The Cidade Lacustre project in Vilamoura takes another step towards a start date as the government this week gave the go ahead for the €1billion project destined to cover over 360 hectares, much of it agricultural land.
The project lies between Vilamoura Marina and Açoteias, Albufeira and side-steps normal planning requirements as it has been deemed of “relevant public interest” by the government.
Cidade Lacustre was born in more buoyant economic times but even in 2009 came in for sharp criticism from eco-group Almargem which referred to the project as “the last act of an environmental tragedy.”
Permission for the resort was signed off last week by Pires de Lima and a secretary of state acting for Agriculture Minister Assunçao Cristas.
The project envisages 3,000 beds in villas, hotels and apartments in a lagoon setting on what currently is farmland which will be dug out and flooded to provide watery views from much of the accommodation, 300 units of which will have their own berths. An inevitable shopping area is planned around the main lake.
Almargem says this action will adversely affect one of the most important wetlands of the Central Coast of the Algarve, which few can dispute.
The project calls for the diversion of a river, the construction of a dam for flood protection and an awkward crane system for transferring boats between the existing Vilamoura marina and the new lagoons.
Cidade Lacustre is planned to include the usual environmental sops for wildlife and habitat, and the preservation and protection of the Roman ruins at Cerro da Vila.
The whole ‘sea world’ type project was dreamt up by Vilamoura developer André Jordan in 1999 when he was involved with Lusotur which owned the Vilamoura resort area.
In July 2004 the Andalucian PRASA group acquired Lusotur from André Jordan for €360 million. PRASA got the rights to build 4,000 more properties and to manage 1,650 hectares of real estate and golf courses.
This business was renamed Lusort and was purchased in 2006 by PROCAM, a subsidiary of Spanish bank Caixa Catalunya which acquired a 50% stake in a deal worth €180 million.
The Portuguese press now is referring to a €1 billion investment, up some €300 million from the initial budget, in Cidade Lacustre by the Spanish bank. Caixa Catalunya was nationalised in December 2012 due to crippling financial problems resulting in an €11.8 billion 2012 loss, and received a €9.08 billion bailout which it has yet to return to the Spanish taxpayer – it may not be in a good position to start lending money for foreign property ventures.
More interestingly, earlier this month, the state-owned bank announced it is selling off its real estate business Inmobiliaria Catalunya Caixa to a U.S. vulture fund Blackstone for just €40 million. (*see below for update)
The sale of Catalunya Caixa’s property division represents a further step in its divestment plan that saw the transfer of many of its toxic assets, mostly home loans, to Spain's public ‘bad bank’ SAREB. The remaining real estate assets may well include the Cidade Lacustre project, in which case the Americans own the project, not the Spanish.
Notice of the Blackstone deal states the U.S. giant ‘now controls the real estate owned by CatalunyaCaixa’ and ‘also inherits properties in Portugal and Poland, where there are some giant developments financed during the bubble era.’
While ownership has yet finally to be revealed the project is unlikely to be started any time soon, due to expected bureaucratic delays.
The eco-lobby may be overwhelmed by this project as it has concentrated to date on Finalgarve’s Praia Grande development near Lagos dos Salgados near Armação de Pêra where a further 360 hectares is threatened by a large scale ‘me too’ development of hotels, golf courses villas and apartments that the government and local council support, and 32,000 signatories on an online petition do not.
Whether this Vilamoura project is apt in the light of the Algarve Tourist Board's purported shift of emphasis to nature tourism and if so, whether the timing is right, are points that the Spanish or American owners may wish to ponder as they take a look at the nearby failed Albufeira Marina project which has many of the same characteristics as the new Vilamoura project i.e. inflated price expectations for housing units, high rents for retail space, high annual service charges and the belief that because a project overlooks water that a premium still can be charged to buyers and users.
http://www.lusort.com/fotos/editor2/dos_imp_cidade_lacustre_pt_1212416582.pdf
http://www.youtube.com/watch?v=Y5gblq6h_Vo
http://lusort.com/en/cidade-lacustre
* Catalunya Banc has found a buyer for its real estate division, that manages assets of 8700 million Euros and more than 50.000 homes. The international funds Kennedy Wilson and Värde Partners have reached an agreement to acquire 100% of the subsidiary of the nationalized bank for an amount that varies between 30 and 40 million Euros.
