Apollo Negotiates Purchase of 14 Offices in Madrid from Merlin

23 October 2018 – Expansión

Apollo is maintaining its interest in the Spanish real estate sector and is considering increasing its footprint in the capital with the purchase of an office portfolio from Merlin. Specifically, the US investment fund is analysing the acquisition of a portfolio comprising 14 office buildings and business complexes located, for the most part, in secondary business areas of Madrid, according to market sources speaking to Expansión.

When consulted on the matter, both Merlin and Apollo declined to comment about the operation.

The offices, which together span a gross leasable area of 126,900 m2, were worth more than €300 million at the end of June 2018. The buildings are located in well-known business districts of Madrid, such as Sanchinarro, Manoteras, Arturo Soria and Avenida de la Ilustración, amongst others. Merlin inherited most of the assets following the integration of Metrovacesa’s real estate business, after the merger of the two groups in 2016.

The assets that Apollo is considering buying include the office building located at number 94 Calle Santiago de Compostela, next to Avenida de la Ilustración, which has a surface area of 13,130 m2; the Euronova business park in Tres Cantos, which has a surface area of 32,663 m2; a property located on Travesía de Costa Brava, in Mirasierra, measuring more than 16,000 m2 and leased to El Corte Inglés; and an office complex comprising two buildings on Calle Francisca Delgado, in Alcobendas, with a combined surface area of 10,896 m2.

Interest

If this operation goes ahead, Apollo, which has put Altamira up for sale, would be committed to Spain again. The investment fund, which made its debut in the country through the European Principal Finance Fund II – the vehicle that acquired 85% of Altamira at the beginning of 2014 and Evo Banco soon after – recently launched the third version of that European fund.

Specifically, as Expansión revealed on 8 October, Apollo has launched the European Principal Finance Fund III, containing almost $5 billion (€4.35 billion based on the current exchange rate). Some of that amount will be allocated to Spain (…).

Original story: Expansión (by R. Arroyo & D. Badía)

Translation: Carmel Drake

Valdebebas, Castellana Norte & Mahou-Calderón Try to Inject New Life into Madrid

2 December 2017 – Expansión

After years of paralysis in the real estate sector, the reactivation of house sales has come at a time when there are hardly any new build homes available in Madrid.

According to calculations by the real estate consultancy CBRE, the municipality of Madrid and its surrounding areas have an absorption rate of around 20,000 homes per year and yet, the output for the region barely reaches 10,000 units.

In this context, yesterday, the Valdebebas Compensation Board, the last major development area in the north of Madrid, approved the economic “reparcelation” of the whole area, which will be the largest process in the history of Spain, with the aim of reactivating the granting of licences in an area where there is still land available for the development of 3,794 homes.

The aim of the economic “reparcelation” is to put an end to the urban planning problems associated with this development, which relate to the commercial area that was initially planned. “The problems date back to 2013, when modifications were made to the general plan, which included the construction of the largest shopping centre in Europe. The plan was modified to make the shopping centre smaller and to add more homes, most of which were social housing properties”, explain sources at the Valdebebas Compensation Board.

The new plan was legally appealed and in May, a ruling overturned the changes. “The legal ruling caused the Town Hall of Madrid to stop granting licences for the whole area. In light of that paralysis, the only option has been this economic “reparcelation” process (…), which will cost more than €5 million, which the Compensation Board will bear in its entirety”(…). “The “reparcelation” will allow the development of the last major PAU in the north of Madrid, given that in the others, such as in Las Tablas, Sanchinarro and Montecarmelo, there are barely any plots left (…).

The lack of supply has already had an impact on prices. “In two years, land prices in Valdebebas have doubled and, that is inevitably reflected in prices. Whilst before you could find a home for €2,400/m2, now you can’t find anything for less than €3,000/m2”.

Operación Mahou-Calderón

Operación Mahou-Calderón represents the last large plot of land in the central district (…). In total, it comprises 147,050 m2 of buildable land, where around 1,200 homes may be built (…) with prices of around €2,950/m2 (…).

Madrid Nuevo Norte

Operación Chamartín is reinventing itself (…). It has been paralysed for more than 20 years, but the new project includes a reduction in the buildable surface area, which will amount to 2.68 million m2, where 11,000 homes will be built, of which 20% will be social housing properties. With an investment of around €6 billion, construction work is expected to begin in 2019.

Berrocales, Valdecarros and Cerros

Meanwhile, the development of the southeast of Madrid has been put on the back burner. The Compensation Boards responsible for the three urban developments there (Los Berrocales, Valdecarros and Los Cerros), have joined forces in a common platform to promote the construction of more than 100,000 affordable homes over the next 25 years in the southeast of Madrid. Meanwhile, the Town Hall of Madrid is proposing a change to its urban development plans, with a maximum of 27,700 homes between now and 2030, to which another 26,000 may be added by 2039, depending on demand (…).

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Hispania Earns 31% More & Increases Its Revenues By 19%

15 November 2017 – Expansión

Hispania – the Socimi in which George Soros holds a stake – increased its net profit to September by 31% to reach €179 million, whilst its revenues rose by 19% during the period to €119 million.

By business segment, hotel revenues rose by €98 million or 21%. Hispania explained that the good performance recorded during the first nine months of the year was due to a 10.2% improvement in the average daily price per occupied room (ADR) and a 10.6% rise in the revenue per available room (RevPar) of its hotels in the Canary Islands.

Meanwhile, the turnover of its offices reached €16 million, up by 16.6%. During this period, Hispania increased the occupancy rate of its offices from 82% in December 2016 to 86% with a gross space leased of more than 15,000 m2 during the period.

The company, which had been negotiating the sale of its office portfolio, decided to postpone that operation due to the situation in Cataluña. Hispania expects to resume the sales process during the first quarter of next year.

Finally, revenues from the residential area decreased by 12% to €4.1 million. Hispania is continuing with its plan to sell homes in the retail market, which it began at the end of 2016. During the period, the Socimi sold 47 units in total between Isla del Cielo and Sanchinarro (Madrid), to accumulate a gain on the sale of 38% on the investment made.

Revaluing its portfolio

The value of the company’s real estate assets as at 30 September amounted to €2,347 million, which represents an increase of 17% with respect to the start of the year and a rise of 40% compared to the same period last year.

By segment, the value of Hispania’s hotel assets amounts to €1,516 million, its offices are worth €591 million and its residential assets amount to €239 million.

At the end of the period, Hispania had financial debt amounting to €620 million in total, with an average cost of 2.6%, compared to €631.3 million at the same time last year.

Original story: Expansión (by R. Arroyo)

Translation: Carmel Drake

Hispania Will Accelerate Its Hotel Investments In 2017

25 January 2017 – Expansión

New strategic plan / The Socimi managed by Azora is planning to sign operations amounting to almost €200 million over the next few months and is also considering selling off its residential portfolio and rotating its offices.

Hispania is clear about its commitment to the hotel sector and is going to put its foot down on the accelerator in 2017, with operations worth almost €200 million due to be completed soon and more, worth over €1,400 million, currently being analysed. The real estate firm, managed by Azora and in which George Soros holds a stake, will present its new strategy to its shareholders at the end of February. The strategy includes: increasing the rate of growth in hotels, divesting from the residential segment and rotating its office assets. (…).

Hispania currently owns 37 hotel assets, containing more than 10,500 rooms, worth more than €1,000 million, making it the second largest hotel owner in Spain, behind only Meliá, and one of the main investors specialising in hotels in Europe, alongside Fonciére and Pandox.

The Socimi’s portfolio also contains 750 homes in Madrid and Barcelona, worth €215 million, and 25 office buildings, with a combined leasable surface area of 153,000 m2, worth almost €450 million. The firm’s plans include selling off its residential assets in a block sale to maximise gains and rotating its office portfolio.

In the residential segment, the company acquired the Torre Isla del Cielo in Barcelona, containing 213 homes for more than €60 million in May 2014; and it also owns 286 homes in Sanchinarro (Madrid). 75 of the homes in the Sanchinarro complex have been renovated Hispania bought them, whilst 64 of the homes in Isla del Cifra have been refurbished. This repositioning strategy has allowed the company to lease the renovated homes for 31% more in the case of Sanchinarro and 74% more in the case of Isla del Cielo. Hispania also owns homes in San Sebastián de los Reyes and Majadahonda, as well as a complex on Avenidad de Hispanidad, in the north west of Madrid.

In terms of offices, Hispania’s portfolio includes the Torre 30 building, leased to Ilunsion, and the Aurelio Menéndez building, leased to Uría Menéndez.

In parallel, the company is working with ratings agencies with a view to securing an investment grade rating, according to market sources. Hispania’s average cost of debt currently stands at 2.7% and depending on the results of the strategic review, the company may analyse a bond issue with the objective of diversifying its financial structure.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Oncisa Sells A Plot Of Land In Madrid To Ibosa For €30M

19 September 2016 – Real Estate Press

The land, which is located in the triangle between the M-11, the A-1 and Avenida de Manoteras, has a surface area of 7,000 sqm and a buildable area of 17,000 sqm. Ibosa is willing to pay €30 million for the plot.

Ibosa plans to construct a 75m tall 20-storey tower on this land, as well as two blocks of flats that will contain more than 130 homes.

In this way, Oncisa has liquidated all of its land on Isla Chamartín, where, in 2011, it sold another plot to Levitt for €27.5 million. That was subsequently acquired by Merlin Properties, which has recently started to construct an office block on the site, due to be completed during the first half of 2018.

The land is attractive due to its proximity to the city’s financial district as well as to the services in some very established neighbourhoods, such as Pinar del Rey and the PAUs of Sanchinarro and Las Tablas, where the supply of new homes and land is practically non-existent.

The operation, which according to market sources has been brokered by CBRE, is proof once more of the renewed investor and property developer appetite for well-appointed plots of land in areas where demand for housing is strong. In fact, it is one of the most important land transactions in the market in recent months and the most significant so far this year.

This project will represent a boost for the area, which is in the middle of a recovery in terms of both sales and prices. It is an area where there is a shortage of product and which is free from the urban planning and legal problems that are burdening its neighbour Valdebebas.

Original story: Real Estate Press

Translation: Carmel Drake

Cogesa Paid c. €2,200/m2 For The Final Plots In Montecarmelo

25 September 2015 – El Confidencial

Some people regard it as an Urban Planning Action Plan (‘Programa de Actuación Urbanística’ or Pau) for “rich people” only. But, Montecarmelo, the smallest of the three new neighbourhoods in the north of Madrid – together with Sanchinarro and Las Tablas – has become the talk of the sector. And it is no wonder. The neighbourhood has starred in the most expensive land operation to be closed since the burst of the real estate bubble, and although it did not trigger alarm bells per se, it did raise concern amongst the main players in the market, for whom the memories of the worst excesses undertaken during the boom are still fresh and vivid.

Less than three months ago, at the beginning of July, the company Cogesa, which forms part of Grupo Dragados and is led by Enrique Pérez, the brother of Florentino Pérez (the President of Real Madrid Football Club), paid an “exorbitant” amount for the final few residential plots in Montecarmelo. Specifically, Cogesa paid just under €2,200/m2 for the land, i.e. significantly more than the figure (€1,400/m2 – €1,500/m2) the experts consulted by this newspaper consider should have been paid for the launch of a profitable development, unless, of course, it is developed as a cooperative.

Montecarmelo, which is located next to Monte del Pardo, the Colmenar motorway and the M-40 ring-road, was conceived at the beginning of the 1990s. With more than half a million square metres of land allocated for residential use – 8,500 homes, both unsubsidised and subsidised – it became the destination of choice for hundreds of young couples who saw the neighbourhood as a good place to live that allowed them to travel into the city centre each day to work. It was born as a commuter town (neighbourhood), just like Sanchinarro and Las Tablas, but is now witnessing the “overheating”  of land prices that seems to be happening once again. (…).

Knight Frank…estimates that there is only around 50,000 m2 of buildable space left in the development, i.e. 5% of the total, since the remaining 95% is under construction or has already been built. (…).

Cogesa’s bid took the other participants in the tender completely by surprise: Construcciones Amenabar and Grupo CP, two companies that have been involved in previous projects, as well as Momentum and the cooperative DMS have said as much…none of the other offers even came close to the figure that was put on the table by the Grupo Dragados’ company, to acquire the last large plot for sale in Montecarmelo. The company already has a presence in the neighbourhood, with around one thousand homes in several developments. At one of them, Las Terrazas de Montecarmela, the company has been selling homes for just under €3,000/m2.

“Cogesa already has interests there. It owns several plots, which means that by paying the amount it has done for this plot, it has also increased the value of its own portfolio there” says an expert consulted by this newspaper. (…).

However, the most recent land operations are raising concerns that the segment is “overheating”. In fact, the numbers do not add up for some developers. “A those prices, they would have to sell the homes for more than €3,500/m2, and not only is it going to be difficult to find buyers willing to pay that much, the figure also leaves minimal scope for profit. A logical price would have been €1,400/m2-€1,500/m2, because even if the cost of the land attributable to the final price of the homes was 50%, they could be sold at €3,000/m2 and not lose money”, explains a source at one developer, who prefers to remain anonymous.

“At these prices, the only thing that would make sense is a development on a cooperative basis, a formula that this company has adopted in the past. The developers need to make a profit of between 15% and 20%, however, in a cooperative, the manager does not earn any more than 10% and the risk is diluted amongst the cooperative”, says Ernesto Tarazona, Partner and Director of Residential Property and Land at Knight Frank, who believes that the lack of supply in the area benefits any project that is undertaken in Montecarmelo. (…).

Original story: El Confidencial (by Elena Sanz)

Translation: Carmel Drake

Funds And Developers Compete To Buy Land In North Madrid

9 June 2015 – El Confidencial

Land is no longer the most toxic asset in the market, rather it has become one of the most sought after by investors. Although, not all plots or all locations are of interest, it is clear that the number of transactions, especially in Madrid, has reached “cruising speed” during the last few months. But, what are investment funds and property developers looking for exactly?

“Land has to be ready to build on (‘suelo finalista’); it is imperative that we can begin to build on it within a period of six months”, says Roberto Roca, Investment Director, Head of Spain at Orion Capital Managers, a fund that has closed two of the largest shopping centre transactions centres in Spain in the last year: the sale of Puerto Venecia (Zaragoza), the largest shopping centre in Europe, for €451 million and the sale of Plenilunio (Madrid), for a record figure of €375 million.

(…)

The market for land in Madrid is in full swing, to the extent that some experts agree that there is “overheating” in certain specific areas.

“Most activity is concentrated within the M-30 and on buildable land. Also, outside of the M-30, to the North of Madrid, from the A-6 to the A-1, i.e. the area comprising the urban developments of Arroyo del Fresno, Sanchinarro, Montecarmelo and Las Tablas”, says Ernesto Tarazona, Director of Residential Property and Land at Knight Frank.

However, in the South of Madrid, “despite the decreases, prices have not dropped enough…to reflect the real demand in the area”, concludes Tarazona.

(…)

One of the most active players in the market is Neinor Homes – the result of Lone Star’s purchase of the real estate arm of Kutxabank – which has €1,000 million to spend on land in Spain, and which regards Madrid as one of its main targets. The company led by Juan Velayos has just bought four plots in Alcobendas and another one in San Sebastián de los Reyes – both towns to the North of Madrid – for almost €65 million. This has been the largest land transaction so far in 2015, both in terms of square metres acquired, as well as surface area purchased. The plots are completely established and ready for construction, with a total surface area of 70,000 m2 and a buildable area for the construction of almost 600 (unsubsidised) homes. The vendor was a private group, i.e. the land did not used to belong to the Public Administration.

This transaction comes after the recent purchase of three other plots of land, one in Madrid and two in País Vasco for €22 million. According to a statement from BNP Paribas Real Estate, which advised on the deal, the first plot – with a buildable area of 6,400 m2 – is in the Legazpi neighbourhood and has been granted a special plan, approved by Madrid’s Local Council, to build a 20-storey tower block. The other two plots are located in Gexto and Urduliz.

Meanwhile, the cooperative manager Ibosa is finalising an agreement with an investment fund, which will allow it to pay €70 million to buy 40,000 m2 of land from the Valdebebas Compensation Board, which will allow the construction of 1,000 homes (of which 100 will be social housing).

Nevertheless, the largest land-related deal in Madrid is undoubtedly the possible future auction – maybe after the summer – of the Ministry of Finance’s plot of land on Calle Padre Damián, which already has 4,000 individuals calling at its door.

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

Hispania Buys Residential Complex And Office Block For €86M

30 March 2015 – Hispania Press Release

Hispania has closed two separate deals: the acquisition of an office building located on C/ Príncipe de Vergara – for €25 million – and the purchase of a residential complex containing 284 dwellings in Sanchinarro, Madrid, for €61.15 million.

Following these transactions, Hispania now has committed investments amounting to an aggregated GAV of €877 million. 

Hispania Activos Inmobiliarios, S.A., through its 100% subsidiary company Hispania Real Socimi, has closed two off-market transactions in Madrid for a total amount of €86.15 million, which have been fully financed using Hispania’s own funds.

Office building on Príncipe de Vergara, 108 (Madrid)

Hispania has acquired an office building located on C/Príncipe de Vergara, 108, where the street intersects with C/Joaquín Costa. The acquisition price amounted to €25 million (€3,718 /sqm).

The asset is located in the city centre of Madrid and enjoys excellent visibility. The building has a GLA of 7,324 sqm, distributed over 12 floors and commercial surface, as well as 68 underground parking spaces.

Residential complex in Sanchinarro (Madrid)

Hispania has also purchased a residential complex in Sanchinarro (Madrid) with a GLA of 39,000 sqm, distributed across 284 dwellings (2 and 3 bedroom properties), 311 parking spaces, 284 storage units and a retail unit, which is currently occupied by a major supermarket chain. The dwellings are in a closed complex with garden areas.

The total purchase price amounted to €61.15 million. The purchase price of the dwellings -excluding annexes and a retail unit- is equivalent to €2,050/sqm above ground. The dwellings are currently rented, with an approximate occupancy rate of 80%. Hispania’s business plan involves investing in the asset and expanding the surrounding facilities in order to convert it into a unique asset in the residential rental market in the Sanchinarro area, with the ultimate aim of optimizing its occupancy rate.

Located to the north of Madrid’s city centre, Sanchinarro is one of the most dynamic residential areas in Northern Madrid. Over the last few years, various companies have chosen to locate their corporate headquarters in Sanchinarro and its surrounding areas. This has increased the already strong demand for residential properties in the area.

These two deals prove, once again, Hispania’s ability to invest in high-quality assets through off-market deals in consolidated areas”, said Concha Osácar, Board Member of Hispania.

Hispania has committed investments amounting to €877 million during the last 12 months.

After these two transactions, Hispania has committed investments amounting to an aggregated GAV of more than €877 million. Hispania has a committed asset portfolio with an office GLA of 97,940 sqm –mainly in Madrid and Barcelona- 683 dwellings in Madrid and Barcelona and 22 hotels in Madrid, Barcelona, the Costa del Sol, the Canary and Balearic Islands and the Costa de la Luz.

Original press release: Hispania

Edited by: Carmel Drake