Top 6 Banks Lose €15,300M From Real Estate In 4 Years

10 March 2015 – El Economista

The real estate sector continues to be a major problem for financial institutions despite the economic recovery. The largest 6 banks lost another €3,027 million last year from their main property development companies, which together hold the bulk of the foreclosed assets, due to unpaid loans.

Following the results reported in 2014, Banco Santander, BBVA, CaixaBank, Sabadell, Popular and Bankinter have now suffered losses of more than €15,300 million in the last four years from their real estate arms.

Nevertheless, the rate of loss is shrinking due to the stabilisation of (house) prices, which have decreased by 40% on average, and the increased sales of homes and, even land. This is in addition to the provisions that have already been made, primarily in 2012, when the Government forced financial institutions to increase their coverage ratios substantially in the face of doubts in the market over the real status of the system’s balance sheet.

Thus, the deficit reported by these companies decreased by 36% with respect to 2013 and by 45% with respect to 2012, but it continues to be 43% higher than in 2011.

The real estate arm of CaixaBank, BuildingCenter, recorded the greatest losses in 2014, according to data published by the entities. Specifically, it generated a loss of €1,280 million. The Catalan group had to clean up its balance sheet by €1,900 million in the middle of last year, through a capital injection to adjust its balance sheet. Its losses have amounted to €3,000 million in the last two years.

Diminishing impact

Indeed, the Catalan group is the least optimistic about the property situation in our country. At the end of January, its CEO, Gonzalo Gortázar, predicted that the accounts of the real estate company “would continue to be significantly impacted” this year and next. Although, he did point out that the impact should diminish.

Canvives, owned by Popular, was the property developer that recorded the smallest losses: €52 million. The company, which used to be owned by Pastor, was merged into the group chaired by Ángel Ron. The deficit of this subsidiary has decreased by 91% in two years after the clean up. Popular holds another large real estate company in its portfolio, Aliseda, which generated additional losses of €146 million last year.

According to its management tem, Popular managed to sell property at a price slightly higher than its book value, after applying provisions, and it doubled its turnover (from this activity), to generate €1,500 million.

The bank, chaired by Ángel Ron, expects to increase the sale of property by 33% this year, as it gradually reduces this type of asset. It was the last entity to launch an aggressive price policy and it is intensifying (its efforts) to reduce the volume of homes and land it holds.

Santander’s property developer generated the some of the smallest losses last year. Just €119 million. This company’s deficit over the last four years amounts to €1,788 million in total.

Santander, like Popular and CaixaBank, is supported by funds, which strengthen the sale of their properties. The three banks have got rid of the majority of the capital (they held) in the platforms they use to manage this type of asset, with the objective of outsourcing the service and achieving gains with which to shore up their capital resources.

The strategy followed by BBVA, Sabadell and Bankinter is somewhat different; they have retained the overall management of their foreclosed properties, although in the case of the first two, the option of finding a specialist industrial partner has not been ruled out. Under no circumstances do these entities expect to partner up with any funds.

The volume of foreclosed assets increases

Although the volume of sales has accelerated, the balance of foreclosed assets is continuing to increase; although if we exclude the stakes held in property-related companies, this balance decreases for the first time since the crisis. In this sense, last year, Santander and BBVA succeeded in reducing the volume of homes and land in their portfolios. The former reduced its balance by 1.8%, to €7,851 million gross (excluding provisions), whilst the latter decreased it by 5%, to reach €13,016 million.

The six listed banks, excluding Bankia, which transferred the majority of its properties to Sareb during the financial bailout, together held foreclosed assets amounting to €70,000 million at the end of 2014, including the stakes they owned in property development companies. This means that the balance had increased by 9% with respect to 2013.

The forecasts made by the entities themselves indicate that all of this stock will have been liquidated within five or six years. Santander, for example, expects to decrease its balance by 20% each year, which means that it may have got rid of the entire volume of homes and land in its portfolio within five years. However, this will all depend on the economic conditions in our country and the recovery of the property sector, which is starting to see the light at the end of the tunnel.

Original story: El Economista (by Fernando Tadeo)

Translation: Carmel Drake

Colonial Repeats Its Sales And Records A Profit Of €492m In 2014

2 March 2015 – Expansión

An extraordinary year for Colonial.

The real estate group closed 2014 with a profit of €492 million, following the loss of €547 million it recorded in 2013. The key driver behind the turnaround in its results was the deconsolidation of Asentia, the subsidiary into which the company grouped its toxic assets. Colonial’s assets were also revalued, by 9.6% in comparable terms, to €5,757 million, which also had an effect on the income statement.

The group’s turnover amounted to €211.48 million, down 0.8%, although in comparable terms, revenues increased by 3.2%.

Colonial’s share price decreased by 2.53% in trading on Friday, to close at €0.655.

Original story: Expansión

Translation: Carmel Drake

Prologis: Sales Grow By 16% In 2014

20 February 2015 – Cinco Días

The logistics space developer recorded sales of €37 million in 2014 and increased its leasable area by 31%.

Prologis, the multinational developer of industrial land increased its turnover in Spain by 16% to €37 million in 2014. The company improved its sales after investing €124 million in the country in one year.

Gustavo Cardozo, Vice President of Prologis and Director of the subsidiary in Spain stresses that “2014 was a very positive year” in which, he considers “we exceeded all market expectations”. Cardozo argues that Spain is attracting interest due to the “improvement in its image and in its economy”.

The company has had a presence in Spain since the end of the 1990s. In the last three years alone, it has invested a total of €160 million and 2014 was its busiest year. According to Cardozo, the market has been boosted by an improvement in the trade balance. “Spain is no longer a country where the domestic market comes first”. Through these acquisitions, Prologis has increased its portfolio by 152,000 square metres, representing an increase of 31%.

Prologis’ main focus of activity has been along the A-2 corridor, with Madrid and Barcelona as the primary targets. Nevertheless, according to Cardozo, the company is going to begin operating in other areas, starting with the south of the capital and the north of the Catalunian city.

“We are open to investing in wherever we see has a future”, explains Cardozo, who does not put any limit on the acquisitions that his company may undertake. Nevertheless, he considers that it will be “very complicated” to repeat the investment volume achieved last year since that was “an extraordinary period”.

In the acquisition sphere, Cardozo sees “increased competition” following the arrival of overseas investment funds. He states that Prologis will focus on tailoring its properties to the specific needs of its clients in Spain, as it has done in previous transactions, such as the one undertaken with TNT Express at the end of last year.

Spain accounts for barely 1.7% of the multinational (group’s turnover), although Cardozo believes that “it will continue to grow”. Prologis has a strong presence in USA, Asia and Europe and generates global turnover of $1,700 million (approx. €1,500 million). Moreover, although the group’s total sales grew last year, “Spain outperformed the average”. The increase in the group’s turnover was driven by improved rental prices.

Prologis closed 2014 with an occupancy rate of 84.9% across the almost 900,000 square metres of space it owns (in Spain). The objective of the company is to close this year with an occupancy rate of 90%. To this end, the launch of the Prologis Park San Fernando in San Fernando de Henares (Madrid) will play an important role.

Original story: Cinco Días (by Diego Larrouy)

Translation: Carmel Drake

Barceló Doubled Its Profit In 2014 To Generate c. €50m

12 February 2015 – Expansión

Barceló recorded a profit of c. €50 million in 2014, whereby doubling its result from the previous year. The co-chairman of the hotel chain, Simón Pedro Barceló announced the result yesterday (the group’s definitive results for the year are still pending) and attributed the increase to “a significant increase in EBITDA (from €183 million to €215 million) and the incorporation of ten new hotels in Mexico and the Dominican Republic. Moreover, 2014 was the first full year to include the results of its new travel division.

Turnover exceeded €2,000 million, of which €1,100 million was generated by the travel sector and €900 million from hotels. The total figure amounted to €1,800 million in 2013. The co-chairman of Barceló said that it is too soon to say how the tourism sector will evolve over the course of the year, but he noted that “the Caribbean and Mexico have had a strong start to the year and although we do not know what will happen during the summer months, we believe that we will outperform the results recorded in 2014 by 10%”.

According to the latest information released by the Mallorcan company, Barceló has 140 hotels in 17 countries containing 37,380 rooms. Half of them are located in Europe and the remainder are in America, primarily in the US and the Caribbean. It also has 400 travel agencies operating in 22 countries.

New acquisitions

The group, which returned to the travel agency segment last year through its acquisition of Orizonia, together with Globalia, has not ruled out growth through further acquisitions. Yesterday, Simon Pedro Barceló confirmed that “new corporate transactions have not been ruled out” in the travel agency sector.

The family business owns 39% of its hotels outright, and leases or manages the remainder. Its goal is to be “a great hotel company”, said Barceló yesterday, which is why the company is continually adding new hotels to its portfolio. “We have just signed an agreement to lease a new 4 star hotel with 250 rooms in Berlin”, he said.

Barceló, who was giving a lecture at ESADE, was very optimistic about the future of the economy and the tourism sector in particular and encouraged employers to work together with entities that are independent and able.

Original story: Expansión (by Marisa Ángeles)

Translation: Carmel Drake

Vertix Returns To The Real Estate Market With 180 Homes

9 February 2015 – Expansión

Felip Massot has appointed his daughter, Elena, as the sold director and CEO of Vertix to replace Francisco Pérez, who has joined Solvia as the new Regional Director of Cataluña.

Vertix is one of the few real estate developers that has been saved from the crisis, although it is now only a fraction of the size it once was. Whilst in 2006, the company, owned by Felip Massot, generated revenues of €200 million and constructed homes at a breakneck pace; in 2014, it recorded a turnover of €50 million and is currently building only around 180 homes, all in the Barcelona area and in locations where demand is guaranteed.

Original story: Expansión (by Marisa Ángeles)

Translation: Carmel Drake

Sareb Sold 15,000 Assets In 2014

5 February 2015 – Expansión

The Asset Management Company for Bank Restructurings (Sareb) sold around 15,000 real estate assets in 2014, in addition to the 9,000 properties it sold in 2013, according to provisional data released by the company.

Sareb’s Secretary General, Óscar García Maceiras, provided this information on Wednesday during a conference entitled “Sareb’s role in the economic recovery” held in Valladolid, organised jointly by the Business Forum of Castilla y Leon and the Schola Foundation.

In his speech, García Maceiras highlighted the “full capacity” that society has shown to contribute to the clean up of the Spanish banking sector and the reactivation of the real estate sector.

In the two years since it was created, Sareb has generated turnover of more than €8,000 million and has sold more than 24,000 properties (homes, land, adjoining garages/store-rooms and tertiary assets), of which more than 15,000 were sold in 2014, according to provisional data released by the company.

García Maceiras said that this “dynamism” has allowed the company to fulfil “its primary mission”, namely the repayment of the debt issued by Sareb and backed by the State.

In this regard, he added that during its first 24 months, Sareb has repaid €5,000 million and has paid interest amounting to €2,400 on that debt, “and so has reduced the cost to the taxpayer of the financial restructuring by €7,400 million”.

During the conference, Sareb’s Secretary General reiterated the company’s commitment to the real estate sector and noted that in two years, Sareb has handled “more than 18,700 developer proposals, including the sale of collaterals, deeds in lieu, restructurings, disposals and other transactions”.

García Maceiras also highlighted the main challenges facing the company today, including the culmination of the change in its commercial managers, which, once the process for migrating assets has been completed, will be Altamira, Haya Real Estate, Servihabitat and Solvia.

Sareb is a private entity, created in November 2012, to help with the clean up of the Spanish financial sector and of the institutions that received state aid, explained the Company in a press release.

Sareb is committed to proceeding with the liquidation of the properties and loans it has purchased before November 2027.

Original story: Expansión

Translation: Carmel Drake

Sareb Recorded Turnover Of €5,000m In 2014

29 January 2015 – Cinco Días

Echegoyen strengthens his team with a man from Barclays

Jaime Echegoyen has made his debut as the Chairman of Sareb, following the surprise resignation of Belén Romana on Monday, by analysing the entity’s provisional accounts for 2014.

In a meeting on Wednesday, the Board of Directors estimated that Sareb will close the year will total revenues of €5,000 million and an EBITDA of €1,000 million.

The final figures will be subject to a ruling by the Bank of Spain, which has not yet published the definitive accounting regulations that will govern the bad bank’s results; it is expected to require that an extraordinary provision be applied to the company’s accounts.

Sareb’s turnover in 2014, as valued by the company itself in a statement, exceeded the amount recorded in 2013 by almost one third. This, says the company “shows the capacity” that it has “both to generate resources through the management and sale of its assets, as well as to assume the commitments of debt cancelation”.

Based on last year’s accounts, Sareb will have repaid €3,416 million of the debt issued to acquire its portfolio, i.e. more than the €3,000 million initially envisaged, of which €2,916 million has already been paid; the remainder will be paid in February. Moreover, the company has made interest payments amounting to €1,135 million on that debt.

Once this process has been completed, Sareb will have repaid €5,416 million of its debt, which has the backing of the state, in just two years.

“Sareb is fulfilling its main objective, which is to manage and sell its portfolio without generating higher costs for the taxpayer”, explained Jaime Echegoyen at the first ordinary meeting held by Sareb’s Board in 2015.

Almost €1,000 million of the total revenues related to the sale of 13 wholesale portfolios, primarily to international investors.

“Although we do not yet know the accounting framework that will be applied to our results in 2014, we can say that the company has achieved the objectives that were set for it last year, and has deepened its strategy for the generation of greater value from the portfolio”, said Echegoyen. “We have a highly skilled workforce that this year has managed more than 10,700 proposals from developers for example; furthermore, the gradual entry into operation of the new contracted servicers will allow us to improve efficiency and provide an increased commercial focus”, he added.

Echegoyen’s first appointment

In parallel, Sareb’s Board of Directors approved a proposal to strengthen its management team, which has lost six members, including Romana, in the last 14 months (in addition, three directors have been replaced).

Juan Ramón Dios Rial will now join as the company’s Director of Recoveries and Restructuring. He comes from Barclays, where Echegoyen was previously CEO.

According to Sareb, Juan Ramón has extensive experience in the management of risk and the restructuring of debt relating to the real estate business. The new director will take over the role currently held by Enrique Saiz, who will continue to collaborate with the company.

Original story: Cinco Días

Translation: Carmel Drake