24/11/2014 – Bloomberg, Expansion
As Bloomberg reported Saturday, Spanish REIT Hispania Activos Inmobiliarios, held by such prominent investors as Paulson & Co, submitted a bid of €150.6 million (0.49 €/share) for highly indebted Realia Business.
The deal includes an €791 million issue of new shares. Proceedings from their allocation will be intended for amortization of a syndicated loan from 2009 and reaching maturity in 2016.
Current stakeholders of Realia may take part in the capital hike and in case of any shortfall, creditors would swap their loans for Realia stock in mid-2015. Hispania has come to an agreement with lenders (such as Fortress, King Street and Goldman Sachs) to buy 50% of the loan for €396.5 million (21%-off), provided that the offer is accepted.
Once approval given, Azora-led Hispania will aim at boosting the value of the developer on the stock up to €970 million.
Realia was one of the few developers which survived the real estate bubble burst and subsequent deep recession. At the end of September, the firm’s debt posted €1.07 billion.
Bailed-out Bankia holds 25% in Realia and FCC (or Fomento de Construcciones y Contratas) possesses approximately 37%.
Once the takeover bid accepted and the recapitalization realized, Gross Asset Value (GAV) of Realia’s properties will be equal to €1.22 billion. Moreover, the company will own €951 million in owners capital and a €270 million debt.
Throughout the process, Hispania would invest between €393 million and €470 million to hold between 50.1% and 58.2% of Realia’s capital.
Next step would be to gradually convert Realia into a REIT (Socimi). The operation would include selling 700 dwellings and 1.8 million square meters of residential land out of its balance. Allegedly, the properties would be trasferred to private buyers and not in a bulk within three-five months.
Thanks to the transformation, Realia would pay-off better to its shareholders as 85% of a Socimi’s profits shall be paid-out in shape of dividends.
Summary & Translation: AURA REE