ECI & Matutes Negotiate the Sale of Ayre Hotels for €200M

12 January 2018 – Expansión

Advanced conversations / The retail giant and hotel chain want to cash in on the sale of a hotel portfolio comprising five establishments and more than 800 rooms.

El Corte Inglés and Grupo Matutes want to take advantage of the good times that the tourist sector is enjoying and the investor appetite for the real estate market to sell some of the assets in the Ayre chain – a brand of urban hotels, which they jointly control (50:50) – and make some money.

Specifically, the groups are finalising the sale of a portfolio comprising five hotels, with more than 800 rooms, located in Madrid, Barcelona, Oviedo and Córdoba, worth around €200 million, according to sources in the sector. Those sources indicate that the two companies have already received several offers and that the operation could be closed during the first quarter of the year.

Ayre was created in 2006 as the urban brand of the Palladium Hotel Group – then known as Fiesta and belonging to the Grupo Empresas Matutes (GEM) –. At the end of that year, El Corte Inglés purchased a 50% stake in the chain, through Parinver, its holding company. The retail group classified that acquisition as an operation of a financial nature at the time.

Currently, the urban chain Ayre owns 10 hotels in Madrid, Barcelona, Sevilla, Valencia, Córdoba and Oviedo. Last summer, the companies decided to put half of the assets up for sale and reposition at least two of the other establishments – the hotels in Valencia and Sevilla – under the Only You brand, the premium sub-brand of Ayre.

The company that owns Ayre is FST Hotels, controlled equally by Fiesta Hotels & Resorts (Grupo Matutes) and Parinver (El Corte Inglés). FST Hotels, which is headquartered in Palma de Mallorca, closed 2016 with turnover of €49.4 million, up by 14% and a net profit of €4.2 million, up by 100% compared to 2015, according to the most recent accounts filed with the Commercial Registry.

The President of the Company is Abel Matutes Juan, whilst Florencio Lasaga, the director of El Corte Inglés and President of the Ramón Areces Foundation (its largest shareholder) serves as the Vice-President. FST Hotels also has Jesús Nuño de la Rosa, the CEO of El Corte Inglés, on its Board, as well as Carlos Martínez Echevarría and Cristina Álvarez Guil, both directors of the retail group; and Abel Matutes Prats, Director General of Palladium, amongst others.

The operation forms part of the strategy of Grupo Palladium, whose objective is to grow through hotel management, and move from being an owner to a manager, in line with other Spanish chains. Palladium, which is headquartered in Ibiza and is more than 40 years old, has 50 hotels in six countries – Spain, Mexico, Dominican Republic, Jamaica, Italy and Brazil – and operates three other brands besides Ayre: Palladium Hotels & Resorts, Fiesta Hotels & Resorts and Ushuaïa.

Meanwhile, El Corte Inglés would add the sale of this hotel portfolio to the list of non-strategic divestments that the group has undertaken in recent months: in November, it reached an agreement with the fund GPF to sell it the management of its Motortown workshops, located in 55 of its shopping centres; in October, the company chaired by Dimas Gimeno sold 40% of Torre Serrano to Infinorsa for €50 million; and in September, it sold off a logistics warehouse in La Bisbal del Penedès (Tarragona). The group has also sold buildings in Madrid, Barcelona and Sevilla, amongst other cities, in recent months.

Original story: Expansión (by R. Arroyo and V. M. Osorio)

Translation: Carmel Drake

ECI Puts Colón Building In Valencia Up For Sale

21 September 2017 – Levante EMV

El Corte Inglés has put the building located on Colón, 1 (in Valencia) up for sale for €90 million, according to sources close to the operation. The building, which used to house a Marks & Spencers store, is currently home to a Sfera shop and youth clothing departments. The company has put three floors and the basement up for sale. The upper floors are offices and do not form part of the operation.

The objective of the company is for an investor to buy the building and then lease back the space. This type of operation is known in the real estate sector as a sale and leaseback arrangement and in recent years, banks such as Santander have adopted the same formula. Some interested parties have already visited the property.

The sale of Colón, 1 forms part of El Corte Inglés’ divestment process, which it initiated a few months ago. The same sources cited above highlight that it is the only property that the department store has put up for sale in the Community of Valencia. The company did also consider the option of putting the building at Colón, 25 up for sale, but ruled that out in the end because the land rights belong to the Colegio Imperial de Los Niños de San Vicente.

The idea of the distribution group chaired by Dimas Gimeno is to get rid of its “non-strategic” real estate assets all over Spain, in order to reduce its debt. The total (asset) sales volume is expected to amount to around €1,000 million; to put that figure in context, the group owns assets worth around €18,000 million.

The building that has gone on the market now has a surface area of 7,343 m2. Another property, in Bilbao, worth around €70 million and measuring 5,487 m2, will also be put up for sale. The other properties are located in Albacete, Burgos, Jaén, Madrid, Murcia, Oviedo and Sevilla.

El Corte Inglés acquired the property on Colón, 1 from the British retail giant Marks and Spencers 16 years ago, together with 8 other department stores, located all over Spain, for around €150 million.

El Corte Inglés recorded profits of €160.63 million in its most recent financial year, which ended in February, up by 3% compared to a year earlier; and it increased its sales by 2% to €15,504 million, whereby recording its third consecutive years of sales growth, according to the group’s annual accounts. ECI is now backing the internet to continue its path of growth.

Original story: Levante EMV (by Ramón Ferrando)

Translation: Carmel Drake

ECI Sells 40% Of Torre Serrano To Infinorsa For €50M

14 September 2017 – Expansión

El Corte Inglés has sold 40% of the company Iberiafon, owner of the Torre Serrano building in Madrid, to the real estate company Infinorsa for €50 million, according to sources at the distribution giant.

The firm that has acquired the property, which is owned by several European funds, already owned 60% of Iberiafon’s share capital and also owns other buildings in Madrid, such as Torre Europa.

This operation, which forms part of the distribution group’s divestment plan, effectively assigns a value of €125 million for 100% of the property. The building’s current tenants include the Masaveu Group and the firms GVC Gaesco and Beka Finance, amongst others.

Located at number 47 on one of the most exclusive shopping arteries in Madrid, next to the El Corte Inglés department store on Calle Serrano, the tower has 13 floors, which have a combined surface area of 20,000 m2, including a 5,700 m2 car park.

Half of the total space is used for offices, whilst the shopping area occupies 4,300 m2, which will continue to be leased to the group chaired by Dimas Gimeno, according to the press release.

El Corte Inglés closed its last tax year, from March 2016 to February 2017, with a 2.4% increase in its net profit, to €161.86 million. That saw the group record three consecutive years of growth, whilst the gross operating profit (EBITDA) soared by 7.5%, to reach €981 million, according to the distribution giant.

Specifically, the profit, the highest in the last three years, has been affected by €178 million relating to “disengagement plan”, which has affected 1,341 people.

Original story: Expansión

Translation: Carmel Drake

ECI Prepares To Sell Its 2 Stores In Parquesur (Madrid)

13 July 2017 – Voz Pópuli

El Corte Inglés is preparing to sell its stores in the Parquesur shopping centre, in Leganés (Madrid), according to financial sources consulted by this newspaper, under the framework of its asset sale policy to reduce debt. The group chaired by Dimas Gimeno occupies two spaces in Parquesur – which is owned by Unibail Rodamco – one for fashion and accessories, and the other for sports and leisure goods and the supermarket. El Corte Inglés assured this newspaper that no operations are currently active and that, in any case, it has remained as the tenant of other real estate assets despite divesting them.

According to real estate sources, the retail leader in Spain plans to sell various assets worth up to €150 million. Its portfolio of assets for sale includes not only the stores in Parquesur, but also others located in Burgos, Valencia and Madrid.

Leading this process is a stalwart of the Spanish company, Carlos Muñóz Gordobil, whom the sources consulted define as “a tough nut” and “old school operator”. The real estate sources argue that the prices that El Corte Inglés is asking for these buildings, which it considers to be non-essential, are too high.

The same sources indicate that El Corte Inglés’ real estate business is still weighed down by the purchase it agreed in 2014 to buy a plot on Paseo de la Castellana, adjacent to the centre that the group has in the area, which Adif sold through an auction. According to these sources, who are experts in the real estate sector, the figure paid by El Corte Inglés, €136 million, was “over the top”, as it exceeded the second highest offer submitted by more than €40 million. According to El Corte Inglés, the purpose of that purchase was to create its largest shopping centre in Spain, exceeding the one located in El Bercial (Getafe), which has a surface area of 180,000 m2.

In 2015, El Corte Inglés recorded profits of €158.13 million, up by 33.9% compared to the previous year and its turnover grew by 4.3%, to reach €15,219.84 million. Although the company has improved its revenues and has significantly decreased its debt, it still has to make some changes to facilitate negotiations with its creditor banks and secure better financing conditions, explained the financial sources consulted.

Four years ago, the retail group held debt amounting to €5,000 million, which put its business model in danger, and which essentially force it into a restructuring process in 2013. The sale of 10% of its capital to a sheik in Qatar, agreed in 2015, for €1,000 million; the sale of 51% of its financing arm to Santander in 2013; and the issue of promissory notes amounting to €300 million at the end of 2015, and of bonds through Hipercor, are just some of the measures taken by El Corte Inglés to reduce its debt to below €4,000 million.

Original story: Voz Pópuli (by Alberto Ortín)

Translation: Carmel Drake

Baraka Seeks Tenant For Edificio España’s Shopping Arcade

9 March 2017 – Expansión

The Baraka Group is looking for a tenant for the 15,000 m2 retail space that it will open in Edificio España. Galerías Lafayette is holding negotiations with the Murcian group. El Corte Inglés and Printemps are also interested.

With less than a month to go before construction work begins at Edificio España, the Baraka Group already has suitors to occupy the first few floors of the building, which will house a shopping arcade. Galerías Lafayette is one of the parties interested in leasing and managing the retail space, which will have a surface area of 15,000 m2, spread over three floors and one basement area.

If it manages to reach an agreement with Baraka, Galerías Lafayette’s entry into Edificio España would also represent its arrival in Spain. The large Parisian department store already has four stores outside of France. (…).

The Baraka Group has also said that other parties are interested in leasing the retail space in Edificio España, including the French firm Printemps and El Corte Inglés. The group chaired by Dimas Gimeno already owns stores on Calles Princesa and Preciados, as well as in Callao, and so, a priori, this project is not strategic for the Spanish chain.

“Nothing has been agreed yet. We have received bids from lots of interested parties, some of them have been rejected and others are being considered. All of the major players in the world of retail are interested”, explained the President of the Baraka Group, Trinitario Casanova, yesterday.

The businessman emphasised that there is still plenty of time to analyse the bids. “The company is not going to receive any rental income for another two years, so there is no rush. The negotiations – some of which are in advanced stages – could take three to six months or even a year”.

In addition to the shopping arcade, the skyscraper will also house a hotel, which will occupy twenty-three floors, with around 700 rooms, as well as a sky bar on the roof, meeting rooms, themed restaurants and a swimming pool.

The Murcian group signed an agreement in July last year with the Wanda Group to buy the asset for €272 million, €7 million more than the Chinese Group paid Banco Santander for the property in 2014. (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

ECI Puts 200 Properties Up For Sale For €1,000M

1 March 2016 – Expansión

Launch of Operation Batman / At the end of March, the retail giant will start to sell off dozens of logistics assets, supermarkets, offices and plots of land, in an effort to reduce its level of debt.

El Corte Inglés is making progress with its plan to divest its non-strategic real estate assets, in an effort to reduce its debt, with the launch of a huge real estate asset sales process. The retail giant is planning to put the For Sale sign up over a batch of 200 properties with an approximate value of €1,000 million.

This batch of assets includes up to 102 supermarkets – some of which are operational, whilst others are closed – , 32 logistics assets, which cover a surface area of 500,000 m2 and several plots of land. It also includes 50 high street retail outlets, with a combined surface area of 180,000 m2, and 20 office properties located in Madrid and Barcelona.

The process, dubbed internally as Operation Batman, is being coordinated by Morgan Stanley, which has collaborated with the El Corte Inglés in other operations. Meanwhile, Clifford Chance is responsible for providing legal advice.

According to sources close to the operation, the company intends to put this portfolio of assets up for sale at the end of this month. For the time being, the company has commissioned the valuation of the properties, with a view to receiving the first non-binding offers on 16 May and the definitive offers by the middle of July. The objective of Dimas Gimeno, the President of the El Corte Inglés, is to complete the asset sales before August.

The upcoming operation is attracting growing interest in the market. Most of the large funds, insurance companies and even some of the larger Socimis have expressed their interest in participating in the auction.

The company will accept offers for all of the properties, as well as for separate lots, if the potential purchaser is interested in buying, for example, only those assets linked to the logistics operations, the supermarkets or the offices. El Corte Inglés is not including the joy of its logistics crown in the lot: its megacentre in the south of Madrid. Nor is it willing to divest Torre Titania, or its historical headquarters in Hermosilla. (…).

Original story: Expansión (by R. Ruiz/A. Antón)

Translation: Carmel Drake