Sareb Invites 20 Investors to Participate in the Sale of its Socimi Témpore

20 December 2018 – El Economista

A formal process is being launched after initial interest was received from three buyers, including one that stood out from the US fund TPG.

On Tuesday, Sareb opened a formal process to sell Témpore, its rental home Socimi, according to confirmation provided by sources in the sector speaking to El Economista. The bad bank, which has not engaged an external advisor for this divestment process, has invited 20 investors to participate.

In November, Nicolás Díaz Saldaña, CEO of the residential company, acknowledged that a Data Room had been enabled containing information about the Socimi and that access had been granted to it for five investors interested in the acquisition of Témpore.

In the end, three offers were received, of which the ones from Ares and TPG stood out, the latter being the highest. In light of the expressions of interest, Sareb decided to raise the matter to its Board of Directors, which yesterday launched an orderly sales process in which investors may participate by invitation only.

According to the same sources, Sareb has not imposed any conditions regarding what percentage of its stake is for sale (it held 98.38% at the end of June), and so it will be open to all offers.

The Socimi has just carried out what will be its last non-monetary capital increase subscribed by Sareb amounting to €150 million to acquire 1,769 assets in total, of which 850 are rental homes. The operation, which forms part of the right of first refusal agreement (ROFO), which Sareb and the Socimi signed, allows Témpore to double in size to reach €325 million.

Growth plan

Before announcing the sales process, Témpore had a growth plan underway with the aim of achieving a portfolio worth €500 million and in this way having sufficient volume to make its debut on the main stock market. That was explained at the time by Díaz Saldaña, who noted that in order to continue growing, “we will have to look for financing, be it from the bank or an alternative, such as a bond issue”.

Amongst the different options, the Socimi is analysing the purchase of whole buildings of rental homes and is also studying the acquisition of developments under construction that are currently in the hands of Sareb. In addition, it is considering buying turnkey projects through delegated promotion. “In the case of the latter, the first projects would be with Sareb, given that at the moment, for the other property developers that we have spoken to, it is more profitable for them to sell in the retail market”, said the CEO.

Meanwhile, yesterday, Sareb announced the sale of some land in the Torre Salses area, in Lleida, for the construction of a large shopping centre, spanning more than 60,000 m2. Eurofund Capital Partners has paid €8.3 million for that plot, whose sale was agreed in 2016.

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake

On the Hunt for Capital: Socimi Quonia Considers Issuing Bonds to Finance its Growth

11 July 2018 – Eje Prime

Quonia does not want to put any limits on its capacity for indebtedness. The company is considering carrying out a corporate bond issue to increase its financing options and, whereby, continue with its development plan, according to explanations provided by the company’s CEO, Eduard Mercader, speaking to Eje Prime. Through this move, Quonia would also open itself up to institutional investors.

The fact that Socimis must dedicate at least 80% of their profits to dividends “limits their capacity to accumulate debt”, explains Mercader. In this way, the main option for these types of companies when they are looking to grow is primarily through capital increases. However, the company’s executive is looking for “alternative formulae”, to apply “in the short term”.

Mercader’s decision to resort to bonds is also a consequence of the difficulties faced when completing capital increases with investors outside of Europe, such as in this case. Quonia was created in 2014 by the Mexican investors Divo Milán and Ana Saucedo and investors from that country currently contribute the majority of its resources.

Quonia has just completed a €3 million capital increase, although the company had approved the possibility of raising up to €26.5 million. Before the end of the year, the company will obtain another €1 million through the capitalisation of investor loans.

Although the resources forecast by the Socimi were greater, Mercader says that the final amount does not limit the company’s development plan. “We adapt ourselves to the capital that we receive”, says the executive, and adds that Quonia “is continuously raising funds”.

After its launch with the purchase of an asset in Barcelona, Quonia has been attracting different investors from Mexico, Europe and the USA. In July 2014, the company adopted the Socimi regime and in July 2016, it made its debut on the Alternative Investment Market (MAB) where it is currently listed.

“We are very much a real estate Socimi, we do not have a financial profile at all”, explains Mercader – “we buy assets with a lot of potential”. The company’s portfolio currently comprises seven assets, located in Barcelona, Lagreo and Sevilla, of a residential, hotel and commercial nature. The valuation of the company’s portfolio in October 2017 amounted to €85 million, with a gross value of €57 million.

The company is currently finalising the sale of one of its properties. Specifically, the building located at number 166 Calle Balmes in Barcelona. It is an eight-storey residential property, with commercial premises on the ground floor, constructed in 1930 in the rationalist style. Both this property and the one at number 45 on the same street are being used as residences for students.

Quonia, whose average investments range between €10 million and €13 million, is on the lookout for opportunities in Spain to continue growing its portfolio. With Barcelona and Madrid always in its sights, the company is branching out to new destinations for its new investments in cities such as Málaga and Sevilla, as well as País Vasco, where it is analysing several operations. Palma is another city where it is considering investing (…).

Original story: Eje Prime (by P. Riaño and J. Izquierdo)

Translation: Carmel Drake

Grupo Ortiz Completes 5-Year Bond Issue Worth €50M

10 July 2018 – Eje Prime

Grupo Ortiz has finalised the placement of bonds worth €50 million with the aim of replacing a previous issue that is due to expire next year. Thanks to this operation, the company will reduce the cost of its debt and extend its maturity period.

The new bonds, subscribed by qualifying investors, are being launched over five years, in such a way that they will expire in 2023. The interest rate on the bonds is 5.25%. The new securities replace those issued for the same total amount in 2014, which are due to expire in 2019 and which generate a cost of the company of 7% per annum.

The new bonds, just like their predecessors, will be admitted for trading on the Alternative Fixed Income Market (MARF). Grupo Ortiz was the third company to launch debt securities on that market.

In 2017, Grupo Ortiz completed a portfolio of building work pending execution worth €6 billion, up by 45% compared to the previous year, boosted by the expansion of its international business, primarily in Latin America. More than two-thirds of the company’s business is generated overseas.

Original story: Eje Prime 

Translation: Carmel Drake

Ardian Places Indigo Sale On Hold after Raising €700M in Debt

4 May 2018 – Expansión

Ardian and its partner Predica (Credit Agricole) have decided to put on hold the sale of their parking lot subsidiary Indigo, one of the giants in the European sector with significant interests in Spain. The shareholders, which have been looking at various options for their investment over the last year, have opted to re-leverage the company in the end, with a €700 million bond issue, which will be used to refinance some of the debt that expires in 2020, and also, to distribute an extraordinary dividend to shareholders.

With this move, the possible sale of the former VinciPark has been put on hold, after Ardian went off the idea of divestment in 2017 when it did not obtain satisfactory offers for the asset. According to sources close to the operation, Indigo’s shareholders were left with three options: put the “for sale” sign back up; re-leverage the company and distribute an extraordinary dividend to the shareholders; or encourage a merger agreement with other parking lot groups.

Until a few weeks ago, all three options were on the table. One of the possibilities involved exploring an alliance with the Spanish firm Saba. The parking lot group controlled by Criteria (La Caixa) is also undergoing a process of transformation after the decision was taken by its minority shareholders, which together hold a 49% stake, to exit the company. That round of contact did not prosper and Indigo decided to begin the procedure to launch a macro debt issue, which took place on 12 April.

Sources in the sector believe that a merger between Saba and Indigo would have business logic given the minimal overlap and their capacity to form a group with sufficient critical mass to explore a stock market listing. Trading on the stock market has always been the ultimate dream of Saba’s founding partners. By contrast, Ardian avoids investments in listed groups (…).

Indigo is, together with Qpark and Apcoa, the largest parking lot group in Europe. According to the latest available figures, the company recorded turnover of €897 million in 2017, with an EBITDA of €310 million. The company’s net financial debt amounts to €1.666 billion. Saba and Empark also feature in Europe’s Top 8 ranking of the largest parking lot groups, but their turnover figures are significantly lower than those of Indigo and QPark.

According to experts, another factor that would contribute to accelerating the corporate movements in the sector is the ownership structure. The giants in the sector are owned by investment funds and private equity firms with a relative dearth of long-term investors. QPark is controlled by KKR, whilst the German firm Apcoa is owned by Centerbridge. Ardian controls Indigo and Macquarie is the new owner of Empark. Saba is the only company with an industrial shareholder – Criteria – and a long-term interest (…).

Although not its largest market, Indigo conducts significant business in Spain. Revenues amounted to €41 million in 2017, with an EBITDA of almost €20 million. It is Indigo’s third largest market in Europe, after France and the United Kingdom. The outlook for Spain is positive. According to the consultancy firm DBK, revenues from the rental of parking spaces (…) in Spain and Portugal amounted to €1.145 billion in 2017, which represented an increase of 3.8% with respect to the previous year. In 2016, that figure grew by 4.5%.

Original story: Expansión (by C. Morán)

Translation: Carmel Drake

Haya Reorganises Its Company Structure & Creates Haya Servicing

19 February 2018 – Eje Prime

Haya is reorganising its company structure. The real estate company, owned by the private equity fund Cerberus, has created a limited company, Haya Real Estate Servicing. This constitution forms part of the bond issue operation that the company carried out at the end of last year.

According to the Official Gazette of the Mercantile Registry, the corporate purpose of the new entity involves activities relating to the purchase, administration and sale of all kinds of real estate assets and securities.

Its share capital amounts to €60,000 and its headquarters are located on Calle Vía de los Poblados, the same registered address as the limited company Haya Real Estate, the group’s parent company. The sole administrator is Carlos Abad, the CEO of the real estate group and its legal representatives are Bárbara Zubíria Furest, the company’s Finance Director, and Ana Suárez Garnelo, Senior Legal Counsel and Secretary to the Board of Directors.

The move forms part of the bond issue that the group undertook in November last year. Then, the company debuted on the debt market by placing €475 million in guaranteed senior bonds.

For the debt issue, the group constituted a new limited company, Haya Finance, created solely to carry out that operation. Nevertheless, in the document sent to the Luxembourg stock exchange, where Haya asked for the bonds to be traded, the group revealed its intention to create a new limited company, arguing that this formula presented fewer restrictions.

“As at the date of issue, Haya is organised as a limited liability company”, said the group in the document. “In accordance with Spanish legislation, the capacity of a limited liability company to guarantee debt in the capital markets has not been tested in the Spanish courts” it continued. In this sense, Haya underlined that a limited liability company may only issue bonds worth up to twice its own resources, at most, unless the issue is guaranteed by a mortgage or joint guarantee from a credit institution, amongst others.

Nevertheless, the company also expressed that “the applicable Spanish statute does not expressly include any restrictions over the maximum amount that can be guaranteed by a limited liability company, and there is debate between the experts as to whether the aforementioned limited limitations should also apply to the guarantee interests provided by a limited liability company to guarantee debt on the capital market”.

Finally, Haya concluded that “in accordance with the trust agreement”, the principle guarantor “shall undertake to convert itself into a limited company that is not subject to the aforementioned restrictions”.

Last week, Cerberus engaged Rothschild to handle the IPO of Haya, currently worth €1.2 billion. The real estate company led by Carlos Abad currently manages a portfolio of assets worth almost €40 billion.

Founded in 2013, after Cerberus acquired the assets of Bankia Habitat, Haya has expanded its reach with the management of additional portfolios on behalf of other financial institutions such as Sareb, BBVA, Liberbank and Cajamar. During the 9 months to September, the servicer obtained revenues of €165.8 million and generated EBITDA of €89.8 million.

Original story: Eje Prime

Translation: Carmel Drake

Finaccess Increases its Stake in Colonial to 18.23%

2 December 2017 – Expansión

The Mexican group Finaccess has reaffirmed its commitment to Colonial by investing another €154 million in the real estate company, which sees its total stake increase to €630 million based on the current market value. Following this acquisition, the group chaired by Carlos Fernández has increased its stake in the real estate company from 13.76% to 18.23% and has whereby retained its position as the company’s largest shareholder.

The operation forms part of the accelerated capital increase that Colonial carried out last week to raise financing for its takeover of Axiare.

Finaccess first acquired a stake in Colonial in the summer of 2016 through an operation that saw it exchange buildings for shares in the company. Since then, the Mexican firm has increased its stake in the real estate company on several occasions.

In addition to the Mexican company, the other two main shareholders of Colonial have also announced their commitment to support the group’s capital increase, up to a total of €250 million, which is why, following the purchase of Finaccess, there will be only €100 million left to raise. After Finaccess, the next largest stakes are held by the Qatar sovereign fund, which currently holds a 10.6% stake, and the Santo Domingo group, with a 7.3% stake. The Puig family, with a 5%, has declined to comment.

On Tuesday, Colonial closed a free capital increase that, together with the placement of its treasury shares, allowed it to raise €416.23 million. The operation followed the issue of €800 million in bonds placed last week. The two operations will contribute a total of €1.216 billion, compared with the €1.033 billion required. Colonial saw its share price close at €8 on Friday, after rising by 0.79% during trading.

Original story: Expansión (by M. Anglés)

Translation: Carmel Drake

Colonial Launches €800M Bond Issue To Finance Axiare Takeover

21 November 2017 – Eje Prime

Colonial is pushing ahead with its plans for Axiare. The Socimi has launched a bond issue amounting to €800 million, funds it plans to use to partially finance the takeover that it has formulated for Axiare, with the aim of creating an office rental giant, as explained by the group in a statement.

The operation has been structured in two tranches, one amounting to €500 million over eight years and the second amounting to €300 million over twelve years. The real estate company led by Pere Viñolas (pictured above)  opened the placement books first thing on Tuesday and expected to close them by the end of the day.

Colonial is returning to the capital markets with an issue that forms part of the financial structure designed to finance the takeover of Axiare, launched on Monday 13 November, with the aim of acquiring the remaining 71% stake that it does not yet control in that Socimi.

The operation, worth €1,462 million, is currently being backed by a bridge loan facilitated by JP Morgan. The real estate company plans to replace that loan with this bond issue and, subsequently, reduce those securities with a program to sell non-strategic assets amounting to €300 million and other resources, including a capital increase, amounting to €450 million.

Original story: Eje Prime

Translation: Carmel Drake

Haya Real Estate Issues €475M In Guaranteed Bonds

10 November 2017 – Expansión

Debt market debut / The real estate and financial asset manager Haya Real Estate is reconfiguring its liabilities with its first bond issue

The real estate and financial asset manager Haya Real Estate, owned by the private equity fund Cerberus, has debuted on the debt market by placing €475 million in guaranteed senior bonds.

The operation has been divided into two tranches. The first, amounting to €250 million, has been placed at a fixed rate of 5.25% and the second (amounting to €225 million), has been placed at a variable rate, linked to three-month Euribor +5,125%. The floating coupon has a zero clause for Euribor in such a way that negative interest is not computed. Currently, three-year Euribor is at minimum levels of -0.32%. The firm guarantees the payment of these issues with shares in the company itself and its service contracts.

Haya Real Estate has been assigned a B- rating by S&P and a B3 rating by Moody’s, which means it is considered high yield. Market sources maintain that demand for the issue was equivalent to more than twice the amount awarded in the end. The strong investor appetite has allowed Haya Real Estate to increase the amount of the issue, given that initially, it was planning to raise €450 million. To bring the issue to a successful conclusion, the firm engaged the services of Morgan Stanley, JPMorgan, Bankia and Santander.

Haya Real Estate will use the funds to repay a syndicated loan, to distribute a dividend to Cerberus, to hold onto cash and to pay the commissions and fees associated with the issue. In addition, it will return money that Cerberus lent it to acquire Liberbank’s real estate asset manager, for which it paid €85 million.

“Cerberus lent us the money until we were able to close the bond issue because the syndicated loan terms were more restrictive”, explained Bárbara Zubiría, Financial Director at the company.

Original story: Expansión (by Andrés Stumpf)

Translation: Carmel Drake

Taylor Wimpey Keen To Sell Its Spanish Subsidiary

3 March 2017 – Expansión

The British group has said that it will consider offers for its subsidiary, which builds homes along the Mediterranean coast and owns assets worth €150 million.

Taylor Wimpey said on Monday that its presence in Spain “is not strategic over the long term”, which is why the company is willing to sell its business in the country if an interested party submits an attractive acquisition proposal.

The Spanish subsidiary of the British real estate company generated an operating profit of GBP 20.6 million (€24 million) in 2016, a figure that doubled the amount (GBP 10 million) it obtained in the previous year. The improvement in results was due to an increase in house sales in the Balearic Islands, Andalucía and Alicante, the main areas where the company has developments.

The firm completed the sale of 304 Spanish properties in 2016 at an average price of €358,000, exceeding the 251 homes sold the previous year at an average price of €315,000. Most of those properties were sold to foreigners wanting a second home in Spain for their holidays or to retire. In total, Taylor Wimpey recorded turnover of GBP 93.6 million in Spain during 2016, compared with €58.1 million during the previous year.

“The residential market in Spain remained positive throughout 2016”, said the company on Monday during the presentation of its results for last year. “Although the weakness of the pound had an impact on British buyers, we still managed to generate a healthy rate of sales during the year, thanks to our diverse client base”. Citizens from Germany, Belgium and Sweden made up for the decrease in interest from UK investors, who in addition to being hit by a reduction in purchasing power due to the depreciation of the pound, were also fearful about the possibility of losing their rights to travel to and reside in Spain post-Brexit.

Pete Redfern, CEO at Taylor Wimpey, was asked during a meeting with analysts about the possibility of selling the firm’s business in Spain, once its profitability has been restored after the losses it suffered during the real estate crisis. According to Redfern, “the environment in Spain has improved, although it is still an environment that is not seeing a significant entry of new capital. Our business is functioning well, but if a good offer appears to buy it (then we would be interested). Our strategy over the long term does not involve staying in Spain”.

Taylor Wimpey has assets on its balance sheet in Spain worth GBP 123.7 million (€145 million). On 28 June last year, five days after the Brexit referendum, the company undertook a €100 million bond issue, to cover the currency risk of its Spanish business, whereby ceasing to finance its assets in pounds. Those bonds pay out an annual return of 2.02% and have a repayment term of seven years.

In total, the Spanish subsidiary has 19 developments, with a portfolio of 293 homes reserved, for a value of GBP 88 million.

The real estate company left the market in Gibraltar three years ago.

The Taylor Wimpey group, which besides Spain, operates only in the United Kingdom, recorded turnover of GBP 3,676 million in 2016 and generated a net profit of GBP 589.7 million.

Original story: Expansión (by Roberto Casado)

Translation: Carmel Drake

Saracho Calls Time On Ron’s Plans For Popular’s Bad Bank

15 February 2017 – El Economista

Project Sunrise, designed by Ángel Ron’s team at Popular to extract €6,000 million worth of real estate assets from the entity’s balance sheet, has run aground. With less than a week to go before Emilio Saracho (pictured above) takes over the presidency, the former global vice-president of JP Morgan has announced that he is not convinced by the plan and has put a stop to it, according to sources.

The vehicle had been approved by the Bank of Spain, but had not yet convinced the Spanish National Securities and Exchange Commission (CNMV) or the European Central Bank (ECB). Their aversion to the plan seems to have led Saracho to reject it. Although the star plan to clean up the balance sheet had received support from the bank’s Board of Directors, the difficulties involved in deconsolidating the portfolio of non-performing assets and the potential risks that could result for the future owners of the vehicle, are hampering its execution. (…).

Moreover, the real estate company has also been impeded by a more limited appetite than it had hoped for from the investment banks, whose involvement is key. The plan is for the company to be financed through senior bonds, subscribed to by those investors and subordinated debt, which will constitute the remuneration that the bank will receive from the company in the future. At the time, the entity confirmed that the interest expressed by JP Morgan, Morgan Stanley and Deutsche Bank was sufficient to crystallise the project. But, in order to deconsolidate the real estate company, the senior bond tranche must represent a majority and a low uptake from the investment banks is likely to increase the cost of that bond issue.

Ron acknowledged in his public farewell, alongside the CEO, Pedro Larena, that Project Sunrise has suffered certain changes from its original scope, but that Saracho was aware of these, along with other measures.

During the last quarter of 2016, the entity recognised an additional €3,000 million in non-performing assets and allocated €5,692 million to clean up efforts, rather than €4,700 million, the amount it had planned to set aside when it carried out its €2,500 million capital increase last summer. The effort reflects that recognition of a greater volume of toxic assets and also served to cover the costs of the adjustments to branches and staff, the impact of the floor clauses and the unexpected losses in TargoBank (…). Nevertheless, it was insufficient to reach the goal in terms of doubtful debt coverage and provisions for properties.

Shock therapy

Saracho was reportedly aware of all of this. Nevertheless, the banker will start work without a pre-determined road map (…) on the understanding that the bank needs to define a comprehensive shock plan.

Saracho will conduct a detailed analysis to assess the entity’s viability and to define its new strategy. Ron was committed to making the bank smaller, focusing on its profitable business niche of SMEs in Spain and spinning off its subsidiaries in the USA, Mexico and Portugal, where the interest aroused will ensure a positive return on investment – market sources speculate that the private bank, and even the insurance business, are included in this equation.

The sources consulted also say that these changes, if they are undertaken, would help restore solvency, but would not be sufficient to ensure the bank’s future. After a detailed analysis of the situation, Saracho will have to choose the best option for his shareholders from a handful of scenarios.

If he thinks the entity is viable, it is unlikely that he will undertake another capital increase (…), but may include transferring assets to Socimis or integrating them into real estate companies in which the bank holds a stake.

In the worst case scenario, the new manager faces the option of breaking up the group and selling it off in parts or by asset. And whilst a sale to a competitor or a merger is not unthinkable, a priori, it appears to be the least attractive option for shareholders, given the lack of interest in the sector.

Original story: El Economista (by Eva Contreras and Lourdes Miyar)

Translation: Carmel Drake