First-Generation Socimis Rush To List Before 30 Sept 2015

7 July 2015 – Cinco Días

Socimis are the investor vehicle of the moment. Their tax advantages and the international funds that they are attracting, have turned Socimis into key players in the timid recovery of the real estate sector. And they are going to become even more important. Many of the first generation Socimis (those constituted in 2013, following the reform of the law governing these listed real estate investment companies) are obliged to list on the stock exchange before 30 September 2015; failure to do so will mean that they lose their right to not pay corporation tax.

“The law made provisions for a transition period for the fulfilment of all requirements. The deadline for one of those, to list on the stock market, ends on 30 September”, explains Antonio Sánchez Recio, Partner at PwC. According to market sources, there may be a dozen companies in this situation, although some of them are small and will only list to comply with the law, rather than to raise capital, at least initially. (…).

They will join those that currently trade on the main stock exchange, namely: Merlin Properties, Hispania, Lar España and Axiare. As well as the smaller companies, which are listed on the Alternative Investment Market (MAB), namely: Entrecampos, Fidere (owned by Blackstone), Mercal, Promorent and Uro.

Around 25 entities are now constituted as Socimis, but some of them have been created in the last few months, and so they will not be affected by the upcoming deadline.

Furthermore, other companies are not obliged to list in Spain at all, since their shares are already traded on other European markets. That is the case of Pryconsa’s companies, called Cibra 2009 and InveRetiro, which in turn are owned by Saint Croix Holding Inmobiilier, a Socimi listed in Luxembourg. And that is also the case of Orion Columba, the owner of the Plenilunio shopping centre, which is now itself owned by the French listed company Klepierre.

In addition to the companies constituted in 2013, the market expects that a large number of these vehicles will undertake IPOs in the coming months. Such is the case of Trajano, the Socimi recently created by Deutsche Bank. One of the most eagerly awaited is the future Socimi Pontegadea, the family office owned by Amancio Ortega, which has assets of almost €5,000 million. (…).

Another large company on analysts’ radars is IBA Capital’s company Zambal, which owns the ABC Serrano shopping centre, amongst other buildings. Other companies also include GMP Property, created by the Montoro family and the sovereign fund GIC, which owns large assets such as Torre BBVA in Madrid. Acciona is in the same boat, it is assessing different options for its commitment to the residential rental sector, including the creation of a Socimi, according to sources close to the company.

Other companies and funds that are setting up their own Socimis include: Green Oak, Drago Capital, Corpfin, Autonomy Capital, Jaba, Meridia, Rodez (through Anglón Alza), Quabit (with the Socimi Bulwin), Brookfields, as well as Santander Real Estate (Banif Inmobiliario), Norfin, Banco Sabadell (Solvia), Triangle, Turanta, Unibail Rodamco and Urbas.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Acciona’s Future – Positive Outlook But What Next?

12 June 2015 – Expansión

Acciona’s Chairman, José Manuel Entrecanales, says that the Group’s restructuring has been completed and that the company is now looking to re-launch itself.

The construction and services group Acciona, which held its annual general shareholders’ meeting yesterday, expects to take a decision regarding the future of its energy and real estate activities before the end of the year. It is exploring the option of listing some or all of its business on the stock market in 2016, according to José Manuel Entrecanales, who spoke at the end of yesterday’s meeting. His comments come just a few weeks after Acciona announced that it is considering adopting the Socimi format for its real estate division. Socimis have operating assets that generate yields, and whereby often promise high dividends.

New partners

As an alternative to the real estate listing, or in parallel to it, Entrecanales is also considering ushering in a new shareholder. The Group has already gone down that route for its renewable assets outside of Spain, for which it has signed a partnership with KKR.

Regarding renewables, Entrecanales confirmed that the group is now analysing several alternatives to the ones it was initially considering. The option of publicly listing its overseas renewable assets on the US stock exchange, once KKR acquired 33% of those assets, has been parked for the time being. Now, it is analysing the possibility of listing all of its assets, including the Spanish ones, and even doing so on the Spanish stock market.

Entrecanales said that the options for going public in the USA or Europe are well matched at the moment. He also indicated that the new proposal has been made in conjunction with KKR.

Entrecanales said to the shareholders that “both the real estate and energy activities may be susceptible to independent access to the equity markets”, although he said that the process is being subjected to internal review.

Transmediterránea and Bestinver

As for the future of the Transmediterránea subsidiary, the Chairman of Acciona said that the outlook is now “optimistic” after the restructuring that has been undertaken and that, as a result, the group has decided to “defer any corporate transactions involving sales, mergers or the entry of new shareholders, at least until the results clearly reflect the true value of the company”

Regarding the other subsidiary, Bestinver, which suffered from the “sudden” exit of its management team last year, Entrecanales said that it has overcome its “troubles” and that the company now has the management team it needs to “face a bright future”.

As such, Entrecanales envisages a new phase of growth and expansion for the group, after going through what he refers to as a “hard stage” over the last two years, during which time the group “has faced one of the toughest challenges in its history”.

Entrecanales downplayed the latest incident that took place this week, when the company was excluded from the Ibex 35 due to its low trading volumes. “It is not a big deal” said Entrecanales. He has no plans to adopt any special measures to try to return the company to the Ibex, such as for example, undertaking a share split to give more liquidity to the securities.

Original story: Expansión (by Miguel Angel Patiño)

Translation: Carmel Drake

The Cerecedas Seek Financial Partner To Buy 30% Of Procisa

3 June 2015 – El Confidencial

Procisa, the real estate company made famous for developing the luxury La Finca estate is looking for a financial partner to provide the financial resources that it needs to continue with its other developments.

At a time when the interest of international funds in the Spanish real estate market is being called into question, one of the country’s iconic property developers is attracting interest from several overseas investors. Procisa, the company owned by the Cereceda family, which was made famous for its development of the luxury La Finca estate, is negotiating the sale of up to 30% of its share capital and is holding talks with several institutional investors.

The process, which is being managed by N+1, has been on the radar of the large players in the sector for several months – they see this as an opportunity to invest in a company that owns some of the most important plots of land in the capital.

After initially exploring the option of an IPO, which was dismissed following analysis with Citi, the real estate company has made progress in its talks with a small number of funds to which it has proposed the deal, with the clear message that their role will be limited to one of financial partner.

In line with the deals closed by other companies in the sector – GMP sold a 30% stake to GIC, and Acciona agreed to allow KKR to join as an investor – Procisa plans to form an alliance with a major investor, which will take a minority stake, but which will provide the financial resources the RE company needs to continue with its promotions.

N+1 has knocked on the doors of giants such as Goldman Sachs, JP Morgan, Cerberus, Bank of America, KKR and Blackstone to propose the deal to them. They could end up acquiring a stake of less than 30%, but this would be represent a historic milestone for this family company, led by Susana Cereceda, following death of her father, Luis Cereceda García, five years ago.

(…)

A RE giant, heavily dependent on bank financing

With assets of €900 million, own funds of almost €200 million, debt amounting to €600 million and losses of €13 million in 2013 (the last year for which official results are available), the company is looking for a financial partner, after it reached an agreement with its lender banks last year to accommodate a loan amounting to €400 million, dating back to December 2009 and after it consummated the merger with Agruva and Luarce, some of the other companies through which the Cereceda family has constructed its real estate empire.

(…)

During these talks, the banks imposed a series of conditions on Procisa, which explains why the Cereceda family is now keen to find a financial partner that will allow it to resume its activity, after years of decreasing results and the creditors’ sword of Damocles hanging over its head.

(….)

As well as La Finca, Procisa is also the owner of Parque Empresarial La Finca, an office complex on Calle Cardenal Marcelo Spínola (Madrid), as well as several office buildings spread across the capital and it is planning the development of two replicas of its famous Somosaguas development in La Romana (Dominican Republic) and Cartaya (Huelva).

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Colonial Completes First Ever Debt Issue By A RE Company

28 May 2015 – Expansión

Colonial placed €1,250 million, but demand exceeded €2,700 million. The real estate company, controlled by the Villar Mir group will use these funds to refinance a bank loan, whereby reducing its financing costs.

Colonial debuted on the bond market yesterday with great success. The real estate company controlled by the Villar Mir Group completed a debt issue amounting to €1,250 million in two tranches: one over four years amounting to €750 million and the other over eight years for €500 million. It paid 1.864% for the first issue and 2.728% for the second.

This is the first debt issue ever to be carried out by a Spanish real estate company and it comes in the middle of the election hangover, which has generated considerable volatility on the markets. The debt issue aroused significant interest (demand exceeded €2,700 million with 225 purchase orders in total), which clearly shows that the confidence of investors has returned to a sector that was hit hard by the crisis (the real estate sector) and above all, to this company in particular, which underwent a tough refinancing process last year.

Lower costs

In fact, Colonial will use the funds obtained to repay a syndicated loan that it signed last year amounting to €1,040 million, which carries a high interest rate, at 400 basis points above 3-month Euribor, and which represents 40.5% of its liabilities. Sources close to the company explained yesterday that this refinancing with result in an annual saving of almost 2%. “The real estate company will stop paying around €20 million per year in interest”, they added. Moreover, the same sources noted that the company, chaired by Juan José Brugera, will no longer be bound by the conditions imposed by the banks, given that “the debt market has granted this financing with no conditions attached”.

To ensure the success of the issue, the CEO, Pere Viñolas and the Corporate Development Director, Carmina Ganyet, launched a road show on 14 May with the banks that they had engaged for the transaction: Morgan Stanley acted as the global coordinator, with the support of Sabadell, BBVA, CaixaBank, Crédit Agricole, ING and JP Morgan. The executives were well received, since S&P had assigned the company a ‘BBB-‘ rating.

As well as the plan to repay the loan to reduce financing costs, Colonial may improve its balance sheet in advance of possible M&A activity in the short term. Sacyr has considered the option of integrating its subsidiary Testa with Colonial to create a large real estate group. Colonial has been authorised to issue more bonds, amounting to €750 million.

Operation “Fade”

In addition to the activity in the private sector, the Government also plunged itself into the quest yesterday with the issue of a ‘fund to cover the electrical hole’ (“fondo que cubre el agujero electric” or Fade). It placed €1,300 million in securities that mature in September 2019, with the help of Santander, BBVA, Barclays and Citi.

The Administration is continuing to refinance this debt, which the vehicle has issued since its creation in 2009, to cover the electrical deficit (which arises due to the mismatch between the revenue received by the companies, from electricity tariffs, and the costs of generating it) at much more favourable costs. For this issue, it has only paid 0.85%, the lowest rate since the vehicle was created.

Meanwhile, the Sociedad Concesionaria Autovía de la Plata, owned by Meridiam (50%), Cintra (25%) and Acciona (25%) launched its first bond issue without a public guarantee in Spain yesterday, for €184.5 million. It is paying 3.169% for these securities, which are being traded on the MARF.

Original story: Expansión (by D. Badía and M. Anglés)

Translation: Carmel Drake

KKR Considers Buying One Third Of Acciona’s RE Subsidiary

18 March 2015 – El Confidencial

The group owned by the Entrecanales family is looking for a partner to allow it to ‘ride the wave’ of the real estate recovery and has invited the US fund to be its travel companion.

KKR. The acronym of Kohlberg Kravis Roberts has become Acciona’s most important partner in recent times. Last June, the private equity giant purchased a third of the international renewable energy business owned by the Entrecanales family’s group for €417 million, and in a stroke, that allowed the Spanish group to clean up its accounts, fulfil its divestment plan six months early and rethink other sales that it had on the table, such as Bestinver and Acciona Inmobiliaria.

The sale of the latter became more attractive after the company was strengthened through the hiring of Walter de Luna, who was until then the number two at Sareb, as the CEO, and Luis Moreno, who was his right hand man at the bad bank; they joined the company with the clear challenge of designing a plan for growth. Nevertheless, that plan requires resources and, once again, Acciona’s American friend seems to be willing to help out.

According to knowledgeable sources, KKR is considering buying share capital in Acciona Inmobiliaria; and if the negotiations between the two parties go well, they will culminate in a third large transaction between the fund and the Spanish group, because, as well as having acquired the international renewable energy business from the construction company, KKR has also created a joint venture with the Spanish group, containing wind assets, the famous ‘yieldco’, which it expects to list on the Nasdaq soon.

In recent official presentations, Acciona itself has formally acknowledged the badly-kept secret that it is looking for a partner to inject the money it needs to reinvigorate its real estate subsidiary and thus be in a position to benefit from the recovery that is emerging in the sector, now that it has managed to sort out the direction of the parent company.

The book value of Acciona Inmobiliaria amounts to c. €1,500 million and market sources indicate that the goal of the Entrecanales family would be for the new partner to take ownership of around one third of its share capital. Nevertheless, other alternatives have also been put on the table (in the discussions with KKR), such as tackling projects together, since the Spanish group has (lots of) projects (in the pipeline) and the American fund has cash.

KKR’s commitment to Spain

Spain has become a priority market for KKR in Europe, where its Operations Director, the Spaniard Jesús Olmos, has been the main driver behind the firm’s growth in our country in recent years. He has led the investment of more than 2,400 million dollars in companies such as Saba, Telepizza, Uralita, Grupo Alfonso Gallardo, Port Aventura, T-Solar and, of course, Acciona. These transactions have been strengthened by the fund’s decision to open an office in Madrid and recruit Alejo Vidal-Quadras, who was the CEO of 3i España until last December.

Now, one of KKR’s next goals in our country is to position itself as a player of reference in the real estate sector, as well as to open its sphere of operation to investments in credit and to continue its growth in infrastructure.

Meanwhile, after seven years of crisis and various failed sale attempts, Acciona Inmobiliaria managed to recover in 2014 to record positive results; it closed last December with an EBITDA – earnings before interest, tax, depreciation and amortisation – of €3 million, compared with losses of €2 million a year earlier.

The group owned by the Entrecanales family values its subsidiary at €1,529 million, of which it considers around 70% (€1,199 million) to be gross gains by the group. By geographical region, 87% of the subsidiaries’ assets are located in Spain and only 13% are overseas; whereas if we analyse the subsidiary in terms of turnover, 45% relates to property (primarily residential), 37% corresponds to land in Spain, 8% is land overseas and development activity accounts for the remaining 10%.

Original story: El Confidencial (by R. Ugalde)

Translation: Carmel Drake

Acciona Expects To Record A Profit In 2014 And Seeks Real Estate Opportunities

14 January 2015 – Expansión

Acciona expects to return to profitability in 2014 having recorded losses of €1,972 million in 2013, when it was hit by the Government’s electricity reform, which led to the impairment of its renewable assets.

The announcement was made today at Spain Investor Day by Acciona’s Director General of Corporate Development and Investor Relations, Juan Muro-Lara, who stressed that the company is also focusing on the new opportunities that it expects to arise in the real estate sector, paying particular attention to the residential market, which represents the backbone of its new strategy.

In fact, as part of the transformation plan launched in 2014, the company has already strengthened its real estate business, by hiring Walter de Luna as the Managing Director of its real estate arm following his departure from Sareb, where he served as number two.

This new strategy has also included the hire of Luis Moreno by Acciona Real Estate, a close associate of Walter de Luna, who also joins from Sareb.

Looking to the year ahead, the company expects growth opportunities in the energy sector to be reactivated; to consolidate the integration of its infrastructure businesses and acheive improvements in its results; to search for opportunities to collaborate and grow in the real estate sector; the stabilisation of Bestinver; and the sale of Trasmediterránea.

With the results for 2014 pending publication, including the real impact of the energy reform, the company forecasts an estimated impact of €365 million or 25% of gross operating profit (EBITDA).

The company’s new roadmap also seeks to reduce the ratio of net debt/EBITDA from 5.7x to 5x by December 2014. In this context, the company is analysing the sale of its shipping arm, Trasmediterránea, as it adopts measures aimed at improving the operations of the division.

Efforts in 2014, when Acciona took the decision to cancel its dividend distribution, focused on reducing costs, undertaking the divestments needed to focus on the ‘core’ business and reorganising its corporate division, as well as on its management company, Bestinver, following the departure of Francisco García Paramés after 25 years with the company.

Despite the losses recorded in 2013, the company recorded profits of €149 million during the first nine months of 2014, up by 98.5% on the same period in 2013, driven by an extension of the loan repayment period for its wind energy assets and certain divestments made during the period.

Original article: Expansión

Translation: Carmel Drake

Walter de Luna Hires Aide From Sareb For Acciona Inmobiliaria

13/01/2015 – El Confidencial

Luis Moreno (pictured on the left) has been named the new Strategy Director for a new project at Acciona Inmobiliaria, a real estate arm of Acciona led by Walter de Luna. Mr De Luna (on the right) knows how important the year 2015 will be for the industry and therefore wants to be surrounded by trusted workers.

He became the Chief Executive Director of Acciona Inmobiliaria in September 2014. Few weeks later, Luis Moreno joined his team.

Both of the experts used to work soulder-to-shoulder for Sareb, the bad bank of Spain: Walter de Luna also as the CEO and Mr Moreno as the responsible for the Financial Assets. Both of them left from Sareb at the end of January due to the difference of opinion between them and the chairwoman of the entity, Belen Romana.

Five months later, the ex-executives set up a real estate consulting company called Iberian Real Estate Opportunities.

In September, Walter de Luna was asked to lead the real estate branch of Acciona. The executive has a wide, two-decade experience in the property sector, acquired in the fields of asset management, financing and investment. Prior to joining Sareb, he had been the director for ING Real Estate Finance for Spain and Portugal for twelve years. Besides, he worked for an almost decade for the Mondragon Corporacion Cooperativa group.

In turn, Luis Moreno’s resumé includes a post of the Restructuring Head at the Royal Bank of Scotland and the Chief of Risk Management at ABN Amro.

Acciona Inmobiliaria has managed to survive the real estate crash, even if its owners, the Entrecanales, considered selling it sometimes. Just a year ago, the family put it up for sale together with two other divisions, Bestinver and Transmediterranea.

 

Original article: El Confidencial (by R. Ugalde & E. Sanz)

Translation: AURA REE

Harbert Buys The Habaneras Shopping Center From Unibail

24/12/2014 – Expansión

Spain’s real estate sector has been buzzing with activity over the past few months, and it’s going to continue up to the very last days of the year with the close of a major sales transaction. As seen with the vast majority of operations in 2014, the purchaser of the property is a foreign fund; in this case, the American group, Harbert Management Corporation, has closed the acquisition of Habaneras shopping center in Torrevieja (Alicante).

Promoted by Metrovacesa, the shopping mall boasts 64,000 square meters and more than 24,000 meters of retail space. Unibail bought the mall, which is located next to Maquinista in Barcelona, from Metrovacesa for €423 million in 2008.

Last year, the property in Alicante received 3.7 million visitors, according to the Spanish Association of Shopping Centers.

Harbert has shelled out €65 million for the property, according to industry sources. The fund, managed by Knight Frank, has created a REIT.

Unibail is one of the largest owners and managers of shopping centers in Europe and Spain. The company boasts 14 shopping centers in Spain, including Splau in Barcelona; Bonaire in Valencia; and La Vaguada in Madrid. At the end of 2011, it invested €185 million when it bought the shopping center, Splau, in Barcelona, from Acciona, making it one of the largest operations in the sector that year.

The company, which is listed on the Paris and Amsterdam stock exchange, is currently in the midst of an asset turnover in Spain.

Habaneras is not the first center to be sold by Unibail this year. The Franco-Dutch company sold Albacenter shopping mall to Lar España for €28.4 million.

New Projects

The real estate company is not only selling, but also investing in projects, such as the expansion of La Maquinista in Barcelona, and the construction of a new shopping center in Mallorca, whose total investment exceeds €255 million.

Also, Unibail is currently one of the third finalists in the bid for the Madrid shopping center, Plenilunio, for which it is willing to pay around €330 million.

Original article: Expansión (by Rocío Ruiz)

Translation: Aura REE

Mutua And EQT Create The Third Largest Group Of Underground Car Parks In Spain

12/08/2014 – El Confidencial

Mutua Madrileña and the Nordic group EQT Infrastructure have reached an agreement to merge their car park businesses, Mutuapark y Parkia, respectively, a transaction which will give rise to the third largest private underground car park operator in Spain.

The new company will have a portfolio of almost 25.000 parking spaces distributed across 54 car parks and revenues of 30 million euros. The car parks of the new company have an average of around 32 years of life remaining on their licenses and are distributed across various autonomous regions such as Madrid, Catalonia, Galicia, Andalusia and the Canary Islands, among others.

With this move, what Mutua and EQT are trying to achieve is to prepare themselves for the future consolidation of the sector, which is still very fragmented compared with the situation in other comparable European markets.

Mutuapark, which manages 23 car parks in Spain with close to 8.000 parking spaces, was a business acquired in 2010 by FCC and combines owned car parks with licensed ones. Parkia, for its part, is present in Spain and Andorra, with 31 car parks (25 in Spain and 6 in the Principality) and 17.000 parking spaces. The business was acquired by the Acciona group in 2011.

In the new company created by the merger, EQT will have 66,8% of the share capital and Mutua Madrileña 33,2%. The transaction is waiting to receive the relevant administrative authorisations, which means it is likely to be completed in the fourth quarter of this year.

For Mutua Madrileña, this merger forms part of its strategy of diversifying its investments in businesses, always with the intention of achieving attractive profits in the long term with a moderate risk profile.

In the case of EQT, the agreement is based on its philosophy to invest in medium-sized companies of a high quality, which are market leaders in growing sectors, with the potential to become first line companies.

Original article: El Confidencial
Translation: Aura REE

Acciona Puts On Sale Bestinver & Transmediterranea

10/02/2014 – El Confidencial

The Entrecanales family braces for compensating its last non-strategic assets sale. Recent electrical reform hit straghtly into Acciona´s accounts. The infrastructure and service firm took ahead accepting offers for both Bestinver and real estate managing affiliate. The sale is a part of a partial divestment plan in its energy business.

(…) Acciona is perfectly aware that it will have to shed the said branches to neutralize almost €350 million budget hole, digged by various regulatory measures taken up by the Ministry of Industry. Last year, the company had to absorb a €137  million blow and in 2014 it will probably be much stronger, around €200 million (…).

The divestment plan foresees between €500 and €1.000 million income. Acciona has already managed to transfer renewable energy assets in South Korea (€82 million) and in Germany (€150 million), as well as a concession in Canada and several real estate assets for about €100 million. In total, it earned €370 million.

In April 2013, Acciona hired Lazard and Maquerie to sell 30% of its renewable energy segment, however the execution failed due to constant changes introduced into law. No investor wanted to acquire the glut of wind farms and thermosolar plants because of incertainty about their future. (…).

Lazard appraises mostly assets outside of Spain, principally in the United States, where Acciona holds 30% of capacity. The company decided, however, to accept offers for Bestinver, manager of the family fund, having under its office around €8.000 million fortune. (…).

The most interesting part is the sale of around €1.600 million in gross real estate assets owned by the group, out of which 30% corresponds to heritage buildings or rented, in up to 90% occupied. Overall real estate business of Acciona is valued at around €500 million, land in and outside Spain exluded.

Battles for Realia or Colonial have woken up stong interest on the side of domestic and foreign funds, thus offers for Acciona´s real estate shall not seem surprising. Precisely, there they arrived for Transmediterranea, a shipping line put on sale many times before, and a service affiliate. (…).

 

Original article: El Confidencial (Agustín Marco)

Translation: AURA REE