26 February 2018 – El Confidencial
“Axiare has assets susceptible to divestment worth €300 million”. That is according to the President of Inmobiliaria Colonial, Juan José Brugera (pictured below, left), and his CEO, Pere Viñolas (pictured below, right), at the presentation of the company’s results.
“We are least interested in the Socimi’s logistics and retail assets, but that does not mean that we are going to sell off all of those assets or that said divestment is going to be undertaken this year. We have not yet been able to determine whether the assets will be sold in the end or when, due to the fact that we are not yet involved in the ordinary management of the company”, they said.
What assets are we talking about? As at September 2017, Axiare held logistics assets with a net value (GAV) of €192.6 million, spanning more than 466,235 m2. The vast majority are located in Madrid and the rest in Barcelona and other markets. To give us an idea, Axiare’s portfolio at the end of the third quarter of last year comprised 74% offices (50% in prime areas), 18% logistics platforms and 8% commercial assets (…)
Colonial, which registered a record net profit of €683 million in 2017, more than doubling (+149%) the figure obtained in the previous year, boosted by growth in the rental income of its office buildings and the appreciation in value of its assets, also estimates making net future investments of between €300 million and €400 million, in line with those undertaken to date.
In other words, between investments and investments, the net result is going to hover around the €300 million mark. These investments are going to focus on those markets where the firms already have a presence and so they will strongly back Madrid, Barcelona and Paris. Moreover, they are expected to be financed, to a large extent, through the traditional mature asset rotation policy. “We are going to continue investing, and also selling”, said both directors.
The merger will be ready in H2 2018
In this way, the real estate company is going to continue with the organic growth strategy that it has been pursuing since 2015, whilst working on the integration process with Axiare, which it estimates will take between four and five months to complete. As such, Colonial expects to close its merger with the Socimi during the second half of the year, which will materialise through a share exchange to take around 13.1% of the firm that it does not control yet.
“Of the possible alternatives, a merger is the most likely”, although both Bruguera and Viñolas have said that all of the options are currently being evaluated and that there will not be any decision in this regard until the second half of the year. Similarly, they said that they are “in conversations with Axiare to join its Board of Directors”, where they do not have a presence yet even though they increased their stake to 86.86% through the takeover, so as to take part in the Socimi’s management whilst the merger goes ahead (…).
New real estate giant
For the time being, the integration between Colonial and Axiare, which constitutes the first merger between the new generation of Socimis, will give rise to a company with real estate assets worth €11.079 billion, thus surpassing Merlin Properties. Of those assets, €9.282 billion will correspond to office buildings that Colonial owns in the centre of Madrid, Barcelona and Paris, spanning a surface area of 1.36 million m2, and the remaining €1.797 billion will correspond to assets contributed by Axiare, most of which are also offices, according to the year-end valuations completed by both companies.
In addition, the two companies generated a joint net profit of €700 million and turnover from rental income of €355 million in 2017. Nevertheless, Colonial calculates that the combined group’s revenues will increase to €500 million once the projects it currently has under development come onto the market.
Original story: El Confidencial (by E. Sanz)
Translation: Carmel Drake