JLL: Only 11.5% Of Madrid’s Office Space Is High Quality

4 August 2016 – Mis Oficinas

Of the more than 18 million sqm of office space in Madrid, only 11.5% comprise high quality buildings, known as Grade A properties. And that percentage decreases even further if we narrow our focus to the stock of offices that are currently vacant, where such buildings account for just 8% of the total, according to a report compiled by JLL.

Specifically, in Madrid the report identified 139 Grade A properties, with a total surface area of 2.1 million sqm, which means that the percentage of high quality offices is significantly lower than in other cities such as, for example, Central London, where it is estimated that the ratio of Grade A buildings over the total stock ranges between 15% and 20%, and Paris, where it amounts to 16%.

To conduct its study, JLL defined three categories to take into consideration when classifying Grade A buildings: physical characteristics (height, surface area per floor, flexibility of the space, etc); technical features (air-conditioning/heating, security, energy supply and the management of the property); and services, as in those offered to the occupants of the building.

These properties are spread very unevenly across Madrid (CBD, Secondary, Periphery and Satellite). In this sense, more than 70% of the Grade A stock is concentrated in peripheral areas (in the Periphery and Satellite areas) and just 21.7% is located in the financial district (CBD), 457,310 sqm in total. On the other hand, if we consider the percentage of high quality office space over the total stock, in the CBD only 10.5% of buildings are categorised as Grade A, whilst in the Periphery area, more than 30% fulfil the criteria.

In terms of rental prices, JLL has identified three factors that determine the highest rents in the market: quality, location and public transport links. The combination of those aspects determines the final price. Thus, in the same sub-market, the difference between the rental price of a Grade A building and another property that does not fulfil those criteria could amount to 30%; in the same way, buildings with the same characteristics but with different locations may also have differences in rent of around 30%.

The level of penetration of Grade A buildings in the rental market is significantly higher than its weight as a percentage of stock and the trend is growing. Thus, in 2015, Grade A buildings accounted for 35% of the total rented surface area, up by 10% compared with 2014.

The ratio is even higher for transactions involving large spaces. In this sense, in rental operations for spaces measuring than 2,000 sqm, 48% of the space leased involved Grade A properties.

This data shows the (high level of) interest from companies in renting Grade A properties, as they are increasingly aware of the impact of the quality of their offices on their results and the productivity of their employees. Nevertheless, given the current levels of new leases and the scarce availability of space, the supply covers just over 12 months of demand. And that problem is not going to be solved through the construction of new properties, as they are insufficient to meet current demand. In fact, according to JLL’s report, 27% of the future space planned for the next three years, both refurbished and newly built, has already been leased or designated for own use.

Original story: Mis Oficinas

Translation: Carmel Drake

Vía Célere Acquires 2 Plots Of Land In Madrid For €10M

6 April 2016 – El Mundo

The property developer Vía Célere has acquired two plots of land in Madrid for €10 million, where it plans to construct two new developments, according to a statement by the company.

The plots, located in the town of Móstoles and in the neighbourhood of Embajadores, have an above ground buildable area of 5,400 m2 and 4,400 m2, respectively. Similarly, the owner pointed out that both sites are well connected and benefit from good services, “which are very important factors when it comes to buying a home”.

The Chairman of Vía Célere, Juan Antonio Gómez-Pintado, highlighted that Madrid and the Community in general “has some very interesting plots of land for the construction of new homes”. Specifically, in the case of the plot in Embajadores, he said that his company has “studied the area in great detail, as it is close to another development that we are already working on and where all of the units have already been sold”. Similarly, regarding the purchase in Móstoles, they commented that the determining factors behind the sale have been “the price and the location, two of our fundamental premises for the construction of new homes”.

Currently, Vía Célere owns seven property developments that have been completely sold out, one that is under construction and one that is pending delivery, but also sold completely and one with units still for sale, which is very close to the Méndez Álvaro area, called Residential Célere Adelgas II (pictured above). In addition, the property developer is hoping to launch three new projects within the next few months.

Original story: El Mundo

Translation: Carmel Drake

San José Leaves Losses Behind With Profits Of €7.3M In 2015

2 March 2016 – El Economista

The San José Group generated a net profit of €7.3 million in 2015, compared with losses of €122.7 million in 2014, according to a statement from the construction and renewable energy company, which stated that its profits before tax rose by 49.5%, to €10.6 million.

The turnover of the group led by Jacinto Rey grew by 15.3% last year, to €536.1 million, thanks to a higher contribution from international construction work, which now accounts for more than half (58%) of revenues.

In fact, the group’s sales in the international market increased by 19% during 2015, to amount to €313.1 million, compared with a lower recovery of 10.4% in the domestic market, where revenues reached €223 million.

San José’s EBITDA stood at €43.8 million, up by 29.6% compared with 2014, whilst its EBIT doubled to exceed €30.7 million.

By business line, the construction segment contributed €442.1 million to the company’s sales, up by 15.8% compared with the previous year, meanwhile the concessions and services division recorded revenues of €46.6 million, up by 12.3%, driven by the definitive approval and launch of the concession phase of its hospitals in Santiago de Chile.

Meanwhile, San José’s sales from its energy division rose by 12.1% in 2015, to reach €12.7 million.

Original story: El Economista

Translation: Carmel Drake

The Asset Management Company Of Aznar´s Son Earns 146 Million With SAREB Properties

8 February 2016 – El Economista

Haya Real Estate, the real estate asset management company of which Jose Maria Aznar´s son is a director and which Jose Maria Aznar´s son is a director and which it is partially owned by US fund Cerberus, but operates with its own autonomy, obtained in 2014 – its first full year, a net turnover of EUR 146.05 million.

According to the accounts just submitted to the Madrid Mercantile Registry, the company where the son of former Prime Minister José María Aznar works achieved EUR 96.5 million in commissions for its activity; EUR 47.6 million for asset management and EUR 1.8 million for other services.

Haya Real Estate was incorporated on May 28th, 2013 and its purpose is the provision of financial advice and real estate assets management and marketing.

Contarct with Bankia

On September 3rd, 2013, the Company signed an agreement to acquire certain assets and development loans in the brick industry owned by Bankia and Sareb groups (the Asset Management Company arising from the Bank Restructuring).

The contract ended on December 31st, 2014, but later – after the announcement of a public tender, the company returned to take over the management of assets, in this case of debt with real estate collateral, initiating the provision of services just over one year ago, on January 1st, 2015.

According to the company accounts, “in order to ensure a certain performance level and volume in the provision of services on the part of Sareb, it has established a guarantee by delivering EUR 235.1 million to Sareb, whose return will take place throughout the duration of the contract “, which has been signed for a period of five years.

To finance this operation, Beech Real Estate signed a loan with Bawwag Bank amounting to 170 million, also receiving financial support from its shareholder through a new loan of 45 million and a capital increase for another 30 million. Until December 31st, 2014, the Management invoiced the totality of its services to Bankia group, this entity being in turn the one invoicing to Sareb for asset management services. However, from January 1st, 2015 and according to the accounts, Haya Real Estate invoices to Sareb directly.

Purchase from Cajamar

Apart from these assets, in June 2014 the company also signed a contract to acquire Cimenta2, the real estate assets management platform of Cajamar, the first cooperative financial credit group in Spain. In addition to purchasing the platform, it took a contract to manage property assets, credits – both mortgage and non-mortgage and securitized loans amounting to EUR 7,300 million, with 10-year marketing exclusivity.

In this case, for the financing of this operation, the company entered into a new loan with BAWAG Bank amounting to EUR 135 million, its shareholder taking another loan for EUR 45 million and carrying out an increase with issue premium for other EUR 54 million. On the other hand, the company also strengthened by incorporating securitization to its offering of services and products through the purchase of “Ahorro y Titulización” (AyT) owned 50/50 by Cecabank and “Ahorro Corporación“.

By December 31st, 2014, the Management Company at which Aznar’s son works as a Director, achieved total assets for EUR 604.6 million and earned a net profit of 4.8 million.

Always in accordance with the accounts filed with the Registry, the firm accumulates debt maturities over the next few years for a total amount of 357.6 million. Having faced during the last year maturities for 97.7 million, this year has payment commitments amounting to other 55.8 million.

Original story: El Economista (by Javier Romera and Alba Brualla)

Translation: Aura Ree

Sareb Tries Its Hand As A Property Developer

7 December 2015 – El Mundo

Sareb, also known as the bad bank, is boosting the recovery in the residential development segment. Using its own land and several delegated firms, the company is going to inject 783 new homes onto the market through 13 developments spread across Spain. Construction on these projects is expected to start in December and to be completed at the end of 2017.

This supply from Sareb represents an important boost at a time when construction activity is very low compared with growing demand, which has started to drive prices up. The statistics speak for themselves: between January and September, just 36,031 permits were granted for the construction of new homes. And although that figure represents an improvement of 30.6% compared with 2014 and exceeds the number of permits granted in 2013 as a whole, it is still very low according to the experts, who are advocating an objective of somewhere between the historical minimum of 2013 (34,288) and the peak of 2006 (865,561).

With this property development initiative, Sareb is opening a new line of business. Until now, it had limited itself to selling land, and since 2014, to the termination of partially-completed new build projects that it had inherited. To this end, it has approved the completion of around 70 projects containing 1,200 homes, and has spent almost €50 million. According to its President, Jaime Echegoyen, “with this (property developer) initiative, we are strengthening our commitment to the reactivation of the real estate market and are boosting the local economy”.

The bad bank is undertaking this major commitment in collaboration with several servicers, in their capacity as technical and commercial managers. “Sareb’s business model means that it makes sense for us to work together with third parties to undertake our activity. In the case of development, we want to have the best professionals in a collaboration model in which the technical management is the responsibility of, in this case, Solvia (nine full management projects and one sales project under the technical management of Algescom), Servihabitat (two) and Altamira (one), but that we will extend this to work with other collaborators in the future”, explains Andrés Benito, Sareb’s Director of Real Estate Development. (…).

The company says that it will focus its developments in “strategic locations”, making it clear, once again, that the real estate recovery is not homogeneous. The cities selected by the bad bank for its developments are: Madrid (two developments), Valencia (two), Málaga (three) and one in each of Sevilla, Pozuelo de Alarcón, Badalona, Alcalá de Heranores, Vigo and Alicante. Sareb expects to invest around €110 million in the 13 developments. (…).

Francisco Pérez, Director of Promotions and Developments at Solvia set out the servicer’s functions under its agreement with Sareb, championing its role as a dedicated servicer: “This project is another example of all of the services that we offer: product proposals, project coordination, the request and processing of all kinds of permits and licences, preparation and development of marketing and sales plans, sales management (including first occupancy licences), handover of keys and post-sales service management. (…).

Looking ahead to the future, the bad bank does not rule out continuing to grow its property development activity, but it will do so cautiously, according to Benito. “Sareb will gradually identify profitable investment projects in accordance with our criteria of prudence and value creation”.

Original story: El Mundo (by Jorge Salido Cobo)

Translation: Carmel Drake