Apollo, Bain & Oaktree Compete To Acquire Habitat

25 September 2017 – El Confidencial

A new large real estate operation is on the horizon. The process to sell Habitat Inmobiliaria has entered the home stretch, after the Catalan company selected a shortlist of three candidates to submit their bids.

The three finalists are the international funds Apollo, Bain and Oaktree, whose binding offers are expected to be received by the beginning of October, according to several sources familiar with the operation. The bids are expected to amount to between €200 million – €250 million and the intention is to announce the winner before the end of the year.

Habitat is the heir of the former Ferrovial Inmobiliaria, the subsidiary that the Del Pino family’s group sold to the Catalan property developer, controlled at the time by Bruno Figueras, for €2,200 million at the end of 2006. That deal was signed just before the outbreak of the crisis and it converted the Catalan company into the fifth largest property developer in the country. Nevertheless, that glory was short-lived.

Just two years after that Pharaonic purchase, Habitat filed for the fourth largest creditor bankruptcy in history, by declaring itself in ‘suspension of payments’ with debt amounting to €2,800 million, exceeded only by Abengoa, Martinsa-Fadesa and Reyal-Urbis.

From there, it began a titanic fight to survive, which included a preliminary agreement in the spring of 2010, which saw it emerge from bankruptcy and then, a modification to that agreement, five years later, which gave control of the company to its creditor funds.

In 2015, firms such as Capstone, Goldman Sachs, Bank of America, Värde and Marathon acquired 70% of the company’s capital, by converting the bulk of its debt into shares, and they ordered a return to house construction, to take advantage of the recovery in the sector.

Moreover, those firms continued as the group’s main financiers, with a participation loan of €70 million and another senior loan of €80 million, they took over the management, and they gradually sidelined Bruno Figueras; he currently holds the role of Vice-President.

At the time, the company analysed the option of organising a sales process, but that never ended up happening. The same idea was revived during the first half of this year when Habitat engaged Irea to organise a sale, merger or the entry of a new shareholder into the company.

After almost 11 years (since the purchase of Ferrovial Inmobiliaria), the Catalan property developer is barely a shadow of its former self, but it still holds a juicy portfolio of buildable land – currently, the most sought-after asset by international funds – concentrated in Madrid, Cataluña, Andalucía and Valencia, plus the company also has a presence in Aragón, Portugal and Hungary.

The three finalists in the bid for Habitat have competed in the past for some of the most important real estate operations of recent times, such as the purchase of Vía Célere by Värde, which Bain analysed, and the acquisition of the €30,000 million in real estate assets from Santander-Popular by Blackstone, which Apollo bid for.

Whoever ends up taking control of Habitat will have the perfect platform to create its own group and to start to compete with other investment giants who have already trodden this path, such as Lone Star, the owner of Neinor Homes; Castlelake, owner of Aedas; and Värde, the primary shareholder of Vía Célere and Aelca.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

WeWork, The Co-Working Giant, Arrives In Spain

13 September 2017 – El Español

The co-working space giant WeWork, which is worth around $22,000 million, has finally arrived in Spain. And it already controls two offices in Barcelona and Madrid. The latter is going to open first, with a hosting service for small companies and independent professionals.

The offices in Madrid are located on Paseo de la Castellana, 43. This 9-storey newly-renovated office building, with a surface area of 6,000 m2, is owned by Colonial and used to house the headquarters of the consultancy firm PwC and also of Abengoa (which moved out in July 2016 to cut costs).

WeWork is not yet offering on its website the space that it has available in Barcelona. According to Ejeprime, it signed an agreement with the Catalan group Castellví in July to occupy a building in the 22@ district, where many of the main technological companies are concentrated.

The strategy that WeWork has adopted for its arrival in Spain is similar to the one that it has implemented in other markets: it does not own any real estate properties outright but rather reaches long-term agreements to lease them. Nevertheless, in May, it signed an alliance with an investment firm with the aim of acquiring real estate assets.

Who is WeWork?

WeWork is a project born in 2010 that offices flexible work spaces for workers. In Madrid, its launch prices start at €250 per month (in the case of individual desks for workers) and range up to €14,500 for private offices with up to 50 desks.

The company, which has a presence in another 17 countries, has raised more than $4,400 million, with investors ranging from fund managers, such as Fidelity and T Rowe Price, to banks such as Goldman Sachs and JP Morgan.

The most recent capital injection was received in August. In total, $4,400 million was contributed by the Japanese technological and telecommunications giant Softbank.

There has been debate over the valuation of the company in recent months. The $20,000 million figure represents 20 times its forecast revenues for 2017. That is much higher than those of its competitors such as Regus. The reason? It is not only a business that is growing quickly (by more than 80% if the forecasts for 2017 are fulfilled, according to CBInsight, with $1,000 million of revenues), but also because of its projection as a expert in how companies work with access to a vast quantity of data, as the magazine Wired pointed out in a recent report.

How does WeWork work?

The company has already created a Spanish company: WeWork Community Workspace SL. It was constituted at the end of June and its administrators include Mike Nolan, the company’s Head of Global Business Planning and Abraham Safdie, Vice-President of the International Business.

Its tax structure is very similar to that of other companies in the sector, such as Uber and Yahoo: the parent company that controls the subsidiary, WeWork Companies International BV, has its centre of operations in the Netherlands, a country with a very favourable tax regime and used by multinationals to reduce their tax bill.

Original story: El Español (by J.M.G)

Translation: Carmel Drake

Oak Hill Grants €66M Loan To Construction Firm Murias

6 June 2016 – Expansión

The US fund Oak Hill Advisors has granted a direct loan (direct lending) to the Basque construction company Murias. The operation is significant, not only because it is the largest financing agreement of its type to be granted in Spain during the year to date, but also because it shows that major international investors on the other side of the Atlantic are regaining confidence in a sector that had been completely stigmatised, namely construction.

Murias Grupo Empresarial, founded in 1973, comprises 25 companies. As well as participating in several public and private construction projects, such as the construction of the new San Mamés football stadium (in Bilbao), the Group has also built several retail parks: the Gorbeia in Vitoria (pictured above); the Abadía in Tolego; Las Cañas in Viana (Navarra) and the Niessen in Rentería (Guipúzcoa). According to market sources, the €66 million that the Group has just borrowed will be used to develop and then manage a shopping centre in Melilla.

The numbers

The Group recorded revenues of €71.8 million in 2013, according to its most recent set of consolidated annual accounts filed in the commercial registry. Its attributable net profit amounted to €1.2 million and it employed a workforce of 296.

The company has been advised by N+1 Debt Capital markets, a division of the boutique Spanish consultancy firm N+1, regarding the structuring and placing of this operation. The loan has been structured through a single-tranche loan, with a single international investor and a term of 5 years. The funds afford the company complete flexibility to undertake the project to construct a shopping centre in Melilla, as well as to finance new projects in the new future.

The investor, Oak Hill, is a giant in the world of investment, with assets under management amounting to more than $27,000 million (equivalent to around €24,200 million). The fund participated alongside other investors in a recent injection of liquidity into Abengoa, as part of its debt restructuring process. In fact, it may take control of the Spanish company. On the other hand, Oak Hill injected €100 million into the car park subsidiary of Isolux. In exchange, Isolux granted Oak Hill an option to acquire the car park subsidiary from 2019 onwards.

Original story: Expansión (by D.B, I.A and M.F.)

Translation: Carmel Drake

Lar To Invest €145M In Leisure Complex in Sevilla

6 March 2016 – Expansión

On Thursday, the Socimi Lar announced that it is going to invest €145 million in what will become the largest retail and leisure complex in the province of Sevilla. Specifically, it will build the complex in Palmas Altas, an area to the South of the city, known for being home to Abengoa’s huge headquarters

Original story: Expansión

Translation: Carmel Drake

Abengoa Finalises Sale Of Former HQ in Sevilla

21 January 2016 – Expansión

Abengoa is getting ready to receive a lifeline of between €250 million and €300 million, which would enable it to continue operating until 28 March, the deadline for its pre-bankruptcy phase, when it plans to launch its viability plan.

The injection of funds will come from two sources: 1) a loan from its bondholders; and 2) from the sale of assets, above all, some of the jewels in its real estate crown, such as its former headquarters in Sevilla.

Abengoa is finalising an agreement with its bondholders whereby they will grant it a loan amounting to between €150 million and €170 million. The details of the agreement, such as the term and tranches of the facility, are currently being finalised. In addition, Abengoa is finalising the sale of assets worth between €100 million and €150 million, including a renewable energy facility and above all, several of its properties. One of those includes its former headquarters on Avenida de la Buharia in Sevilla and the building it owns in Madrid, on General Martínez Campos. The former, located in a prime area, is one of the most iconic buildings in the city of Sevilla. Abengoa’s objective is that its board will approve its viability plan next week.

Discounts of 70%

In addition to the mass sale of assets, the viability plan will include a significant reduction in the group’s debt. Abengoa is negotiating with its banks and bondholders regarding a discount and the capitalisation of loans representing up to 70% of its debt. The aim is to arrive at a debt balance of less than €3,000 million.

Original story: Expansión (by M.Á.Patiño)

Translation: Carmel Drake