Renta Corporación’s Great Return to the RE Market

29/10/2014 – Expansion

Promising Start & Investors

President of the firm, Luis Hernandez de Cabanyes (pictured), claims that Renta is not the same battered company anymore as it once more begins with ‘healthy balance and almost null debt’. He also added that this time ‘there will be no leverages but much more control as we have had our lesson’.

Strategy of the president includes opening doors to the foreign funds to its stake. He assured he had received several enquiries from the Latin America, Northern America and Asia but his intention is to let them take a 10% share at most. Also, old stakeholders expressed their interest in re-taking stakes in the company.

As he stated later, the tensed situation in Catalonia ‘does not help at all’, however he also admitted that investors are in love with Barcelona and they will invest in the city in the future for sure.

Debt-For-Equity Swap & Stake

On November 11, the company’s managing board will debate on the swap for equity chosen by its lenders in shape of debt refinancing. In total, the creditors will grab a 14% stake, valued at €27 million (33 Euros a share), corresponding as follows: 4.99% to Sareb (loans inherited from Caja Madrid and Bancaja), 4.1% to Banco Popular, 2.9% to ING Real Estate Finance and 2% to Caixa Geral. Adversely, Deutsche Bank sold its 2.76% share to two private investors.

As a result of the swap, Mr. Hernandez will reduce his holding in the company from 37.9% to 32%, while Blas Herrero will keep 8%. Around 39% will be intended for the free float.

Back on the Stock Market

This October 30th, Thursday, the Spanish stock exchange market will welcome back Renta Corporación, whose shares have been suspended since March 19th 2013 when the property manager voluntarily filed for insolvency process due to not being able to overcome a €160 million debt.

This June, the company came to a refinancing agreement with its lenders and left the bankruptcy state behind. Still, it has to pay its liabilities through debt-for-equity swaps, progressive relief or conversion to participative loans.

According to the National Stock Exchange Market Commission (or the CNMV), the firm obtained permission to trade again after presenting ‘all the necessary information regarding its current situation and viability plans’. Its shares will sell at a price of 0.570 Euros each. To compare, when it went public in 2006, the shares traded at €27.22 each and reached a €30 cap.

However, at the same time the commission recommends taking a careful look into Renta Corporación’s documents before investing in the firm as yet it has not fully recovered from the tough times.

Also, the CNMV reckons it reasonable to analyze the firm’s balance sheets, profit and loss account and cash flows from the last two years preceding the suspension on the stock market.

The Risk

Renta Corporación has also provided reports on the challenges it is bound to face, such as meeting the requirements of the covenant with creditors, those related to the firm’s business field and the real estate sector, as well as the capacity of obtaining liquidity in reasonable term and the equity risk.

The group’s president is pretty optimistic about the return to the stock exchange: ‘we believe the shares will perform positively but, to be honest, I have been tremendously wrong in that sense in the last years’.

Before the recession, Renta Corporación came to earning €30 million in 2006, whereas now its operating profit posts 6€ million.

The firm, specialized in acquiring real estate assets for transformation and sale, will also undertake asset managment for the third party offering its values and experience, and it hopes to close the year 2014 with €200 million in asset sales (€150 million in 2013), aiming at having always 25 to 30 ongoing operations in its portfolio. Presently, it is focused on Madrid and Barcelona but it does not rule out coming back to the international market.

In the first quarter of the year, Renta Corporación earned €4.4 million. In 2013, the firm interviened in real estate operations worth €200 millon and gained €10 million. Presently, it employs 27 specialists.


Original articles: Expansión, Expansión (by Marisa Anglés) & Expansión

Translation: AURA REE