Month: April 2015

Villar Mir Will Build A New Skyscraper On La Castellana

30 April 2015 – Expansión

Through his real estate subsidiary Espacio, the businessman Juan Miguel Villar Mir has been awarded the plot of land behind the Cuatro Torres complex in Madrid, where he will build a private hospital and a shopping area.

There will soon been a fifth skyscraper in the complex known, until now, as the Cuatro Torres Business Area, on the Paseo de la Castellana, in Madrid. Yesterday, the Town Hall of Madrid announced that it was awarding the plot of land located behind the complex, to the real estate company Espacio, owned by the businessman Juan Miguel Villar Mir.

Espacio will construct a private hospital with a shopping area on this land. The businessman, who also owns the construction company OHL and who is the primary shareholder of Colonial, has won the award process for this plot of land, where the Town Hall of Madrid was originally going to build the International Convention Centre, before it was forced to suspend its plans in 2010, due to a lack of funding.

At the end of 2014, Ana Botella’s Government decided to seek an alternative plan for this plot of land and it organised a bid in which it asked for participants to offer an annual fee of €1.935 million for the right to use the plot of land. Four bids were submitted but only two were admitted since one did not exceed the (minimum) required fee and the other was ruled out for formal reasons.

One of the two projects that made the cut was led by the property company Hispania, which presented its bid jointly with Ferrovial, and committed itself to paying €2.6 million (per year). Villar Mir, meanwhile, offered to pay €4 million per year for the next 75 years.

The land situated just behind the existing Cuatro Torres has a surface area of 33,325 square metres and a buildable area of 70,000 square metres. In this space, to which a green area measuring 33,647 square metres will be added, the winning bidder will have to allocate 53,500 square metres for public use; the remaining 16,500 square metres may be destined for commercial use.

Villar Mir’s proposal is to construct a skyscraper, which will be similar to the other towers in terms of height and which will house a hospital. “The building will be as tall as the neighbouring towers and will house health services, and the top floors will be occupied by scientific companies linked to the health sector”.

Moreover, next to the skyscrapers, Espacio will create another, low-level building, which will be used to provide recreational and commercial services for the new skyscraper and the four existing ones, which mainly house offices. “Most of the construction will be horizontal, built in a north-south direction, over the entire floor of the structure that has already been constructed and designed based on landscaped terraces, which will descend from the high public square down to the pedestrian access, which is reached from the plot classified as a green area”, said (a representative from) the project.

In addition, the new skyscraper will be connected to the four that have already been constructed – which all have direct access from the Castellana – through a landscaped pedestrian zone.

In total, Villar Mir will invest €500 million in the project, including both the full (canon) payment and the construction work. Of this amount, €134.06 million will be spent on the building and development of the plot.

This project comes in addition to the plan to lengthen the Paseo de la Castellana by 3.7km to the north on land that Renfe and Adif own in the area.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Reyal Urbis’ Proposed Agreement

30 April 2015 – Expansión

The real estate company Reyal Urbis has responded to the request made by the judge and several of its creditors to amend its proposed agreement, which it wants to use so overcome the creditors’ bankruptcy that it has been immersed in since February 2013. The company recorded further losses of €47.4 million between January and March, an increase of 61%.

Original story: Expansión

Translation: Carmel Drake

Lar España Distributes Dividend 10 Months After Launch

29 April 2015 – Cinco Días

The Socimi will rely on a possible extension or issue of promissory notes to raise funds.

It will also make purchases that will increase its asset volume to €800 million.

Yesterday, the Socimi Lar España held its first shareholders’ meeting, at the historical stock exchange building in Madrid, where a dividend of €0.033 was approved. The distribution will be made in cash within the next 30 days. Moreover, it ratified the company’s accounts to December 2014, which reported profits of €3.5 million.

During a session with journalists after the meeting, the managers of the Socimi, managed by Grupo Lar, welcomed the success. “It is noteworthy that after just ten months of operation, given that we launched the Socimi in March, and taking into account the initial costs, we have ben able to generate profits in the period to December and distribute dividends” said José Luis del Valle, Chairman of Lar España’s Board of Directors.

In addition, the shareholders’ meeting approved the authorisation (required) to issue debt securities (promissory notes) or increase capital by up to 50%, if necessary, which would result in new resources of around €200 million. “We are going to have to go to the market in the coming months”, admitted Valle.

Thus, Lar España joins other Socimis, such as Hispania and Merlin, which have already used the mechanism to increase their capital during their short lives. Lar España already launched a 7-year bond issue amounting to €140 million at the beginning of the year, which accrues interest at an annual rate of 2.90% and is listed on the Irish stock exchange.

Currently, the company has a margin of between €200 million and €300 million to invest in future agreements, according to its managers.

This type of listed real estate investment company has been operating in Spain since last year. They are listed vehicles, created for the acquisition and development of urban real estate assets for rental. They benefit from tax advantages and are obliged to distribute dividends.

The initial objective of this listed company was to secure real estate assets amounting to between €750 million and €800 million within its first 24 months of life, although the managers shortened those deadlines yesterday. “Our objective is to close the plan much earlier than expected”, said Miguel Pereda, CEO of the Grupo Lar.

Pereda explained that this listed vehicle has no intention of specialising (in a certain type of asset), but rather will seek to diversify in terms of its assets and geographical areas.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Metrovacesa Approves Capitalisation Of €751M Loan

29 April 2015 – Expansión

The real estate company Metrovacesa, owned by Santander, BBVA, Sabadell and Popular, received the green light from its shareholders yesterday to convert a €751 million loan granted by three of its owner banks into equity.

Santander, the primary shareholder in Metrovacesa, which holds a 55.89% stake after it took over Bankia’s shareholding; BBVA, which owns 18.3%; and Sabadell, which owns 13.04%, granted a loan to the real estate company for €751 million in January. Now, the three banks have converted the refinanced loan into shares through this increase. Thanks to this transaction and the sale of its stake in Gecina, Metrovacesa has reduced its debt to €2,409 million, compared with the balance of more than €5,000 million that it accumulated last year.

In parallel to this transaction, a further increase has been agreed, through monetary contributions and pre-emptive subscription rights, for €0.9 million, aimed at minority shareholders.

At their meeting, the shareholders also approved the appointment of four new directors, which means that the management body will comprise 11 members. The new appointments include Rodrigo Echenique, Abel Matutes and Juan Ignacio Ruiz de Alda, representing Banco Santander and Manuel Castro, from BBVA.

Metrovacesa also approved its accounts for 2014. The real estate company reduced its losses by 50% taking its consolidated loss to €186 million compared to €349 million in 2013, according to sources close to the company. Meanwhile, the parent company recorded a loss of €21.6 million.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Villar Mir Continues To Strengthen Its Stake In Colonial

28 April 2015 – El Mundo

Villar Mir consolidates its 24.4% stake through the acquisition of 1.1 million shares.

Obtains a block of shares at a price that ranged between €0.603 and €0.607.

Grupo Villar Mir has purchased a block of 1.1 million shares in Colonial, representing 0.03% of the real estate company’s share capital, for €665,700.

The corporation controlled and chaired by Juan Miguel Villar Mir has hereby consolidated its 24.4% stake and (position as) the company’s primary shareholder.

Grupo Villar Mir has acquired the new block of shares in Colonial for a price of between €0.603 and €0.607 per share, in transactions closed on the stock exchange on 20 April and 21 April, according to the register of the Spanish National Securities Market Commission (CNMV).

The group is strengthening its stake in Colonial at a time when the asset company is entering a new phase of investment, in which it plans to allocate funds of €300 million in 2015.

The other key shareholders of Colonial are the Qatar Sovereign Wealth Fund, which is the second largest shareholder with a 13.1% stake; MoraBank and the Santo Domingo group, which hold 7% each; plus three international investment funds that own 3% each.

Original story: El Mundo

Translation: Carmel Drake

Hispania Completes €337M Capital Increase

28 April 2015 – Hispania Press Release

Hispania has completed the investment of the funds raised in its IPO in March 2014, including its leveraging capacity.

Investors placed orders for shares amounting to more than €844 million at the offer price of €12.25 per share, which implied an excess over demand of 2.5 times vs. the number of shares offered.

Hispania Activos Inmobiliarios, S.A. has successfully closed the €337 million capital increase it announced yesterday, which was aimed at institutional investors. The capital increase was carried out by means of an accelerated private placement and the strong demand allowed the Socimi to close the deal in just 3 hours.

Total demand surpassed €844 million at the offer price of €12.25 per share, which represents a 4.7% discount vs. yesterday’s closing price of €12.86 per share.

The new shares represent 50% of the company’s share capital before the capital increase and 33% of its share capital after the capital increase.

“The excellent response from investors to our capital increase shows how much the market trusts Hispania and its capacity to generate more value within its asset portfolio. Hispania is currently analysing a pipeline of opportunities worth around €2,400 million. For this reason, it is vital that we have equity available so as to be able to take advantage of the opportunities in the market”, said Concha Osácar (pictured above), Board Member of Hispania.

Hispania is the first of the so-called Socimis in the Spanish market to have completed the investment of almost all of the equity raised through its IPO, as well as its leveraging capacity, reaching a total committed investment of c.€880 million. Its asset portfolio comprises 46 assets (including the assets that Bay will acquire by virtue of the Investment Agreement signed with the Grupo Barceló). It is expected that, after the acquisition of the assets by Bay and once the repositioning capex has been invested in the current portfolio and in the assets to be acquired by Bay, 57% of the value of the assets in the portfolio will correspond to hotel assets, 27% to office assets and the remaining 16% to residential assets. These figures include the capex investment expected for 2015.

Hispania foresees significant investments to improve and reposition the assets that currently form part of the portfolio, including Bay, amounting to c.€50 million in 2015- on a consolidated basis.

Original press release: Hispania

Edited by: Carmel Drake

CDC Sells Its HQ To Platinum Estates For c.€15M

27 April 2015 – Expansión

CDC used to occupy two buildings and has surrendered one of them as security to cover the guarantee imposed by the judge in the case of Palau de la Música.

At a press conference on Friday, CDC (la Convergència Democràtica de Catalunya or Democratic Convergence of Catalunya (political party)) reported the sale of its central headquarters in Barcelona to the Chinese fund Platinum. The political party occupies two adjacent buildings, which have a surface area of 4,500 square metres, on Calle Corcega in Barcelona, and according to sources close to the transaction, the price amounted to almost €15 million.

One of the two properties was surrendered as security to cover a guarantee, after the judge investigating the Millet case, involving the misappropriation of funds from Palau de la Música, imposed a €3.2 million bail charge on CDC.

The coordinator of the internal regime and spokesman for the party, Francesc Sánchez stressed that the headquarters “had not been repossessed” because if it had been “they would not have been able to sell it”.

For the CDC, this transaction is not a simple sale; they say it comes in the context of a (wider) “reorganisation”. In July, i.e. before 27 September (the date on which the Catalan elections will be held) and after the internal consultation by UDC (Unió Demicràtica de Catalunya or Democratic Union of Catalunya) about the model of the State, CDC’s national convention will approve a new ideological base, which will give a social-democratic twist and make clear a sovereign commitment, without ambiguity.

CDC acquired Enher’s former headquarters for €3.7 million (625 million pesetas) in 1998 and moved into the premises in 1999 after the former Catalan President Jordi Pujol faced the ballot box for the final time.

The organisation will continue to rent out its current headquarters for another year and plans to move into a new building after 27 September. Francesc Sánchez listed some of the features that the new building must have: it must also be located in Eixample, it must be bright and spacious and it must have “glass doors” to show transparency and the “inter-relationship” with citizens.

In any event, CDC will be looking for smaller headquarters that are less expensive to maintain. Although the new location must also have capacity to host major events such as national council meetings, which are currently held in hotels.

The purchaser of the building is Platinum Estates, a company headquartered in Hong Kong and owned by the textile magnate Harry Mohinani, of Indian origin. This is not the first investment that the group has made in Barcelona. In 2014, it acquired Telefónica’s former headquarters on Avinguda Roma, known as the Estel building. It paid €56.4 million and plans to dust off the project launched by its former owner, Carlyle, and convert the property into homes. This project has an investment budget of €100 million.

This announcement has taken the real estate market by surprise. At a time when there is surplus capital and few buildings for sale in Barcelona, neither the large consultancy firms, nor the major investor groups were aware that this building was on the market. All signs indicate that the party did not sound out many buyers and that the sale was shrouded in the utmost secrecy.

In 2013, all of the international investor groups returned to the real estate market in Barcelona. And judging by the current pressure in the market, some of them fear that they arrived too late. There is a distinct lack of buildings for sale and the scarcity is even more acute in the centre of the city. A building like the one just sold by CDC meets the expectations of most investors, many of which are looking for buildings to convert into hotels, although in this case, it is expected to continue to be used for offices.

Original story: Expansión (by M. Anglés and D. Casals)

Translation: Carmel Drake

Uro Property To Issue Bonds To Secure €1,300M Funding

27 April 2015 – El Confidencial

The Socimi has launched its road show to issue 25-year debt that will allow it to repay all of its banking loans. The placement will be conducted in Holland through a special vehicle.

Uro Property has stepped on the accelerator to adjust its financial structure and position itself so as to compete head to head with the major Socimis in the market. Following its sale of 381 Banco Santander branches to AXA Real Estate (last month), the company chaired by Carlos Martínez Campos and led by Simon Blaxland, has launched a bond issue with a view to securing funds amounting to €1,300 million.

Through this placement, the Socimi wants to refinance all of its bank debt, which amounted to €1,424 million before the transaction with AXA, but which will be reduced by the corresponding proportion following the sale to the French group, since all of the funds (raised from the sale) will be used to repay its financial commitments.

This will be the first major bond transaction carried out by a Spanish Socimi. It forms part of the general move by these companies to return to the stock markets in search of liquidity and whereby take advantage of the window of opportunity that has opened up in stock markets around the world.

Holland is the market chosen by Uro to conduct its bond issue, which will be undertaken through the ad hoc creation of a special vehicle to issue the debt. Uro will verify investors’ appetite during the international road show, which the company has now launched; its objective is to reduce its current spread by 200-300 basis points and adjust the lifespan of the issuing vehicle to reflect the average life of Santander’s rental assets, i.e. around 25 years, although there will also be shorter terms.

The agreement with AXA has proved to be a lifeline for the Socimi, since it has resulted in the materialisation of the asset values assigned by CBRE. When Uro first listed on the MAB on 12 March, the real estate consultancy firm valued the company’s total portfolio at €2,000 million. Less than two months later, the French group, which owns one of the largest real estate investment vehicles in Europe, has paid 10% whereby giving credibility to Uro’s core assets.

Following the transaction with AXA, Uro now owns 755 Banco Santander branches, which have a combined surface area of more than 340,000 square metres and are valued at more than €1,700 million. Moreover, the branches that Uro has retained are the most desirable (prime) and are mainly located in Madrid and Barcelona, which explains why, despite having sold around one third of its assets (in terms of the number of branches), in terms of value, the sale only represents 15%.

Next steps

With all eyes on the closure of the (bond) issue in May, Uro is working on its road map, with a view to freeing up all of its bank loans and therefore, being able to address the company’s next objective, namely its listing on the stock exchange next year.

The Socimi’s major shareholder is Santander, which holds 24% of Uro’s share capital, whilst CaixaBank holds 14.98%, BNP Paribas owns 8.81% and Societe Generale holds 3.14%. Moreover, several hedge funds and entities such as Barclays and Bayerische Landesbank hold smaller stakes, of less than 1%, whilst the company’s former shareholders, Sun Capital, which is now known as Atisha Holding, and the Pearl Group, now Phoenix Life, hold 21.7% and 14.38%, respectively.

All of these shareholders have committed to continue to hold the Socimi’s share capital, for the next 12 months at least, although it is possible that, if an agreement is made between the shareholders, this period, known as the lock-up, may decrease if the circumstances in the market dictate that a move to obtain liquidity should be launched before the planned schedule, to pave the way for the stock market listing.

Uro’s IPO on the MAB was carried out to comply with the rules established for Socimis, which requires them to become listed vehicles within a maximum period of two years. Although Santander’s landlord still had time before the end of that term, it decided to list in March precisely because it wanted to pave the way for its bond issue, since investors always look more favourably upon debt issued by listed vehicles.

Nevertheless, since that was not its natural market and since at the time, it regarded the step more as a requirement than a vocation, it limited its placement on the Alternative Investment Market to the minimum legal requirement of €2 million. In contrast, once it has finished adjusting its financial structure and is able to begin actively working on its stock exchange listing, the company will have the opportunity to raise capital, which it will use to finance purchases, like other Socimis have done, given that all of the funds raised from its current bond issue will be used to repay its debt.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Large Chinese Investors Pounce On Spanish Hotel Sector

27 April 2015 – Expansión

The Asian giant is taking centre stage / Since HNA acquired shares in NH, interest from Chinese investors looking to buy hotels in Spain and forge alliances with chains such as Melia and Barceló has skyrocketed.

The Spanish tourism sector has sparked significant interest amongst Chinese investors. Since HNA knocked on NH’s door for the first time in 2011, interest in investing in Spain has been unleashed. In recent years, hotel purchases by Chinese investors and alliances between Asian groups and major Spanish (hotel) chains, such as NH, Melia and Barceló, have exploded, as all parties look to explore opportunities in Europe and Asia.

In the past two years, China has invested more than €870 million in Spanish hotels and chains. Of that amount, €420 million relates to the funds disbursed by HNA to become the major shareholder of NH. The industrial conglomerate paid €234 million for a 20% stake in 2013 and last year, it purchased the shares owned by Amancio Ortega, owner of the textile empire Inditex, and Intesa Sanpaolo.

Furthermore, in 2014, Chinese investors signed five transactions to purchase hotel assets, including the deal between Barceló and Kangde for the Hotel Santiago in Tenerife (pictured above), which was agreed at the end of last year and signed in 2015.

Platinum

Out of all of these deals, the one that attracted the most media interest was Dalian Wanda’s purchase of Edificio España (Madrid) for €265 million. The intention of Wang Jianlin, who owns Wanda, is to create a residential, retail and luxury hotel complex. However, for the time being, Jianlin is focusing on the five-star hotel that he is preparing (to open) in London, where he will launch his Wanda brand in Europe.

Platinum Estates, the group led by the textile businessman Harry Mohinani and headquartered in Hong Kong, has closed two deals on a smaller scale. In February 2014, Platinum acquired the Estel building, in Barcelona (Telefónica’s former headquarters) for €56 million. In the autumn, it purchased Hotel Asturias (Madrid), near Gran Vía, from the Salazar family for €35 million.

The company plans to convert both properties into luxury apartments. According to experts in the sector, that is one of the keys to explaining the Asian interest in Spain, where foreign citizens are required to invest €500,000 in a residential asset to obtain a (resident’s) visa (known as the golden visa). Other factors include the measures promoted by the Chinese government to encourage investment overseas and the revaluation of the Yuan against the euro. Sources in the sector confirm that interest from Asian investors has increased, but they say that they do not seem to follow any particular investment pattern, and that, to date, they have focused on individual assets. Despite all of this, the large consultancy firms in the sector are optimistic about the potential of the Asian market – they have already recruited Chinese employees and are now preparing tours around the country to bring the two markets closer.

That is another one of the advantages that the alliances with Chinese groups offer the Spanish hotel chains. For example, NH will enter the (Chinese) market hand in hand with HNA. Both have created a joint company, with a Chinese majority, which will begin operating in 2015, when NH takes over the management of 6 of HNA’s hotels. In the case of Melia, the chain operates two hotels owned by its partner Greenland in China, and in 2014, it teamed up with the travel group Ctrip.

Original story: Expansión (by Yovanna Blanco)

Translation: Carmel Drake

MoD Opens The Bidding For ‘Campamento’ Land

27 April 2015 – Expansión

Auction worth more than €200 million / The Government is launching an auction process to sell a plot of land measuring 1.5 million square metres in Madrid, where the Chinese millionaire Wang Jianlin wants to construct luxury homes, hotels and casinos.

The Spanish Government has decided to refloat the so-called Operación Campamento just seven months before the general election. Today, the Ministry of Defence, the main owner of the land in the area measuring more than 1.5 million square metres, has officially put the plot, measuring 1,550,576 square metres, up for sale on the real estate portal Admeet.

The land, located in the south-east of Madrid, is the preferred location of the Chinese tycoon Wang Jianlin, owner of the business conglomerate the Wanda Group, to construct a mega-project containing thousands of homes, a retail complex, theme parks and casinos.

Negotiations

Jianlin, who officially closed the purchase of 20% of Atlético de Madrid’s share capital in January, has been negotiating with the Town Hall and Community of Madrid for months, to identify a location for his residential and leisure complex in the capital. Previously, in June 2014, he bought Edificio España from Banco Santander for €265 million, which was his first transaction in the Spanish market.

In January, when he signed the deal to acquire a stake in the Madrid football club, Jianlin took the opportunity to reiterate his interest in acquiring the land that is now up for sale. The plot housed the Ministry of Defence’s barracks in Madrid for many years.

Wang Jianlin is willing to invest €3,000 million in this project. To do that, the first step will be to acquire the land. By law, this purchase must be made through a competitive process since it involves a public asset.

“The interested parties must participate in a transparent and competitive auction process, in accordance with state legislation for the sale of property”, says the advert.

Auction

The auction of the land by the Ministry of Defence will be led by Pedro Morenés. The plot measures around 1.132 million buildable square metres and the vast majority has been marked for residential use (986,710 square metres). Subsidised and non-subsidised housing may be built on the site.

Wanda’s goal is to construct up to 15,000 high-end homes, with prices of around €4,000 per square metre. Moreover, offices, retail spaces and leisure complexes may also be built on the site. Wang Jianlin wants to use this land to create a leisure complex, similar to the ones he has constructed in Asia. For the time being, the Ministry of Defence has only released information about the land, and has not set a date for the auction or specified a minimum price.

Minimum price

However, sources in the sector estimate that the Government may set the minimum price at just over €200 million, an amount that is expected to be surpassed both by Wang Jianlin’s bid, as well as by the bids made by other interested parties.

The seller has not revealed the auction date, which may be determined by the timings of the local and general elections due to be held in May and November, respectively. To date, the current President of the Community of Madrid, Ignacio González, has shown his willingness to collaborate with the Chinese businessman, following the decision by the US billionaire Sheldon Adelson to abandon the Eurovegas project in Alcorcón.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake