Zambal Extends the Ministry of Foreign Affairs’ Rental in the Torres Ágora until 2023

26 February 2019 – Eje Prime

Zambal has renewed its contract with the Ministry of Foreign Affairs and has consolidated one of its main assets. The Socimi, managed by IBA Capital Partners, has signed a new rental contract with the public body for the Ágora Towers, the facilities that house most of the personnel assigned to the Ministry of Foreign Affairs, European Union and Cooperation.

The new rental contract will last for four years, of which the first two are mandatory, according to reports made by the real estate company to the Alternative Investment Market (MAB).

The Ministry of Foreign Affairs has been the tenant of the Ágora Towers, located at number 26 Calle Serrano Galvache in Madrid, since 22 October 2012 (…). Zambal has been the owner of the complex, which comprises two 15-storey twin buildings with three basement floors, since December 2013. The towers have a gross leasable area of 30,469 m2 and 469 parking spaces (…).

Original story: Eje Prime (by Roger Arnau)

Translation: Carmel Drake

New Legislation Stipulates that Residential Rental Contracts will Last for 5 or 7 Years

15 December 2018 – Expansión

On Friday, the Council of Ministers gave the green light to a royal decree of urgent measures relating to housing and the rental sector. The Minister for Development, José Luis Ábalos, highlighted that the majority of evictions occur due to a failure to pay the rent, whilst the number of mortgage foreclosures has decreased.

The main measures with respect to rental are: extending the term for the extension of leases, from three to five years – or up to seven years if the lessor is a legal entity – and increasing the term for tacit renewals from one to three years. Also, limiting the deposit to two months as a guarantee, facilitating agreements between tenants and owners to improve housing, management expenses shall be borne by the lessor when that is a legal entity, improving the remission of tourist rental contracts and horizontal ownership so that three fifths of the residents can limit tourist apartments, amongst other measures.

Nevertheless, the minister highlighted that this decree does not include measures aimed at intervening in rental prices, as had been agreed with Unidos Podemos in the budget agreement. However, he did not rule out that they may be included within the framework of the budget negotiations for next year.

For the time being, and precisely due to the absence of these measures in terms of prices, Pablo Iglesias has warned that the vote of his party to approve this decree-law will be “unfavourable”.

“We had agreed something else with them in the budgets, that the housing measures had to include controls over rental prices to decrease rental prices”, he said when the measures in the decree were made public.

“We hope that they are rectified so that we can go ahead with this decree, provided that it has the same content that we agreed”, added Iglesias, who also declared in a tweet that “the Government’s decree does not contain the most important measure from the agreement: that of prohibiting abusive increases in rental prices”.

Original story: Expansión

Translation: Carmel Drake

Grupo Ortiz Completes 5-Year Bond Issue Worth €50M

10 July 2018 – Eje Prime

Grupo Ortiz has finalised the placement of bonds worth €50 million with the aim of replacing a previous issue that is due to expire next year. Thanks to this operation, the company will reduce the cost of its debt and extend its maturity period.

The new bonds, subscribed by qualifying investors, are being launched over five years, in such a way that they will expire in 2023. The interest rate on the bonds is 5.25%. The new securities replace those issued for the same total amount in 2014, which are due to expire in 2019 and which generate a cost of the company of 7% per annum.

The new bonds, just like their predecessors, will be admitted for trading on the Alternative Fixed Income Market (MARF). Grupo Ortiz was the third company to launch debt securities on that market.

In 2017, Grupo Ortiz completed a portfolio of building work pending execution worth €6 billion, up by 45% compared to the previous year, boosted by the expansion of its international business, primarily in Latin America. More than two-thirds of the company’s business is generated overseas.

Original story: Eje Prime 

Translation: Carmel Drake

Changes Afoot: Sareb Considers Modifying the Management of its €35.5bn Portfolio

29 May 2018 – Eje Prime

The bad bank is rethinking its future. The company is analysing the possibilities that the current servicer market offers it in terms of restructuring the approximately €35.5 billion that it has on its balance sheet in a completely different way. The objective of the move, according to sources close to the group, is to generate more profitability.

When at the end of 2014, the bad bank launched the so-called Project Ibero, it awarded the management of its portfolio to four servicers: Haya Real Estate, Altamira, Servihabitat and Solvia, and it distributed the work between the entities, according to El Economista.

Now, the company is analysing what would be the most efficient way of segmenting the assets, and the possibilities that it is considering include the option to “regionalise” the portfolio by geographical area. Likewise, it could organise its catalogue by asset type, given that more sophisticated operators now exist that were not on the scene in 2014, and they specialise by market segment focusing on areas such as logistics, retail and hotel.

In the review of its new strategy, the entity chaired by Jaime Echegoyen (pictured above), is also considering bringing some of the management activity in-house, like it has been doing to date with the large bankruptcy cases, such as for example Martinsa Fadesa. Another example is the property development department, for which it is now looking for an industrial partner, in a process that includes finalists of the calibre of Vía Célere, Aedas Homes and Aelca.

The first contract that Sareb has started to review, which expires at the end of 2019, is the portfolio currently in the hands of Haya Real Estate, with a net value of around €12.5 billion at the end of 2017. The next contracts are not due to expire until 2021, since the duration of the agreements that Sareb signed range between five and seven years from the date they entered into force.

Original story: Eje Prime 

Translation: Carmel Drake

Singapore GIC To Expand Its Logistics Portfolio In Spain & Portugal

19 May 2017 – Expansion

P3, the company specialising in the ownership, development and management of logistics assets, wants to take advantage of the support being offered by its new owner, the sovereign fund Singapore GIC, to lead the logistics market in Spain and establish itself as one of the country’s leading developers and investors in this segment.

The company, which operates under the commercial name P3 Logistics Parks, currently owns a portfolio of assets covering 400,000 m2 in Spain, after it purchased eleven logistics warehouses in April. P3 is planning to finish the year with 500,000 m2 under management, according to the CEO of the company in Spain, David Marquina.

“We want to become one of the main suppliers of logistics space over the next three years. Specialisation and a long-term outlook are our mantras”, he said.

To this end, P3 has just opened an office in Madrid and has a team there analysing opportunities. The group specialises in closing off-market operations.

The firm wants to strengthen its two business lines in the country: investment in rental assets and the construction of turnkey projects for clients. “We are analysing both the purchase of companies that own logistics assets, as well as the acquisition of portfolios and individual properties to grow in size”.

Similarly, as part of its expansion plan, P3 is considering expanding its operations into Portugal. The company, which was created in 2002 in Prague and which quickly began its expansion into central and Western Europe, owns a portfolio containing 170 logistics warehouses and parks in 11 countries across Europe, spanning a total surface area of 3.5 million m2 and with a land bank covering more than 1.8 million m2 for development.

“Germany, France and other countries where we have had a more limited exposure until now, such as Italy and Spain, are strategic markets for the group”.

In Spain, P3 has a presence in the central logistics corridor, which connects Madrid, Zaragoza and Barcelona, and it wants to strengthen its presence in the Mediterranean corridor.

The director highlights that 98% of its assets are leased through rental contracts that have an average term of 6.2 years.

For Marquina, the economic recovery and political stability have allowed investors to be interested in Spain, which is firmly back on the investment map. “After the crisis, real estate and logistics development was left paralysed. The stock became obsolete and out-dated. Over the last four years, liquidity has increased in the market and there has been a compression in yields, but there is still a long way to go”, he said.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

BBVA, Sabadell & Bankinter Raise Their Fixed-Rate Mortgage Rates

2 February 2017 – Expansión

The move comes at a time when fixed-rate mortgages account for 31.8% of all new mortgages signed, according to the most recent data from Spain’s National Institute of Statistics (INE), which corresponds to the month of November 2016. The figure (which includes mixed mortgages) sets a new record and comes in stark contrast to the same month in 2015, when fixed-rate mortgages accounted for just 9.3% of the total.

The move applies to all terms (periods) and involves increases of around 20 basis points on nominal rates and AERs (annual equivalent rates, which indicate the total cost of mortgages).

Bankinter, which was the most aggressive entity when it came to offering fixed-rate products during 2016, raised its prices across all mortgage terms on 15 December, from an AER of 2.82% to 2.96% over 10 years; from 2.94% to 3.10% over 15 years; and from 3.09% to 3.26% over 20 years.

Domino effect

(…). This move was immediately followed by BBVA. It increased its mortgage rates from an AER of 2.72% to 2.98% over 20 years; from 2.98% to 3.24% over 25 years; and from 3.01% to 3.55% over 30 years.

At the time, the bank chaired by Francisco González kept the conditions of the 15-year product the same. However, last month (January), it increased that rate too from 2.50% to 2.76% AER. It was BBVA that took the market by storm last March with its launch of the best fixed-rate, 15-year term, mortgage on the market.

In this way, the rise in fixed rates is being led by the very entities that supported the promotion of fixed-rate products so heavily in the first place. And despite the upwards increases, these entities continue to offer some of the most attractive mortgages in the Spanish market. (…).

The latest entity to have announced rate rises is Banco Sabadell, which has increased the nominal interest rate on its Premium Fixed-Rate Mortgage by 20 basis points. That means an increase in the NIR (nominal interest rate) from 2.70% to 2.90% over 20 years and from 2.90% to 3.10% over 30 years. (…).

In recent months, the price cutting of fixed-rate mortgages had focused on the 10-year and 15-year term products, where this type of product is less attractive, given that over short timeframes, experts recommend taking out variable rate loans in order to benefit from zero interest rate scenarios.

End of an era

(…) With these rate rises, we are now leaving behind an era during which the banks competed fiercely to offer the best conditions on their fixed-rate loans.

The experts agree that the price of these mortgages will not fall to their 2016 levels again. They believe that last year represented a historical opportunity for buyers, who will now have to face tougher demands in terms of prices and conditions – commissions and the forced cross-selling of products.

Original story: Expansión (by Enrique Utrera)

Translation: Carmel Drake

Moody’s Warns Of Higher Default Risk For Restructured Mortgages

11 November 2016 – Expansión

Yesterday, the ratings agency Moody’s issued a warning about mortgages that are being restructured, which represents an increasingly larger pool, thanks to the economic recovery and the proliferation of real estate management platforms. In the entity’s opinion, several variables may lead to an increase in the risk profile of these assets. Specifically, restructured mortgages are more risky when: the mortgage term is extended; grace periods are granted for the payment of interest or the repayment of the principal; interest charges are reduced; and other modifications are made.

This warning comes just a few weeks after Blackstone created the first securitisation fund in Europe containing restructured loans, amounting to €265 million. It created the fund using mortgages that it purchased from Catalunya Banc at the beginning of 2015. Nevertheless, it only included loans that borrowers have been repaying normally, without any help, for more than 37 months.

Analysts at Moody’s consider that foreign residents in Spain are twice as likely to default on their loans than Spaniards. “A defaulted payment by a foreigner on a Spanish loan does not have any impact on his credit history in his country of origin; and clearly, that reduces the incentive for him to seek solutions to repay his debt”, say the experts. In turn, the risk of default is 30% higher for borrowers who have restructured mortgages over secondary residences compared with those who have restructured mortgages over primary residences.

Moody’s has also conducted analysis by geographic region and in this sense, its results are clear: borrowers who have restructured mortgages for homes on the coast are almost twice as likely to default than borrowers with restructured mortgages in Madrid.

The default rate

Meanwhile, Axesor forecasts that the default rate for loans to families and companies will close the year at 8.96%, which would bring it below the 9% threshold for the first time since May 2012. The balance of doubtful debts amounted to €116,613 million in August, which represented a YoY decrease of 17.58%, and that figure is expected to continue to fall at a double-digit pace, which means that we could close the year with a doubtful debt balance of around €110,051 million.

Original story: Expansión (by D.B.)

Translation: Carmel Drake

Socimis Have Raised €1,700M In Funding In YTD16

11 August 2016 – Expansión

Merlin, Hispania, Grupo Lar and Axiare are increasing their capital and attending the bond market in order to finance new acquisitions, increase their asset portfolios and grow in size.

The large listed real estate investment companies (Socimis) – Merlin, Hispania, Lar España and Axiare – are preparing themselves to gain financial muscle and resume their property purchases. Specifically, so far this year, those Socimis have raised almost €1,700 million between capital increases, financing agreements and bond issues and they are expected to continue to pull on the real estate sector this year.

These four companies, which debuted on the Madrilenian stock exchange between March and July 2014 with €2,560 million to invest, have been the stars of the reactivation of the real estate sector and intend to continue to grow this year. Last year, the Socimis accounted for more than 40% of all real estate investment, with an investment volume of around €5,300 million. To that end, Merlin, Axiare, Hispania and Lar España managed to raise almost €3,000 million on the main market through several capital increases.

Bond issue

So far in 2016, the Socimis have again been very active in terms of raising funds for investment. Specifically, Merlin, which is preparing for its merger with Metrovacesa in a deal that will see it become the largest real estate company in Spain, has opted to go to the bond markets. The company chaired by Ismael Clemente completed a bond issue in April amounting to €850 million, with a maturity of seven years and an annual coupon of 2.225%, payable annual in arrears.

Similarly, in June, the Socimi announced that it had signed a revolving loan (a flexible arrangement) for a maximum amount of €320 million over five years, which will be used for the current investment program that it is undertaking, as well as to finance new acquisitions. (…).

Meanwhile, Hispania, which focuses on the hotel sector above all, completed a capital increase in June amounting to €231 million, through the issue and placing into circulation of 25.8 million new shares, at €8.95 per share (the sum of the nominal value and the issue premium). The company in which George Soros owns a stake, which had used up almost all of its investment capacity, has identified new opportunities worth €1,500 million. (…).

Another of the Socimis listed on the stock market that wants to gain financial muscle to make purchases is Lar España. That company has completed a €147 million capital increase this year, through the issue of 30 million shares at a price of €4.92, in order to be able to undertake new transactions.

In addition, in February, the company signed a loan with a banking syndicate comprising Natixis, Credit Agricole and Santander, amounting to €97 million over a seven year term. This financing was associated with the acquisition of Megapark Barakaldo. (…).

Financing agreements

In March, also with the aim of raising funds for investment, Axiare Patrimonio signed a new financing contract with Banco Santander for €14.9 million over two premises in Edificio Velázquez, in Madrid.

In addition, in June, Axiaire reached a financing agreement with Bankinter amounting to €31.2 million, with a five-year term. (…).

Similarly, the company has also signed an agreement with BBVA amounting to €7 million, also with a five-year term. In this case, the financed property is an office building on Calle Josefa Valcárcel (Madrid).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Bankinter Revives Fixed Rate Mortgage War

9 June 2016 – Expansión

A new battle has commenced in the war between the banks to grant fixed rate mortgages. One of the most active entities in the commercial supply of these products, Bankinter, is redoubling its efforts. Yesterday, the bank announced widespread cuts in interest rates on its 5-, 10-, 15- and 20-year mortgages. Bankinter, whose fixed rate mortgages were already amongst the most competitive in the market, has cut the interest rate on its ten-year home loans from 1.75% to 1.6%; on its fifteen-year home loans from 2% to 1.8%; and on its twenty-year home loans from 2.3% to 2.1%.

The zero interest rate environment in the Eurozone has led the banks to offer fixed rate mortgages, given that 12-month Euribor, which is the index to which most floating rate mortgages are linked, is trading at negative rates (-0.018%). In this context, it is more profitable for the banks to offer fixed rate mortgages, given the limited margin they are able obtain on their variable rate products.

The main advantage for customers is that they know the amount of interest they will have to pay on the day they take out the mortgage; that figure is fixed and will not vary for the duration of the mortgage term. In other words, clients are protected against possible interest rate rises, although they would not benefit from any further hypothetical decreases.

Bankinter’s fixed rate mortgage has an arrangement fee of 1%, with a minimum of €350. It also charges a penalty of 0.5% during the first five years of the life of the loan in the event of its total or partial repayment, and of 0.25% thereafter, as well as a commission of 0.75% to offset the interest rate risk, in the event that the early repayment generates a loss of capital for the entity.

If Bankinter’s fixed rate mortgages are taken out to purchase a primary residence, then the value of the loan may not exceed 80% of the purchase price or appraisal value (the lesser of the two amounts). If the product is requested for a secondary residence, then the limit is 60% of the lower of those two values.

In addition, in order to benefit from these interest rates, the bank requires its borrowers to receive their salary into their Bankinter account, as well as to take out life assurance and home insurance with the entity. The applicable interest rates are higher if these products are not contracted.

The reductions also apply to the fixed element of Bankinter’s 15- and 20-year mixed (fixed and floating) rate mortgages, which decrease to 2% and 2.3%, respectively.

Original story: Expansión (by A.R.)

Translation: Carmel Drake

Uncertainty Over Extension Of “Anti-Bankruptcy” Law: RE Firms On Tenterhooks

9 April 2015 – Expansión

The real estate sector is still waiting to see whether Mariano Rajoy’s Government will extend (the term of) Royal Decree Law 10/2008. The legislation has been in place for seven years now, even though it was initially designed to last for only two. The law allows companies to avoid being wound up when the losses they incur result from real estate, real estate investments or stocks.

The Royal Decree was passed to limit the impact of the decrease in the value of real estate assets, which generated millions of euros of losses for many of the key companies in the sector. Therefore, the Government granted them two years to rebalance their accounts and maintain their production activity.

Year after year, first the Government of José Luis Rodríguez Zapatero and then that of Mariano Rajoy, has extended this law. Had it had not done so, several large companies, such as Reyal Urbis and Quabit, would have gone under by now.

Even if the law is not extended (this time around), neither of those two listed real estate companies will be effected (given that the first has already filed for bankruptcy and the second has increased its capital), but many others in the sector will be.

Companies and experts in the real estate sector had assumed that a decision would be announced at the most recent Council of Ministers in March. However, given that no announcement has yet been made, many now believe that it will not be extended.

Last year, the term of the Royal Decree 10/2008 was extended at the beginning of March. Then, CiU used an amendment to a piece of legislation that did not have any clear link to the real estate sector (the bill for the privatisation of the state insurance company Cesce) to make the request for another extension.

The business fabric

Sources close to the Government say that a final decision has not yet been taken. “Activity is now returning to the real estate sector; as such it would be incomprehensible that companies that have survived an unprecedented crisis have to file for liquidation now, just because the Royal Decree Law 10/2008 is not extended for another year. The destruction of the business fabric that took so many years to establish, as well as the job losses, make us think that an extension of the term of the Royal Decree is justified”, says Juan Antonio Gómez Pintado, Chairman of the association of real estate companies in Madrid (Asprima).

Companies in the sector are not the only ones interested in extending the term of the Royal Decree. Wind and photovoltaic companies, affected by cuts in premiums for those types of energy, have also made use of this legislation to avoid being wound up.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake