Merlin Properties Sounding Market with View to Placing Long-Term €500-Million Bond

30 September 2019 – Merlin Properties is sounding the market to potentially issue a 15-year, approximately €500-million bond. The bond would be the first for the firm with such a long duration.

The socimi is hoping to take advantage of favourable market conditions to restructure its debt. The socimi also placed bonds in 2016 and 2017, in addition to taking out a €1.55 billion loan last April, the largest of its type in Spain.

Original Story: La Vanguardia

Adaptation/Translation: Richard D. K. Turner

SGR Seeks Buyer for Real Estate Assets that Had Been Destined for Generalitat

27 August 2018

Though it has not yet concluded its first real estate transaction since its rescue, the Sociedad de Garantías Recíprocas (Society of Reciprocal Guarantees – SGR) is already preparing a second sale, looking to unload additional real estate assets. The financial institution, saved from bankruptcy by the current municipal council with 200 million euros from the FLA (liquidity fund), is concluding the sale of an important portfolio made up of loans and real estate that will allow it to end the year with debts of 15 million euros, well below its previous €400 million that had nearly pushed it into bankruptcy.

Within the portfolio are real estate assets valued at 26 million euros that SGR had intended to place with the Generalitat as part of the restructuring process. According to the original plan to save the institution, prepared and executed by the Valencian Institute of Finance (IVF), the Valencian administration had to stay in the operation to comply with its requirement to perform due diligence in the recovery of public resources. That requirement was a part of the €200 million guarantee that the Generalitat concluded in 2013 – or the EU could consider the guarantee as illegal state aid.

Now, however, those assets will no longer go to the Generalitat. The entirety of that portfolio, consisting mainly of urban land or lots, industrial buildings (23%), buildings (11.5%), rural lands (11%) and building plots (8.5%) plus a part of the assets that remain in the balance of the SGR will be subject to a second sale, once the sale of the first real estate portfolio is formalised.

According to Manuel Illueca, general-director of the IVF and president of the SGR, the composition of this second package is “attractive” for investors, since the high percentage of land included in this portfolio “may be better placed on the market now that the real estate market has once again taken off.”

The director of the IVF highlighted the market’s favourable response to the placement, which is why it is already preparing the second phase of asset disposals before signing the first, something that will happen in September. The potential investors include international investment funds and, although exact nature of the portfolio is still to be defined, he estimated that it would be concluded “within the range of typical discounts of this type of operation.”

“We needed to sell because we had to achieve a net positive asset ratio over a period of three years. The market has been receptive, and we have been able to reduce our debt. We are now going to carry out a second operation to further advance the restructuring process. The expectation for financial institutions that operate with the SGR today, is a full recovery of the amounts owed,” says Mr Illueca.

When the first sale of assets ends, the solvency ratio of the SGR will rise to 14.5%, with net senior debt at approximately €15 million, compared to the €400 million it had before. Apart from that, there are the €40 million in subordinated loans it has with the entities, the director of the IVF explained.

The first operation, in which SGR is being advised by Alantra, includes 793 properties that range from industrial warehouses, homes, parking spaces and land, stemming from a time that saw “endless guarantees.” The expectation, when the operation was announced, was to unload the equivalent of 75% of the properties on its balance sheet, raising 30 million euros. The net book value of the portfolio amounts to €44 million, while the assessed value reaches €83 million.

In 2016, SGR already tried to raise 180 million euros with its ill-fated Citrus Project, a portfolio of executed guarantees of more than 800 million euros, with foreclosed assets and loan losses initially valued at €82 million for which it expected to obtain €170 million.

After the project failed to move ahead, as the best offer received was only €65 million and not even for the entire portfolio, the new head of the IVF opted to move ahead with the execution of the €200-million guarantee, which expired in 2018, to try to sell the assets. The operation aimed to get more time to find a better solution on the market, as has occurred.

After the early repayment of the 200-million-euro guarantee in favour of the Generalitat, negotiated with the group of banks that already participated in its rescue in 2013, SGR’s outstanding debt with the financial institutions fell to 94 million euros: €54 million of senior debt and another €40 million in an unsecured participative loan from the municipal council.

Original Story: Valencia Plaza – Xavi Moret

Translation: Richard Turner


Banco Sabadell Finalises Purchase of the Planeta Building in Barcelona

24 May 2018 – Eje Prime

Firstly, some of the tenants vacated Edificio Planeta and now the property itself looks set to change hands. The iconic asset belonging to the Lara family, owner of the publishing group that gives it its name, located in the centre of Barcelona, is very close to ending up in the hands of Banco Sabadell.

The Spanish bank is finalising the purchase of the building, taking advantage of the debt restructuring process that the Hemisferio group is currently undertaking. Moreover, in this regard, Sabadell may have required the resignation of José Lara García as director, according to La Vanguardia.

Owned by Planeta since 2001, the property will lose the multinational publicity group McCann as a tenant on 31 May; that firm is moving to a newly renovated building in the most sought-after business centre of the Catalan capital, 22@, as reported by Eje Prime.

Constructed in 1979, Edificio Planeta, which cost the publishing group €100 million, is the fruit of work by the architects Tous and Fargas, who received the commission from Banco Industrial de Catalunya. Its surface area of 26,000 m2, spread over three octagonal towers, will form part of Sabadell’s portfolio. As such, the entity will acquire an asset situated very close to the towers of its competitor, La Caixa.

Original story: Eje Prime 

Translation: Carmel Drake

Realia Finalises €700M Syndicated Loan To Repay Debt

23 February 2017 – Expansión

Realia is finalising a syndicated loan amounting to around €700 million. And with just the finishing touches left to complete, all indications are that the company controlled by Carlos Slim will reach an agreement with its new creditors within the next few weeks, just in time to cancel the debt held by its subsidiary Patrimonio before it matures, on 27 April.

In addition to CaixaBank, which will lead the new loan syndicate, Santander and Bankia have approved the operation and are negotiating with other banks to include them in the agreement as well.

“Realia Patrimonio is currently negotiating its refinancing with several entities”, explained the company in a document submitted to the CNMV, in which it warned that if, by the aforementioned maturity date, the entity has not reached an agreement with its creditors or it has not been possible to secure new financing sources, then “it will have a liquidity problem”.

In April 2007, Realia Patrimonio undertook a debt restructuring through the subscription of a syndicated loan with Caja Madrid and Banesto, which subsequently transferred part of its exposure to another 14 entities for an initial maximum amount of €1,087 million, which it has been repaying ever since. Currently, its debt balance amounts to around €680 million.

Original story: Expansión (by R. Arroyo)

Translation: Carmel Drake

Singapore Sovereign Fund Acquires P3 Logistics Parks

17 November 2016 – Expansión

GIC, the Singapore sovereign fund, is strongly committed to the European logistics sector. The investment group has just completed the acquisition of P3 Logistic Parks, one of the largest companies specialising in the logistics segment on the continent. The operation will be one of the largest transactions in the real estate market in Europe this year. GIC will pay €2,400 million in total to the funds TPG Real Estate and Ivanhoe Cambridge, which purchased P3 in 2013.

With this purchase, GIC is entering the Spanish logistics sector with a bang, given that P3 Logistics Parks owns 80,000 m2 of storage space in the country, spread over five assets. Specifically, the group owns one platform in Abrera (Barcelona), another one in Pedrola (Zaragoza) and three in the central region: in Valdemoro (Madrid), Alovera and Fontanar (Guadalajara). Its clients are major transportation companies, which lease all of the available surface area.

In total, P3, which is headquartered in Prague, controls logistics platforms with a combined surface area of 3.3 million m2, across Europe. Since TPG acquired the company three years ago, the firm has doubled in size through acquisitions, and now has a network of 163 logistics centres, located in 62 cities across nine European countries.

This year, P3 has completed a long-term debt financing process worth €1,400 million, with the aim of strengthening its growth strategy and securing some financial breathing room.

GIC’s challenge is to drive a new expansion phase to take advantage of the international boom in the logistics sector, driven in large part by the increase in online commerce. For this, P3 owns a portfolio of land on which it could build an additional 1.4 million m2 of logistics space.

New developments

In fact, the logistics park operator is already building eleven new complexes, which will generate 300,000 m2 of additional space over the next few months.

“We are delighted to have one of the most important sovereign funds in the world as our partner; GIC’s long-term investment strategy is very much aligned with our vision to build high quality assets and be long-term owners”, said Ian Worboys, CEO of P3.

Original story: Expansión (by S. Saborit)

Translation: Carmel Drake

JP Morgan Declares That It Holds A 3% Stake In Realia

2 December 2015 – El Economista

JP Morgan has declared that it holds a 3.1% stake in the share capital of Realia, a percentage valued at €7 million on the basis of the current market price of the real estate company controlled by Carlos Slim.

In this way, the entity has become a shareholder of the company in which Slim holds a 25.10% stake and FCC, the construction group in which the Mexican businessman also holds a stake, holds another 36.8%.

JP Morgan holds a package of 9.55 million shares in Realia, and therefore on 25 November, it exceeded the 3% capital threshold in the firm that requires it to declare its stake, according to the registers of Spain’s National Securities Market Commission (CNMV).

The entity has taken this position in the real estate company after Carlos Slim took control of the firm through a public share acquisition (takeover) and the real estate company announced a capital increase with a view to strengthening its financial structure.

The capital increase will amount to €87 million, and Slim has already expressed his commitment to participate in the operation, whereby he will inject around €21 million.

With this operation, Realia seeks to strengthen its financial structure, as a preliminary step prior to the launch of the restructuring of the company’s debt, which amounts to €1,067 million, half of which matures next year, in June 2016.

The clean up of the real estate company constitutes one of the main objectives of the new majority shareholder, as stated in the prospectus for the takeover that he launched for the company.

Original story: El Economista

Translation: Carmel Drake

Realia Launches €87M Capital Increase

11 November 2015 – Cinco Días

Realia has approved the launch of a capital increase amounting to €87 million, which the real estate company’s majority shareholder, Carlos Slim, has promised to participate in, according to the company.

By virtue of the operation, the real estate company will issue 150 million new shares at a price of €0.58 per share, the same price that Slim paid in the takeover (OPA) through which he took control of the company.

With this operation, Realia is seeking to strengthen its financial structure ahead of the company’s debt restructuring program. In total, Realia’s debt amounts to €1,067 million, of which half is due to mature within the next few years.

Original story: Cinco Días

Translation: Carmel Drake

Quabit Recorded €6M Loss In H1 2015

17 August 2015 – Expansión

The real estate company Quabit recorded a loss of €6 million during the first half of 2015, compared with a profit of €62.3 million during the same period in 2014. According to management, the company’s earnings performance during the first half of 2014 was positively affected by the operations linked to its debt restructuring program.

Quabit has indicated that the loss recorded during H1 2015 reflects the “state of transition” in which the company currently finds itself and is the result of “limitations that have existed in recent years surrounding the launch of new projects, due to the crisis in the sector, and the difficulties involved in obtaining funding”.

Since restructuring its debt, Quabit has started to resume its activity, with projects in Zaragoza, Boadilla del Monte (Madrid) and Guadalajara, which now “need to undergo a period of maturation” before they will be reflected in the income statement.

The extraordinary impact of the debt restructuring is also reflected in Quabit’s turnover, which amounted to €4.1 million between January and June 2015, down by 91.8% on the same period last year, when the real estate company recorded revenues of €50.4 million.

EBITDA and debt

The company’s gross operating profit (EBITDA) was negative during H1 2015 (€5.8 million) compared with €71.6 million the previous year. Net debt with credit entities amounted to €355.4 million at the end of the first half of 2015, the same figure as a year earlier.

As at 30 June 2015, Quabit held a stock of 305 homes, compared with 281 homes at the end of 2014, up by 8.5%.

Original story: Expansión

Translation: Carmel Drake

Anti-Eviction Law: Public Bodies Denounce Bank Breaches

22 July 2015 – El Economista

The monitoring of the measures adopted by the Government to alleviate the hardship of families doomed to eviction is not proving to be as orderly as had been expected. Yesterday, the Bank of Spain revealed, in its Monitoring Report for 2014, that complaints had been received from “several public bodies” about “various credit entities” regarding the implementation of the so-called Code of Good Practice.

The aforementioned code was introduced in 2012 to force the restructuring of debt owed by underprivileged households, to grant them more favourable conditions, including significant discounts, “daciones in pago” and even, letting families stay in their homes in return for the payment of minimal rents to avoid forcing them out onto the street. The adoption of the code is voluntary, but once adhered to, its application becomes obligatory. The financial institutions signed up on mass, more than anything to avoid public embarrassment, given that the list of members is made public.

Yesterday, sources in the sector acknowledged that certain local and regional authorities have filed complaints about the monitoring process.

Local and regional governments

This represents a leap, albeit not in terms of scale, but maybe in terms of the focus of the conflict. The adoption of good practices and consumer protection measures are still major unfinished projects for the sector, whose reputation was seriously damaged during the crisis, due to the poor marketing of products such as preference shares, the scandalous retirements of managers from rescued entities and even, the sale of mortgages with floor clauses.

Conscious of the extent of the damage, numerous bankers publicly admitted their mistakes and sought to make amends. Last year, the supervisory body itself bolstered its schemes to ensure the proper marketing of products and the rapid resolution of disputes, through the creation of the Department for Market Conduct and Complaints, which took on a strengthened version of the role previously performed by the former Director General of Supervision and complaints service. The Department was launched on 1 October and in just three months (to 31 December), it opened 18 investigations and one inspection in situ.

The Department directs its efforts on the basis of alerts logged by other units of the Bank of Spain, by public and private institutions and above all, by customer complaints. One of its operations last year involved the aforementioned analysis of complaints regarding the use of the Code of Good Practices; and another also verified that the granting of consumer credit to certain firms complied with the necessary conditions regarding transparency and customer protection. According to the supervisory body, that most recent investigation was activated as a result of a complaint “from a public body, which filed a complaint against a number of lenders”. (…).

In 2014, the Bank of Spain forced the withdrawal or rewording of 132 adverts published in the press and online. The most positive piece of data to result from the year is that customer complaints decreased for the first time since 2011, by 15%, to 29,500. Nevertheless, that still represents a near-record volume compared with the 10,000 or 15,000 claims that were typically processed in the years leading up to the outbreak of the floor clause conflict.

Original story: El Economista (by Eva Contreras)

Translation: Carmel Drake

Quabit Reaches Agreement With Sareb To Restructure Its Debt

30 June 2015 – El Mundo

After several months of negotiations, Quabit Inmobiliaria and Sareb have reached an agreement to restructure the debt that the RE company owes the ‘bad bank’ – it represents 72% of the Quabit’s total financial debt and was due to mature in 2016.

The agreement has been ratified by the Boards of Directors of both companies, and is pending legal implementation, which is expected to take place in July.

Under the terms of this new agreement, Quabit commits to make an advanced payment of €35.6 million before the end of the year, which will allow it to free up assets with short term development potential, where there are plans to build around 1,000 homes. In parallel, a new calendar of maturities has been established, which extends until 2022.

Similarly, regarding the debt associated with the stock of finished products (53 homes), both entities have agreed to set new minimum sales prices, which will allow them to speed up the sale of the residential “stock” and repay the corresponding debt.

The signing of this agreement will provide Quabit Inmobiliaria with the possibility of realising the capital increase that it plans to propose at its General Shareholders’ Meeting today (30 June 2015), amounting to approximately €70 million.

With respect to the rest of the group’s debt, the payment of the majority (representing 24% of the total) is limited to the specific assets that guarantee it. For the remaining 4%, the entity will have to agree similar conditions to those just reached with Sareb.

“The signing of this agreement will allow us to handle the long-term future in an optimistic way. Also, it places us in a strong position to become a leading, active agent in the sector once more. In recent years, we have been working on stabilising our financial structure and now we have the opportunity to develop new investments and projects”, said Félix Abánades, Chairman of Quabit Inmobiliaria.

On the other hand, he added that “both entities are satisfied with the joint work performed and the agreement reached. Quabit has laid the foundations to secure its future, to actively manage and develop its own assets and to meet its debt payments.

Original story: El Mundo

Translation: Carmel Drake