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Spanish Property Market Overview – April 2016
Activity continued apace in the Spanish real estate sector during March with the completion of transactions across the residential, hotel, office and debt recovery sectors.
According to preliminary data from CBRE, total real estate investment amounted to €2,100 million during Q1 2016, with the residential and retail segments leading the charge, recording investments of €750 million and €645 million, respectively. 78% of the funds came from international investors, and significant transactions included the purchase of the Festival Park shopping centre in Mallorca for €100 million, the acquisition of a portfolio of supermarkets by Invesco for €350 million and Blackstone’s purchase of a portfolio of 4,500 homes from Banco Sabadell for €450 million.
During March, notable transactions included Lindorff’s purchase of the servicer Aktua from Centerbridge for €200 million, Dogus’s acquisition of Hotel Villa Magna for €180 million, Merlin’s purchase of Galp’s HQ and another property in Lisbon for €103 million and Meridia Capital’s acquisition of Nestle’s HQ in Barcelona. Smaller deals involved Drago’s acquisition of Banco de Andalucía’s former headquarters in Sevilla for €25 million and Eurostone’s purchase of the news agency Efe’s former headquarters in Madrid, on Calle Espronceda, which it plans to convert into luxury apartments.
Meanwhile, Sareb was forced to convert €2,400 million of its subordinated debt into capital to cover the losses incurred last year, driven by the requirement to recognise additional provisions following its implementation of the Bank of Spain’s new accounting circular. The bad bank also completed the refinancing of half of its debt during the month, as it looks to reduce its interest payments at a complex time for the entity. Nevertheless, the company led by Jaime Echegoyen ended the month with good news as it reported the completion of the migration of its assets to four servicers (Altamira, Haya, Servihabitat and Solvia), a yearlong process that has involved the transfer of 4 million documents and 350,000 keys. Sareb also completed the sale of a secured loan portfolio worth €73.7 million in March and said that it plans to make more sales of this kind during 2016 now that resources have been freed up from the asset migration process.
The Socimis were as active as ever, with many, such as Lar España, reporting record results during March. These tax efficient real estate vehicles now account for almost one third of Spain’s Alternative Investment Market – the 15 listed entities have a combined market capitalisation of €1,600 million. New entities are debuting on the MAB every month and in March, Inversiones Doalca and Jaba I Inversiones Inmobiliarias were admitted. Meanwhile, BMB announced plans to list its Socimi in June and several hotel chains expressed their interest in creation vehicles of their own.
In other news, El Corte Inglés put 200 properties up for sale with an approximate value of €1,000 million, as part of a plan to divest its non-strategic real estate assets. Two potential buyers emerged for Edificio España in the form of the US giant Hines and the Philippine group Emperador, which acquired Torre Espacio at the end of 2015. The property is currently owned by the Wanda Group, itself owned by the Chinese magnate Wang Jianlin, which is understood to be asking for between €250 million and €300 million from the sale, having purchased the iconic property for €265 million from Santander in 2014.
Finally, in the banking sector, Bankia announced plans to launch Project Wind II, involving the sale of overdue mortgages, amounting to €800 million. This decision comes after the success last year of Project Wind I, the entity’s first major sale of mortgages to investors, which had a value of €1,300 million. Meanwhile, the banks’ real estate arms reported combined losses of €3,266 million for 2015, up by 11% compared with 2014, reflecting the fact that the volume of assets on their balance sheets is still growing (and resulting in higher provisions) and that divestments are being made at prices that do not even cover management costs and taxes.
In summary, the recovery in the real estate sector is well underway, but the hangover from the crisis is still lingering in certain segments.
Source: AURA REE
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