Blackstone Wants to Create a Hotel Leader with Hispania

5 April 2018 – Expansión

The investment fund Blackstone is considering a corporate operation involving the real estate group Hispania, as revealed by the online edition of Expansión yesterday. Financial market sources indicate that the fund is interested in the group’s real estate assets, rather than in Hispania’s company structure, and may make an offer shortly. Half an hour before the close of trading yesterday, Spain’s National Securities and Exchange Commission (CNMV) decided to suspend trading of the company’s shares when they had risen by 1.65% to €18.50 per share.

In the statement, the regulator indicated that trading would remain suspended “whilst the relevant information is communicated”. The Socimi’s asset portfolio amounted to €2.5 billion at the end of last year, of which €600 million corresponds to the 25 office buildings that it is looking to sell as part of its strategy to focus on the hotel management business. The transfer of that real estate portfolio is already on track and could materialise soon with its sale to the fund Tristan Capital. That portfolio would have to be excluded from the bid that Blackstone is considering, which would amount to around €1.7 billion, according to sources in the real estate sector.

Blackstone’s objective is to acquire Hispania’s hotel portfolio, the largest in Spain, taking advantage of the interest from its existing shareholders, including George Soros, to close their investments in Spain, which were initiated in 2014 and which are expected to be liquidated in 2020. To this end, the price set in the negotiations would have to come close to the valuation of the hotel portfolio, estimated at €1.638 billion as at December 2017, compared to its current market capitalisation of around €2.0 billion. The valuation of the portfolio reflects an important appreciation with respect to the purchase cost of the assets contained therein, in which Hispania invested just over €1.069 billion, and 42% more than the total allocated, including spending on renovations and updates to the properties.

At the end of last year, the Socimi reached an agreement with its until then partner in Bay, the hotel group Barceló, to acquire 100% of that subsidiary. According to the most recent accounts, Hispania’s hotels generated revenues of €129.67 million in 2017, up from €117.8 million recorded the previous year. Of that amount, €77.9 million was generated by properties in the Canary Islands, followed by €22.1 million contributed by hotels in the Balearic Islands and €8.7 million by hotels located in Madrid.

Blackstone is the international fund with the greatest exposure to the Spanish real estate sector, following several record-breaking operations. It owns assets worth €15 billion, including 51% of Popular’s real estate business, with a gross value of €30 billion, but acquired for €5 billion. Last year, it also purchased HI Partners, the hotel subsidiary of Sabadell.

Original story: Expansión (by R.Ruiz/R.Arroyo/M.Á.Patiño)

Translation: Carmel Drake

Hispania Receives a €100M Loan from EIB

12 January 2018 – Expansión

Hispania has signed a loan with the European Investment Bank (EIB) for €100 million to update its hotel portfolio and bring its assets in line with better technical standards, including energy efficiency measures.

Specifically, the investment will be used to improve tourist accommodation that the Socimi controlled by George Soros owns in tourist regions such as the Canary Islands and Andalucía.

The EIB is the European Union’s long-term financial institution, which grants long-term loans to investment projects aimed at promoting the implementation of EU objectives.

The loan to Hispania contributes to improving the competitiveness of the Spanish hotel sector, according to the EIB, through the incorporation of technical standards at its facilities. In this way, the investment supports the growth of less developed regions, where most of the hotels are located, explains the institution.

Hispania whereby joins Axiare, which received €16 million from the EIB last month to improve energy efficiency and the general features of its buildings with the aim of making them more sustainable.

Largest owner

Hispania is currently the largest owner of hotels in Spain with more than 13,100 rooms across the country.

At the end of last year, the company agreed to purchase the remaining 24% stake in BAY from Barceló for a total of €172.4 million. Moreover, it acquired Hotel Barceló Guadalmina from the Mallorcan hotel chain for €19 million. With these acquisitions and the investment plan to improve and reposition its portfolio, Hispania committed all of its financial capacity at the end of last year.

In February, the Socimi, in which George Soros holds a stake, announced its intention to maintain its initial objective of selling all of its assets before March 2020, the date that will mark six years since its debut on the stock market.

Original story: Expansión (by R. A.)

Translation: Carmel Drake

The Vilella Family Puts its ‘Helios Hotels’ Portfolio up for Sale for €110M

9 January 2018 – Eje Prime

The Spanish hotel sector is starting 2018 in the same way that it closed 2017, with negotiations for the sale of portfolios. Whilst during the final days of last year, the sector witnessed the sale of HI Partners, which was sold by Sabadell to Blackstone, and the acquisition of all of the shares in the chain Bay by Hispania, January is starting with the placement on the market of Helios Hotels, the chain owned by the Catalan Vilella family and Mehdi Hamila. The objective of the partners is to raise €110 million from the different assets that the company owns in the Balearic Islands, Cataluña, the Community of Valencia and Andalucía.

With 1,000 rooms in total, the Helios portfolio contains four hotels and an aparthotel, although the company is yet to receive an offer that meets its expectations, according to Crónica Global. The hotel chain’s assets comprise: Helios Lloret (Girona), Helios Mallorca, Helios Costa Tropical (Almuñécar, Granada), Helios Benidorm (Alicante) and Apartamentos Helios Mallorca.

The Vilella family is renowned in the hotel sector on the Costa Brava, where, through the family company Turiexpert, it owns the Hotel San Carlos in Roses.

Original story: Eje Prime 

Translation: Carmel Drake

Hispania Completes Purchase of Barceló’s Remaining Stake in Bay for €172.4M

27 December 2017 – El Economista

Hispania has acquired the 19.5% stake that the Barceló Group still held in the Socimi Bay Hotels & Leisure (BAY) for a total amount of €172.4 million, according to a report filed by the company on Wednesday with Spain’s National Securities and Exchange Commission (CNMV).

As such, the Socimi in which George Soros holds a stake now owns 100% of BAY, given that in October 2015, it acquired 80.5% of the company from Barceló.

As a result of the transaction, the parties have agreed to extinguish the contract between the shareholders relating to BAY and to novate certain terms of the investment contract signed when Hispania first entered BAY’s share capital.

The amount of the transaction also includes: the settlement of an incentive detailed in the contract between the shareholders for an approximate amount of €155 million; the expected dividend to be paid by BAY for 2017 amounting to €10.7 million; as well as certain compensation and/or liquidation payments resulting from the termination of the shareholder contract and the novation of the investment contract.

The total price of the operation shall be made in two payments: a first payment amounting to €80 million, which was paid at the same time as the shares were transferred to Hispania; and a second payment, amounting to €92.4 million, which will be paid on 28 February 2018.

The Socimi has specified that the sale and purchase contract anticipates certain upwards movements in the price, agreed in the case of the subsequent resale by Hispania of the acquired stake and only provided certain circumstances arise.

At the same time, the Barceló Group has notified BAY that it is exercising the sale option that it holds over the Hotel Barceló Marbella for €19 million. That transaction is expected to be executed before 28 February 2018.

Original story: El Economista

Translation: Carmel Drake

Snapshot Of The MAB’s Real Estate Companies

4 September 2017 – Expansión

An attractive tax structure and investors’ appetite for real estate assets have led to a veritable flood of Socimi debuts on the stock market in recent years. With the exception of Merlin and Colonial – which form part of the Ibex – and Axiare, Hispania and Lar España – which are listed on the main stock market – the other Socimis trade on the Alternative Investment Market (MAB). In 2013, that market opened a new segment for this type of investment vehicle, which now comprises 40 companies.

To be incorporated, Socimis must have a minimum share capital of €5 million and invest in urban properties allocated for rent. These companies, which must be listed on regulated markets, are exempt from paying Corporation Tax in exchange for fulfilling certain obligations such as the distribution of dividends in a systematic way.

The first Socimi to debut on the MAB was Entrecampos Cuatro. That company, constituted in 2004 as a merger of several companies from the Segura Rodríguez family group, was responsible for firing the Socimi-starting gun on the MAB in November 2013.

The 40 Socimis now listed on the MAB have a combined market capitalisation of more than €7,000 million and comprise a very heterogeneous group both in terms of size, as well as by specialisation and category. The companies range from family groups to institutions (with one fund or professional investor holding a stake) to publicly owned entities (with numerous shareholders).

Of the Socimis currently listed on the MAB, the largest by a long way is General de Galerías Comerciales (GGC). That Socimi, which currently has a market capitalisation of €2,547 million, debuted on the stock market in July and, despite its size, is controlled almost in its entirety by a single shareholder, the Murcian businessman Tomás Olivo. GGC is exceeded in terms of market capitalisation only by Merlin and Colonial.

GGC is followed by the Montoro family’s real estate firm GMP, in which the fund Singapore GIC owns a 30% stake. That company currently holds 27 properties in its portfolio, including several iconic buildings, such as the historical Torre BBVA (renamed Castellana 81 due to its location) and a few metres away, Castellana 77 (also known as Torre Ederra). Other large listed Socimis include Zambal, the Socimi managed by IBA Capital, with investments in offices and commercial assets; and Bay, the Socimi owned by Hispania and Barceló. The latter, which focuses on the tourist sector, held 21 assets with a gross value of €790 million at the end of last year and since then has purchased another three assets: Hotel Selomar in Benidorm for almost €16 million; Hotel Fergus Tobago in Palmanova for €20 million; and the Armadores de Puerto Rico company for €6 million.

Shopping centres are also present on the MAB. In this way, for example, Intu owns two listed shopping centres: the Socimi Asturias Retail & Leisure, owner of the Intu Asturias shopping centre (previously Parque Principado), which has a total approximate surface area of 75,000 m2; and Zaragoza Properties, owner of Puerto Venecia Shopping Resort, in Zaragoza, with a surface area of more than 200,000 m2.

Another example is the Socimi Heref Habaneras, which owns the Habaneras shopping centre in Torrevieja (Alicante).

Residential market

One of the investment segments that has gained weight amongst the specialist Socimis in recent times is the residential market. Specifically, the private equity fund Blackstone has two listed Socimis. The largest, Fidere, debuted on the stock market in June 2015 with an asset value of €304.3 million and a portfolio of 2,688 social housing properties for let purchased during the crisis.

Moreover, the fund listed another Socimi on the stock market in March, Albirana Properties, which owns more than 5,000 assets spread all over Spain, most of which are rental homes (….).

A few weeks ago, the MAB introduced a modification to its rules to tighten up the access requirements for new Socimis. This change, which came into force in August, requires Socimis to have minority shareholders in their shareholdings when they debut on the stock market. Until then, companies had a year to fulfil the requirement. This led to an intensification in terms of the number of Socimi debuts. In July alone, seven companies joined the MAB: GGC, Bay Hotels & Leisure, Grupo Ortiz, Kingbook Inversiones, AM Locales Property, Colon and Numulae (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Millenium Group Resumes Its Hotel Socimi’s Activity

15 March 2017 – Cinco Días

The Millenium group has resumed its plans to launch a hotel Socimi. Following a break caused by the absence of a Government and the misgivings of some of its investors, the company has returned to the project.

The aim of the firm led by Javier Illán, which has now constituted the Socimi Millenium Hotels Real Estate, involves listing the company on the stock market in 2019, whereby maximising the term permitted for that purpose. Meanwhile, the vehicle is working hard to secure high profile investors and acquire hotel establishments.

Millenium plans to raise around €400 million from investors and expects that its Socimi will have a market valuation of between €650 million and €700 million when its debuts. For the time being, the company does not have a registered advisor for its debut on the stock market, but it has received support from investors who have participated in its investments since 2000, including large homegrown and overseas real estate mutual institutions and pension funds.

For new investors, Millenium has established a minimum entry ticket of €5 million. Moreover, it has not ruled out the possibility of allowing hotel owners to take a share in its share capital in exchange for “gifting” the property to its portfolio. Regarding the debut on the stock market, the company may open up another stock tranche, with a lower minimum investment of around €250,000, to give liquidity to its shares.

The vehicle is expected to acquire around thirty hotels, including those that the group already owns, such as the Hesperia on Paseo de la Castellana, the Hotusa in Plaza de Castilla and the Tryp Chamberí, all in the centre of Madrid.

The Socimi will acquire urban and vacation hotels, however, Javier Illán states that they are also analysing cities that receive lots of tourist visitors. Besides Madrid and Barcelona, he points to other major capitals such as Málaga, Sevilla, Córdoba, Granada, Bilbao, San Sebastián and Valencia. The Canary Islands and the Balearic Islands, together with the Costa del Sol, will be its areas of focus in the vacation segment, all areas that have been under the spotlight of domestic and international investors alike, over the last year.

This year, Illán hopes to close around ten acquisitions on which he expects to spend around €200 million. He also acknowledges that the company is holding talks with all of the hotel chains interested in operating lease contracts.

For the time being, none of these operations has materialised and the hope is that they will be completed one by one and not in batches to avoid acquiring unwanted assets.

The Director also assures that he intends for 70% of the portfolio of establishments to require investment for their repositioning and refurbishment (value added, in English), which whereby differentiates it from the model adopted by Hispania in the vehicle that it created together with Barceló: Bay.

The group, which specialises in the development of luxury residential properties and commercial premises is carrying out detailed analysis with a view to creating a Board of Directors for the Socimi, which will mainly comprise independent directors.

Original story: Cinco Días (by L. Salces and A. Simón)

Translation: Carmel Drake

The New RE Kings: Professional & Discreet

7 November 2016 – El País

The property sector still suffers from its soiled reputation as the cause of the bubble that led to the ruin of so many real estate companies, savings banks and families, ultimately bringing down the Spanish economy. But in a very discrete way, the sector is recovering its strength and real estate companies are becoming involved in major corporate operations once again, from purchases to mergers to stock exchange IPOs. The large corporations have also turned their business models on their heads. Whilst previously they undertook all kinds of activity (from property development to rental), we are now seeing specialist companies, many of whom are controlled by overseas investment funds.

The kings of property have also lost the glamour that those self-made businessman, such as Enrique Bañuelos (Astroc), Luis Portillo (Colonial) and Fernando Martín (Martinsa) enjoyed as their fortunes shined on the Forbes rich list (…). Nowadays, the new real estate companies do not have a visible face but rather are professional undertakings, and in many cases the managers are anonymous. The Socimis have taken up their place alongside the private equity funds and the large international investors such as the US businessman George Soros; Wang Jianlin, the richest man in China; and the Mexican magnate Carlos Slim.

Real estate stalwarts, such as Martinsa-Fadesa, Metrovacesa and Astroc, whose names used to feature on property developments, were left for dust, devoured by the black whole of gigantic debt. Their place has been occupied by the Socimis Merlin, Hispania, Lar and Axiare, whose names are barely known by the majority of the general public; by property developers such as Vía Célere and Neinor Homes, some of which have been created by overseas capital either investing directly in their capital or through partnerships for specific projects; and even by the former real estate arms of the banks, most of which are now owned by international funds.

One of the few exceptions to the empires from the last decade that has managed to survive is Colonial, which has cleaned up and transformed into a company that specialises in rental properties, and which is back with new investment plans. Last month, the company chaired by Juan José Brugera acquired 15.1% of the Socimi Axiare for €135 million. “Most of the companies that are left are a selection of the most professional enterprises”, said the Professor of Applied Economics at the Pompeu Fabra University, José García Montalvo. (…).

“The new managers of the real estate companies are more professional”, argues García Montalvo. In addition, the companies are more specialised and some even focus only on specific segments. One example is Lar España, a Socimi that specialises in shopping centre management (although it does also own a few office buildings), which has launched a €240 million investment plan for next year, supported by the major funds that comprise its shareholders, such as Franklin Templeton, Blackrock and Pimco.

Another example is Hispania, in which the US multimillionaires and fund managers George Soros and John Paulson hold stakes. It has also grown rapidly since it debuted on the stock market in 2014 and now manages assets amounting to almost €1,500 million. Its strategy is clear: to grow in size. Although it failed in its purchase of Realia, the company led by Concha Osácar and Fernando Gumuzio has absorbed the hotel Socimi Bay and all of the experts in the sector have tipped it to play an important role in upcoming operations. (…).

Original story: El País (by Ramón Muñoz and Lluís Pellicer)

Translation: Carmel Drake

4 Socimis Have Accumulated Assets Worth €10,250M In 2 Years

26 September 2016 – Expansión

Merlin, Hispania, Axiare and Lar España, which all debuted on the stock market in 2014, have closed June with assets worth €10,253 million. From zero to €10,000 million in just two years. That is the giddy journey that the largest four Spanish Socimis have just embarked on. (…).

Merlin Properties

Founded by Ismael Clemente and his team at the management firm Magic Real, Merlin is now the eighth largest real estate company in Europe and the largest in Spain. (…).

Merlin debuted on the stock market with an initial share capital of €1,250 million and in less than three months it managed to invest €1,000 million. As at June 2016, its real estate portfolio was worth €6,527 million, with office buildings (with an estimated value of around €2,338 million), high street premises (worth €2,040 million) and shopping centres (€709 million) representing the Socimi’s main investment categories.

During the first half of 2016, Merlin bought two office buildings in Portugal; four logistics assets under development in Pinto (Madrid), Azuqueca (Guadalajara), Meco (Madrid) and Cabanillas (Guadalajara); a retail outlet in the Larios shopping centre and another property in Porto Pi. The Socimi spent €149.3 million in total on these purchases.

The shareholders of Merlin and Metrovacesa recently approved the merger of the two companies, which means that the Socimi will soon own assets worth €9,400 million.

Lar España

It was the first Socimi to debut on the sotck market (in March 2014), it is managed by the team from the real estate company Lar and it had an initial share capital of €400 million. Lar España closed the first half of 2016 with a portfolio worth €1,050 million.

The main operations of the company include several recent acquisitions, including the Vistahermosa retail park in Alicante; large establishments such as Megapark; and the luxury residential project Juan Bravo 3, which it is developing along with one of its shareholders, the US management firm Pimco.

Others, such as the Gran Vía de Vigo shopping centre, purchased for €141 million, will be accounted for in the third quarter of this year, as the Socimi strengthens its commitment to the shopping centre market in Spain.

Hispania

Another real estate company, Hispania Activos Inmobiliarios, also debuted on the stock market in March 2014. The company, created by the managers of Azora, Fernando Gumuzio and Concha Osácar, raised €550 million to purchase various assets.

After acquiring several complexes of homes, hotels along the coast and offices in Madrid and Barcelona, Hispania launched a takeover bid for the real estate company Realia to create a giant in the sector. That transaction was foiled in the end, after the Mexican businessman Carlos Slim made a better offer, and so Hispania opted for another operation: an alliance with the chain Barceló to create Bay, a Socimi specialising in hotels.

Currently, Hispania owns a portfolio of assets worth €1,627 million, which represents a two-fold valuation increase compared to the same period in 2015. Its hotel portfolio alone is worth €970.3 million. As at 31 December, the Socimi owned properties worth €1,425 million, but following its purchase of assets such as the San Miguel company (owner of three hotels in Ibiza) and a residential complex in Madrid (Hispanidad), that value increased.

Moreover, Hispania has managed to revalue its hotel portfolio by €67 million, its offices by €28 million and its residential portfolio by €22 million.

Axiare

Axiare was the last of the great Socimis to list on the stock market, in July 2014, when it had €360 million to invest.

As at 30 June, Axiare’s portfolio of assets was worth €1,049 million, which represents an increase of 25.3% over the acquisition prices of those assets.

Moreover, the Socimi is in “advanced” negotiations regarding investments worth €400 million. (…).

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Soros Commits To Back Hispania’s Future Capital Increase

6 May 2016 – Cinco Días

The Socimi Hispania is considering carrying out another capital increase, of up to €250 million, and the multimillionaire George Soros (pictured above), the company’s largest shareholder with a 16.7% stake, has expressed his intention to participate.

According to a statement made yesterday to the CNMV, on the occasion of Hispania’s general shareholders’ meeting, the company, which debuted on the stock exchange in March 2014, is in advanced negotiations regarding investment operations amounting to €200 million.

Hispania is looking for new resources to make acquisitions, “now that it has committed almost all of its investment capacity”. The Socimi already raised €337 million in a previous capital increase in Spring 2015, which Soros Fund Management participated in.

“Our main investor has expressed interest in supporting the operation”, said sources at the Socimi in a document to the CNMV. In this way, the fund managed by Soros would contribute around €42 million to avoid the dilution of its stake.

For 2016 as a whole, Hispania, which is managed by Azora, expects to generate significant growth in its results across its different investment lines (hotels, offices and residential). The company already part-owns the Socimi Bay, in partnership with Barceló, which specialises in the hotel sector.

“The window of opportunity is mainly opening in the holiday hotel sector in Spain, which is still offering a very attractive risk-return profile”, said the Socimi, led by Concha Osácar and Fernando Gumuzio, in the document.

Original story: Cinco Días (by A.S.)

Translation: Carmel Drake

The Socimis Consolidate Their Positions As RE Kings

1 April 2016 – Cinco Días

When the Socimis began to emerge timidly in 2014, few thought that they would become the key and crucial factor behind the change in the real estate cycle in Spain. The four largest companies alone, excluding the dozen other companies listed on the Alternative Investment Market, have managed to double the value of the properties that they own in the last year, to take the total to €9,235 million.

The key behind this change has been two-fold. Firstly, the acquisition that the Socimi Merlin Properties closed last year, of Testa from Sacyr, which doubled its size. Secondly, the large number of international funds that have relied on these Spanish managers to enter the domestic real estate market, where opportunities are now arising after the tough years of the property crisis.

Socimis are a type of company that is exempt from paying corporation tax in exchange for having the obligation to distribute dividends each year. Their structure is similar to the more established Anglo-Saxon REITs, which control properties that are leased out (offices, shopping centres, hotels..). The most obvious risk is that they drive up the prices of these kinds of assets, because they set short-term timeframes for investing the money they raise from investors.

Merlin Properties

The largest of these companies in Spain is Merlin Properties, chaired by Ismael Clemente, an experienced former director of Deutsche Bank. This Socimi has managed to sneak into the crème de la crème of the business world by listing on the Ibex 35 since the beginning of the year. Almost all of the funds that control its capital are international, with very diluted individual shareholdings. The largest block belongs to BlackRock, which owns a 5% stake.

(…). Merlin’s portfolio amounts to €6,052 million, and comprises offices (36%), retail premises (31%), shopping centres (11%), hotels (6.6%) and residential assets for lease (4.8%). (…). In December, the entity announced that it expects to issue bonds with a BBB rating. The company currently has a market capitalisation of approximately €3,370 million.

Hispania

Thanks to its partnership with Barceló, Hispania has become another one of the major players in the sector. (…). In total, Hispania now owns properties amounting to more than €1,425 million, comprising hotels (59%), offices (29%) and residential properties (12%). (…).

The multi-millionaire George Soros owns 16% of the company, meanwhile John Paulson owns a 9.9% stake. (…).

Lar España

One of Lar España’s most recent operations has been the announcement that it will invest €145 million in the construction of Sevilla’s largest shopping centre. The Socimi, managed by Grupo Lar, has gradually specialised in these types of assets, which now account for almost 70% of its business volume.

The company is currently listed with a market capitalisation of €340 million. Its other assets include a small residential portfolio (7%), as well as logistics assets (8%) and office buildings (17%).

Axiare Patrimonio

The company is led by Luis López de Herrera-Oria, a veteran in the real estate sector (…). Its shareholders include several funds – also international – such as Citigroup, Deutsche Bank, Gruss, JP Morgan Chase, Perry Partners and Pelham Capital.

It has doubled its portfolio of assets in the last year to €859 million, thanks to the appreciation in the value of its assets and new acquisitions. 72% of its portfolio relates to offices and 15% comprises logistics assets.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake