Santander Considers Repurchasing 85% Of Altamira From Apollo

27 July 2016 – Expansión

The financial institution is considering taking back control of its real estate platform to improve its margins and create a large global firm to provide services in other countries.

The sale of Altamira could turn full circle. Santander and the US fund Apollo have held meetings in recent weeks to discuss the possibility of the Spanish bank repurchasing 85% of the real estate platform, according to financial sources consulted by Expansión.

These negotiations come just two and a half years after the financial institution decided to get rid of its controlling stake in the real estate platform. Then, Apollo fought off other funds in a competitive process in which it paid €664 million for 85% of the company, generating a gross profit of €550 million for the bank.

According to financial sources consulted, Santander’s new approach has arisen for three main reasons: the aim of creating a new area for the management of doubtful assets at the global level, ahead of the forecast increase in default rates in countries such as Brazil; to improve its margins, given that the current agreement forces the bank to pay commission to Altamira; and to take advantage of the financial improvement that Altamira is enjoying.

For the time being, the plans are in a very preliminary phase and both Santander and Apollo have explored other options for Altamira. One of the options would involve a movement in the opposite direction from the 85% repurchase: namely, to extend Apolllo’s agreement to other countries.

New management

Since Apollo took control of Altamira, changes have been introduced in the management of the platform with the aim of maximising sales. One of the new administrators’ great successes came when the company was awarded one of the four management contracts that Sareb put up for tender at the end of 2013.

Specifically, Altamira Asset Management took over the second largest contract on offer, comprising 44,000 properties and loans to doubtful property developers that had been originated by Catalunya Ciaxa, BMN and Caja 3, worth €14,000 million initially. To win this tender, the platform controlled by Apollo paid out €174 million as a deposit for this contract, which it will recover as it achieves its objectives.

In addition to these assets, Altamira administers foreclosed properties and loans linked to properties from Santander and from its main shareholder Apollo. Nevertheless, the Spanish bank will reduce the perimeter of the assets that it holds on its balance sheet as a result of the merger between Metrovacesa and Merlin Properties.

According to its accounts for 2015, Altamira Asset Management Holdings, the company in which Altamira holds a 85% stake, recorded profits of €25.2 million last year, down by 11% compared to the previous year. Part of that decrease was due to the costs of migrating Sareb’s portfolio of assets. Its turnover amounted to €267 million and the operating profit stood at €81 million. The company forecasts that its profits will increase this year thanks to the sales it will generate from Sareb: “In 2016, we will manage Sareb’s portfolio for the whole year, which is expected to increase the group’s turnover”, according to last year’s annual accounts.

Original story: Expansión (J. Zuloaga)

Translation: Carmel Drake

Vinci Park In Exclusive Negotiations To Buy Empark For €900M

23 April 2015 – Expansión

Exclusivity / The group controlled by Ardian will purchase the parking space market leader, which has debt of €500 million.

Yesterday, the French company Vinci Park (controlled by the fund Ardian, together with Credit Agricole and Vinci) announced that it had begun exclusive negotiations with the shareholders of Empark regarding the “potential purchase” of the market leading parking space company in Spain and Portugal, which is controlled by Portuguese shareholders. “We are still negotiating to arrive at a final agreement” say sources at Vinci Park. The company is committed to maintaining an investment grade rating.

A few days ago, Empark’s shareholders said that an agreement with Vinci was imminent for the sale of a controlling stake.

Financial troubles

Other investors have expressed interest in Empark, valued at around €900 million (including debt of €500 million), including the Spanish businessman Eugenio Hinojosa who, with the support of several financial institutions, including Santander, designed a purchase offer to compete against the bid made by the French group. Empark will have to explain the transaction to its bondholders in London.

Assips is Empark’s controlling shareholder, with a 50.3% stake – the vehicle is controlled by the Portuguese firm A. Silva & Silva, which is in turn controlled by the founding families of the company who participate in the management of the group.

The top executives at Empark, which manages 500,000 parking spaces in Spain, Portugal, UK and Turkey, are José Augusto Tavares (Chairman), Pedro Mendes (CEO) and Antonio Moura.

The remaining capital is divided amongst several investment funds managed by BES (22%) and Ahorro Corporación (8.2%). The Mello family holds a 2.6% stake. These shareholders will also sell (their stakes) to Vinci Park.

Other movements

The controlling shareholders commissioned JPMorgan and Caixa Banco de Investimento (CBI) to search for a buyer in 2014. One of the reasons for exiting the company (which they acquired from Ferrovial in 2008) has been the financial troubles of the Portuguese shareholders, which have been going through a complicated bankruptcy process and have had to deal with debt maturities in recent months.

Empark recorded sales of €180 million in 2013 and a gross operating profit (EBITDA) of €63.3 million. During the first three months of 2014, Empark recorded turnover of €42.8 million, down 0.6% (on the previous year) and a gross profit of €15.3 million, in line with 2013. Vinci Park, which has operated in Spain since 1994, manages 39 car parks in various cities across the country. The company also has a presence in a further thirteen countries and generates total revenues of €704 million.

The sale of Empark coincides with the decision by KKR, Torreal and ProA to sell 49% of Saba.

Original story: Expansión (by C.Morán and D.Badía)

Translation: Carmel Drake

Sacyr Seeks Investors To Inject €300m Into Testa

4 February 2015 – Expansión

Operation Accordion / The construction company will receive contributions from its subsidiary amounting to €1,180 million, as the preliminary step in the placement of up to 30% of its capital with institutional investors.

Yesterday, in a whirlwind shareholders meeting, Sacyr gave the go ahead for Testa, its real estate management company, to carry out a significant internal restructuring with the dual-objective of enabling it to pay multi-million debts to its parent and at the same time, strengthening its balance sheet from the inflow of funds through a capital increase on the stock market.

Specifically, Testa’s shareholders renewed the mandate to the Board of Directors (led by Fernando Lacadena, the new CEO, who replaced Daniel Loureda) to conduct an operation to return €1,197 million to its shareholders through an extraordinary dividend payment of €527 million and a reduction in capital of €669 million, within the next year.

Sacyr will be the main beneficiary since it controls 99.3% of Testa’s share capital. This operation is subject to a simultaneous capital increase, to allow Testa to reconstruct its balance sheet through an IPO, which has a minimum target of €300 million.

IPO

The two operations are closely linked, which is why Sacyr has taken its time to sound out the market and determine the level of investor interest in Testa. The intention of the group, chaired by Manuel Manrique, is to carry out a placement through an IPO aimed at institutional investors. In parallel, Sacyr also plans to divest some of its stake, although how much it will relinquish has still to be determined. In any case, the construction company wants to retain its role as the controlling shareholder, and so its stake after the sale will not fall below 70%.

(…)

Testa’s shares closed trading yesterday at €19.30 per share, after a strong rise of 7.3%. The company’s market capitalisation amounts to €2,230 million, which means that at current market prices, the sale of a 25% stake would generate income of €550 million.

In a second phase, Sacyr’s objective is to convert Testa into a Socimi (a real estate company that pays out 85% of its profits in dividends). This new type of company, which benefits from significant tax exemptions, has attracted interest from reputed investors such as George Soros, John Paulson and large funds, including Pimco.

For Testa, the new Socimi structure would have the advantage of starting out with a large, ready-made portfolio of assets, which generated turnover of more than €140 million during the first nine months of 2014.

According to the latest appraisal data published by the CNMV, the market value of Testa’s properties amounts to €3,287 million, which would make it the largest Socimi in the country by asset value. Currently, Merlin Properties is the largest Socimi, with assets valued at more than €1,276 million.

This year, we also expect to see the IPO of Bulwin, the Socimi created by the listed company Quabit. The historical real estate company GMP has also changed its structure to a Socimi.

Original story: Expansión (by C. Morán and R. Ruíz)

Translation: Carmel Drake