Spanish Property Deals Grab Investor Interest

At least a dozen large international investors are lining up to look at a large Spanish property-loan portfolio sale that will take the temperature of one of Europe's most distressed real-estate markets.

Commerzbank AG CBK.XE -2.28% recently began shopping around the portfolio—code named Project Octopus—that includes loans with a face value of €4.4 billion ($6 billion) that are backed by shopping centers, hotels and offices. 

The loans were originally extended by Eurohypo AG, a unit of Commerzbank that is being wound down after suffering large losses in recent years. 

The deal is expected to be one of the biggest of its kind in Europe this year and will be a key test of investor faith in Spain's budding economic recovery. Any buyer of the loans likely would pay a discount to their face value. Still, they would be making a multiyear bet on the euro zone's fourth-largest economy, which late last year emerged from more than two years of recession. 

Investors looking at the deal include Blackstone Group BX +0.67% L.P., Cerberus Capital Management L.P., Värde Partners, Apollo Global Management APO -0.81% LLC, Lone Star Funds, Kennedy Wilson, KW +1.64% Pacific Investment Management Co., Starwood Capital Group LLC, CarVal Investors, Colony Capital LLC and Centerbridge Partners L.P., according to people familiar with the deal. Some of these funds have teamed up with large lenders such as Deutsche Bank AG DBK.XE +0.56% and Wells Fargo WFC -0.02% & Co.

Commerzbank, which is among a number of European banks that have been unloading loan portfolios to align with new banking regulations, hired investment bank Lazard Ltd. LAZ +2.96% to run the sale. Commerzbank declined to comment. 

European banks still are digging out from an avalanche of bad real-estate debt that crushed them when the financial crisis hit. In 2014, more than €40 billion in European real-estate loans could be put on the market, a 32% increase from 2013, according to a report last week from real-estate broker Cushman & Wakefield.

Big sellers include so-called bad banks that were set up in Spain and Ireland to manage soured real-estate assets. Those banks are increasing their disposal activity, while sales in Italy also are expected to pick up, said Andrew Sim, head of European investment at Knight Frank in London.

Spain's real-estate market has seen a revival of late. The government, through its bad-bank structure Sareb, is expected to put several large property portfolios up for sale in the first quarter, and local banks also are looking to reduce their exposure to real estate.

However, there are reasons to be cautious, say some analysts. A shock to the economy would be a "particularly big problem" for the property market, where asset values have fallen far less than in other troubled countries like Ireland, said Matthew Richardson, European real-estate research director at Fidelity Worldwide Investment in London.

"If you're an institutional investor running third-party money, it's a heck of a risk to take," Mr. Richardson said.

Last week, Commerzbank sold €710 million of nonperforming Spanish property loans to hedge funds. In December, it sold €280 million of shipping loans to a buyer affiliated with Oaktree Capital Management L.P.

The latest Commerzbank Spanish portfolio sale is expected to be completed this summer. Interested investors will participate in the first round of bidding within the next four to six weeks, a person close to the deal said.

The deal could be structured similarly to Commerzbank's £4 billion ($6.6 billion) U.K. real-estate portfolio deal last year, said people familiar with the ongoing process. About half the Spanish portfolio consists of performing loans, while the other half is split between nonperforming and subperforming loans, these people said.

The U.K. sale was broken into two parts, with Wells Fargo taking control of £2.7 billion in performing loans, while Lone Star took on £1.3 billion of nonperforming loans.

There also is a chance one investor could buy the whole portfolio, said Adolfo Ramírez-Escudero, managing director in Spain at CBRE Group Inc., which is representing one of the bidders. He noted only a handful of bidders have the resources to consider this option.

Large asset managers such as Lone Star and Kennedy Wilson have opened local offices in the Spanish capital, and funds including Apollo Global Management and TPG Capital LLP have purchased real-estate servicing units from local banks, giving them a platform to manage the assets they buy.

On Tuesday, a portfolio of seven shopping centers in Spain was sold to U.K.-based GreenOak Real Estate Advisors L.P. and Spanish investor Grupo Lar Real Estate Investments SA for €160 million by Dutch property fund Vastned Retail VASTN.AE -0.25% NV.

The rising number of investors looking at distressed Spanish assets also may drive prices higher, increasing risk. A person familiar with Project Octopus noted the deal was "extraordinarily" well bid.

"You look at the bigger picture and it sounds pretty good. But on second look, you're thinking the good news might be priced in," the person said.

Source: online.wsj.com

Foreign investors even more confident about Spanish property investment

FOREIGN INVESTORS have done a dramatic U-turn on Spanish property investment, with two thirds now believing Spain has attractive buying opportunities.

A total 67% of participants in an Urban Land Institute and PwC survey said they were feeling more confident about investing in the country.

Marc Pritchard, Sales and Marketing Manager for leading Spanish home builder Taylor Wimpey Espana comments, “It is very encouraging to see the experts such as the Urban Land Institute and PwC highlighting the turnaround which Spain has undergone and the vast potential which remains. We have been saying for some months now that the situation, especially within the second homes market, is steadily improving.

“Last year we at Taylor Wimpey Espana recorded our best year since 2006 in terms of sales volume and you only have to look at the vast sums being invested into real estate by both private individuals such as Bill Gates and large investment funds, to see that ‘good opportunities’ still do exist in Spain.“

Source: theolivepress.es

Spanish firms plan property REITs fundraising push

Two Spanish firms are approaching investors to raise up to 900 million euros ($1.2 billion) for listed property funds, a type of vehicle that is taking off as more foreign investors pile into the country in search of real estate bargains.

Six years into a property market slump, buyers are starting to clinch more deals for distressed assets as banks clean up their books and prices come closer to bottoming out after falling around 40 percent from their peak.

That is encouraging funds to try out investment paths that have been rare in Spain until now, including through real estate investment trusts or REITS - listed vehicles that typically invest in income-producing assets, such as rental properties.

Private investment firm Azora is close to launching a fundraising drive for a vehicle of this type and aims to bring in up to 500 million euros ($683.3 million) from investors, two sources with knowledge of the plans said.

It has hired Goldman Sachs and UBS to market the listed fund, which will be known as Hispania, the sources said.

Azora declined to comment.

It will follow a similar move by family-owned real estate company Grupo Lar, which on Thursday published a prospectus for a listed property vehicle of up to 400 million euros, which will be placed among investors by JPMorgan.

The deals mark the biggest fundraising push of its kind to date, as Spain only has a handful of smaller REITs - or SOCIMIs in Spanish - which are not listed on the main stock exchange.

RENTAL MARKET

An overhaul of Spain's rigid rental laws last year has partly opened the door to these vehicles, officially introduced five years ago. The government made rental contracts shorter and made it easier for landlords to evict non-paying tenants, making the market more attractive for investors.

At present only about 17 percent of Spaniards live in rental homes, much lower than the European average of 30 percent.

REITS have taken off recently in other European countries such as Ireland, which also suffered a property market collapse and is seeking to attract foreign investors back to the country. The vehicles carry tax advantages and attractive returns.

"We've looked at these kind of things in Ireland before," said a London-based investor who had been approached for the Grupo Lar and Azora vehicles and said his fund would likely participate in the fundraisings.

"These types of listed real estate cash boxes usually give returns of around 10 percent," he said, adding they could be used in Spain to invest in everything from hotels to commercial properties and real estate being sold by Sareb - a government-backed 'bad bank' set up to house 51 billion euros of soured property assets taken off bailed-out banks.

Foreign investors, including many U.S. funds specialised in distressed real estate, have started to notch up acquisitions in Spain in recent months. These were elusive in the early years of the property slump as buyers struggled to agree on prices with banks selling their foreclosed assets and wary of making losses.

Spain's government forced banks to take hefty provisions against such losses in 2012, helping to ease deals, while Sareb last year began to offload portfolios of properties or debt to investors such as private equity group H.I.G Capital and U.S. investment firm Fortress.

Grupo Lar has also bought properties off Sareb, while Azora teamed up with Goldman Sachs last year to buy a package of 3,000 Spanish residential flats from the regional government of Madrid, for about 200 million euros.

Foreign banks are also making a push to sell soured Spanish property. Germany's Commerzbank has hired Lazard to sell a portfolio of around 4.3 billion euros in performing and non-performing real estate loans, one of the biggest of its kind on the market so far.

Source: http://in.reuters.com

Leveraging On the Time and Effort in Property Search

Maximum results with minimum effort in the quickest possible time sound like a near-impossible thing. However, it is definitely doable, particularly in the real estate industry. You can get top results with relatively little investment of resources, whether it's time, money, or intellect. Leveraging time and effort in property search is the trick to success.

Use Your Contacts and Social Network

Searching for the right property is the most time-consuming and stressful part of a real estate buying process. It is nearly impossible to find everything that you are looking for in a property in one place, unless lady luck showers liberal doses of good fortune on you. One form of leverage that you just can't afford to ignore is your network of contacts. Your mailing list or just your social network can be used to meet better suppliers, generate referrals, and find great investment deals. In most situations, your contacts could be the most valuable form of leverage you have.

Work with Proven Real Estate Professionals

Find an expert to work with a team of skilled and experienced individuals. A great realtor will shorten your learning curve enormously and make a significant difference to the amount of time and effort you would normally invest in a property search. Ask for referrals or go online, and then interview a few to find the best one. Your focus should be on finding a real estate professional that is experienced, ethical, and works full time.

Only Focus on Properties that Fit Your Needs

Most agents will try to encourage you to widen your range of search, so they can show you more variety. This can be a complete waste of time and effort, if you have pretty much decided on the kind of property you want to buy. Make sure your agent has fully understood your brief and instruct them to limit the search within those parameters. You may allow them some inventive diversion, which might lead to a surprising result.

Go with Your Gut Feeling

In order to get results faster, it is important to go with your gut feeling sometimes. You can be equipped with all the facts, floor plans, and flow charts but many a times, the clinching factor in any property purchase is human instinct. If your intuition gives you a strong ‘buy’ sign, there could be something in the property that is beckoning your senses even if you are unable to exactly pinpoint the reason. In such instances, it is better to go with your inner voice, if all other things look apparently good.

Use Technology to Make a Smart Buy

It is important to be tech-savvy, if you want to find the property you are looking for quickly and with lesser effort. Real estate tech tools and apps are being increasingly used by smart investors to cut short the search process and find the exact property they have in their mind. Quick Response technology is one of the most commonly used real estate tools. You simply have to hold your smartphone up to a bar code on the signboard or newspaper advertisement, and it links you straight to the sales brochure for that property. It allows you to examine a property in detail, if you happen to pass by one that matches your criteria and expectations.

Author Bio: Karrie Morton is an online marketing associate of HomePropertySearch.net - provides real estate services. Karrie’s interest range from providing improvement tips on home and yard. She also loves finding new ideas for home improvement projects. Connect with Karrie through her social media accounts. Facebook | Twitter | Google+ | Pinterest

The Expat’s Guide to Buying a House in Spain

If you’re contemplating leaving your home country (or have already done it), you’ll undoubtedly need a place to live. For many expatriates, this means buying a house—perhaps a simple task in one’s home country. If you’ve got your eye on Spain, your dream of homeownership can definitely be accomplished, especially if you’re willing to do a bit of research and follow our handy suggestions!

Spain is the perfect place to get a great deal on a fantastic house. Due to massive overbuilding revealed by the credit crunch, there is an abundance of real estate to be had at reasonable prices—many offered for less than half of their original price. The Spanish market is certainly one meant for buyers.

If you’re ready to buy, you’ll first need to find a realestate agent with a reputation to back him or her up, as anyone can set up as an estate agent. Make sure that your agent is fluent in both Spanish and your own language to best meet your (and the seller’s) needs. 

Next, don’t worry about having a house built. Because there are so many sitting empty, you’re likely to find a much better deal if you’re able to find a house that already exists. Additionally, many builders go out of business quickly, and this might mean a lot of waiting for you.  When you find your house, insist on a surveyor’s report, which will ensure the safety, security, and quality of your new home. While some sellers won’t want to provide the surveyor’s report, it is important that you make it happen to best protect your investment—EUR 400 now is worth a lot more later. 

Make sure you’re set on a home before you offer a deposit too. In Spain, a deposit is a commitment and you’ll be required to complete the purchase. Otherwise, you’ll lose your deposit (10-15% of the asking price). Also remember that your property debt is now associated with the property and not you, so make sure your lawyer or agent has proof that the seller has fulfilled all of his or her financial obligations.

You’ll also want to make sure you have a Spanish bank account—it will be extremely difficult (read: impossible) to set up utilities without it. Find a bank with an English speaker, which shouldn’t be difficult, and ask if it might be possible to get bank statements in English too.  

Finally, make sure that you’re familiar with the 1988 Law of the Coast governing coastal development. Make sure to purchase a property that is unable to be reclaimed by the government. Also look into the Valencia Land Grab Law of 1994, as some properties, especially in rural areas, may be impacted.

As with any home purchase, make sure to conduct a variety of research and learn the basic vocabulary associated with buying a home. A well informed buyer is a good one! Happy hunting.

Heidi Andrews roots for the LA Dodgers and the freedom to eat chocolate for breakfast. When she isn’t learning to make those cool designs on espresso drinks, you can find her writing about financial freedom, new technology, and investment opportunities for Jason Hartman Media. 

Be Bold to be Sold

Selling a property is different from selling goods on eBay. Of course, eBay is a good way to be found. However, there are lots of things to consider. Remember that if you make a little mistake, your home might end up collecting dust or become ruins –a would-be UNESCO heritage site. The market value of the property decreases the longer it stays up for grabs in the market. It becomes overpriced, thus, losing potential buyers.

AGENT

007 might not be capable of selling properties despite his charm. Look around for an agent that is competent enough to do his job. You can contact an agency and select the best agent for you. Choose somebody who has the most excellent listings. Make sure to read the contract before giving the green light to the agency. Ensure that the length of the term is suitable for you. Also, check the fees for advertising and if it’s possible to cancel it. Once an agent is chosen, negotiate his commission. He might cut the amount because the competition among them is steep. Another thing to commit to memory is to listen to the agent. Nowadays, people think that they are geniuses when reading some articles on the web. Agents are there for a reason. They are professionals that can hold your hand as you go along the selling process.

PRICING

Look for comparables around your area. Comparables are properties that resemble yours. If you have a chalet type house, don’t compare it to a castle. Owners metaphorically regard their homes as castles that they get attached to them. Hence, clouds their decision to figure out the right price. Pricing is a tricky thing because it involves emotion at times. Real estate agents can guide you through it by teaching you about CMA (Competitive Market Analysis). Luckily, this service is likely to be without charge. They can also point out a unique feature at your property that can boost up its value. If not provided by the agent, ask him to give you with active and sold comparables, and market statistics. These will help you understand the pricing more.

FIRST IMPRESSION

Tidy up before an open house. Who would like to live in a place that is nasty? A place like a murder scene with bullet holes might be attractive to a few. The majority don’t want to see that, though. They want to see firework (or at least feel it) as they enter your house, feel like they are in Disneyland…well, that’s exaggerated. You get the picture, right? If it’s within your budget, hire a stager. Agents can be confused what to do or improve for home showings. Home staging is getting more and more popular. Professionals beautify the house by adding furniture and decorations that can amaze the buyers. Some would even bake a pie to stimulate not only the sense of sight but also the sense of smell. Don’t forget to take care of the outside as well. Mow the lawn is the least you can do.

OFFERS

Pick the best offer. Choose wisely not according to the price but the conditions. The highest bidder may not be the best if the conditions are at your disadvantage. The high price can blind you when deciding and the conditions may be concealed by the bright amount of hefty lot of cash. For that reason, a lower offer may be the finest option if it doesn’t have any conditions that would lead to your doom.

Bio:

Ernest works with home and real estate sites which really gives him the thought of materializing his passion about kitchen furniture and home designs especially in housesfor sale in Calgary.

Foreign investors return to Spain

A year after fleeing Spain as its economy tottered on the brink of a full-blown sovereign bailout, foreign investors are coming back.
The prospect of relatively high returns in a eurozone economy emerging from recession with a strong corporate presence in Latin America is apparently proving irresistible.
Among the latest converts, Microsoft co-founder Bill Gates snapped up in September a 5.7-percent stake in Spanish construction and services group FCC for 108 million euros ($147 million).
News of the US billionaire's decision sent FCC stock surging more than 10 percent in a single day and made headlines in the Spanish media.
"Foreign investment is returning to Spain," said state secretary for business Jaime Garcia Legaz as he presented a report last month on sovereign funds by the Spanish business school ESADE.
"They are expecting a Spanish economic recovery," he added.
"It is clear that the perception of Spain has changed. It is improving week by week."
Spain would enjoy a surplus in its current account -- the broadest measure of trade including financial flows -- equal to two percent of its economic output at the end of this year, he forecast.
That would be a far cry from the 10-percent current account deficit Spain posted in the depth of the financial crisis, which erupted in 2008 after the collapse of a decade-long property bubble.
Between January and August this year, foreigners ploughed nearly 19 billion euros in net direct investments into Spain, twice as much as they had in the same period a year earlier.
The money is welcome in a country gingerly emerging from a two-year recession as it narrows its public deficit, boosts competitiveness and struggles with a jobless rate of 25.98 percent.
"The Spanish market is regaining its attraction," said France's ambassador to Spain, Jerome Bonnafont, describing the change as "a turning point".
"There is a clear increase in spontaneous questions from French companies about Spain," said Richard Gomes, local director of Ubifrance, an organisation that helps French firms to operate internationally.
Sovereign funds are banking on Spain, too, showing particular interest in companies that have a strong presence in Latin America, according to the ESADE study.
Among the most emblematic investments, Singaporean sovereign fund Temasek has ploughed money into Repsol, and Abu Dhabi's IPIC is now the full owner of Spanish petroleum and gas group Cepsa.
Maria Victoria Zingani, financial director at another Spanish oil giant, Repsol, said Temasek had also approached her company in 2012 as it toured Southeast Asia to lure foreign investors. Today the fund, which has visited Repsol installations in Brazil and Bolivia, holds a 6.23-percent stake in the group.
Sovereign funds are looking for highly diversified companies with long-term growth prospects and a presence in Latin America, she said.
"It is a phenomenon that is growing and will continue to grow," said ESADE professor Javier Santiso.
The ESADE study identified 82 sovereign funds in the world with total assets of more than $5.5 trillion.
After initially targeting infrastructure and energy industries, they are increasingly looking at the new technology sector while also casting a cautious eye at property, Santiso said.
According to the ESADE study, Asian funds especially from Singapore and China are emerging as the big investors in Spanish companies, a change from just two years ago when Arab funds, in particular Qatar Holdings, were the leaders.
Qatar Holdings took stakes of more than six percent in Banco Santander and energy group Iberdrola, spending more than $2 billion on each investment as it banked on their strong presence in Brazil. It is now the main shareholder in Iberdrola with 8.18 percent of the company.
"Sovereign funds anticipated the return of foreign investors, betting on Spain since 2011," said Antonio Hernandez, analyst at financial advisory group KPMG, predicting they would continue to do so in 2013.

Source: au.news.yahoo.com

Distressed Property Investors In Spain Turn To Buy2let Market

Domestic and overseas real estate investors are engaging in bulk-buying of foreclosed properties in Spain so that they can rent them out. Repossessed property assets in prominent urban centres in the country can be purchased at 71.6 per cent below their original price, on average. During 2012, a legislation that enticed people to invest in rental real estate was passed, and under this law, inflation will have no association with rental rates. Landlords can now increase rental rates more frequently.

According to the same law, duration of leases was reduced along with the waiting period for the eviction of tenants who do not meet payments on time. In addition, the law stated that overseas owners who rent out properties to employed individuals who are under thirty years of age could claim tax relief between sixty and hundred per cent on the income from their rental properties.

Individual property buyers, however, have seen tax breaks set aside. Regular citizens who are struggling with a falling disposable income as well as the credit crunch, have now lost hope of entering into the property market. The main reason for this is that the demand for rental homes is expected to rise dramatically in the coming years. The recession has officially ended for Spain as it recorded an economic growth of 0.1 per cent during Q3 of 2013.

Institutional investors buying properties in bulk

A good number of respected property investors such as Goldman Sachs and Blackstone Group concentrate on purchasing foreclosed properties in bulk, especially apartments that have already been occupied in major urban centres such as Madrid. The demand for homes in these centres is high, and tenants are usually able to afford rental payments. Three months ago, Blackstone Group purchased eighteen apartment buildings from Madrid’s local government for more than 125 million Euros. A month later, Azora Capital and Goldman Sachs purchased more than 20 social-housing establishments from the city government.

Madrid has several portfolios to attract high profile institutional investors to Spain. Most portfolios are huge and contain more than 1000 housing units in addition to garages and other amenities. The asking prices are set over 50 million Euros for these portfolios, and investors are ready to bid their way to the purchase.

Source: property-abroad

Deeply ambitious in Calpe

CALPE was named the ideal site for the deepest swimming pool in the world.
The Oceanus 51 group announced its choice of location during the Mediterranean Dive Show held recently in Calpe.
The 51-metre deep pool is the brainchild of Calpe diver Julio Parra who revealed that the Marina Alta town and its tourist infrastructure provide an ideal setting for the project.
The Calpe pool, designed to represent a cave, would be 18 metres deeper than the Nemo 33 pool in Brussels.
“Calpe is definitely our first option.  Now we must get this across to the town hall ,” Parra said.
The pool, entirely funded by private investment will cost between €5 and €6 million but the town hall would have nothing to pay, according to Parra.    All Oceanus 51 requires is approximately 3,000 square metres of municipal land for the pool and its installations for which it would pay ground rent.
The project would bring around 300,000 divers and the families to Calpe each year, the diver predicted and would low-season tourism.  “Divers would come year-round,” Parra pointed out.

Source: euroweeklynews.com

Spain's economic outlook improving, says Moody's ratings agency

Ratings agency Moody's has raised its outlook for Spain's economy from "negative" to "stable".

Moody's said there had been a real improvement in the economy and government finances.
Last week, the Standard and Poor's ratings firms also raised its outlook for Spain on signs of economic improvement.
Debt-laden Spain has emerged from a two-year recession, with export growth and companies becoming more confident.
But unemployment remains high, at 26%, and economic growth is expected to be shallow.
Nevertheless, Moody's said: "The external accounts continue to improve, the situation in the labour market has stabilised and the private non-financial sector continues to deleverage."
Moody's left the overall rating for Spanish debt unchanged at Baa3 - just above junk-bond level - but the change in the outlook reduced the likelihood of another downgrade as the country works to rebound from its financial crisis.
"The external accounts continue to perform better than expected, with Spain among the few EU countries to see its export market share increase over the recent past," Moody's said.
The firm said that it "expects the strong export performance to continue, as competitiveness is supported by very low wage and price increases."
Another key change is the government's increasing access to private capital markets, Moody's said.
Last week, S&P raised its outlook from negative to stable, and re-affirmed its BBB- long-term sovereign credit rating.
Spain's economy grew 0.1% in the July-to-September period, after contracting for the previous nine quarters - officially lifting it out of recession.
Prime Minister Mariano Rajoy's government is hoping economic growth will help reduce Spain's spiralling public debt, currently 943bn euros (£792.5bn; $1.3 trillion), or more than 92% of the country's entire gross domestic product (GDP).
The country's banks, which received 41bn euros of EU bailout funding in 2012, have been gradually reducing their borrowings from the European Central Bank over the last year.

Source: www.bbc.co.uk

Will this week's data support further Sterling strength?

Sterling finished off Friday with a final flourish, rounding off a strong week for the UK currency with data highlighting that mortgage grants were at their highest level since 2008.

Sustained strength saw new heights on Friday as sterling reached the highest level in over two years against the US dollar after a fourth consecutive weekly rise, whilst also experiencing a three week high against the euro. This week, there is a whole range of data being released in the UK which is liable to cause some movements in the markets.

The manufacturing, construction and services sectors will release their Purchasing Managers Index (PMI) figures on Monday, Tuesday and Wednesday respectively. Thursday then holds the regular Bank of England’s decisions over the quantitative easing and official bank rate, with the accompanying statements of higher impact, before Friday closes with the less influential consumer inflation expectations.

Given recent movements and events for the currency, all of the above will be important in seeing whether the currency can consolidate its position and hold on to these very strong levels. Get in touch with your trader now for the latest sterling rates at the start of another