offices Market News: Spanish Real Estate Intelligence

Metrovacesa Sells an Office Building Still Under Construction to Axiare

22 November 2017 - Expansión

The real estate company controlled by Santander and BBVA has sold a building, located in Madrid and still under construction, to the Socimi for €30 million.

The Socimi Axiare is continuing to expand its portfolio, whilst its counterpart Colonial is pushing ahead with its plans to buy the company. The group led by Luis López de Herrera Oria has closed the purchase of an office building, located on Calle Josefa Valcárcel in Madrid.

Axiare has paid its former owner, Metrovacesa, €29.7 million for the property, which is still under construction, as reported by the Socimi to Spain’s National Securities and Exchange Commission (CNMV).

The project under construction includes a gross leasable area for offices of 8,652 m2, spread over seven floors, as well as two underground floors, which will contain 261 parking spaces. The construction work on this building is expected to be completed during the last quarter of 2018.

The property forms part of a small real estate portfolio that Metrovacesa held onto after transferring its non-residential buildings to the Socimi Merlin Properties in an operation closed in October 2016. Specifically, this project emerged from the final investment plans of Román Sanahuja, owner and President of Metrovacesa prior to 2008, when the real estate company ended up in the hands of its creditor banks.

Following this purchase, Axiare has a portfolio of assets worth €1.74 billion, dedicated primarily to office buildings. So far this year, the Socimi has purchased seven properties, located in Madrid and Barcelona, for a total investment of €245 million. Similarly, it has assets “in an advanced stage of analysis” worth another €170 million.

On Monday 13 November, Colonial launched a takeover bid  for 100% of Axiare, in an operation worth around €1.4 billion. Before launching the public offer, Colonial, which has been Axiare’s largest shareholder since October 2016 with a 15% stake, increased its shareholding to 28%.

Colonial’s offer boosted Axiare’s share price, which now stands at around €1.453 billion, equivalent to €18.38 per share, compared with the takeover offer price of €18.50.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

C&W: Office Rentals Down By 56% In Barcelona In Q3

21 November 2017 - Expansión

The uncertainty caused by the process directly affected the activity of Catalan companies even before the illegal referendum was held on 1 October. That finding is evidenced by the data relating to the leasing of office space, which fell by 56% in Barcelona during the third quarter, according to the Marketbeat study prepared by the real estate consultancy firm Cushman & Wakefield.

This decrease contrasts with the growth that had been achieved during the first two quarters of the year, when the leasing of office space increased by 39% with respect to the same period last year. Operations included in this study relate to both the leasing and acquisition of new space, provided that, in the case of the latter, the company uses the space directly and does not re-lease it to obtain returns.

The decrease recorded during the third quarter was spread unevenly across the different neighbourhoods. One of the most pronounced decreases was seen in the Digaonal area and along Paseo de Gracia, where the volume of space leased fell from 10,000 m2 to 4,000 m2, in other words, by 60%. According to Ramiro Rodríguez, Director of Market Research at Cushman & Wakefield, “companies from the legal, consultancy and financial sectors” are typically based in this area.

In the Plaza Europa area, the percentage decrease was even greater – 80% - but it should be noted that the magnitudes there are smaller - the volume of space leased there fell from 5,000 m2 to 1,000 m2. The companies that dominate that area are from the “technological and telecommunications sector”, said Rodríguez.

It should be noted that these figures correspond to the months of July, August and September. By then, the first alarms had been set off following the call for the illegal referendum on 1 October, but by the point, the political crisis that culminated in the application of Article 155 by the Spanish Government had not yet been unleashed.

Asked about the effect of those events, Rodríguez stated that they extended the “feeling of uncertainty”, which led to a certain stoppage in the leasing of office space. Nevertheless, following the illegal vote, there was a “return to normality”, which has allowed operations to be reactivated.

For this reason, the head of the study forecasts that, by the end of the year, the volume of office space leased will amount to around 360,000 m2, representing a rise of approximately 12.5% with respect to the 320,000 m2 that was registered in 2016. Currently, the cumulative YoY increase between January and September 2017 amounts to a similar percentage (12%), and, in theory, a similar rate of growth is expected to be maintained during the fourth quarter.

In addition to the uncertainty caused by the ‘independentista’ process, the main obstacle that companies looking for new offices will find is the shortage of available space, especially when it comes to larger offices. According to data compiled by Marketbeat, the supply in Barcelona had an availability ratio of 8% at the end of September, which represents a decrease of 3.5% with respect to the previous quarter.

Original story: Expansión (by I. Bolea)

Translation: Carmel Drake

Axiare: BofA & 4 Large Hedge Funds Acquire Stakes in Midst of Colonial Takeover Bid

21 November 2017 - Bolsa Mania

Bank of America, one of the giants of the US financial sector, has acquired a stake in Axiare, at the same time as Colonial has launched a takeover bid for the Socimi with the aim of creating an office rental giant. The US entity has declared to the CNMV that it holds a 6.7% stake in Axiare, whilst another group of funds has purchased just over 8% of the entity, at a time when the largest real estate operation in Spain this year is on the verge of being completed.

On Monday, the investment fund Wellington Management announced an increase in its stake from 3% to 3.8%. That means that 15% of Axiare’s share capital is now in the hands of funds. MVN Asset Management (Maven Securities), Gruss Global and Amber Global appeared last week with stakes of 3.5%, 1.1% and 1.21%, respectively. Those qualifying investors join Citi, which already held a 4.9% stake in the Socimi and which emerged as the only high-profile shareholder behind Colonial, after the other shareholders sold their stakes in this real estate company.

Specifically, the British firm MVN Asset Management (Maven Securities) declared a stake of 3.09% in Axiare on 13 November, and on Tuesday (21 November), increased that percentage to 3.5%. Gruss Global controls another 1.1%. Meanwhile, Amber Global, an entity headquartered in the Cayman Islands, has reported that it holds a stake of 1.21%, in that case, all through derivatives, according to the CNMV’s registers. Maven and Amber Global acquired their stakes in Axiare on the same day that Colonial launched its takeover bid for the Socimi Axiare. Colonial is already the largest shareholder with a 28.7% stake.

With its offer, the real estate company led by Pere Viñolas is looking to acquire the remaining 71% of Axiare that it does not yet control. On the same day as it submitted its offer, Colonial increased its stake in the Socimi from 15% to 28%. To that end, it offered €18.50 per share in the Socimi chaired by Luis López de Herrera-Oria. That price represents a premium of 13% over the share price of Axiare on the eve of the takeover and 20.8% over the average list price for the last three months. On Tuesday, the Socimi’s shares were trading at around €18.30.

Axiare claims that the takeover is “hostile”

Axiare says that the takeover that Colonial launched over the company on Monday is hostile in nature, given that it did not know anything about the intentions of the real estate company. The firm, whose largest shareholder is Colonial, announced that it will consult its legal and financial advisors regarding the details of the operation.

“Until the morning of 13 November, neither the management team nor the Board of Directors of Axiare was aware of the intentions of Colonial to purchase an additional block of shares, nor of its intention to formulate a takeover bid”, say sources at the firm chaired by Luis López de Herrera-Oria.

This is not the first time that discrepancies have arisen between the two companies. In fact, it is the second time that Axiare has expressed its resistance to Colonial’s acquisition of its shares. The first time was when the company purchased 15% of the Socimi. Proof, they argue, is that Colonial is not represented on the most senior governing body of Axiare, because it is considered to be a “competitor”.

Original story: Bolsa Mania (by Alberto Sanz)

Translation: Carmel Drake