Tag: bond issue

Alpha 2: Colonial Invests €400M In RE In Spain & France

7 February 2017 – Expansión

On Monday, Colonial, the second largest real estate company in Spain (after Merlin Properties) unveiled its new strategic plan, known as Alpha 2. Under this plan, the company has invested €400 million in four operations: three in Spain and one in France (Paris). The group has opted to undertake operations to reposition its assets. In this way, it will allocate €250 million to property acquisitions this year and the remainder will be spent on renovation work.

The group will invest €51 million on an office building on Paseo de la Castellana, 163, which has a surface area of 11,000 m2. The property is currently occupied and will be renovated floor by floor, as the current tenants vacate the property.

In Barcelona, the group has acquired the headquarters of Fundación Bertelsmann, on Travessera de Gràcia, 47-49. The operation, including the remodelling work, amounts to €41 million. On the other hand, Colonial will spend €32 million to build a new office tower in Plaza Europa, number 46-48. This operation will be performed through a joint venture with the perfumery and fashion group Puig. The future building will be located opposite the Catalan company’s current headquarters.

Finally, the fourth operation involves the acquisition of a building at number 112-122 Avenida Emile Zola in Paris. In total, the group will spend €245 million on this purchase, in an operation that was announced a few weeks ago.

This plan complements another one, executed last year, known as Alpha, which initially planned to make investments amounting to €400 million, but in the end spent more than €500 million.

Its purchases included the acquisition of 15% of the Socimi Axiare’s share capital. The company led by Pere Viñolas (pictured above) spent €135 million to become the largest shareholder of that listed company, which debuted on the stock market in the summer of 2014 and which has been setting itself up as one of the main owners of office buildings in Madrid and Barcelona – it has very similar portfolio to that of Colonial.

Currently, Colonial owns 59 properties in Paris, Madrid and Barcelona, with a combined value of €7,543 million, according to the most recent estimates, performed as at 30 June 2016. Its most recent acquisitions include several office buildings, such as IBM’s headquarters in Madrid, located on Calle Santa Hortensia, worth €154 million. The Mexican group Finaccess (former owner of the Modelo group, the manufacturer of Corona beer) sold that property, along with another building on Calle Serrano, in exchange for a stake in Colonial.

Alpha also included the purchase of a 4.4% stake in the French firm SFL, which the Reig family sold for €106 million.

During the 9 months to September 2016, the real estate company in which the Sovereign fund of Qatar, Finaccess and Villar Mir hold stakes, generated revenues of around €205 million, up by 21% compared to the same period in 2015.

During the same period, Colonial earned €249 million, up by 17%, whilst its level of indebtedness (LTV) amounted to 40.3%. Just three months ago, the real estate company carried out a bond issue amounting to €600 million.

Original story: Expansión (by G. Trindade and R. Ruiz)

Translation: Carmel Drake

Hispania Gets Ready To Debut On The Bond Market

17 January 2017 – Cinco Días

The Socimi Hispania is planning to join the bond issues undertaken in recent months by other major players in the sector, including Merlin and Colonial, with the aim of diversifying its financing. To this end, it has already started to sound out the ratings agencies. Its objective is to obtain an investment grade rating for its securities.

Hispania Activos Inmobiliarios is studying the option of debuting on the capital markets with a bond issue to refinance some of its gross debt, which currently amounts to €631 million, according to sources familiar with the operation.

The Socimi has already started the process to request a rating from the ratings agencies, with the aim of launching the operation during the first few months of the year.

The firm has made contact with the three large players –Standard & Poor’s, Moody’s and Fitch–, although it will not need a rating from all of them, rather from just one of them or two at most. The aim is to achieve an investment grade rating – BBB – or Baa3 – , which would allow it to debut on the capital markets at a reasonable cost.

Hispania, in which the magnate George Soros owns a 16% stake, will thereby join the other bond issues undertaken recently by other companies in the sector.

The Socimi Merlin Properties – which forms part of the Ibex 35 – went to the market in October with a 10-year bond placement amounting to €800 million. The current yield on that debt is 2.3%. It has a Baa2 rating, which is one notch above the limit that separates junk bonds from investment grade securities, according to Moody’s nomenclature. Moreover, Merlin has assumed another €1,550 million in bonds from two bond issues made by Metrovacesa, with which it completed its merger at the end of October. (…).

Hispania’s current debt has an average maturity period of 7.2 years and €497 million of the balance is due to be repaid from 2022 onwards. The current average debt cost is 2.7%. Hispania also has hedges in place to avoid any surprises if interest rates rise. 96% of its debt is guaranteed. (…).

In general terms, the optimal balance sheet structure of these types of companies rests on three pillars: bank debt with an additional guarantee – in the majority of cases, properties from the company’s portfolio – , unsecured financial loans and listed debt.

With the proceeds that it raises from the bond issue, Hispania plans to repay some of its current debt balance. It would thereby take advantage of the good conditions in the market with liquidity and the environment of low interest rates. This company, created in 2014 under the special tax regime for Socimis, is led by Concha Osácar and Fernando Gumuzio, and is managed by Azora. In addition to Soros, its shareholders include the funds Fidelity, FMR, Tamerlane and BlackRock.

Hotel specialist

Hispania’s portfolio of real estate assets closed the third quarter of 2016 with an appraisal value of €1,680 million. The Socimi owns 36 hotels in Spain with 10,407 rooms. 68% of the value of those assets is located in the Canary Islands and 64% is managed by Barceló, with which it has signed a strategic alliance. The Socimi recently purchased three properties in the Cala San Miguel in Ibiza (pictured above) for €32 million.

Original story: Cinco Días (by A. Simón and R.M. Simón)

Translation: Carmel Drake

Interview With Ismael Clemente, CEO of Merlin Properties

29 November 2016 – Expansión

On 21 December 2015, Merlin Properties became the first real estate company to enter the selective Ibex 35 since the burst of the real estate bubble. And for just over a month now, it has led the ranking of the largest Spanish real estate groups, following its merger with Metrovacesa. The Socimi, led by Ismael Clemente, has marked this milestone just two years after making its debut on the stock market.

In an interview with Expansión, the CEO of Merlin Properties, Ismael Clemente, has confirmed that he is committed to ensuring that the banks that have just become shareholders of the Socimi will stay for the long haul. He is also commited to maintaining a high level of shareholder remuneration.

Following the integration with Metrovacesa, Merlin has increased its real estate portfolio to €9,500 million and has incorporated three new shareholders: Santander, which is now its largest shareholder, with a 22.2% stake; BBVA, with 6.4%; and Popular, with 2.8%.

“There is no formal commitment that the market is not already aware of. But, from a factual standpoint, we think that, given where Santander and BBVA have placed their stakes (in industrial investments), they will hold onto their share capital for much longer than the market expects, because they can see that we are a company with great potential and a strong dividend yield, which we will maintain over the medium term”, said Clemente.

The Director said that the banks are the new high profile shareholders of the Socimi, but added that they are not interfering with the management of the business. In this sense, Clemente commends the appointment of the directors who will control the banks’ stakes and, specifically, that of Rodrigo Echenique, the former Chairman of Metrovacesa and the Chairman of the Board of Directors of the new Merlin. (…). “He is much more gifted than I am in terms of his experience and professional career”.

Clemente says that the historical shareholders “have reacted well” to the incorporation of the banks into Merlin’s capital. (…).

The Director revealed that the Socimi’s shareholder remuneration policy will continue with a stable dividend, through the sum of ordinary and extraordinary payments – in the event that divestments take place – and will maintain a high pay out, based on cash flow.

Debt reduction

Clemente explains that the company is not planning to undertake any more capital increases in the short term. “We do not know what stage of the market we are in. We are unsure as to whether the share price will continue to reflect a discount compared to NAV (net asset value) or will return to a premium” (…).

In addition, the Socimi has set itself the objective of reducing its level of indebtedness. To this end, it has launched several bond issues this year. In October, it placed €800 million of bonds to allow it to finance Metrovacesa’s bridge loan amounting to €500 million and to pay off some other debts.

“We do not have any significant maturities until 2021 and, from here, a stable calendar of maturities will begin, which we will have to refinance like any other company in the sector.

In terms of the behaviour of the Socimi’s share price, Clemente acknowledges that, since December last year, the firm has entered a “very negative dynamic”, which he blames on the political instability in Spain. (…).

Nevertheless, Clemente is steadfast (…) adding: “We can only work to improve NAV per share. What’s more, we have a generous dividend working in our favour”.

Original story: Expansión (by Rocío Ruiz and Rebeca Arroyo)

Translation: Carmel Drake

Merlin Begins Its New Journey As Spain’s Largest RE Company

2 November 2016 – Cinco Días

On Monday, Merlin Properties consummated the latest stage in the process to create Spain’s new real estate giant. Trading of the Socimi’s new shares began on the Ibex 35 after it completed the absorption of Metrovacesa’s real estate assets, giving rise to a company with a market capitalisation of around €4,810 million, according to Bloomberg.

The 146.7 million new shares in the Socimi – or listed real estate investment company –, following the exchange of Metrovacesa shares, began trading on the stock exchanges in Madrid, Barcelona, Valencia and Bilbaoon Monday.

To complete the exchange, Merlin had to hand over those 146.7 million shares with a nominal value of one euro to Metrovacesa’s shareholders. Those shares were launched with an issue premium of €10.40, in other words, with a total value of €1,526 million.

This operation was first announced back in June, when the Socimi chaired by Ismael Clemente (pictured above) reported that it was going to absorb the real estate business of Metrovacesa – owner of offices, shopping centres and other real estate assets that are rented out – which was controlled at the time by Santander (70%), BBVA (21%) and Popular (9%).

During trading on Monday, Merlin’s share price fell by 0.58% to €10.24.

By virtue of this agreement, another jointly owned company emerged, in the form of Testa Residencial, which will be converted into a Socimi and listed on the stock market in the future, and which owns the companies’ rental homes. In this case, the aforementioned financial entities will control around 65% of the new companies and the former shareholders of the Socimi will be minority shareholders, although one of Merlin’s directors, Miguel Oñate, will serve as the CEO.

As a result of this operation, the bank chaired by Ana Patricia Botín, now holds a 21.95% stake in Merlin and a 46.21% stake in Testa Residencial.

The exponential growth of Merlin

Similarly, the former real estate company, created in 1918 to develop the neighbourhood of Cuatro Caminos following the arrival of the Metropolitan Railway in Madrid, will continue to operate another company called Metrovacesa Promoción y Suelo, which will be responsible for the future construction of homes.

Merlin, created in 2014, attracted confidence from international investors from the get go. Upon constitution, it acquired the Árbol portfolio, containing more than 1,000 BBVA branches, which had previously been owned by several funds and family offices.

The strategy of the Socimi’s managers was to grow rapidly, benefitting from investor confidence and the recovery in the sector. In 2015, it seized the opportunity to buy Sacyr’s real estate subsidiary Testa for €1,800 million. As such, it added several iconic buildings in Barcelona and Madrid to its portfolio, including one of the four towers to the north of the Castellana. Following that decision, it received the blessing from its investors to carry out a €1,034 million capital increase and it immediately followed that with the clean up of its liabilities, with a syndicated loan from ten entities amounting to €1,700 million and the issue of bonds amounting to €850 million (in April).

With the integration of Metrovacesa complete, the new Merlin now controls assets worth €9,600 million, and whereby becomes one of the largest 10 Socimis in Europe and the second largest owner of shopping centres in Spain.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Colonial Completes €600M 8-Year Bond Issue

24 October 2016 – Expansión

The real estate company Colonial has completed a bond issue amounting to €600 million with a maturity of eight years and an annual coupon of 1.45%, according to a statement made by the group to the CNMV.

The company will allocate some of the amount raised from this operation to the repayment of bonds issued in May amounting to €750 million; they have a maturity of four years and an annual coupon of 1.863%.

The subscription and payment of the latest issue will likely take place on 28 October. For this operation, Colonial has engaged Deutsche Bank – London Branch, BNP Paribas, Crédit Agricole, JPMorgan, Mediobanca, Merrill Lynch and Natixis.

The company’s return to the debt market comes just days after it announced the acquisition of a stake in Axiare. Specifically, Colonial purchased 15.1% of the Socimi for €135.6 million.

Original story: Expansión (by R.Arroyo)

Translation: Carmel Drake

Moody’s Assigns Merlin An Investment Grade Rating

19 October 2016 – Expansión

The ratings agency Moody’s has granted Merlin a Baa2 rating, in other words, investment grade. The agency Standard & Poor’s (S&P) also assigned the Socimi’s debt an investment grade rating in February. Merlin is just a few days away from closing its merger with Metrovacesa, which will result in the creation of the largest real estate asset company in Spain.

This rating represents a boost for Merlin’s plans to return to the capital markets soon with a new bond issue. It placed bonds amounting to €850 million in April.

With this rating from Moody’s, the Socimi has become the highest rated Spanish real estate company. The agency highlighted the position of leadership that the Socimi will have in the Spanish market following its merger with Metrovacesa, as well as the diversity of its assets.

Original story: Expansión

Translation: Carmel Drake

Merlin Completes Purchase Of Remaining 23% Stake In Testa

9 June 2016 – Cinco Días

Merlin Properties now owns 99.9% of Testa. Within the next few days, once the finishing touches have been completed, the Socimi will pay €317 million for the 22.7% stake in Testa that Sacyr still owns. This final transaction, which forms part of the acquisition agreement governing the construction company’s real estate subsidiary, has been moved forward by several weeks, ahead of the original deadline of 30 June.

A year ago, the Socimi chaired by Ismael Clemente, announced the acquisition of Sacyr’s subsidiary for €1,793 million, and established a timetable of partial purchases spanning one year. This arrangement was reached mainly because Testa’s shares were being used as collateral to secure a loan that Sacyr had taken out to buy 20% of Repsol in 2006.

Sacyr is in the process of obtaining the necessary consent from its financing banks and has already obtained approval from 80% of them, according to reports from financial sources. On the other side, Merlin has reserved the amount in cash, pending the conclusion of this final part of the acquisition.

Merlin will obtain an ownership stake of 99.9% (the rest belongs to individuals) and will launch the merger of the two companies immediately. From an operational point of view, the integration between the two companies’ teams has been a reality now for several months; as such, this operation simply represents the completion of the acquisition process and will not result in any changes to the companies’ operations.

During the first phase of the acquisition, completed in June last year, Merlin acquired 25% of Testa’s share capital by subscribing to its €431 million capital increase. On 23 July 2015, Merlin paid €861 million for another 25.1% stake. And then, a few days later, in August, it bought an additional 26.91% stake in the real estate company. The Socimi will pay €317 million in this final transaction, according to information provided to analysts in previous presentations.

Merlin, which is listed on the Ibex 35 and focuses on the rental of properties, generated a net profit of €49.1 million in 2015, the first full year of operation for this young real estate investment company. The company recorded revenues of €214 million from the rental of its real estate portfolio, an amount that almost quadrupled the figure it had recorded in 2014, thanks to the inclusion of the assets owned by the real estate company acquired from Sacyr.

The Socimi’s real estate portfolio was valued at €6,053 million at the end of 2015, according to a report from an independent appraisal company, issued following the purchase of Testa.

In addition, last December, Merlin completed an operation with 10 banks to refinance the €1,700 million debt that it had inherited from Testa. Moreover, in April, it launched a bond issue amounting to €850 million to restructure its liabilities.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Metrovacesa Refinances All Of Its Debt Ahead Of Its IPO

18 May 2016 – El Confidencial

Metrovacesa, the real estate company controlled by Santander, BBVA and Banco Popular, has managed to definitively emerge from the abyss into which it fell in 2009, when the then owner, the Sanahuja family, saw how the creditor banks enforced their guarantees for the €4,000 million that they were owed.

The company now chaired by Rodrigo Echenique, one of the strong men from the entity led by Ana Botín, has managed to reach an agreement with the creditor banks to refinance all of Metrovacesa’s financial commitments through bond issues and debt restructuring.

This week, the company will release €700 million in 6-year bonds onto the market with interest of 240 basis points. Once that test has been passed, Metrovacesa will restructure its remaining €1,100 million in financial commitments, an operation that may include another bond issue, now that it has received the ok from its creditor banks, with a similar term and margin.

With all of this homework done, the real estate company is completing an ambitious clean-up plan, which has led it to undertake: two capital increases in less than a year, for a total amount of €1,650 million; the carve out of its entire property development business into the recently created MVC Suelo; the sale of its logistics business; and a significant reorganisation of its shareholders, with Santander’s purchase of Bankia and Sabadell’s stakes, which allowed the Cantabrian entity to take over 70.27% of the group’s shares. (…).

Now, according to sources familiar with the company’s plans, once all of its debt has been restructured, Metrovacesa plans to return to the stock market, probably as a Socimi. Although no date has yet been set, they are working with a two year timeframe (…).

Proof of the good work done so far came in the form of the credit rating that the company obtained from the ratings agency S&P, which granted it a preliminary rating of BBB- and a stable long-term outlook, and Moody’s, which assigned it a Baa3 rating, also with a stable outlook. (…).

The resurgence of a giant

Following the carve out of its property development business, Metrovacesa has a portfolio of assets worth €4,300 million, primarily comprising office buildings for rent, although it also owns a sizeable package of shopping centres, a dozen hotels and more than 3,000 homes with a gross leasable area of more than 1.5 million sqm.

Those figures make it one of the giants of the reborn real estate business, alongside the Socimi Merlin, which led the return of property companies to the Ibex 35 following its acquisition of Testa, and Colonial, a mirror into which the company chaired by Echenique is looking to recover its past splendour and the only one of the large companies in the sector that has not converted itself into a Socimi, because the tax credits that it has eclipse the tax advantages of the new company structure.

Metrovacesa was excluded from the stock market in May 2013, after 72 years as a listed company and after seeing the creditor entities take control. Currently, Santander owns a 70.27% stake, BBVA a 20.52% stake and Popular a 9.14% stake. (…).

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

S&P Confirms Merlin’s Investment Grade Rating

21 April 2016 – El Mundo

Standard & Poor’s (S&P) has ratified the BBB rating that it assigned to Merlin Properties back in February, after the Socimi successfully closed its recent €850 million bond issue, according to reports from the company.

The ratings agency considers that Merlin’s investment grade reflects the “optimal risk profile” of the Socimi, which is further supported by a portfolio of property assets worth around €6,100 million.

The firm also assigns a stable outlook to the rating for the company led by Ismael Clemente, because it considers that its “large and diversified” property portfolio constitutes a “source of recurring revenue generation”.

“The assets are also well located, which allows the company to benefit from the recovery in the real estate sector that Spain is currently enjoying”, added the ratings agency.

The ratings firm has also assigned the same BBB rating to the €850 million bond issue that the Socimi recently placed. Through this operation, the company will restructure one tranche of the debt that it inherited from Testa when it acquired the company from Sacyr.

Moreover, S&P leaves the door open to a possible increase in Merlin’s rating, in the event that the Socimi adopts a “more conservative” financing policy, however it also warns of a downgrade in the event that its debt exceeds the threshold of 50% of the value of its assets.

Original story: El Mundo

Translation: Carmel Drake

Merlin Debuts On Capital Markets With €850M Bond Issue

18 April 2016 – Invertia

The Socimi has debuted on the capital markets with this operation, through which the firm seeks to refinance some of the debt it inherited from Testa.

Specifically, Merlin explains that this debt issue fits within its strategy to reduce the debt it holds after it completed the refinancing of the debt relating to Testa, the real estate company that it acquired from Sacyr, at the end of 2015 .

At that time, the Socimi signed a loan for €1,700 million with ten overseas banks, which was structured into two tranches of €850 million each, one of which is due to expire in December 2017 and which will be repaid through the bond issue.

Merlin is debuting on the debt market after it entered the Ibex 35 at the beginning of this year and managed to achieve an investment grade rating from Standard & Poors, which awarded it a BBB rating.

As such, the debt issue is taking place whilst the Socimi Merlin completes its purchase of the remaining 22% stake of Testa’s share capital, which is still owned by Sacyr, in an operation that must be closed before the end of June, as established in the agreement that the two companies signed last year. The ultimate goal of the company is to merge the two companies to create the largest listed real estate firm.

Original story: Invertia

Translation: Carmel Drake