Baraka Injects €13.4M to Strengthen its Residential & Commercial Businesses

17 May 2018 – Eje Prime

Trinitario Casanova is continuing to add projects to his real estate business in Spain. The Murcian group Baraka has just injected another €13.4 million into its companies that specialise in the residential and commercial sectors. The group’s upcoming plans in Spain include initiating operations in Chamartín, where it has just acquired a plot of land measuring 1.2 million m2.

According to the Official Gazette of the Mercantile Registry (Borme), Baraka has injected another €10 million into its company Baraka Renta. That business division of the group focuses primarily on the purchase of land and the subsequent development and execution of rentals for various companies, both domestic and international, in the food sector.

Baraka has also strengthened its company Baraka House, where it has increased the share capital by €3.5 million. That branch of the group focuses on the development of high-rise homes for young people. “This new line is being carried out in the main cities in Spain thanks to the use of pre-fabricated constructions”, explain sources at Baraka.

In this way, the group is injecting new resources into its companies to undertake new real estate projects in Spain. The latest deal that Casanova has carried out focuses on Madrid, specifically the Operación Chamartín macro-project.

The Murcian businessman has paid €400 million to the original owners of some of the plots of land in Operación Chamartín for their reversion rights to develop 1.2 million m2 of land that is currently owned by Adif.

Rente expropriated these plots with the idea of building the railway station on the site, but, subsequently, the public company reached an agreement with BBVA and Grupo San José to develop the land.

Both companies created the property developer Distrito Castellana Norte (DCN), which is now leading this urban development operation that is going to build 10,500 homes on a surface area spanning 2.66 million m2.

Nevertheless, Casanova wants to take advantage of the claim being made by the reversionists, who are asking the administration to be awarded the right to acquire their former plots in the event that Renfe decided to change the use for which they were expropriated and to sell them, as has actually happened, according to these parties.

Casanova’s next steps for this project in Chamartín involve first paying a cheque for €400 million to the reversionists, who have received a small payment for now whilst they wait for the rights that they are requesting to be activated or not, and later on to pay €1 billion to Adif for the outright purchase of the plots. That is the amount that DCN has promised to pay the Spanish railway manager.

Second generation and reinforcements for the property developer 

Proof that the residential sector is firmly in Baraka’s sights came with the appointment of Fuensanta Casanova, daughter of Trinitario Casanova, as the Head of Development and Investment at Baraka, as Eje Prime revealed in Madrid (…).

Original story: Eje Prime (by C. Pareja)

Translation: Carmel Drake

Axis: Spain’s Banks Will Divest At Least €40bn of Their Problem RE Assets This Year

30 March 2018 – El Mundo

Spain’s banks are still trying to lighten their balance sheets of the huge load left on them by the real estate crisis. Forecasts for this year indicate that they will manage to divest assets worth at least €40 billion including properties, foreclosed land and defaulted and non-performing loans.

Those are the estimates made by the consultancy firm Axis Corporate on the basis of operations that are currently being sounded out in the Spanish real estate sector. The figure includes transactions worth at least €9 billion by Sareb, sales of around €6 billion by Bankia and operations by CaixaBank and Banco Sabadell with a volume of close to €12 billion each. “To all of these operations, we have to add the retail operations that the servicers are currently undertaking”, explains José Masip, Real Estate Partner at Axis Corporate and coordinator of the Assets Under Management Observatory Report published recently by the company.

In 2017, sales of toxic assets linked to real estate exceeded €50 billion, “almost twice the €27.4 billion sold between 2012 and 2016”, says the report. Spanish entities are accelerating the clean up of this type of asset from their balance sheets to reduce their default rates and fulfil the European regulations that force entities to reduce the weight of non-performing assets to pre-crisis levels. Despite that and according to data from the consultancy firm JLL, the volume of non-performing assets with real estate collateral in the hands of the banks and Sareb amounts to around €200 billion: €80 billion in REOs (foreclosed assets) and €120 billion in NPLs (Non Performing Loans or doubtful credits).

Greater weight of funds

Both firms predict that the rate of sales seen last year will continue in 2018, above all due to the growing interest from international investment funds (…).

The main investment funds focused on the purchase of real estate assets in Spain are Bain Capital, Oaktree, EOS Spain, Apollo and Axactor, who are following in the footsteps of others such as Blackstone and Cerberus.

The latter two entities starred in the two most important operations of last year. In July, Santander sold a portfolio comprising 51% of the toxic property it had inherited following the purchase of Banco Popular to Blackstone in an operation worth €5.1 billion; meanwhile, in November, BBVA sold 80% of its real estate portfolio to Cerberus for around €4 billion. In a similar operation, also in 2017, Liberbank sold part of its toxic portfolio to the funds Bain and Oceanwood for €602 million.

The transactions were structured through the creation of joint ventures in all cases, in which the bank held a minority percentage of the company or servicer and the acquiring fund took over the bulk of the management. According to Emilio Portes, Director of the Portfolio Business at JLL for Southern Europe, “the structure offers entities a stake in the profits of the assets with upside potential at the same time as cleaning up their balance sheets and slightly improving their capital ratios. Similarly, it offers buyers more advantageous prices without limiting their strategy and management capacity”.

Indeed, in Axis’s opinion, those servicers are expected to be some of the main players in the market over the short and medium term. According to data from the consultancy firm, more than 80% of the assets under management are in the hands of five of them: Altamira (linked to Santander), Servihabitat (CaixaBank), Haya/Anida (controlled by Cerberus after the operation with BBVA), Aliseda/Anticipa (Blackstone) and Solvia (Sabadell). The outlook for this year points to greater concentration in the sector, “with the possible sale of some of the existing servicers”, in such a way that their specialisation and differentiation will be definitive.

Original story: El Mundo (by María Hernández)

Translation: Carmel Drake

La Finca Goes On Market For €700M: A Chinese Fund Is Interested

22 September 2016 – Ok Diario

Procisa, the property developer behind the business and residential complex La Finca, located in the northwest of Madrid, has put the “For Sale” sign up. Its Board of Directors is now listening to offers for the purchase of 100% of the company’s share capital, which is currently controlled by the heirs of Luis García Cereceda, founder of the family empire who died in 2010. There are already several investors interested in negotiating the purchase of the group.

According to sources close to the company’s Board of Directors, the objective right now is to continue depreciating the assets and to close the sale before the crisis that the company is undergoing hinders the operation.

According to data from the Commercial Registry, the value of Procisa’s assets decreased to €890 million at the end of 2014 (the last year for which accounts are available), an figure that falls well below the more than €1,000 million recorded in 2010. In fact, according to the sources consulted, the firm is currently reported to be worth around €700 million, a figure that concerns the company’s directors.

The key behind the success of this operation is for the majority shareholder, Susana García Cereceda, to give her approval for the sale of 100% of Procisa, something which has been denied until now. In fact, in June, the General Shareholders’ Meeting approved the carve out of the company into several companies, to allow the US fund Värde, which is investing in the Spanish real estate market, to enter the business. The majority shareholder wanted Värde to acquire 40% of the office business and for the entirety of the residential business to remain in the hands of the García Cereceda family.

According to the plans designed by the main shareholder, Procisa’s assets were going to be distributed between the new company La Finca Global Assets (which was going to manage the rental of offices and retail premises), the company Finca Somosaguas Golf (which was going to focus on building a luxury residential area under the Casablanca brand) and La Finca Promociones y Conciertos Inmobiliarios (into which the other assets and debts from the current Procisa company were going to be integrated).

Nevertheless, that operation was blocked by the Commercial Court number 11 of Madrid, in light of the opposition filed by Yolanda García, the sister of Susana and owner of 49% of Procisa. It was in this context that the company’s change of strategy arose, which is now “to listen to offers” in order to complete the sale of all of the company’s share capital. (…).

According to sources, a Chinese investment fund is already willing to make an offer for Procisa, although the sources consulted preferred not to give any more clues about the deal so as not to jeopardise the potential sale. The trump card that the company’s Board of Director have to close the operation is the recovery of the Spanish real estate sector, and the fact that a number of major companies are located in La Finca, both Spanish and multinationals. In addition, the company owns a luxury residential area, which has great potential to appreciate over the medium term.

Original story: Ok Diario (by L. Ramírez and Jaime Acero)

Translation: Carmel Drake

Deutsche Buys €400M Developer Loan Portfolio From Bankia

4 July 2016 – Expansión

Deutsche Bank has reaffirmed its commitment to the Spanish real estate market despite instability in the markets caused by Brexit. Last week, funds from the German entity sealed the acquisition of almost €400 million in doubtful property developer loans from Bankia.

This is the second transaction of its kind that Deutsche Bank has signed with Bankia in just six months. At the end of 2015, it acquired just over €600 million in unpaid company loans, backed by real estate collateral. In this way, the German bank became the owner of at least one hundred loans linked to property that had originated on Bankia’s balance sheet.

Sources in the market estimate that Deutsche Bank could have paid just under €150 million for this latest operation, known as Project Ocean.

With these types of portfolios, funds are typically looking for loans that give them relatively easy access to real estate collateral, either through legal foreclosures or agreements with the borrowers.

These deals allow the vendor entities to reduce their default rates; lower their risk-weighted assets; generate gains, in some cases; and focus their resources on granting new, profitable, loans.

In fact, Bankia is close to completing another major divestment within the next few days, with the transfer of 2,500 flats to the fund Sankaty, the subsidiary of the US giant Bain Capital. These properties have been valued at between €300 million and €400 million.

A new star

This investor has become the largest purchaser of problem assets from the banks (in Spain) in 2016. In this way, in addition to Bankia’s portfolio, Sankaty signed another two acquisitions last week: Project Pirene, comprising €460 million in problem assets linked to property developers, from Sabadell; and Project Baracoa, containing 2,400 loans to bankrupt companies, worth €530 million, from Cajamar.

Sector sources say that these operations prove that investors are still interested in Spain, even through Brexit has made the financing of these purchases more difficult.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

Price Increases Spreading In Major Cities. Valencia, Malaga And Palma De Mallorca Gain Speed.

13 February 2016 – Expansion

Real Estate recovery takes pace and extends to a growing number of provinces and province capitals. Specifically, 21 provinces are already positive year-on-year, according to the sold homes assessment carried out by Tinsa valuating company. On the other hand, sixteen provincial capitals have also increased prices in the last year. 
Thus, the recovery is concentrated in Madrid, Barcelona and Costa del Sol, which are the leading indicators of Spanish Real Estate sector. In fact, whenever there has been a crisis, these three areas have been the big headlights targeting where the rest of the market would head for in the coming months. 
Firstly, Madrid and Barcelona are the two largest metropolitan areas and also the cities that account for more space in prime areas. Stock depletion in these areas as well as high demand in these two cities has led to strong advances, reaching 6.2% in the Spanish capital and 8.7% in Barcelona. These increases are also supported on the largest credit facilities and improvement in confidence during the past year. 
On the other hand, many coastal capitals have experienced a great boost thanks to the pull of Marbella, Valencia, Malaga and Palma de Mallorca. This increase is due to the strong increase on foreign demand. These cities show a strong acceleration in the last month. For instance, the price of housing in Valencia rose at a rate of 0.6% in the fourth quarter, 1.6% in Málaga and 2.2% in Palma de Mallorca; in January, the three of them soared to paces of 4.7%, 5% and 5.6%, respectively. In addition, tha fact that this price has been relaunched in cities where the stock was weighing down the real estate suggests that this volume of unsold homes is very quickly shrinking.

Two paces     

However, Spanish market being divided into two speeds is something that cannot be left out. On the one hand, the great capitals and certain areas of the Mediterranean coast, which show a strong growth. On the other hand, much of the inland Spain, where there is either a large second-hand market or an aging population that subtracts dynamism from the demand. 
In this situation we find cities like Pamplona, Palencia, Zamora, Leon and Huesca, where prices have not yet finished their fall. However, Tinsa forecasts indicate that the recovery of the “brick” will be consolidated in 2016, bringing these areas to positive territory. Although the landscape is far better among the great capitals, some of these cities also remain in negative. This is the case of Zaragoza, where home prices fell at a rate of 3.1% in January, or Bilbao, shrinking back by 0.2%. Sevilla, however, shows a shy increase of 0.6%.

Original story: Expansion (by P. Cerezal)

Translation: Aura Ree


The Spanish Real Estate Sector Is Getting Ready For A “Digestion” Of The Investment Made In 2016

12 February 2016 – Expansion

After a record year in asset transactions, the Spanish real estate sector is getting ready for a “digestion” of the investment made in 2016, according to the the forecasts of the consulting company Irea, which considers that, despite the total volume of investments will decrease at around 15% -as it already happened in 2015-, the sector will maintain the pulse thanks to the strong activity in residential land and hotels.

Residential land and hotels shall lead the real estate sector

“It is not that the party is over but that, rather than a race for the massive investment, it will be a year of “digesting what was purchased “explains Irea CEO, Mikel Echavarren to EXPANSION.

Record year

By business segments, Echavarren emphasizes activity in hotels and residential land, which will remain as supports of the sector. The hotel investment volume reached 2,614 million euros in 2015, 142% more than in 2014. “It is not expected to be so high, but it will still be awesome, after consecutive years of tourists entry record, due to the euro devaluation, the instability of North African rivals and the price of oil hitting rock-bottom,” he explains .

Regarding residential land, Echavarren remarks that there are areas in Spain where demand is “undeniable” and prices are even rising. “Investment in construction, finalist and well located land at last has a controllable risk,” he added.

However, all in all, this year Irea foresees a reduction in assests investment (residential property, offices, shopping centers and hotels, among others). In 2015, the total investment volume of assets was 12.848 million euros, representing an increase of a 33%. “This year could be between 8,000 million and 9,000 million euros,” he anticipates. 
As for the sale of debt portfolios, which started strongly in 2013, the number of transactions is expected to be reduced, as well as its volume, following last year’s trend. Thus, if the volume of debt transactions decreased by 36% up to 8.117 million euros in 2015, for next year forecasts are that the figure does not to exceed 6,000 million. 
Echavarren explains that the reason for this reduction is that the assets backing the debt held by banks and SAREB are more fragmented so, to place homogeneous packages, these should be smaller.

Political concern

Regarding the political situation, Echavarren recognizes that some Spanish funds are already more reluctant to invest in some segments, such as city councils of “uncertain political management or high urban risk”. “They are not considering leaving Spain, but certainly being more selective,” he adds. In contrast, international investors are more concerned about the situation of the global economy, but “they are certainly not happy “with the current situation. 
With regard to the involvement of certain political decisions, such as the hotel moratorium, both in investment and real estate, Irea CEO recalls that in Barcelona, hotels prices have increased significantly. “Buying a five star hotel knowing you’re not going to have new competition for several years increases the interest of investors.” He says. 
As for similar measures in Madrid, “it makes no sense” to Echavarren, since the problem in the capital is not the  excess of offer but the demand attraction. “In Madrid we do have cruises coming in by the Manzanares” he jokes.

Original story: Expansion (by Rebeca Arroyo)

Translation: Aura Ree

Axiare Completes €395M Capital Increase

10 June 2015 – Expansión

The Socimi Axiare, led by Luis López de Herrera-Oria (pictured above), has completed the €395 million capital increase that it launched in May to continue investing in the Spanish real estate sector.

Axiare has thereby duplicated its size – its market capitalisation now exceeds €800 million. JB Capital has coordinated the operation.

Original story: Expansión

Translation: Carmel Drake

Large Funds & Socimis Invest €2,500M In RE In Q1 2015

20 April 2015 – Expansión

Q1 2015 / Major international investors and Socimis purchased more non-residential property in Spain during the first quarter of 2015 than during the whole of 2012.

The investor frenzy that began in the Spanish real estate sector at the end of 2013 and intensified last year is on track to smash all historic records (this year), including the peak levels of the boom years. Between January and March, large international funds, companies from Spain and the rest of Europe and new listed real estate real estate investment companies (Socimis) made purchases worth €2,463 million, according to the consultancy firm C&W, i.e. three times the volume recorded during the same period last year.

This figure exceeds the total volume of investment made during 2012 in its entirety, when the global crisis really hit the Spanish real estate sector and only €2,087 million was invested in the market, according to Deloitte Real Estate. Having been boosted by domestic and international purchasers who spent more than €8,500 million in 2014, the start of this year reflects a “unique” time in the sector for various reasons, according to market experts.

On the one hand, the Spanish economy is recovering well, which is resulting in higher consumption and more recruitment, which is in turn influencing commercial and office buildings.

On the other hand, the decrease in prices, of up to 40% in the case of assets, has meant that many opportunities exist in terms of price in the Spanish market, in contrast to what is happening in other European countries. “The low profitability of fixed income assets has turned real estate into an important sector in terms of investment portfolios. Furthermore, prices are stabilising, access to credit is opening up and the economy is growing”, say sources at Aguirre Newman. The confluence of these elements has led all of the players in the real estate sector to show their support Spain: from the most opportunistic funds seeking properties with significant discounts to more institutional investors, such as sovereign and pension funds, and including Spanish and foreign real estate companies.

Battle for assets

All of this has led to a real war for the best assets (known in real estate jargon as trophy buildings), which means that this year looks set to be a record year in terms of purchases. “We expect to see great figures in 2015, approaching €7,000 million in terms of direct non-residential investment”, explain sources at JLL España.

“If the level of interest in Spanish real estate assets from major global investors continues for the rest of the year, then we could see historic record figures in 2015, even higher than the peak recorded in 2007, when transactions with a total value exceeding €12,000 million were closed”, add C&W.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake