Tag: bond issue

Merlin To Complete Its €850M Bond Issue Imminently

4 April 2016 – Cinco Días

The Socimi Merlin Properties, which is listed on the Ibex 35, will issue BBB-rated bonds amounting to €850 million within the next few days, for the first time in its short history. This operation forms part of the debt restructuring process supported by Testa, the real estate company acquired from Sacyr.

Within the next few days, the market will be filled with bonds from the Socimi Merlin Properties, which will use this financing instrument for the first time since it debuted on the stock exchange in June 2014. The entity chaired by Ismael Clemente (pictured above) hopes to launch €850 million of this type of security with a BBB rating, imminently, through an issue aimed at institutional investors, according to financial sources.

This operation forms part of the company’s debt restructuring plan following its acquisition, last year, of the real estate company Testa from Sacyr for around €1,800 million. As a result of that deal, the Socimi took on debt amounting to €1,700 million, which it needs to refinance soon (…).

Merlin’s first step involved refinancing a €1,700 million loan with ten overseas banking institutions to pay off the debt. The debt was structured into two tranches, amounting to €850 million each, which are due to mature in December 2017 and June 2021, respectively.

The upcoming €850 million bond issue relates to the first tranche, which matures in December 2017 and which Merlin plans to repay by approaching the capital markets. The bond issue will probably be registered in Luxembourg this week, which according to Ismael Clemente, is the most active market alongside Ireland and Frankfurt for this type of operation.

The roadshow will begin next week

Next week, the heads of Merlin will hold a roadshow for international institutional investors to explain the operation. They expect pension funds, debt funds and insurance companies to be most interested in the purchase. Financial sources indicate that the underwriting banks will be JP Morgan, Credit Suisse, ING, Goldman Sachs and BNP Paribas, amongst others. (…).

The Socimi will decide the term of the new bonds on the day that it places them, but in theory, the term will be between five and eight years, depending on demand from investors, and the interest rate will range between 2% and 3%. Merlin’s current loan with the 10 banks accrues interest at Euribor plus 100 basis points, which will increase to Euribor plus 200 basis points from December. (…).

The banks with which Merlin currently holds its €1,700 million loan are: Société Générale, Credit Suisse, BNP Paribas, Crédit Agricole, ING, Intesa Sanpaolo (an Italian bank with a limited history in Spain), Mediobanca, Deutsche Bank, JP Morgan and Goldman Sachs. (…).

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Merlin Considers How To Exit Residential Sector In 2016

1 March 2016 – Expansión

On Monday, Merlin Properties presented its results for 2015, its first full year, which closed with a net profit of €49.1 million, slightly lower than the figure it recorded in the previous year (€49.7 million). It also announced a 277% improvement in revenues to €214.5 million, following the consolidation of Testa from the second half of the year onwards.

The acquisition of Testa from Sacyr for €1,794 million involved the incorporation of a residential portfolio, comprising more than 1,519 units spread across eleven buildings. These assets are peripheral for Merlin, which focuses on the office, shopping centre and logistics platform segments.

The President of the Socimi, Ismael Clemente, explained that the objective of the company is to divest that business during 2016 and he indicated that a joint venture is the most likely option.

Clemente revealed that Merlin is working with three investors and explained that this operation, which would result in the departure of 10 people from Merlin’s workforce, would involve designing a co-management structure, as well as exchange equations or contribution calculations.

The residential business accounts for 5% of Merlin’s balance sheet, with a value of around €288 million. “Our maximum priority is to achieve the excellent execution of the operation that we are going to carry out”, said the Director, who ruled out any negative effect on his divestment plans from the political uncertainty.

Regarding the unwinding of its positions in hotel assets, which do not form part of its core business either, Clemente said that the Socimi will act in line with “pragmatic” criteria and in accordance with the performance of the portfolio.

Bond issue

Merlin also announced yesterday that it had obtained an investment grade BBB credit rating from Standard & Poor’s, one notch below the rating for the Kingdom of Spain, which will enable the group to go to the bond market and improve its financial structure.

In this sense, the company is planning a corporate bond issue of between €800 million and €1,000 million, probably in two tranches. The issue, conducted through the parent company, will probably be listed in Luxembourg to reduce its average cost of debt from the current level of 2.4%.

Merlin also announced a distribution to shareholders of, at least, €140 million, which represents a 133% increase with respect to the previous year.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

BBVA Issues 5.5-Year Bonds Worth €1,250M

11 November 2015 – El Economista

Yesterday, BBVA completed the placement of mortgage bonds amounting to €1,250 million, with a five and a half year term, on which it will pay interest of 0.625%, the lowest coupon in the bank’s history for this kind of debt.

According to market sources, the strong demand from overseas investors allowed the bank to lower the price of the issue to 38 basis points above the midswap rate, the reference rate for this kind of issue.

The underwriting banks for the operation were BBVA itself, plus Commerzbank, Credit Agricole, HSBC and Natixis. The last time that BBVA carried out an operation of this kind was on 12 January 2015, when it also placed €1,250 million in mortgage bonds, although they had a 7-year term.

On that occasion, the entity paid interest of 0.75%, the lowest coupon on that kind of debt at that time, thanks to the fact that the operation attracted investors from all over the world, whose demand exceeded €2,500 million.

Following in the footsteps of CaixaBank

BBVA has launched this bond issue just one week after CaixaBank closed its own operation to issue 5-year mortgage bonds amounting to €1,000 million. Demand in that case almost doubled supply.

The price of that issue, which was closed on 4 November, amounted to 43 basis points above the midswap rate, and the bonds carry a coupon of 0.625%.

Original story: El Economista

Translation: Carmel Drake

Merlin Plans To Issue Bonds Amounting To €1,000M

10 November 2015 – Expansión

The Socimi wants to debut on the debt market, by registering a bond program that will range between €800 million and €1,000 million and will be placed in 2 to 4 issuances.

This formula will help the company to pay off the €1,600 million debt it took out to acquire Testa and which it expects to refinance in 2016.

In an interview, Merlin’s President, Ismael Clemente (pictured above), explained that the company – which debuted on the stock exchange in June last year – is already working towards the refinancing of Testa’s debt and that it expects to see results during the course of the next year.

Merlin reached an agreement with JP Morgan and Santander (which account for 90% of this liability) to extend the maturity period by 2 years.

The refinancing will take place in two tranches – one syndicated loan and another similar to a bridge loan, payable with future bond issues, the next step in the company’s strategy.

In this sense, Clemente explains that the company intends to register a bond program for an amount ranging between €800 million and €1,000 million to be placed in 2 to 4 issuances.

To this end, the company is in talks with the three large ratings agencies in order to obtain investment grade ratings, which it hopes to receive during the first half of 2016.

The Socimi, which in its day starred in the largest IPO since Bankia, also hopes to become part of the Ibex 35, given that following its purchase of Testa from Sacyr, it will be ranked between 25th and 27th in the list, with a market capitalisation of almost €3,600 million.

Once it has completed the purchase of Testa – an operation that was announced in June for €1,793 million – Merlin will operate under its own brand and will no longer maintain the Testa brand. It will also increase the size of its Board of Directors (to between 12 and 15 members) by incorporating Testa’s independent directors, and will do the same with its staff and management team, which it will transfer to its headquarters on the Paseo de la Castellana. (…).

The company has revealed that its results for the first nine months and for the year as a whole are in line with its forecasts and it has indicated that at the strategic level in 2016, Merlin plans to merge the Socimi’s and Testa’s teams, as well as to integrate the systems. (…).

Original story: Expansión

Translation: Carmel Drake

Sabadell Launches €1,000M 5-Year Bond Issue

28 October 2015 – Cinco Días

Banco Sabadell has issued 5-year mortgage bonds amounting to €1,000 million, with a coupon of 0.625%, after applying 0.48 percentage points to the midswap index (the interest rate on risk-free money over a certain period). Commerzbank, Goldman Sachs, Lloyds Bank and Société Générale were the underwriters of the issue.

Sabadell initially planned to place €750 million, but requests were received for €1,500 million, and so the company decided to increase the volume. Sources close to the placement also highlight the quality of the orders.

The requests have been made by more than 80 international investors. Sources at the underwriting banks explain that Sabadell has become “the first bank in the south of Europe capable of undertaking an issue amounting to €1,000 million; in recent weeks, the maximum size has been €750 million”.

This bond issue comes a week after Cajamar completed its own debt issue, also placing 5-year mortgage bonds. That issue amounted to €750 million, whereby exceeding its initial objective of €500 million.

Cajamar set the placement price of the issue at 80 basis points above the midswap index (the benchmark rate for long-term issues) to offer a fixed annual coupon of 1% and a yield for investors of 1.22%. The underwriters in that case were Santander, JP Morgan, Natixis, Nomura and Deutsche Bank.

Original story: Cinco Días

Translation: Carmel Drake

Saint Croix Socimi To Debut On The MARF

1 October 2015 – Expansión

The Socimi Sainx Croix, owned by the Colomer family, registered its first fixed income program yesterday, for up to €80 million on the Alternative Fixed Income Market (‘Mercado Alternativo de Renta Fija’ or MARF), a financing option launched by the Government in 2013 to facilitate SMEs’ access to capital markets. In this way, Saint Croix became the first Socimi to turn to this market in search of financing.

According to a statement by the BME yesterday, Saint Croix plans to allocate the funds that it will raise through this bond issue to the acquisition of new assets and the maintenance of existing assets in its current portfolio.

Renta 4 coordinated the management and structuring of the plan and will act as the underwriter for the bond issues that are carried out. Axesor Ratings has assigned the issuer a BBB rating with a stable outlook, in other words, it is classified it as investment grade. Ramón y Cajal Abogados was engaged to provide legal advice for the design and registration of the program.

Saint Croix Holding, which relocated its headquarters to Luxembourg from Spain in 2014, owns 150,000 m2 of rentable space, with a total value of €284 million as at 30 June 2015. Its assets include several hotels, located in Huelva and Madrid, as well as the headquarters of CLH. The Socimi’s owners, the Colomer family, also own the real estate company Pryconsa.

The Socimi has included an explicit warning to investors in the bond issue brochure, about the political risks in Spain, making a clear reference to Cataluña (see page 32).

MARF

This  is a new debut for the MARF. In total, according to data from the BME, thirteen companies have decided to issue bonds through this market. Copasa, Pikolin, Tecnocom and Barceló are a few of the companies that have already successfully launched operations on this market.

Original story: Expansión (by D.B., M.S. and R.R.)

Translation: Carmel Drake

Lar España Evaluates €200M Capital Increase

18 June 2015 – Europa Press

Lar España is analysing the possibility of increasing its share capital this year to take advantage of the “new opportunities” for investment in the real estate sector that it has identified.

The capital increase would amount to a maximum of €200 million, since the Socimi has been authorised by its shareholders to increase its capital by up to 50% of its current level, according to reports filed with Spain’s National Securities Market Commission (CNMV).

Lar España is evaluating whether to raise further capital after its recent bond issue (€140 million) in February, which it also undertook to raise funds to invest in the real estate sector.

With this latest increase, the company will join many of the other Socimis constituted last year, such as Hispania, Merlin and Axiare, which have also resorted to capital increases to raise funds with which to purchase new real estate assets to grow their portfolios.

In the case of Lar, the company claims to have identified “new investment opportunities”, which have led its board of directors to “launch a process to analyse the possibility of undertaking a capital increase in 2015”.

Nevertheless, the Socimi says that, the final operation “will be subject to changes in market conditions”.

Since its constitution and IPO in early 2014, Lar has purchased assets worth around €550 million, including seven shopping centres in several regions, four office buildings in Madrid, eleven logistics warehouses, three medium-sized retail premises and a residential building in Madrid.

Original story: Europa Press

Translation: Carmel Drake

Colonial Repays €1,040M Loan Early & In Full

8 June 2015 – Expansión

Colonial, the real estate company in which Villar Mir owns a stake, has repaid the syndicated loan that it held amounting to €1,040 million, ahead of time and in full. It used the funds raised from its €1,250 million bond issue, closed at the end of May, to finance the repayment.

Original story: Expansión

Translation: Carmel Drake

Socimis: Spain’s Political Uncertainty Is Starting To Affect Investors

29 May 2015 – El Economista

The sector is hoping that the fear will pass and the uncertainty will come to an end soon.

Just two weeks ago, the real estate sector claimed that the emergence of new political parties in Spain would not affect the volume of investment. However, that perception has changed following the recent elections.

The current political uncertainty is palpable and the players in the sector fear that investment in property is stalling. The main Spanish Socimis are already detecting reluctance from investors, based on the views they shared at a forum organised by Deloitte. Moreover, the CEO of Merlín, Ismael Clemente, warned yesterday that companies issuing bonds will do so in poorer conditions from now on.

The fears

According to sources consulted by this newspaper, the sector fears that funds “will suspend the plans they had for Spain until after the general election”, or that they will have a complete change of heart and choose to focus on other markets.

Nevertheless, there is another side to the coin and that is that the funds may play their cards so as to push down prices  in the face of so much “uncertainty”. That is the word that has been repeated time and again in the sector over the last few days, but everyone is hoping that the “fear will soon pass”.

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake

S&P Assigns Investment Grade Rating (BBB-) To Colonial

13 May 2015 – El Mundo

Within the next few months, Colonial will launch its first bond issue amounting to more than €1,000 million.

The company is seeking to refinance some of its debt (€1,040 million, i.e. 40.5% of its total liabilities).

The company Colonial has obtained a ‘BBB-’ rating from Standard & Poors, making it the first Spanish real estate company to achieve an ‘investment grade’ rating. It intends to use (that rating) to debut on the capital markets in the coming months with a bond issue of more than €1,000 million.

Through this operation, the real estate company, in which the Villar Mir Group holds a stake, is seeking to refinance €1,040 million of debt, i.e. 40.5% of the company’s liabilities.

Specifically, it is seeking to take advantage of the conditions in the market to extend the maturity period (of its debt) and reduce its financing costs, according to market sources.

Colonial has engaged Morgan Stanley, BBVA, Banco Sabadell, CaixaBank, Crédit Agricole, ING and JP Morgan to coordinate the operation.

The company will begin a ‘road show’ within the next few days in the main European markets, to analyse demand for the up-coming launch of what would also be the first bond issue by a Spanish real estate company.

Colonial will specify the amount and other terms and conditions of the operation once it has completed the so-called ‘demand evaluation’ phase, according to a communication made to Spain’s National Securities Market Commission (CNMV).

Phase of growth

The real estate company will therefore debut on the capital markets at the same time as it embarks on its new growth strategy, having completed its restructuring, refinancing and recapitalisation plan at the beginning of last year, through which it reduced its debt and opened up its share capital to new shareholders.

As part of the new phase, Colonial has expressed its interest in Realia and has also said that it would be willing to evaluate a possible purchase of Testa, the real estate subsidiary of Sacyr, in the event that the group decides to sell the company rather than list (some of) it on the stock exchange.

These corporate movements are taking place during the current period of recovery in the real estate sector in Spain, after several years of decreases – the recovery has attracted interest from international investors.

Colonial owns a portfolio of office buildings for rent in the prime business districts of Paris, Madrid and Barcelona, which together have (a surface area of) almost one million square metres. Through this debt restructuring program, the real estate company is seeking to ensure not only that its assets are ‘prime’, but also its liabilities.

Original story: El Mundo

Translation: Carmel Drake