27 April 2015 – El Confidencial
The Socimi has launched its road show to issue 25-year debt that will allow it to repay all of its banking loans. The placement will be conducted in Holland through a special vehicle.
Uro Property has stepped on the accelerator to adjust its financial structure and position itself so as to compete head to head with the major Socimis in the market. Following its sale of 381 Banco Santander branches to AXA Real Estate (last month), the company chaired by Carlos Martínez Campos and led by Simon Blaxland, has launched a bond issue with a view to securing funds amounting to €1,300 million.
Through this placement, the Socimi wants to refinance all of its bank debt, which amounted to €1,424 million before the transaction with AXA, but which will be reduced by the corresponding proportion following the sale to the French group, since all of the funds (raised from the sale) will be used to repay its financial commitments.
This will be the first major bond transaction carried out by a Spanish Socimi. It forms part of the general move by these companies to return to the stock markets in search of liquidity and whereby take advantage of the window of opportunity that has opened up in stock markets around the world.
Holland is the market chosen by Uro to conduct its bond issue, which will be undertaken through the ad hoc creation of a special vehicle to issue the debt. Uro will verify investors’ appetite during the international road show, which the company has now launched; its objective is to reduce its current spread by 200-300 basis points and adjust the lifespan of the issuing vehicle to reflect the average life of Santander’s rental assets, i.e. around 25 years, although there will also be shorter terms.
The agreement with AXA has proved to be a lifeline for the Socimi, since it has resulted in the materialisation of the asset values assigned by CBRE. When Uro first listed on the MAB on 12 March, the real estate consultancy firm valued the company’s total portfolio at €2,000 million. Less than two months later, the French group, which owns one of the largest real estate investment vehicles in Europe, has paid 10% whereby giving credibility to Uro’s core assets.
Following the transaction with AXA, Uro now owns 755 Banco Santander branches, which have a combined surface area of more than 340,000 square metres and are valued at more than €1,700 million. Moreover, the branches that Uro has retained are the most desirable (prime) and are mainly located in Madrid and Barcelona, which explains why, despite having sold around one third of its assets (in terms of the number of branches), in terms of value, the sale only represents 15%.
Next steps
With all eyes on the closure of the (bond) issue in May, Uro is working on its road map, with a view to freeing up all of its bank loans and therefore, being able to address the company’s next objective, namely its listing on the stock exchange next year.
The Socimi’s major shareholder is Santander, which holds 24% of Uro’s share capital, whilst CaixaBank holds 14.98%, BNP Paribas owns 8.81% and Societe Generale holds 3.14%. Moreover, several hedge funds and entities such as Barclays and Bayerische Landesbank hold smaller stakes, of less than 1%, whilst the company’s former shareholders, Sun Capital, which is now known as Atisha Holding, and the Pearl Group, now Phoenix Life, hold 21.7% and 14.38%, respectively.
All of these shareholders have committed to continue to hold the Socimi’s share capital, for the next 12 months at least, although it is possible that, if an agreement is made between the shareholders, this period, known as the lock-up, may decrease if the circumstances in the market dictate that a move to obtain liquidity should be launched before the planned schedule, to pave the way for the stock market listing.
Uro’s IPO on the MAB was carried out to comply with the rules established for Socimis, which requires them to become listed vehicles within a maximum period of two years. Although Santander’s landlord still had time before the end of that term, it decided to list in March precisely because it wanted to pave the way for its bond issue, since investors always look more favourably upon debt issued by listed vehicles.
Nevertheless, since that was not its natural market and since at the time, it regarded the step more as a requirement than a vocation, it limited its placement on the Alternative Investment Market to the minimum legal requirement of €2 million. In contrast, once it has finished adjusting its financial structure and is able to begin actively working on its stock exchange listing, the company will have the opportunity to raise capital, which it will use to finance purchases, like other Socimis have done, given that all of the funds raised from its current bond issue will be used to repay its debt.
Original story: El Confidencial (by Ruth Ugalde)
Translation: Carmel Drake
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