However, the amount of the transaction could reach 50 or 60 million Euros on the medium term, depending on the results obtained by the company, as assured by sources informed of the operation.
The objective of Kennedy Wilson and Värde Partners is to transform CatalunyaCaixa Inmobiliaria into its platform for growth in Spain, where they have ambitious plans to acquire properties put on sale by financial institutions, the bad bank Sareb and the Administrations. “These US funds consider that the time has come to buy portfolios of assets in Spain, and this is why they need to acquire a company specialized in asset management and real estate services”, the consulted sources explain.
Up to twenty-five Spanish and foreign investing groups showed their interest in CatalunyaCaixa Inmobiliaria. With the aid of N+1, the bank controlled by FROB made a selection of a group of eight funds that entered the phase of binding offers, as advanced by Expansion on the 7th May. At the end, Catalunya Banc received six proposals made by the funds TPG, Carlyle, Cerberus, Wilbur L. Ross, Kennedy Wilson with Värde Partners and Magic Real Estate
This last company was the only Spanish candidate and now it has acquired together with Blackstone the housing development sold by the Town Council of Madrid.
The chosen offer has been the one made by Kennedy Wilson and Värde Partners, who have agreed to take on the whole staff at CatalunyaCaixa Inmobiliaria, made of 195 workers. Eduard Mendiluce will remain as head of the company with headquarters at El Prat (Barcelona), who will dissociate himself from Catalunya Banc and will no longer be a part of its managing board. The sale should be formalized in the last quarter of the year.
With headquarters in Beverly Hills (California), Kennedy Wilson is specialized in the sale of properties through auctions and had already collaborated with CatalunyaCaixa in the sale of the Murcian resort Hacienda del Álamo. The company, list in the NY Stock Exchange, manages assets of 12.000 million dollars and has an office in Madrid led by Ronald Lafever. It invested 306 million Euros in July in the acquisition of properties from the Irish bad bank.
On the other side, Värde Partners is another opportunistic fund with headquarters in Minneapolis and offices in London, who had no previous investments in Spain.
Along with Servihabitat and Solvia, CatalunyaCaixa Inmobiliaria has one of the most important teams of specialized professionals in the commercialization of awarded properties from banks. In 2012, the company sold 7275 properties for 1500 million Euros and rented 1408 properties.
In this operation Kennedy Wilson and Värde Partners – who have created a joint company – are not acquiring a single real estate asset, as CatalunyaCaixa Inmobiliaria is only a services company. The 50.000 properties and the assets for 8700 million Euros it manages belong to Sareb (6400 million Euros) and Catalunya Banc (2300 million Euros).
The bank presided over by José Carlos Pla transferred to Sareb most of its awarded properties in December. A third of the 6000 million Euros transferred to Sareb were awarded properties and two thirds were credits to developing companies.
The bank did not transfer all properties valued below 100.000 Euros and the credits below 250.000 Euros. Catalunya Banc also retained all properties located in other countries. There is a resort with 900 moorings in Vilamoura, in the Portuguese Algarve and three plots located in Poland, one of them in the center of Warsaw where an office building is planned.
CatalunyaCaixa Inmobiliaria manages and commercializes all these assets and, in exchange, receives a fixed and a variable commission from Sareb and from Catalunya Banc. Its expenses are mainly the salaries of its workers and the contract to use the software platform from the bank. The agreement takes into account the use of the network of 1163 branches of Catalunya Banc as a privileged selling channel.
The objective now is to expand the portfolio of assets managed by CatalunyaCaixa Inmobiliaria, which could reach management agreements with other companies, although the majority of new assets it will manage will come from acquisitions made from now on by Värde Partners and Kennedy Wilson in the Spanish market.
Catalunya Banc, which should be auctioned by Frob in October, assures that the sale of CatalunyaCaixa Inmobiliaria will generate benefits and will allow a further disinvestment plan to concentrate in retail banking. The institution, which will execute a dismissal program to lay off 2250 employees, has put on sale the network outside Catalunya.
The institution has returned to benefits in the first semester, with earnings of 183 million Euros. With this sale, Catalunya Banc is the first institution to get rid of its real estate platform. Bankia Habitat and Servihabitat (subsidiary of La Caixa) have started similar processes, which have not been closed yet. The funds Cerberus and Centerbridge are the candidates to acquire the subsidiary of Bankia, while TPG and Bridgepoint are fighting to acquire 50% of Servihabitat Gestion.
