The real estate news in October was marked by the signing of several operations, especially in the logistics and residential segments, as well as by some initial movements in the hotel sector. However, the strong shock of the second wave of the coronavirus and the tightening of mobility restrictions are again sowing uncertainty throughout the market.
In October, we learned that the aggregate turnover of the 40 main real estate companies in Spain amounted to 11.7 billion euros in 2019, up by 8.9% compared to 2018.
Also during the month, the US firm Blackstone presented its results corresponding to the third quarter of its fiscal year. The company recorded revenues of more than 3 billion dollars and obtained a net profit of 1 billion dollars. In addition during October, the fund bought a logistics portfolio from Prologis for 524 million.
On the other hand, the large Spanish real estate companies presented their results for the third quarter. The property developer Metrovacesa managed to increase its income by 3% to 112 million euros during the first nine months of the year, but recorded losses due to the impairment of its assets. In addition, the company controlled by Santander incorporated a program to issue promissory notes into the MARF with a maximum balance of 100 million euros.
Meanwhile, the property developer Neinor Homes obtained a net profit of 22 million euros during the first nine months of the year, down by 12.7% compared to the same period a year earlier. In addition, the firm recorded revenues of 197 million euros.
In October, the company specialising in coworking spaces WeWork put its Spanish subsidiary up for sale and commissioned the consulting firm CBRE to coordinate the sales process.
In October, we learned that during the second quarter, house sales fell in all autonomous communities by an average of 48.2%, according to data from the General Council of Notaries. Meanwhile, in August, 19,825 mortgages were constituted over homes according to the property registers, down by 3.4%, according to the INE.
Likewise, the ratings agency Standard & Poor’s published its forecast that house prices in Spain will fall by 1.4% this year, but will rise again as of 2021, when they are expected to increase by 1.8%.
Despite these forecasts and data, several operations were signed in the residential sector during the month. The property developer Metrovacesa closed the sale of two turnkey developments to a real estate fund managed by AEW, comprising a total of 203 rental homes.
Meanwhile, the Catalan property developer Becorp, owned by the Grifols family, reported that it plans to launch up to 2,800 build to rent homes in Barcelona and its metropolitan area over the next three years.
The property developer AQ Acentor, owned by the German fund Aquila Capital, started work on what is going to be the largest building project of the year in Spain: AQ Urban Sky, located in Málaga, which will span a total area of 78,000 m2 and which will involve an investment of 180 million euros.
During the month, we learned that the average occupancy rate in Spain was around 33% in those hotels that were open until September, whilst last year that figure was 76%, according to the Barometer for the Hotel Sector in Spain, produced by STR and Cushman & Wakefield.
The sharp fall in tourism has caused several companies to put their assets on the market. In this way, the NH Group hotel chain initiated contact with investors for the sale of a portfolio containing four or five hotels located in various European countries. For its part, the fund Farallón decided to put the Mandarin Oriental Hotel on Paseo de Gracia in Barcelona up for sale for 200 million euros.
Likewise, the Único Hotels chain announced that it is looking for a buyer for the Único Hotel in Madrid with the aim of obtaining liquidity. Whilst the Saudi prince Turki Bin Nasser, the owner of the Fairmont Rey Juan Carlos I hotel in Barcelona, also put his iconic property onto the market.
Several new accommodations were also opened during the month. The Catalonia Hotels & Resorts chain opened its first establishment in San Sebastián – the property has a 4-star rating and 128 rooms. In addition, B&B Hotels opened a new hotel in Madrid with 81 rooms.
In October, we learned that investment in offices amounted to 1.5 billion until September, according to Savills Aguirre Newman. During the third quarter of the year, more than 96,000 square metres of office space was leased in Madrid and 35,000 square metres was leased in Barcelona.
Despite the drop in the rental of office space, the investment arm of the Italian insurance group Generali announced that it is planning to launch a new fund with 2 billion euros specialising in core-plus offices in Europe.
One of the most important operations closed in October involved the fund Global Realty Capital (GRC), which reached an agreement with the Socimi Domo Activos for the acquisition of Metro’s headquarters in Madrid. Meanwhile, the Spanish insurer Mapfre bought the headquarters of the law firm Clifford Chance in Luxembourg for 60 million euros.
Also in October, several office buildings were put on the market. WR Berkley announced that it is looking for a buyer willing to shell out 820 million pounds sterling for The Scalpel skyscraper in the City of London. Whilst the US fund Blackstone reported that it is considering the sale of the Glòries office complex in Barcelona for 120 million euros.
The prospects for the future of the retail segment this year and next are bleak. The impact of the Covid crisis will lead to the closure of one in three businesses and at least ten shopping centres, according to a report prepared by Forcadell and the University of Barcelona.
In this context, companies in the sector have already started to adopt measures to deal with the situation. The Socimi Lar España is analysing the possibility of divesting several real estate assets with the intention of strengthening its balance sheet and reinforcing its cash position. However, the firm will only sell if the market pays it well.
Also, 50% of the Xanadú shopping centre owned by the British group Intu Properties is still up for sale. Possible buyers include the investment fund Northwood, which has expressed its interest in taking over the asset. In fact, the firm already showed its interest in the centre even before Intu commissioned the sales process.
In light of the difficult situation that the sector is going through, the Executive Council of La Generalitat approved a decree-law to intervene in the rental market in Cataluña. The measure is intended to help businesses and the hospitality industry alleviate the economic impact of restrictions due to the coronavirus crisis. In addition, the Catalan Government decreed that the region’s shopping centres and non-food stores spanning more than 800 m2 must close from Friday 29 October.
During the month, we learned that almost 1.2 million square metres of logistics space was leased in Spain between January and September 2020, according to a report by the real estate consultancy CBRE. Specifically, the investment volume exceeded 651 million euros in total.
In terms of operations, the sale of the new Amazon logistics centre in Alcalá de Henares (Madrid) stands out. The German fund Patrizia sold that asset to a pan-European fund managed by the firm itself for 110 million euros. Similarly, Thor Logis acquired a last-mile logistics portfolio, comprising two leased buildings in Pinto and Torrejón and three new developments, for 39 million euros.
Recently, the sovereign wealth fund of Singapore, through its company P3 Logistics Parks, put up for sale a portfolio comprising 16 logistics assets located all over Europe. These assets have a combined gross leasable area of 375,000 square metres.
Banco Sabadell reached an agreement with the fund Tilden Park for the sale of the first portfolio of non-performing assets to have been sold in Spain since March. The operation will be closed for more than 60 million euros and the portfolio includes around 1,000 non-performing loans to SMEs with real estate guarantees.
Banco Santander set up its own non-performing real estate asset manager (for NPLs and foreclosed homes). The objective of the company -which is being integrated into the Deva Servicer project- is to reduce the costs of managing its assets and to generate business by providing its services to third parties.
Meanwhile, the banking entity CaixaBank released two large portfolios of toxic assets onto the market valued at 1,000 million euros ahead of its merger with Bankia. The bank intends to place the last remaining loans from Martinsa Fadesa, together with others that constitute the operation known as Project Louvre with opportunistic funds.
Top 10 most read news – October 2020
- Dimas Gimeno will open his first store on Gran Vía after leaving El Corte Inglés (in Spanish)
- Hotel Owners in Ibiza Put 30 of Their Properties Up For Sale, Including Several 5-Star Establishments
- Repsol, Google and Operación Calderón Place Arganzuela on Investors’ Radar
- The hotel chain Catalonia opens its first establishment in San Sebastián (in Spanish)
- Santander Creates a New Real Estate Servicer for Non-Performing Assets
- Two Luxury Hotels Go Up For Sale in Madrid and Barcelona
- Everis enters the smart office sector with a project to save millions for headquarters (in Spanish)
- Savills IM closes a Japanese residential fund with 200 million dollars (in Spanish)
- Blackstone looks for a buyer for its shopping centre in Lugo (in Spanish)
- Property Developers Expect to Handover 20,500 New Homes Before 2021