Spain's economy has been looking up of late, with the International Monetary Fund (IMF) adjusting its growth forecast from 0.6% to 1.2% for 2014. James Daniel, head of the IMF's mission to Spain, explained recently, "The economy has turned the corner, recovery is on the right track and the outlook is better than it was a year ago thanks to society's efforts and adopted measures."

Improving economies, pent-up demand and cheap funding costs propelled European real estate deals to their highest number in six years in the first quarter and the next three months topped that. Paris-based Klepierre’s 4.2 billion-euro ($5.6 billion) offer for Corio, announced Tuesday, would be the biggest transaction in Europe’s real estate industry in at least two-and-a-half years.

Retail real estate investment in Europe enjoyed a strong quarter as the Q2 volume reached €9.6bn, up 86% from the Q2 2013 volume of €5.2bn. The first half volume of €16.4bn is 44% ahead of the first half of 2013, and 35% above the 5 year first half average.
 
The second quarter was characterized by landmark transactions in Europe's major cities of London and Paris. The largest transaction was the €805m (£656m) purchase of a 30% stake in Bluewater, Kent by Land Securities (plus €49m (£40m) for the full asset management rights and 110 acres of surrounding land, valuing the scheme at c€2.7bn (c£2.2bn) overall). Meanwhile in Paris a consortium of private investors assembled around Fonciere Apsys acquired the Beaugrenelle Shopping Center for a price in the region of €700m. 

Blackstone has bought a loan portfolio from CatalunyaCaixa for €6.39bn.

CatalunyaCaixa said the sale of the portfolio of residential mortgages had triggered “major interest” from international investors, with 12 funds in the first round of bidding.

Blackstone paid €3.6bn for the portfolio, which it will transfer into a Spanish asset securitisation fund.

Blackstone has won the hotly contested bidding for Catalunya Banc’s €6.4 billion Project Hercules portfolio of bad Spanish residential loans.
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The US opportunity fund is paying €3.5 billion for the portfolio, which Catalunya Banc said had already been written down by €2.2 billion to €4.2 billion. To get to €4.2 billion, FROB - the agency set up to restructure Spain’s troubled banks – will contribute €572 million.

According to Spanish press reports FROB agreed to provide public funds to support the deal during the negotiations. It has been structured so that the loans will be held by a “fondo de titulacion de activos” – basically a securitisation vehicle – in which Blackstone will hold the majority interest and all the senior bonds; these will have priority on the cash flows until a specified return hurdle is met. After that, the income will flow to FROB, which will hold all the junior/subordinated bonds.

Benson Elliot Capital Management has acquired a shopping center in Albacete, Spain, and is planning to transform the property, it has announced. 

Revealing details of its new retail asset, the London-based firm said there was increasing consumer demand in the country as Spain “accelerated” its recovery from recession. Its comment comes as Spain finds itself in a nascent economic recovery helped by tax cuts and a €6.3 billion economic stimulus package. 

Though no acquisition price was stated, Benson Elliot is thought to have agreed a price of around €20 million. Its new asset, the Imaginalia shopping centre, is a 484,000 square feet property located in Castilla-La-Mancha, a regionally dominant city with a population of 172,000, between Madrid and the Alicante coast. 

Job growth in Europe’s first and second-tier cities – coupled with low wage rates – will drive office demand according to a new report by Moody’s Analytics.

The researcher’s ‘European Regional Forecasts: Comparative Advantage, Opportunities and Risks’ report outlines the prospects for cities across the continent.

The highest job growth rates, the study found, are likely to be recorded in cities recovering from “deep downturns since the global financial crisis”.

Merlin Properties has completed its £740m purchase of a portfolio of BBVA bank branches.

The Spanish REIT, or SOCIMI (sociedades cotizadas de inversión en el mercado inmobiliario), said it had bought the TREE Inversiones Inmobiliarias company, which held the portfolio, from Europa Capital, Deutsche Bank and Banca March. The deal is Merlin’s first, having listed this week.

The portfolio of 880 bank branches and five properties is fully-let to BBVA on leases expiring in 2039.

Speaking to PERE ahead of his June 25 appearance at the PERE Summit: Europe, Ken Caplan said The Blackstone Group continues to find value investing in Europe. He noted that the firm still is “excited” about the opportunity in the region, although he confirmed that “shifting sentiment” was taking place, with a greater number of investors interested. 

Blackstone’s European real estate chief highlighted the differences between London, where the firm still is interested in deals, and Continental Europe. “I guess one could talk about the ‘weight of capital’ in a place like London, but it is not the same all across Europe,” he said. “Certainly, there are more people interested, but there still are a limited number of parties with the experience and necessary capital, particularly for large-scale distressed situations.” 
Caplan continued: “One of the positives of having a functioning market is that sellers are more willing to transact. The debt markets are getting healthier, and we are seeing very interesting opportunities with solid fundamental value. Now, we also are seeing more things happening in southern Europe, whereas that was a really quiet part of Europe a year or two ago.”

It is noon in London on June 18, and Ismael Clemente is just 12 days away from the initial public offering of Merlin Properties – a Spanish SOCIMI, which is Spain’s version of a REIT – for which he is trying to raise €1.5 billion. At his side during the hectic investor roadshow is David Brush, the former head of Brookfield Asset Management’s European opportunistic real estate business – a familiar figure in the private equity real estate industry who used to work with Clemente at Bankers Trust and later Deutsche Bank Real Estate.

Why Spain crashing out of the World Cup almost certainly means those getting excited about investing in the country’s real estate are right to be so. July 2014 issue

Whoever said that national sporting success is heavily linked with GDP growth obviously never considered Spain and football. In that particular case, the exact opposite seems to be true. Basically, the more that Spanish people are spending or earning or the more goods and services the country produces, the worse its national team is. Putting it the other way around, the worse its GDP growth is, the better its national football team performs.

Merlin Properties has listed as a Spanish SOCIMI, raising €1.25 billion making it Spain's biggest flotation in the last three years and the largest listing ever of a SOCIMI. 

The SOCIMI, which is Spain's version of a REIT, is being orchestrated by MAGIC Real Estate, which has almost €5 billion of assets under management in Spain, Portugal and Morocco, and whose founding partners are Ismael Clemente and Miguel Ollero. Clemente is executive chairman and chief executive officer of Merlin, while Ollero is chief financial officer and COO. Ex-RREEF and Brookfield Asset Management executive David Brush, who recently joined the firm, is chief investment officer.
 

We’ve discussed retail property, which is one of the primary commercial real estate property types and thus an important part of any diversification or asset allocation strategy.  In our earlier overview, we reviewed how this sector can be somewhat cyclical and is influenced by the state of the economy, especially such indicators as employment growth and consumer confidence levels.  Valuation remains a property-specific matter, though, and in this article we’re going to drill down into some of the key aspects of due diligence on retail properties and some of the key factors driving their valuation.

Rome wasn’t built in a day. For many European financial analysts that maxim is the more cautious analog to the Wall Street adage Your first loss is your best loss.

Indeed, the two sayings capture well the contradictory responses to the financial crisis that have been taken on both sides of the pond. 

In the U.S., nonperforming loans (NPLs) quickly went on the market in order to help eliminate losses from lenders’ balance sheets. With the start of the recovery, the NPL market started to lose steam and opportunistic buyers started to look to Europe—just as banks were beginning to sell.

Commercial real estate is made up of a number of market segments, and a significant one is the hospitality sector – hotels, motels, resorts, and other tourist or business accommodations.  Ownership of these properties is closely tied to the underlying business, so it’s important to understand the dynamics of the sector. 

Even during the Great Recession of 2007-2009, self-storage outperformed all other asset classes of commercial real estate.  Self-storage has only experienced an actual loss rate (foreclosures) of about 2%, by far the lowest of all commercial real estate asset classes.

After John Carrafiell co-founded GreenOak Real Estate in 2010, the firm’s first investments were in New York, London and Tokyo. But in February, GreenOak and several partners announced that, after almost a year of talks, they had moved into Spain’s downtrodden property market and bought eight shopping centres for €160m.

Real estate is a special asset class that can help make your money work for you in regards to inflation. While many people dislike inflation because it makes things like the price of gas go up, and causes us to spend more money on things like food, rent and entertainment, real estate investors LOVE inflation. Not only does inflation tend to cause property values to increase, but investors can also charge more rent for the buildings they own – making inflation the double whammy for real estate investors!

Here are the top 5 reasons why passive real estate investing is one of the best ways to make your money work for you

Startups are considered by many to be one of the riskiest asset classes and the returns associated with startups, thanks to exits like the purchase of Instragram by Facebook or Microsoft’s acquisition of Yammer, can be astronomically high.  That high-risk, high-reward mentality should be balanced with a medium or low-risk mentality to keep investment portfolios in check at a macro level.   While high risk real estate transactions totally exist in the market, like ground-up development and conversion projects, there are medium and low risk transactions like first trust deed investments with low loan to value ratiosand commercial buildings with built in income that can help balance a holistic portfolio.