Colonial Plans To Spend €1,500M On New Assets Over 5 Years

21 October 2015 – Cinco Días

Colonial plans to invest €1,500 million on the purchase of new real estate assets to incorporate into its property portfolio over the next five years (2016-2019), according to a statement released by the company.

The real estate company owned by Grupo Villar Mir, said that it is already analysing possible acquisitions worth around €1,000 million as part of its new growth strategy.

Madrid, Barcelona and Paris continue to be the main cities of focus for Colonial’s new expansion policy, nevertheless, it is also evaluating asset purchases in other locations.

Of the total expected investment, the company led by Juan José Brugera (pictured above) has already purchased buildings in its existing markets worth €405 million this year. Specifically, it has acquired three properties in Madrid, one in Barcelona and two in Paris.

As at 30 June 2015, Colonial owned a real estate portfolio worth around €6,400 million, comprising office buildings located in the centres of Madrid, Barcelona and Paris, which have a combined surface area of 758,000 m2.

Colonial expects to grow not only by making acquisitions, but also by optimising its existing contracts, according to comments made by the company in a presentation to Spain’s National Securities Market Commission (CNMV) as part of the celebrations held to mark the company’s “Shareholder Day”.

In this sense, the real estate company estimates that it can improve its revenues from rental income by almost €100 million (specifically, by €91 million), which would take its revenues above the €300 million mark (to reach around €320 million), compared with their current level of €229 million.

Of that total, €46 million would come from the renewal of existing contracts; another €33 million from improvements to and the renovation of buildings to lease them out again; and the remaining €11 million would come from the new properties already purchased this year.

In its presentation, Colonial highlighted the position it has in the market for office rental in Madrid, Barcelona and Paris. According to its data, it has the capacity to absorb 11% of demand in the Spanish capital, 6% in the French capital and 2% in the Cataluñan capital.

Moreover, the company defends the strong financial and equity position with which it is now embarking on this growth phase. On the one hand, it says it has long-term shareholders and on the other hand, it has a “first class financial structure”.

In this sense, it says that its liabilities are equivalent to 42% of the value of its assets and it is proud to have been the first company in the sector in Spain to obtain a rating from the credit ratings agencies.

In terms of its shareholders, the Grupo Villar Mir is the largest shareholder with a 15% stake, despite the fact that it recently sold shares to raise funds to inject into the capital increase of its construction company OHL. Colonial’s other shareholders include Qatar, with 13%, and the Santo Domingo Group and MoraBank, which own 7% each.

Original story: Cinco Días

Translation: Carmel Drake