Tag: control

CNMV Approves Colonial’s Takeover of Axiare

28 December 2017 – Eje Prime

Colonial is getting closer to the finishing line in its race to create a real estate giant. Today, Spain’s National Securities and Exchange Commission (CNMV) approved the takeover bid launched by the real estate group for the Socimi Axiare on 13 November 2017; given its size, the potential deal has had the sector on tenterhooks for the last month and a half.

The market supervisor has valued the operation to purchase the 71% of the share capital in the Madrid-based company that Colonial does not control yet at €1.033 billion. If the transaction goes ahead, the Socimi will sell non-strategic assets worth around €300 million, as Eje Prime revealed.

Through this merger, the Socimi led by Pere Viñolas, one of the real estate sector’s stars this year, is seeking to generate a giant with almost €10 billion in assets, which would threaten the position of leadership in the market currently held by Merlin.

According to the details of the takeover offer accepted by the CNMV, Colonial will pay €18.36 for each one of Axiare’s 56.30 million shares. In theory, the real estate company offered the firm led by Luis López de Herrera-Oria a payment of €18.50 per share, to which the Socimi responded by calling the operation “hostile”. Nevertheless, the distribution of Axiare’s dividend has led to a reduction in that final offer, after Colonial warned the Socimi that this fact would change the conditions of the takeover bid.

Following the approval of the stock exchange supervisor, and with CaixaBank’s bank guarantee at the ready, the period will open on Friday (29 December) for Axiare’s shareholders to take a stance, as well as for the issue of a report about the operation by the target Socimi’s Board of Directors. This period to accept the takeover bid will run from 29 December until 29 January, both inclusive. Colonial needs the support of 21.21% of the shareholders, in addition to the 28.7% stake that it already controls, which would allow the company led by Viñolas to exceed the 50% threshold in terms of its stake in the rival company.

Original story: Eje Prime

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

KKR & Cabot Compete To Acquire Hipoges

31 August 2017 – Voz Pópuli

KKR and Cabot Financial are competing in one of the processes that has generated the most excitement amongst overseas funds in recent months. The two Anglo-Saxon investors are the finalists in the bid to acquire Hipoges, a platform created at the end of 2008 by former directors of Lehman Brothers, the investment bank that went bankrupt in September of that year.

The platform is controlled by Cerberus, with a 40% stake, and by its CEO, Juan Francisco Vizcaíno, who owns 18.3%. It is not clear how much of the company is up for sale, although the various sources consulted by this newspaper explained that the initiative to launch the sales process has been taken by the directors. The final price of the transaction could amount to €25 million.

The bid is being led by Alantra as an advisor and funds such as Bain Capital have participated in it, in addition to Cabot and KKR.

Hipoges has a presence in four countries, although most of its business is concentrated in Spain. In total, it administers almost €8,000 million for 22 clients, above all overseas opportunistic funds and financial institutions.

Intense competition

The platform advises investors regarding the acquisition of portfolios and the subsequent management of the assets acquired. Hipoges is responsible for administrating debt, filing claims to recover it, going to court and in the event that a property is repossessed, managing and selling it. It also competes with the major real estate companies, such as Haya Real Estate, Altamira, Servihabitat, Aktua, Aliseda, Solvia and with other independent firms such as TDX, Finsolutia and Copernicus.

Of the €8,000 million that it administers, 72% are unpaid loans granted to property developers and mortgages. The remainder are loans to SMEs (14%), consumers (12%) and invoices (2%).

By entering this process, KKR wants to take another step forward in its real estate strategy in Spain. After purchasing a portfolio of mortgages from Abanca – formerly NCG Banco – the North American fund is negotiating the acquisition of a platform that will allow it to continue gaining experience in the property sector.

Meanwhile, Cabot is another of the foreign groups that is most committed to the purchase of banking assets. It arrived in Spain in 2015 with the acquisition of Gesif and is hoping to enter the real estate business with Hipoges.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

GGC Will Debut On MAB As Spain’s 2nd Largest Socimi

29 June 2017 – Expansión

A new real estate company is preparing to debut on the stock market: next Tuesday, General de Galerías Comerciales (GGC) will become the thirty-ninth Socimi to trade on the Spanish stock exchange.

Like the majority of the listed real estate investment vehicles, this company will make its stock market debut on the MAB, an index designed for small businesses looking to expand that demands fewer requirements for trading. Nevertheless, given its size, General de Galerías Comerciales could compete with any of the firms on the main stock market, given that this Socimi will make its stock market debut with a market capitalisation of €2,054 million.

This value means that it will be the largest company to debut on the Alternative Investment Market ever. Until now, that position was occupied by the telephone operator Masmóvil, which, with a market capitalisation of €1,277 million, has just approved its transfer to the main market.

General de Galerías Comerciales will not only exceed the large Socimis on the MAB, including the property developer backed by the Montoro family, GMP, whose market capitalisation amounts to around €819.5 million, it will also outrank some of the large Socimis that trade on the main stock market.

In this way, the market capitalisation of General de Galerías Comerciales (€2,054 million) will exceed that of Hispania, which was the second largest Socimi on the Spanish stock market until now, with a market capitalisation of around €1,582 million. Meanwhile, Axiare and Lar España, the other two Socimis on the main market, are worth around €1,180 million and €727 million, respectively. Only Merlin Properties, with a market capitalisation of more than €5,273 million, will be larger than GGC.

What is GGC and who is its owner?

General de Galerías Comerciales is the owner of six shopping centres: Gran Plaza, in Granada; Mataró Parc, in Barcelona; La Cañada, in Marbella; Las Dunas, in Cádiz and Mediterráneo, in Almería. La Socimi is controlled by a majority shareholder, Tomás Olivo López, who also serves as the firm’s CEO.

This Murcian property developer, who has been based on Marbella for many years, founded General de Galerías Comerciales in 1995, together with his brother Ramón and Sandra Ravich (both hold minority stakes) and, since then, he has created a large real estate group, through both the development and purchase of properties.

Besides the six shopping centres, the Socimi also owns 19 urban or buildable lots of land, 17 rural plots, a commercial building, as well as several warehouses, homes, premises, offices and garages, the majority of which are located in Andalucía.

The jewel in its real estate portfolio is the La Cañada shopping centre, which, with a gross leasable area of more than 108,000 m2, is worth €675 million. The Socimi receives rental income of €24.86 million per year from this property, according to information provided in its IPO prospectus. GGC’s other large asset is the Nevada shopping centre, which it owns in Armilla (Granada); that property is worth €520 million and generates annual rental income of €32.5 million.

GCC will make its stock market debut at a value of €79 per share, a price that was fixed after CBRE performed a real estate valuation of the company’s assets, and which values its real estate portfolio at more than €2,000 million.

The most recent Socimis to debut on the stock market have been Albirana Properties, with residential assets controlled by Blackstone; Colón Viviendas, managed by Azora and Optimum III, which debuted on the stock market on 16 May with a portfolio comprising six residential buildings and a valuation of €54.03 million.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Värde Sells Reyal Urbis’ Debt & Launches Bid For Habitat

7 June 2017 – Expansión

Corporate movements / The US fund is selling its stake in the debt of the property developer to the firm Taconic Capital after failing to reach an agreement ahead of the liquidation. In exchange, it will strengthen its commitment to Habitat.

After several intense weeks of negotiations, Värde has put an end to its relationship with Reyal Urbis. The US firm’s first dealings with the real estate firm saw it purchase a package of debt at the height of the process to negotiate an agreement that would allow the property developer to emerge from the bankruptcy proceeding in which it has been immersed since 2013. In a repeat of the deal struck with the real estate arm of San José, the final objective of the US fund was to obtain access to Reyal Urbis’ portfolio of assets (primarily land) by exchanging it for debt. To this end, Värde had started to negotiate with some of the most high-profile creditors, to buy up loans and propose an orderly liquidation plan, according to sources in the sector.

Nevertheless, Värde’s plans were thwarted by the Tax Authorities. Reyal owes the Public Administration more than €400 million (…), which was not willing to accept Värde’s proposal. As such, the US fund opted to sell its stake to another fund, specifically, to Taconic Capital.

According to sources in the sector, in addition to Taconic, some of Reyal’s other creditors include other funds such as Aurelius and Morgan Stanley. It will be them, along with the banks such as Santander, the Tax Authorities and Sareb who will now decide the future of the company.

Habitat

The decision to sell its debt in Reyal Urbis does not represent a setback in Värde’s commitment to the Spanish real estate sector and, in fact, the fund has already placed its focus on another one of the country’s large real estate companies: the Catalan firm Promociones Habitat.

Controlled by several funds such as Bank of America, Melf, Goldman Sachs and SP 101, the owners of Habitat put the company up for sale in March, through a process organised by the consultancy firm Irea.

These funds acquired stakes in Habitat’s share capital in 2015, after exchanging the debt that they acquired months earlier from the creditor bank. Although a longer period of continuity in the company was established at the time, in the end, the investors have decided to exit two years early, in light of the interest that investors have expressed in the Spanish real estate company. Although the process is still in its initial phase, Värde seems to be the best-placed candidate to purchase it, according to sources close to the process. The sale of the company is expected to be completed before the end of the year.

Sources in the sector indicate that other possible candidates in the running to acquire Habitat include Apollo, Cerberus, Bain Capital and Bank of America Merrill Lynch.

Habitat is one of the most highly regarded Catalan real estate companies in the sector. Led by Bruno Figueras, the company filed for voluntary creditor bankruptcy at the end of 2008, a process that it then emerged from in 2010 (…). After a series of negotiations with the creditors (…), the banks that had financed Habitat back in the day agreed to give way to the international funds that specialise in debt purchases. Two years later, those same funds have started to look for their exit route.

The real estate company has convened a General Shareholders’ Meeting to be held on 21 June 2017, where it will present the results for last year. In 2015, the most recent year for which results are publicly availabe, Habitat recorded revenues of €10.53 million, compared to €27.7 million in 2014. (…), which translated into gains of €1,073 million in 2015, compared with losses of €370 million the year before (…).

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Santander Launches The Sale Of Its Landlord URO Property

11 November 2016 – El Confidencial

Banco Santander and the other shareholders of URO Property, the Socimi that owns 755 of the Cantabrian-based entity’s branches, have formally launched the sale of the company, with a view to finding a white knight to acquire most of the Socimi’s shares.

According to three sources close to the operation, Citi was given the mandate to open an organised process on 19 September, with a view to closing the operation before the end of the first half of 2017.

The US entity had already been engaged in May to analyse the possible alternatives for a change in the shareholder structure and now that interest from sovereign and pension funds, insurance companies, fixed income investors and several real estate companies, has been confirmed, the formal process has been launched.

Citi, Santander and URO all declined to comment on the announcement.

The Socimi is attractive because it represents a low risk investment, with guaranteed returns and the certainty of dividend distributions. Those characteristics make it an object of desire for large sovereign funds and very conservative vehicles, the main candidates that Santander and its partner shareholders are targetting for this divestment process.

In addition, URO’s shareholders are open to exploring formulas such as the one that Santander has just successfully carried out with Metrovacesa, including merging the Socimi with another large landlord of commercial premises, according to the sources.

In addition to the activity undertaken by the bank chaired by Ana Botín, several other entities have also sold off large batches of branches in recent years, including BBVA, which sold 800 branches to Tree Inversiones Inmobiliarios, now part of Merlin, and Sabadell, which sold a portfolio of 228 branches and 133 parking spaces to Moor Park, which, in turn, subsequently sold the portfolio to the Mexican businessman Moisés El-Mann.

URO is currently very limited in terms of its business operations, due to the clauses included in the bond issue, amounting to €1,300 million, which it undertook in the spring of 2015, a month after it sold 381 of Santander’s branches to Axa.

Those two operations were a complete success from a financial point of view because they granted the Socimi the stability that it had been seeking for so long, but they also reduced its room for maneouvre, as the entity was forced to use the rental income from 666 of Santander’s branches to guarantee the issue, and also pledge another 80 branches (…).

Santander and CaixaBank will continue to hold stakes in URO

According to URO, the net book value of its current portfolio of branches amounts to €1,585 million, based on its most recent official accounts corresponding to the month of June, whilst its market capitalisation on the Alternative Investment Market (MAB) amounts to €197.5 million.

The decision to activate a formal sales process represents the company’s response to the desire expressed by several of its shareholders to exit from its share capital, now that the “lock-up period” has come to an end.

URO’s creditor entities, led by Santander and CaixaBank (which hold stakes of 22.78% and 14.5%, respectively), decided to execute their debts and take over control of the company in 2014. Both plan to continue as shareholders in the Socimi following the sale, although they are hoping to take advantage of this move to adopt smaller positions.

Other shareholders include BNP Paribas, one of the entities that wants to sell, which controls 9.18%; whilst the former shareholders of URO, Sun Capital (renamed Atisha Holding) and Pearl Group (now Phoenix Life) hold 18.92% and 14.90%, respectively. Other entities, such as Barclays and several hedge funds, which hold stakes of less than 5%, also want to exit. (…).

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Slim Appoints Trusted Advisor As Realia’s Non-Exec Chairman

7 October 2015 – Cinco Días

The tycoon Carlos Slim is starting to introduce his own people into the real estate company Realia. Yesterday, he appointed two new members to the Board of Directors, including Juan Rodríguez Torres, who will serve as the non-executive Chairman.

Slim controls the property company, which was founded in 2000 with assets from Bankia and FCC, through his company Inmobiliaria Carso.

He took control after purchasing a 24.9% stake in the share capital from Bankia at the beginning of this year. Moreover, he indirectly controls 36.88% of Realia’s capital through his majority shareholding in FCC.

The new Chairman is a man who Slim trusts completely. The two men are the same age (75) and both studied Civil Engineering at the Universidad Nacional Autónoma de México. They have also served together as directors on the boards of several companies owned by Slim, the second richest man in the world, according to Forbes. Rodríguez takes over from Ignacio Bayón, who has held the post since Realia was constituted and who is now retiring.

Several other changes were communicated to the CNMV, including the resignation of Iñigo Aldaz, the CEO – Slim has not yet revealed who will take over his role.

Realia is restructuring its Board of Directors after Slim won the takeover war that was waged with Hispania, in which George Soros holds a stake, to take over the control of the real estate company in June.

The company also appointed the Mexican CEO of FCC, Carlos Jarque, as a member of the Board of Directors of the construction company.

Moreover, Alicia Alcocer Koplowitz and Esther Alcocer Koplowitz will continue as members of the Board, in their capacity as representatives of FCC. Meanwhile, Gerardo Kuri, Slim’s key man at Cementos Portland, also controlled by the tycoon, will enter as a shareholder-director.

Improvement in Realia’s asset value

Meanwhile, the company also reported that it has established a new accounting policy whereby the valuation of its assets would have increased from €912 million as at 31 December 2014, when they were valued at acquisition cost, to a fair value of €1,399 million. “The impact of this measure on the company’s own funds, at the consolidated level, would have been an increase of approximately €367 million”, said a source at the company.

According to Realia, through this decision, the company is bringing itself in line with the standard practices of the main listed real estate companies in Spain. They are also improving the transparency of the communication of the company’s value to the market, since the fair value method, endorsed by an independent expert, more adequately reflects the value of the assets of real estate companies.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Testa Becomes A Socimi & Puts Its Residential Portfolio Up For Sale

29 September 2015 – Expansión

The real estate company Testa is making progress with its integration with the Socimi Merlin Properties. Yesterday, the company held an extraordinary shareholders’ meeting to approve a change in the corporate structure of the real estate company into a listed real estate investment company (Socimi).

The decision comes after an agreement was made between Sacyr and Merlin in June to sell Testa for €1,793 million. Currently, the Socimi led by Ismael Clemente (pictured above) controls 77% of Testa’s capital and is expected to own 100% of the shares before the end of June 2016.

The Socimi-conversion will apply (retrospectively) from 1 January 2015, which means that Testa may benefit this year from the tax advantages afforded to this kind of company, although they have yet to be quantified.

At the meeting yesterday, the shareholders approved the appointment of Ismael Clemente as a Director of Testa; he currently also serves as the Chairman and CEO of Merlin Properties. In addition, Miguel Ollero, a Director of Merlin, was also appointed as an independent Director of Testa, following the resignation of Juan María Aguirre Gonzalo.

Following the entry of these two new Directors, Testa’s governing body comprises seven members, including the Chairman, Fernando Rodríguez Avial and the CEO, Fernando Lacadena.

Once the purchase of the whole company has been completed, the two companies will merge into a single Socimi. The new Merlin Properties will have assets worth around €5,000 million.

Having taken control of Testa, the Directors of Merlin have decided to divest the real estate company’s residential portfolio, which contains around 1,500 homes. They have engaged two consultancy firms to coordinate this process, which is expected to begin within two weeks.

Potential purchasers of the portfolio include other Socimis and investment funds.

In addition to the sale of this package of properties, which generates annual rental income of €10.5 million, Merlin has also announced that it will sell the portfolio of hotels currently owned by Testa, before the end of the year.

Merlin’s shares closed trading on the stock exchange yesterday at €10.72 per share, up 0.33%, taking its market capitalisation to €3,461.3 million, whilst the market capitalisation of Testa is €2,055.5 million.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Merlin’s Acquisition Of Testa Moves Faster Than Expected

12 August 2015 – Cinco Días

The Socimi, Merlin Properties, now owns 77% of the real estate company Testa and has paid consideration of around €1,465 million to date.

The construction company, Sacyr, was not expected to cede this stake in its subsidiary until March 2016.

The process to sell Testa, the former subsidiary of Sacyr, is moving faster than expected. The deadlines have been accelerated as the construction company chaired by Manuel Manrique has overcome various obstacles in order to generate some cash from the transaction. The restructuring of the debt and the release of the pledge over the shares in the real estate company linked to its stake in Repsol, have allowed Merlin Properties to take ownership of an additional 26.9% stake in the real estate company today for around €375 million, according to banking sources. By the end of the day, the Socimi will control 77% of the company.

On 9 June, Merlin announced its purchase of Testa for €1,793 million. The operation was designed to be completed in several stages. During stage one, the Socimi, which boasts Ismael Clemente as its CEO, acquired 25% of the real estate company. The remaining shares were pending the release of a pledge over the shares linked to Sacyr’s debt. This was because when the construction company restructured its €2,272 million liability, it pledged its 9% stake in Repsol (amongst other assets) as a guarantee. On 23 July, Merlin paid €861 million for a 25.1% stake in Testa. Sacyr was forced to allocate €600 million of the consideration received at the time, to paying off its debt with creditor banks. In turn, the Socimi took ownership of the majority of the shares as a result of its disbursement.

As such, Sacyr was able to return to renegotiate its debt and reduce the percentage of Testa’s shares secured by its shareholding in Repsol. As such, the construction company has now been able to accelerate the sales process of the next package (of shares) to be acquired by Merlin – this change in control was not originally scheduled to take place until March 2016. The same sources state that the consideration (€375 million) that the Socimi will disburse today will go straight into Sacyr’s coffers, with no obligation to reduce its liabilities, and may be allocated to its operational needs. The remaining shares in Testa continue to be pledged by the shareholding in Repsol.

In total, Merlin has now paid around €1,465 million for the three share packages in a period of just two months.

In terms of the remaining 23% stake, the sales period is due to close on 30 June 2016. Merlin’s ultimate objective is to turn Testa into a Socimi and subsequently merge with it. Based on the information provided, the transaction will give rise to the largest real estate company in Spain, with assets worth around €5,500 million, including the Torre PwC, one of the four skyscrapers in the Norte Castellana business district in Madrid. According to the purchaser, these buildings, which are primarily leased as offices, will generate gross annual revenues of approximately €290 million.

In addition, Clemente said last month that Merlin will sell off Testa’s residential and hotel portfolio, which represents around 15% of its total portfolio.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Slim Set To Acquire Realia After Hispania Withdraws Its Bid

24 July 2015 – Expansión

The Mexican businessman, who already owns 25% of the real estate company, has now been given free rein to make an agreement with Realia’s creditors.

The takeover war for Realia came to an end on Wednesday, one day before the deadline for its approval. The Socimi Hispania Real, a subsidiary of the listed company Hispania, announced on Wednesday that it was withdrawing its public bid to acquire Realia’s shares, which it had launched in November 2014.

Hispania’s Board of Directors have decided to withdraw, rather than improve, their bid of €0.49 per share, despite the offer (€0.58 per shares) submitted by their competitor, the Mexican businessman Carlos Slim, through his real estate company Carso.

Hispania’s decision leaves Realia’s shareholders with just one alternative, the one presented by Slim, who already controls 24.9% of the real estate company, after he purchased the stake previously owned by Bankia.

Nevertheless, it seems unlikely that this bid will be successful either. According to sources close to the process, the percentage of shareholders agreeing to Carso’s bid did not exceed 1% of the capital on Wednesday, a situation that would not only not harm Slim’s interests, but that would actually benefit him by preventing the creditors from executing Realia’s debt.

Lower price

The offer presented in March by the Mexican businessman falls well below the listed price of the real estate company. The company’s shares closed trading on Wednesday at €0.705, despite having fallen by 2.08%, to place the market capitalisation of the company at €216.7 million. Slim’s bid price values Realia at €30 million less.

The change in control of Realia would result in the early repayment of the €1,170 million debt held by the real estate company. Almost €800 million of that amount was loaned by the funds Fortress, King Street and Goldman Sachs. Those three creditors had made an agreement with Hispania to not enter into negotiations with any other candidate regarding the purchase of Realia for 10 months. Now that the Socimi has withdrawn its takeover offer, that agreement is void.

That loan is due to be repaid at the end of 2016. If Slim does not acquire more than 30% of Realia, then the change of control clause will not be invoked and no early repayment will be required.

Even if he does not manage to buy more shares, Slim may still be able to control Realia with the support of FCC, in which he is primary shareholder, with a 25.6% stake. The construction company, which owns 36.9% of Realia, has said that it would not sell its stake in the event of a takeover.

In his takeover prospectus, Slim – who is being advised in this process by the law firm Ontier – considered the possibility of negotiating with the creditor funds to capitalise some of the loan, amongst other options – he also considered undertaking a capital increase, whereby allowing new shareholders to enter and diluting his own shareholding.

During the first quarter of 2015, Realia generated turnover of €23.3 million, i.e. 33.9% less than in 2014, whilst its net profit amounted to €170,000, compared with a loss of €7.6 million in the previous year.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake