such as: Grupo Lar and Pimco; Renta Corporación and Kennedy Wilson; Momentum Real Estate and HMC; Aquila Capital and Inmoglaciar; Mina Inmobiliaria and Eurostone; Aelca and Värde; and Q21 Real Estate and Baupost. (…).

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake