Santander’s Landlord Finalises The Sale Of 400 Branches

5 March 2015 – El Confidencial

Uro Property, the name given to the company formerly known as Samos, will begin trading on the MAB (‘Mercado Alternativo Bursátil’ or Alternative Investment Market) with the minimum legal amount, given that its ultimate aim is to move onto the main stock market.

Another one of the Socimi giants is counting down the hours until its goes public. Uro Property, the name give to the company formerly known as Samos, and the company through which several investment funds advised by Oleguer Pujol purchased a one third stake in Santander’s branches, will list on the MAB within the next few days and will continue to put the pieces in place to fulfil its aim of listing on the main stock market, with a healthier financial structure.

With this challenge in mind, the company chaired by Carlos Martínez Campos and led by Simon Blaxland is finalising the sale of 400 of the 1,316 branches that it owns, a transaction that it is already negotiating with an institutional investor and that will allow it to repay some of its €1,424 million loans ahead of time. This debt was already financed last year, when Samos’s creditor entities, led by Santander and CaixaBank, took control of the company, by capitalising €424 million of mezzanine debt and creating Uro.

This transaction turned Santander into the main shareholder of the Socimi, with a 24% stake, whilst CaixaBank took ownership of 14.89%; BNP Paribas holds a 8.81% stake and Société Générale holds 3.14%. In addition, several hedge funds and other entities, including Barclays and Bayerische Landesbank were left with stakes of less than 1%; whilst the former shareholders, Sun Capital, now known as Atisha Holding and the Pearl Group, now Phoenix Life, hold 21.7% and 14.38%, respectively.

All of the shareholders have committed to retaining their stakes for a minimum period of 12 months, during which time Uro Property is confident that it will close a new financing deal that will allow it to reduce its spread from its current level of 300 basis points to closer to 200 basis points.

In fact, the listing on MAB is seen as another step in this process, given that by law, all of the Socimis are obliged to go public within a period of two years. Although Uro Property’s deadline in this sense does not expire until after 2015, it has chosen to go public as soon as possible precisely because it believes that its status as a listed company will facilitate its refinancing.

This explains why Santander’s landlord is going to limit its initial placement to the minimum established by law: two million euros, a paltry figure, considering that its assets have been valued by CB Richard Ellis to amount to €2,000 million and given that forecasts suggest its market value amounts to around €500 million.

An independent audit to separate the company from Pujol

Renta 4 has been hired as the liquidity provider, whilst EY has performed the valuation of the company ahead of the placement. Aware that all eyes are focused on it, given its historical ties with Oleguer Pujol, the company commissioned Deloitte to conduct an independent audit (the auditor of the Socimi’s accounts is PwC), which certified that the maximum investment made in the Socimi by the son of the former President of Cataluña amounted to €67,000.

The Socimi has signed a new lease agreement with Santander, which has committed to occupy the properties for a minimum period of 25 years, and it may extend that period by 14 more years for a third of the assets, which the bank, chaired by Ana Botín, has identified as more strategic for its business. In return, the company has been granted the right to review the portfolio each year, as well as the ability to exchange some branches for others, provided these exchanges do not represent more than 1% per year, under any circumstances.

Santander will pay Uro rent amounting to €125 million net, since the bank itself will bear all of the costs relating to the properties. This guaranteed income, together with the refinancing deal signed last year, allowed the Socimi to generate profits in 2014. Moreover, with the new financial structure that it is negotiating, which it is hoped will extend the current six year maturity period, the Socimi is confident that it will significantly improve its results; this is key for a vehicle such as this, whose main attraction is the fact that it is obliged to distribute the majority of its profits in the form of dividends.

Uro will be able to begin working on its plans to list on the main stock market and expand its portfolio of assets from 2016, in line with the steps being taken by its competitors, such as Merlin, which acquired BBVA’s offices.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

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