Project Sintra: BBVA Engages PwC to Sell €1bn of Toxic Loans

13 March 2018 – Voz Pópuli

BBVA does not want to waste any more time on the real estate clean-up exercise. In the last few days, the entity chaired by Francisco González has launched a €1 billion portfolio on the market: Project Sintra, according to financial sources consulted by Vozpópuli. It is being advised in the operation by PwC. Neither the bank nor the consultancy firm wanted to comment.

This portfolio is the penultimate step for BBVA in the reduction of its real estate exposure to zero, after the agreement it reached with Cerberus to transfer €13 billion of foreclosed assets, as this newspaper revealed. That sale, Project Marina, is still pending the necessary authorisations and is scheduled to be closed in the middle of this year.

The balance of BBVA’s divestments is as follows: before Project Marina, the entity had a gross exposure (not including provisions) of almost €16 billion, which will end up at just over €3 billion. Of that figure, two-thirds relate to unpaid loans linked to land and completed developments, with a coverage ratio of 54%.

With this new operation, BBVA wants to be crowned as the first major entity to get rid of its inheritance from the crisis. Last year, Santander closed the sale of €30 billion from Popular to Blackstone, but it still has €11.7 billion left to divest.

The same stars

With Project Sintra, BBVA has now awarded the mandate for three consecutive operations to PwC. It did so with Project Jaipur, worth €600 million, which was acquired by Cerberus; and Project Marina, which had the same advisor and buyer.

The latter operation generated unease amongst certain funds, which complained to the bank because it had not opened a competitive process, but instead chose to negotiate one on one with Cerberus. Sources close to that operation defended that a bilateral sale could optimise both the price and an auction, thanks to the threat of opening the process to more rivals.

In this way, BBVA is one of the entities that has decided to accelerate the sale of portfolios during the first quarter, like Sareb, which is finalising the sale of between three and four packages: Nora, Bidasoa, Dune and Slap, with a combined volume of €3.2 billion.

One of the most fashionable assets and one that entities are increasingly including in their portfolios is land. In this way, Sareb is preparing an operation containing land only and Kutxabank is evaluating a similar process.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

La Sella Group Sells ‘Hotel Denia La Sella’ to Investment Vehicle Managed by Alantra

7 February 2018 – Press Release

Christie & Co has advised on the sale of the Hotel Denia La Sella Golf Resort & SPA, a 5-star hotel located in Denia, province of Alicante.

The 5-star Hotel Denia La Sella Golf Resort & SPA, located only 7 kilometres away from the centre of Denia, is one of the most luxurious establishments in Alicante. The asset has 178 fully equipped rooms and 8 suites, 2 restaurants (Asador Montgó and Segaria Thai Restaurant) and 2 bars. It also has more than 1,400 m2 available for events, a spa and gym area, an outdoor pool and an adjoining golf course, which has also been acquired together with the asset.

The Hotel, always managed by the former owners and known as Marriott La Sella Hotel, was under a franchise agreement with Marriott Hotels International until December 2016.

The new owner of the asset is a vehicle managed by Alantra, a firm specialising in financial advice and asset management whose investors have seen the hotel as an opportunity to reposition the asset. Going forward, the property will be managed on a rental basis by ‘Gestión de Activos Turísticos’ (GAT).

GAT has extensive experience in the hotel sector, managing hotels in several other domestic destinations (Hotel Cándido 4 * in Segovia, Hotel Buenavista 5 * in Toledo) (…).

Original story: Press Release

Translation: Carmel Drake

Aedas is Building Spain’s Largest Ever Residential Development in Sevilla

21 January 2018 – El Confidencial

In all likelihood, this is the largest high-rise housing development to have ever been built in Spain. Not even during the boom years, when some of the biggest follies and real estate extravaganzas were committed, was a project undertaken to build a community of more than 3,000 residents. This proper new neighbourhood will involve an investment of €100 million for its developers.

The mega-urbanisation in question is the masterpiece of Aedas Homes, the listed property developer launched by the US fund Castlelake, which was the entity behind the purchase of the land on which the 1,046 homes that comprise the project are going to be built – the same number of units that the company sold during 2017. The homes are going to be spread over seven towers and the inhabitants will share all of the common areas of the urbanisation, including: a running track, a 1,000 m2 Olympic swimming pool, six padel courts, a five-a-side football pitch, a multi-sports court, a social club and an enormous private garden spanning 33,000 m2. The service charge will be very similar to the amount charged in any other urbanisation, around €80-€90 per month (…).

Not Madrid or Barcelona…but Sevilla

The striking thing about this project, in addition to its size, is its location, given that it is not found in either of the large real estate markets in Spain (…) but rather in Sevilla, which wasn’t even on the radars of most property developers, let alone large investment funds, just a year ago.

To understand the situation in this market, we have to rewind more than two decades. “During the economic boom cycle, the General Urban Development Plan for Sevilla was reviewed, which led to a lack of buildable land and a complete stoppage in terms of construction with the consequent increase in house prices. When the sector was on the up, there was no land on which to build, and so when the bubble burst, the market was paralysed to such an extent that, since 2007-2008, nothing has been constructed. The cranes disappeared from Sevilla for 10 years”, says Diego Chacón, Regional Director in Andalucía for Aedas Homes.

With the approval of the General Plan in 2006, the situation changed. Nevertheless, it was then, with four years of paperwork ahead, that the bubble burst. When the recovery happened, Sevilla was not a market to invest in. That privilege was assumed by Madrid and Barcelona, primarily. Then, Castlelake spotted this enormous plot, which had benefitted from the new General Plan, due to the opportunity that was presenting itself with demand from a middle class that had been completely expelled from the market. The vendor was a local property developer: Gabriel Rojas.

How much are these homes going to cost?

“When we looked at the land with a view to buying it, we conducted a study of the market and we identified that there was some unmet demand. There were potential buyers aged between 30 and 45 years, who were looking for high-quality, new build homes costing between €120,00 and €150,000 for two-, three- and four-bedroom homes, with good common spaces”, said Chacón, who explains that the prices in the first phase start at €111,000 – including a parking space and storeroom – in other words, at around €1,250-€1,300/m2, a very competitive price if we take into account that second-hand properties in the area cost around €1,500-€1,600/m2.

The purchase was closed in 2015 – sources in the market indicate that the transaction could have amounted to €30 million, around €350/m2 – and by the end of 2016, the plot was buildable and had been approved by the Town Hall of Sevilla. In other words, it was ready for construction work to begin.

Aedas’ strategy involves executing the project in phases. The marketing of the first tower has already begun. The first phase comprises 79 primarily three- and four-bedroom homes, almost all of which have been sold and which will be handed over in 2019. The second phase of the first tower will begin in November, whilst work on the second tower will begin after the summer (…).

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

Iberdrola Sells 55% Of Hotel Hilton Barcelona For €80M

22 June 2017 – Expansión

Iberdrola Inmobiliaria has completed the sale of 55% of Hotel Hilton Diagonal Mar in Barcelona to the real estate division of the insurance company Axa (Axa Investment Managers- Real Assets). The operation has been closed by Axa on behalf of one of its clients, said the vendor in a statement issued on Tuesday.

The energy group’s real estate arm will retain ownership of 45% of the property. Iberdrola Inmobiliaria will receive €80 million for the percentage stake sold.

The Hotel Hilton Diagonal Mar, inaugurated in 2005, is operated by the chain Hilton Worldwide under a long-term lease contract. The four-star establishment contains 430 rooms, of which 20 are suites.

In the operation, the vendor has been advised by the consultancy firm Irea and the law firm Ashurst. Currently, Iberdrola Inmobiliaria owns a portfolio of rental assets spanning a gross leasable area (GLA) of more than 217,000 m2. Its most iconic property is the company’s headquarters in Bilbao.

Moreover, the company is developing around 300 homes, located mainly in the Community of Madrid, although it also has two projects on the coast. In addition, Iberdrola Inmobiliaria is working on a project comprising 42 villas located in the Islas del Mar area (Puerto Peñasco) of Mexico.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake

Meridia Capital Buys 4 RE Assets For €20M

12 January 2017 – Inmodiario

Yesterday, Meridia Capital Partners announced the purchase of a portfolio of four assets with a combined surface area of 24,063 m2 – comprising one logistics platform and three retail units – located primarily in Madrid. All of the properties have been acquired by the fund Meridia II for a price of approximately €20 million.

The logistics platform has a gross leasable area (GLA) of 16,385 m2 and is located in one of Madrid’s main logistics areas (CLA, Getafe), which is home to several high profile logistics centres and companies (for example DHL, Decathlon, Flex, Conforama).

The three retail units have a combined GLA of 7,678 m2 and are leased to well known food retailers such as Mercadona – the market leader in Spain – and Día – which is the third largest player in its sector.

Launched in 2014, Meridia II is a €150 million real estate fund specialising in the logistics, retail and office sectors in Spain. Following this latest deal, the fund has now invested almost all (94%) of its available capital.

Juan Barba, Partner and Managing Director of Real Estate at Meridia Capital, said “This transaction is another example of the good opportunities for adding value that are currently available in the Spanish market. The presence of high profile tenants in the area of the recently acquired platform is proof of its excellent location. This deal strengthens our exposure to the Spanish retail/logistics sectors and complements our previous acquisitions, including a warehouse in Valencia, as well as the Consum and Aecus portfolios. Through this transaction, we incorporate the seventh Mercadona unit into our portfolio, whereby consolidating our relationship with the leading food retailer in Spain”.

In this deal, Meridia Capital was advised by Aguirre Newman and Cuatrecasas, whilst the vendor was advised by CBRE:

Original story: Inmodiario

Translation: Carmel Drake

Wanda Accelerates Timetable For Edificio España Sale

29 June 2016 – Expansión

Wanda wants to get its homework done before it goes on holiday and so has decided to accelerate the sales process for Edificio España. Following a recent visit to Spain by representatives of the Chinese group, Wanda has called on the interested parties to submit binding offers for the iconic Madrilenian property. Candidates have until tomorrow to present their final proposals.

The business conglomerate led by Wang Jianlin, which acquired Edificio España from Banco Santander in June 2014 for €265 million, engaged the real estate consultancy firm JLL to manage the sale of the property a year and a half after its acquisition. The possible buyers include the Chinese group Fosun, the Philippine group Emperador, the Hong-Kong based firm Platinum Estates and the Spanish RE manager Domo. Sources at JLL declined to make any comments about the process.

During their stay in Spain, the representatives of the Chinese group met with some of the candidates and revealed certain information about the property, located in Madrid’s Plaza de España, as well as about the company Renville Invest, which is the immediate owner of the building.

In addition, although the positions adopted by the Town Hall and Wanda, regarding the approach to the renovation of the property, seem irreconcilable, the Chinese group is still in contact with Manuela Carmena’s urban planning team, according to sources at the Town Hall. Specifically, the councillor responsible for the Sustainable Urban Development department, José Manuel Calvo, met with Wanda’s representatives on 14 June to discuss the project for remodelling Edificio España.

The main obstacle in the negotiations between the municipal team and the Wanda group lies in the Town Hall’s demand to preserve the façade of the property, as required by law, a position opposed by Wanda, which had been hoping to demolish the building and reconstruct it.

Original story: Expansión (by R. Arroyo)

Translation: Carmel Drake

Amancio Ortega Offers €490M For Torre Cepsa

28 June 2016 – El Confidencial

Amancio Ortega has entered the bidding, through Pontegadea, to acquire Cepsa’s skyscraper, by placing an offer on the table worth €490 million, according to sources familiar with the operation.

The owner of Inditex is thereby setting himself up to undertake his largest operation in the country to date, in a deal that would rank well above the figure of €400 million that he paid for the iconic Torre Picasso, the building he acquired from Esther Koplowitz almost five years ago.

Then, like now, the businessman approached the operation without the need to request financing from the banks – he has a wealth that differentiates him from the other candidates and enables him to bid slightly below the other interested parties.

In addition to Pontegadea, two other funds have expressed their interest in putting €530 million on the table, according to sources. Clearly, those bids are higher than Ortega’s, but they are linked to certain financial and payment structures that are a long way from offering the guarantees that Pontegadea provides to all vendors.

The hunt

Thanks to his dividend from Inditex, the businessman receives an annual cheque amounting to €1,100 million, which he uses, almost entirely, to acquire properties. This policy has converted Pontegadea into one of the largest real estate owners in Spain, comparable only with the newly created Merlin-Metrovacesa and Colonial.

Nevertheless, the dimensions of this remuneration mean that it is becoming increasingly difficult for the second richest man in the world to find opportunities in Spain. His interests focus on operations with at least eight zeros in the price, and as a result he has multiplied the number of operations undertaken overseas in recent years. (…)

Despite his financial prowess and the increasing challenge of finding desirable properties, Pontegadea remains faithful to its conservative policy and avoids processes that involve increasing the price in the final stretch.

In fact, its offer for Cepsa falls a long way below the €550 million asking price that the Sheik Khadem al Qubaisi hopes to obtain. The Sheik owns the purchase option over the Madrilenian skyscraper and has until September to exercise it if he wants to stop Bankia from taking over the asset once again. (…).

Nevertheless, Pontegadea is remaining firm in its valuation of the building, a figure that, if they end up closing the operation, will be significantly lower than the €558 million paid by the Philippine Group Emperador to acquire Torre Espacio. Nevertheless, according to several experts in the sector, there are important differences between the two operations, not least the higher risk of having OHL as a tenant rather than Cepsa.

The 248 metre tall skyscraper, designed by Norman Foster, has a leasable surface area of 56,000 sqm, spread over 34 floors. The sale has sparked interest from large institutional investors, such as Invesco, AEW, Deka, Hines, Patrizia, Etoile Properties and Axa.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Pisos.com: Buyers Offer 23% Below The Asking Price

27 January 2016 – Cinco Días

Data is regularly being published about the rise in the number of house sales, how the fall in property prices is being mitigated, the gradual return of credit to the market and the impact of the overall economic recovery as the driver behind the real estate market overcoming the crisis. Nevertheless, the online portal Pisos.com has gone a step further by cross-checking information about the prices that purchasers are willing to pay and the asking prices being set by vendors; and they are checking the differences between them (…).

In its study, which is based on figures from 2015, the real estate portal notes that the differences between asking prices and offer prices have decreased in line with the improvement in the labour market (as soon as job destruction came to a halt, house sales began their timid recovery) and the relaxation of conditions to access finance.

This alignment of positions has been made possible thanks to the fact that house prices now seem to have bottomed out, at least in the majority of regions, “and buyers’ budgets have increased, thanked to increased savings and the return of credit to the market”, explain sources at Pisos.com.

In this way, during 2015, the average house price in Spain amounted to €138,150, whilst the most sought-after home (by buyers) cost €112,500 on average and had a surface area of 90 m2. The portal understands that the difference between these amounts, i.e. €25,650, represents the difference that currently separates demand and supply, which is equivalent to 23% of the most sought-after price.

Pisos.com has been performing this cross-check of supply and demand since 2009 and in its study, it shows how the relationship has evolved during the crisis and the start of the recovery. In 2009, the difference amounted to 55%, which is explained to a large extent by the sharp decline in the number of house sales; the transactions that did materialise were accounted for with a sizeable discrepancy.

Since then, the positions have moved towards each other to narrow at 20% in 2013. Nevertheless, in 2014, they increased again, to 25% and then last year, that gap moderated slightly to the aforementioned 23%. The evolution varies by region, which is to be expected in the housing market. (…).

Starting prices

Prices in six autonomous regions increased, namely: Andalucía, Aragón, the Balearic Islands, Galicia, Navarra and País Vasco. The highest average asking price is still found in País Vasco, at €232,500. At the other end of the spectrum, citizens in Murcia, Valencia, Castilla-La Mancha and the Canary Islands searched for homes with a average price of €67,500. Navarra is the only autonomous region where the price that buyers are willing to pay exceeded the asking price. The autonomous regions in which asking and offer prices were the closest were: Cantabria (9%), País Vasco (9%) and Cataluña (12%). By contrast, the largest differences were found in Murcia (where the difference still amounts to 39%), Asturias (37%) and La Rioja (36%).

In terms of other variables in the market, such as the number of transactions and the evolution of prices, the General Council of Notaries published its study yesterday, which showed that (house) sales grew by 14.7% YoY in Q3 2015, following their significant growth in the previous quarter (16.8% YoY). Moreover, the notaries highlighted that all of the autonomous regions, with the exception of Navarra, contributed to this result. (…). Meanwhile, prices grew by 2.7% YoY during the same period, just below the rate of growth seen in the previous quarter (3.6%). (…).

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake