Värde Buys Aelca From Avintia For €50M

28 June 2016 – Alimarket

The US investment fund Värde Partners is continuing to pursue its strategy to become a key player in the revived Spanish property market. Within a week of acquiring the property developer Dospuntos – the new face of the former real estate arm of the construction group San José – it has closed the purchase of the real estate arm of another major Spanish construction company.

As such, Värde will pay almost €50 million to acquire 75% of the share capital in Aelca Desarrollos Inmobiliarios, the company that undertakes the residential business of the construction group Avintia, which the group chaired by Antonio Martín Jiménez put up for sale at the beginning of the year.

Aelca, created in 2012, has proven itself to be one of the most active property developers in the Community of Madrid, with a portfolio of more than a dozen new build developments under construction, which together contained around 1,000 homes at the beginning of the year. Aelca, which is dedicated to the development, marketing and management of homes, recorded turnover of €9.91 million in 2014, although it was forecast to generate revenues of around €70 million last year, thanks to the completion of more than 200 homes. Aelca’s workforce comprises 17 employees.

Following the sale of Aelca, the Avintia group, headed by the construction firm Avintia Proyectos y Construcciones, which has been responsible for executing Aelca’s developments to date, will now be able to focus its activity on the construction sector, where it is one of the most important residential construction companies in the country, by turnover, as well as in the areas of facilities services, retail, hotels and tertiary development, commercial and logistics. Avintia was forecast to generate revenues of €259 million in 2015, with 770 employees on its payroll and trade volumes of more than €423 million.

Värde Partners manages more than $10,000 million in assets around the world and it has starred in some of the most significant real estate transactions in Spain in recent years. As such, in addition to its acquisitions of the real estate arms of the San José and Avintia groups, it has also joined forces with the fund Kennedy Wilson to acquire the real estate platform Aliseda from Banco Popular.

Original story: Alimarket

Translation: Carmel Drake

Madrid’s Town Hall Votes Against Operación Chamartín

19 May 2016 – Expansión

The Town Hall of Madrid has taken another step in its crusade against Operación Chamartín, promoted by Distrito Castellana Norte (DCN) – jointly owned by BBVA and San José – and has thereby buried the private initiative for the extension of La Castellana, backed by the previous PP regional government.

The latest chapter in the battle to control the development of the area in the north of the capital was written yesterday with the Committee for Sustainable Urban Development’s rejection of Operación Chamartín. Specifically, the Committee ruled out the project with votes from Ahora Madrid and the PSOE, its partner at the Town Hall.

By contrast, councillors from the PP and Ciudadanos parties, who are in favour of the project, voted against the proposal to deny the definitive approval of the Partial Interior Reform Plan promoted by DCN, included on the Committee’s agenda for the day.

The plans for Operación Chamartín were submitted at the beginning of 2015 by the previous Town Hall, the Community of Madrid and the Ministry of Development together with the development company, but it was not debated in the municipal Plenary because of the upcoming elections.

During the Committee’s debate, the PP councillor José Luis Martínez Almeida warned about the “criminal liabilities” that the Government team may incur for not basing its decisions on reports and for seeking to substitute a global agreement for the development of the north of Madrid with a 16-page plan.

Meanwhile, the Ciudadanos councillor Bosco Labrado asked the Government’s team to look for a real solution for DCN’s project.

By contrast, the PSOE councillor Mercedes González congratulated the Government’s team on the new proposal for the north of Madrid and asked that the minutes reflect that his political party vindicates Eduardo Manglada and all of the other people who have contributed to changing the city. He mentioned Eduardo Leira – the husband of the mayoress – and Enrique Bardají, amongst others.

The Committee’s rejection of DCN’s project, which still needs to go through the Plenary, comes a week after Manuela Carmena’s town planning team presented its own alternative for the development of the north of the capital, known as Madrid Puerta Norte, at a public meeting. .

The alternative project

These plans, amongst other things, drastically reduce the number of homes to be constructed, down from around 17,800 to 4,600, and cut the buildable surface area from 3,270,053 sqm, planned by DCN, to 1,750,197 sqm.

The Town Hall’s proposal, which was presented by the mayoress herself and by a representative from the Sustainable Urban Planning Department, José Manuel Calvo, has not been agreed with the Ministry of Development or the Community of Madrid, which together with the Town Hall own 82% of the affected land, or with BBVA and San José, the promoters of the plan and owners of the management rights over the land.

In order to understand the Town Hall’s plans at first hand, the Ministry of Development has called a meeting for this Friday to which it has invited the mayoress of the capital, the President of the Community of Madrid, Cristina Cifuentes, contacts from the property developer DCN, and representatives from BBVA and the construction firm San José.

Sources at DCN declined to comment on the plans presented by the Town Hall as they are waiting to be provided with further information.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Operación Chamartín: Carmena Cuts Homes & Offices By 50%

10 May 2016 – El País

On Tuesday, the mayoress of Madrid, Manuela Carmena will present her plans “to boost the development of the north of the city”, an “open document” prepared by municipal technicians, which amends and reduces the plans for Operación Chamartín. After working on the project for almost a year and refusing to negotiate with BBVA or San José, the Town Hall is effectively burying Distrito Castellana Norte. The Town Hall’s alternative plan, to which El País has had access to, maintains the buildability coefficient, but removes all of the roads and railways from the planned surface area calculations, which Distrito Castellana had taken into account. In this way, the profitable surface area for homes (17,000 were going to be built) and offices is cut in half. Carmena proposes undertaking the renovation of Chamartín train station, the Northern junction (Nudo Norte) and Fuencarral immediately, using public money, and taking Pasillo Verde (which runs from Atocha to Principe Pío) as an example.

Distrito Castellana Norte, the private project promoted by BBVA (75.5%) and the construction company San José (24.5%) forecasts investing €5,974 million to rebuild the 3,114,336 sqm area.

But the local government believes that the initiative should “be the responsibility of the Administration”, particularly given the dimensions of the area (311 hectares; by way of comparison, the Centro district covers 523 hectares). Thus, the Town Hall proposes “more weight in the public management” in the “largest town planning operation in Madrid”. And to this end, it proposes “the creation of a public urban consortium to develop the area to the south of the M-30”, leaving the initiative to the north of the motorway in the hands of private property developers.

BBVA and San José plan to extend the Paseo de la Castellana by 3.7 km to the north, and to construct 17,699 homes and a financial district with the tallest skyscraper in the European Union (70 floors), as well as five other towers, similar in height to the four towers already in place (45-57 floors). For this, they plan to apply a buildability coefficient of 1.05 sqm for every metre of land, thanks to the increase approved by the PP (before, that figure stood at 0.6).

The Northern junction and Fuencarral

The Town Hall’s plans respect that building density, but “exclude land relating to the road and railway networks from the calculations, as well as all land that is not necessary to undertake the operation or whose transformation is not planned”. As such, it would leave 1,440,387 sqm of space occupied by the M-30, the M-40 and railway infrastructure out of the operation, and instead proposes “continuing with its current use and rating”.

After these exclusions, the total surface area of the operation would be reduced to 1,744,549 sqm (of which 233,082 sqm correspond to Chamartín train station.

Therefore, applying the buildability coefficient, there would be 1,587,040 sqm of space for residential and commercial use. This would reduce the private project by half, which had calculated that there would be 3,261,000 sqm of profitable space (1,774,000 sqm for homes; 1,046,000 sqm for offices; 165,000 sqm for hotels; and 176,000, sqm for retail).

(…)

Original story: El País (by Bruno García Gallo)

Translation: Carmel Drake

Operación Chamartín: The Plot Thickens

30 September 2015 – El Confidencial

The small print of the agreements signed between the Government and the developers of Operación Chamartín, BBVA and San José, includes an important payment in kind that has gone undetected until now. A payment that will convert the Ministry of Development into one of the largest landowners of this development.

And so, not only will the company formerly known as Duch, now Distrito Castellana Norte, have to pay €1,240 million in cash to acquire the land (covering an area of almost 2 million m2) currently owned by Adif, it will also have to make a payment in kind, involving the transfer of urbanised land with buildability of 100,000 m2 for residential use.

This payment forms part of the principles of the agreement signed on 22 January between Duch and the public entities Adif, Renfe Operadora and Adif-Alta Velocidad, the owners of the land where the majority of Operación Chamartín is expected to be constructed and, therefore the main beneficiaries of this urban planning project.

Specifically, when this development, whose official sign off has so far been delayed for more than two decades, was reactivated at the beginning of the year, the economic agreement was structured around three pillars: the payment of a cash fee amounting to €984 million, the payment of interest linked to this expenditure over the next two decades (which takes the total amount of the cash payment to the aforementioned figure of €1,240 million), and the payment in kind in the form of plots of land.

But the public administrations’ role as landowner goes much further than that, given that the land that the Ministry of Development will take control of will be added to the plots (covering an area of almost 600,000 m2) that will correspond to the Town Hall of Madrid.

The Local Government, led by Manuela Carmena (who has the ultimate power to unblock this development) is set to become the second largest landowner, as a result of the sum of: the space (165,000 m2) it currently owns in the area; the area (150,000 m2) that houses the EMT’s garages in Fuencarral; and the land (300,000 m2) that corresponds to it from the transfer of 10% of the land from the developers, as required by legislation.

Sell or develop

At the current market price of €1,000 /m2, the value of the plots of land owned by the Town Hall could amount to around €600 million, whilst the land owned by Adif could be worth around €100 million.

In both cases, the public administrations have the ability to benefit from their roles as landowners to develop social housing on the Operación Chamartín site itself or to make profits to return to society.

And one of the main attacks launched against the developers of this site has been they are simply seeking to “strike it rich”, criticism that has been fuelled by the fact that the development is located in the north of the capital, an area traditionally regarded as very wealthy, and because the original plans include just 10% of social housing.

The reason why it looks like the people responsible for Distrito Castellana Norte are planning to construct so few VPO homes is partly because these calculations do not include the uses that the public administrations will make of all of their plots of land. Therefore, it is up to Carmena and Adif to increase the volume of social housing in this development.

Between the two of them, they own more than 20% of the total surface area (3.1 million m2) that makes up the Operación Chamartín site.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

San José Will Surrender 35% Of Its Capital If It Fails To Repay Loan

25 June 2015 – Bolsa Manía

San José will surrender shares representing up to 35% of its total capital to a group of six banks to repay a €100 million loan, in the event that it fails to repay said loan before its maturity date in October 2019.

The entities that have signed this loan agreement are: Banco Popular, Barclays Bank, Bank of America Merrill Lynch, Deutsche Bank, Sareb and KutxaBank.

To this end, San José’s shareholders’ meeting has approved the issue of “warrants” in favour of these entities. These warrants are securities that include the option to subscribe to shares in the company to offset any debt.

The loan linked to these warrants is one of the tranches that San José restructured after it reached a refinancing agreement at the beginning of the year. This agreement already required the surrender of its entire real estate division to the banks to repay the majority of its liabilities (€1,329 million).

The rest of the debt (€297 million) was divided into three tranches, one of which provides for the repayment of the liability in the event of non-payment of the loan on the maturity date, in four years time.

San José subjected its refinancing agreement to a judicial homologation process, in order to extend the agreement, reached with the majority, to all of its creditor entities.

Thus, Sareb and KutxaBank are included in the agreement and will have “warrants” even through they rejected the restructuring agreement, according to the shareholder documentation provided by the construction, services and renewable energy group.

New growth phase

In its presentation to shareholders, San José said that this refinancing agreement adapts the maturity dates to the cash flow streams and provides the company and its subsidiaries with sufficient financing lines to properly perform their activity and embark on the new growth phase.

The company highlighted the increase in its international business, which now accounts for more than half (59%) of total revenues, and the prevalence of its non-residential construction works, which dominate 87% of the business.

The shareholders of the company led by Jacinto Rey also agreed to appoint José Manuel Otero Novas as an external director of the company.

Original story: Bolsa Manía

Translation: Carmel Drake

The Electoral Shift May Undermine Operación Chamartín

27 May 2015 – El Mundo

The Ministry of Development fears that the electoral shift may undermine the plans for the project known as Distrito Castellana Norte, which is worth more than €6,000 million.

From June, the new municipal political map in Spain will face decisions regarding the future of dozens of urban development projects in the country’s large capital cities, worth thousands of millions of euros, many of which are still awaiting licence approvals from their respective town halls.

The largest one is Operación Chamartín, in Madrid, the largest urban development plan in the capital. The project has been in the pipeline for 20 years – four less than the Partido Popular held office for at the town hall – and was accelerated in recent months by the incumbent mayoress, Ana Botella, in an effort to obtain the final approvals.

The inability to comply with all of the procedures required for the operation, located in the North of the capital, covering 3.7 km in length and three million square metres in surface area, with plans to build 17,000 homes, as well as offices, retail areas and green spaces, forced Botella to leave the final approval (of the project) in the hands of her successors at the Town Hall. Specifically, to the resolution of around 1,800 claims and above all, to the approval of a partial plan for the extension of the Paseo de la Castellana.

Until 24 May, it was expected that a new municipal team led by the Partido Popular would continue the project, which promises to transfer the centre of the city from Puerta del Sol to the North. But the setback suffered by the Partido Popular in the capital last Sunday leaves the project in the air. The most likely option, that of a left-wing coalition between Ahora Madrid and the PSOE, is raising concerns amongst the stakeholders. The focus of the likely team, led by Manuela Carmena, would centre on social housing rather than on million-euro urban developments.

The project known as Distrito Castellana Norte is estimated to be worth more than €6,000 million; BBVA and the construction company Grupo San José are the main partners in terms of financing and development. The operation also includes municipal and regional land, but the majority is owned by the Ministry of Development, and in particular, its two largest companies: Renfe and Adif.

The urban development plan that Ana Botella was unable to finalise involves covering over the train tracks at Chamartín station. The value that the sale of this land to BBVA and San José would have for the companies owned by the Ministry of Development amounts to €1,200 million, most of which would be paid to Adif, whose debt amounts to €18,000 million this year, making it the State’s most indebted public company, behind only the FROB (Fund for the Orderly Restructuring of the Banking Sector). Given the financing needs of the conventional railway infrastructure companies and the lack of funds available for such investments, the minister Ana Pastor has publicly backed the plan. In fact, Adif was already counting on the payment of €200 million this year based on the approval of the pendingpartial Plan.

Now the deadlines are being called into question, at least the fast-track option is, which carries the support of the incumbent town hall. But the amendment, rejection or definitive approval of the largest chapter in the capital’s urban planning cannot be left on the sidelines for long.

After its launch in 1995, with the granting of land to the current BBVA, the project has survived (changes in) municipal teams, real estate bubbles and judicial processes, which have delayed its approval and halved the value that the property developers were guaranteed to generate.

In the end, last year, the grant was awarded, but BBVA and the Grupo San José extended their offer up to a maximum deadline of 2016. If there is no partial plan by the new Town Hall and the new extension expires, the Ministry of Development will see its largest urban development project die, although it is likely to be a legacy that another Government will pick up in due course.

Original story: El Mundo (by César Urrutia)

Translation: Carmel Drake

BBVA And The Government Reactivate The Castellana Extension

2 February 2015 – Expansión

BBVA and San José will invest €4,800 million in the Castellana Extension / Covering an area of more than 3 million sqm in the North of Madrid, it will be the largest real estate development project in Spain. An IPO has not been ruled out.

Investment of almost €6,000 million, an area of more than 3.11 million sqm, 20 years of planning and another 20 years of development – those are some of the dizzying figures encompassed by the Castellana Norte urban development project in Madrid, also known as Operation Chamartín or the Castellana Extension.

“It is a very unique, innovative project that will result in the strengthening of the local, regional and national economy. It is the only project of its kind anywhere in the world”, said Francisco Gonzalez, the Chairman of BBVA, on Friday as he presented the plans for the regeneration of the north of Madrid, which has been paralysed for years and which will be the largest real estate development project undertaken in Spain in the last two decades.

The financial institution is the owner of 75.5% of the company Castellana Norte Madrid, the developer behind the plan. The remaining shares are held by the San José Group, whose own shares soared by 8.5% in trading on Friday.

Homes and offices

The project includes the extension of the capital’s main thoroughfare, the Paseo de la Castellana, by 3.7 km and the movement underground of the railway tracks at Chamartín station. 17,000 homes will be built on this land, of which 10% will be subsidised in some way; a financial district covering almost one million square metres will also be constructed.

The company Castellana Norte will drive the regeneration of this area, alongside Chamartín station and its adjoining railway tracks. Thus, of the total investment (€5,974 million), the company will spend €1,300 million on infrastructure and another €3,500 million on the construction of buildings. A long way off of the €11,000 million projected in the initial plans devised for the area in 2008. “The previous project was based on estimated revenues and therefore associated investment when housing was worth 40% more (than it is now)” explained Antonio Béjar, the Chairman of Castellana Norte. “The current plan addresses the shortcomings of the past and will involve a significant degree of self-financing”, he added. Sources of funding may include the entry of a new partner into the company, the use of bank financing and even the IPO of the company.

Construction of this neighbourhood, designed in four areas, will take place over 20 years and will result in the creation of 120,000 new jobs. “The project will generate economic gains of more than €3,363 million for the public administrations”, confirmed the Town Hall of Madrid on Friday.

The developers hope that the various government bodies involved in the process (the Ministry of Development, the Community of Madrid and the Town Hall of Madrid) will formally approve the project during the next few months so that work can begin on the development “at the end of this year or at the beginning of next year”.

Sustainable travel will play an important role in the new urban development, which will include three new metro stations, two train stations and 12.8km of cycle lanes. 80% of the 3.114 million square metres of land (just under the permitted buildable area) will be used for public infrastructure projects, including space for green areas equivalent to 56 football pitches.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Banco Popular Rescues San José Realtor And Takes Over

02/01/2015 – ABC

The San José Real estate group has been saved by the bell

Saved by the bell. The San Jose Group has found a white knight to save it from the dire straits of bankruptcy, as the ABC reported yesterday. Banco Popular and its partner, the Värde Partners fund, will take control over the realtor of the new holding company, after managing to swap its debt for equity stocks of the division which was completely unprofitable.

As the newspaper was informed, according to the announcement to be made today by the company, headed by Jacinto Rey, to the National Securities Market Commission (CNMV), the conditions of the previous syndicated loan are breached and they must start all over again from scratch, leading to a new company with new owners in its real estate division.

Thus, the new agreement reached between the directors of Grupo San José and the creditor banks is divided into three parts: Firstly, the creation of a new holding company — Grupo Empresarial San José, under the leadership of the current president Jacinto Rey, which will assume a debt of 100 million euros; secondly, this holding will also own the construction company, with a debt amounting to 250 million; and thirdly, the so-called “unsustainable” debt (in financial terms) — over 1.2 billion — will remain in the real estate company. This debt originates from San José’s takeover bid from 2007 for the Valladolid-based realtor Parquesol, which is what Banco Popular, the Värde Partners and Marathon Asset Management funds will capitalize on.

The real estate division will thus become property of the creditor banks. 80% of it will be controlled by Popular, Värde and the Marathon fund. Banco Popular and Värde are going to integrate it into their real estate joint venture, where the former holds 49%, and the latter, 51%. The remaining 20% will be split among the rest of the creditors – JP Morgan, Deutsche Bank and SAREB.

The agreement reached with its main creditors–Banco Popular and Värde–will boost the financial viability of the new business group, which will resume its traditional activities as a construction company but with a very limited amount of debt in order to continue with its expansion plan, especially towards Latin America.

Up until yesterday, San Jose had debt of over 1.6 billion. Its major creditor from the beginning was Banco Popular, with a debt amounting to 476 million (a figure that includes the part coming from Banco Pastor, which was acquired by Popular). Currently, Värde Partners, a partner headed by Angel Ron (its real estate and cards division) has become its largest creditor over recent months, holding claims to 52% of the total liabilities from the banking syndicate, i.e. 868 million.

The fund has been steadily doing away with most of the debt piled up by the company from the financial institutions that have been trying to get rid of it — Santander, BBVA, Sabadell, Barclays and Abanca. Bank of America has been the intermediary. Yesterday, Grupo San José rose 11.59% on the stock exchange, as the new agreement was coming.

Original article: ABC

Translation: Aura REE

BBVA Strives to Revive ‘Operation Chamartin’, SanJose Threatened

3/12/2014 – El Confidencial

The game is played between the chairman of BBVA, Francisco Gonzalez, and the head of Grupo SanJose, Jacinto Rey. Last week, the parties met at a contentious meeting of the managing board of DUCH (Desarollo Urbanistico CHamartin). This investee company controlled by the bank and the builder is responsible for developing a project known as ‘Operation Chamartin‘.

Clash between the business partners was caused by Mr Gonzalez’s proposal on a capital hike of €285 million, an investment impossible to perform by Mr Rey who is struggling to beat his own €1.6 billion debt down.

The proposition threatens Jacinto Rey, who holds 27.5% of DUCH through his Desarrollos Urbanisticos Udra, with being debarred from the game. To keep the stake unchanged, the businessman would have to inject €80 million. It is an enormous effort for a company found in the middle of debt refinancing process, after some of its main creditors, like BBVA, Santander, Sabadell or Barclays sold their debt share to vulture fund Värde Partners which is now lurking and watching each of its steps.

On the other hand, BBVA owns a 72.5% stake in DUCH throught its rela estate arm Anida, so the entity would have to contribute with nearly €220 million to maintain the holding. Beyond the amount, the bank ponders opening door to an investor willing to take part in the Operation Chamartin (covered area highlighted in the picture), as well as to buy the share in hands of SanJose.

According to procurement contract, DUCH was obliged to pay €984 million to Renfe and Adif for 1.8 million square meters embraced by the urban development at the beginning of 2014. However, the payment’s deadline was put forward when Madrid’s Supreme Court restricted the total buildability foreseen in the Partial Plan approved by the City Council.

As the project could move on the soonest in few months, Grupo SanJose reckons the capital hike is unnecessary at this point.

However, BBVA is fed up with waiting. Exactly one year ago, the entity decided to revive the large-scale project. First, it assigned David Martinez as its new Chief Executive Director and then Antonio Bejar for the chairman office.

 

Original article: El Confidencial (by Carlos Hernanz)

Translation: AURA REE

Three-Quarters of San Jose’s Creditors Say ‘Yes’ to Refinancing

11/11/2014 – Expansion

Real estate and builder company San Jose controlled by the Rey family is at the brink of reaching the agreement with its lenders on refinancing its debt obligation amounting to €1.63 billion.

San Jose has got the green light for liabilities restructuring from 75% of its creditors, the company said in a statement provided to the National Stock Exchange Commission (or the CNMV).

As the Expansion newspaper reported on 19th November, the banks, led by Popular, Abanca and BBVA, agreed on swapping the debt for majority stake in the property manager. The Reys would preserve the control over activity of the builder.

Like its competitors from the market, the San Jose group has suffered a lot because of the slump in civil engineering and residential segments in Spain, losing €36.3 million from January to September 2014, but trimming the red by 36% if compared to the €56.8 million loss from the same period of time in 2013. Currently, its shares on the stock sell at 0.78 euros each, giving a total capitalization of €51 million.

 

Original article: Expansión

Translation: AURA REE