Azora and Oquendo Capital End Direct Lending Partnership

15 July 2019 – Richard D. K. Turner

A short-lived alliance between Azora and Oquendo Capital, designed to facilitate access to alternative financing for companies in the real estate sector, has ended before it really even had begun. The two firms initially planned to raise €300 million to finance debt and other operations linked to the real estate sector. However, after just eight months and €40 million, Azora and Oquendo are now negotiating how the end their partnership.  

Since November, Azora and Oquendo Capital had been attempting to raise €300 million to directly finance small to medium-scale real estate projects in Spain and Portugal. The two firms had planned to focus on land, logistics and the hospitality sectors.

Sources are pointing to possible disagreements regarding the distribution of commissions.  Both companies declined to comment.

Original Story: El Confidencial – E. Sanz / C. Hernanz

Oak Hill Grants €66M Loan To Construction Firm Murias

6 June 2016 – Expansión

The US fund Oak Hill Advisors has granted a direct loan (direct lending) to the Basque construction company Murias. The operation is significant, not only because it is the largest financing agreement of its type to be granted in Spain during the year to date, but also because it shows that major international investors on the other side of the Atlantic are regaining confidence in a sector that had been completely stigmatised, namely construction.

Murias Grupo Empresarial, founded in 1973, comprises 25 companies. As well as participating in several public and private construction projects, such as the construction of the new San Mamés football stadium (in Bilbao), the Group has also built several retail parks: the Gorbeia in Vitoria (pictured above); the Abadía in Tolego; Las Cañas in Viana (Navarra) and the Niessen in Rentería (Guipúzcoa). According to market sources, the €66 million that the Group has just borrowed will be used to develop and then manage a shopping centre in Melilla.

The numbers

The Group recorded revenues of €71.8 million in 2013, according to its most recent set of consolidated annual accounts filed in the commercial registry. Its attributable net profit amounted to €1.2 million and it employed a workforce of 296.

The company has been advised by N+1 Debt Capital markets, a division of the boutique Spanish consultancy firm N+1, regarding the structuring and placing of this operation. The loan has been structured through a single-tranche loan, with a single international investor and a term of 5 years. The funds afford the company complete flexibility to undertake the project to construct a shopping centre in Melilla, as well as to finance new projects in the new future.

The investor, Oak Hill, is a giant in the world of investment, with assets under management amounting to more than $27,000 million (equivalent to around €24,200 million). The fund participated alongside other investors in a recent injection of liquidity into Abengoa, as part of its debt restructuring process. In fact, it may take control of the Spanish company. On the other hand, Oak Hill injected €100 million into the car park subsidiary of Isolux. In exchange, Isolux granted Oak Hill an option to acquire the car park subsidiary from 2019 onwards.

Original story: Expansión (by D.B, I.A and M.F.)

Translation: Carmel Drake

Deutsche Bank Lends €50M To RE Firm Aktua

18 April 2016 – Expansión

Deutsche Bank was involved in the largest direct lending transaction in Spain last year. Moreover, 2016 is only three and a half months old, but the same bank is already the lender in one of the largest operations of the year. And with the same borrower.

In 2015, the real estate services platform Aktua was the recipient of a €150 million injection, which Deutsche Bank granted to refinance its debt and allow it to pay a dividend to its owner, the fund Centerbridge. Within the next few days, the details will be finalised regarding the transfer of that platform to Lindorff.

Now, the German bank has increased its loan amount by €50 million. The aim is for Aktua to be able to finance the purchase of the management of Ibercaja’s real estate assets, which the company announced in February.

With these two operations, the financing that Deustche Bank has granted to Aktua, the former real estate subsidiary of Banesto, amounts to €200 million, which increases the volume of direct lending operations that the German bank has completed in Spain. “In the corporate segment alone, we have lent more than €500 million in two or three years”, explains Jesús Medina, Director of Structured Finance at Deutsche Bank.

That amount also includes the funds loaned to the chocolate company Natra at the end of 2015. The German financing entity entered into a syndicate of lenders after purchasing the firm’s debt from a Spanish bank in the secondary market, and as a first step, it participated in the restructuring that Natra needed to complete to survive. But the second step involved putting new money on the table to enable the chocolate company to do more than survive. And it did so in the form of a direct loan, together with another debt fund, amounting to around €20 million. “Our feeling is that there are operations in the market and that the structured financing segment is going to continue to grow, but we have to meet the needs of the moment and the windows of opportunity that arise”, added the executive.

Original story: Expansión (by I. Abril and D. Badía)

Translation: Carmel Drake

Financial Institutions See 2015 As “Year Zero” Of The Recovery

9 February 2015 – El Mundo

Many banks (49%) believe that financing will return to normal between 2016 and 2018

Although many large banks are already taking positions in the real estate sector to benefit from its recovery, with transactions such as Operation Chamartín led by BBVA, or Santander’s increase of its stake in Metrovacesa, the financial sector does not believe that 2015 will be the year that marks the full recovery of the real estate sector. That is the conclusion of a study conducted by the consultancy KPMG, based on the views of more than 200 sector experts in the Spanish market.

According to the document, 2015 is going to be “year zero” in terms of the start of recovery of the Spanish real estate sector in Spain – 80% of Spanish banks and Sareb do not expect credit for housing and other real estate activities to flow normally this year, despite the fact that according to data published by the Bank of Spain, consumer loans and mortgages recorded a slight increase towards the end of 2014, for the first time since 2007.

Many financial institutions (49%) expect that financing will return to normal between 2016 and 2018, whilst 31% do not expect that it will happen for more than two years.

By that time, i.e.. from 2018 onwards, 79% of the banks surveyed (plus Sareb, the bad bank) expect that the stock of real estate assets, which is still being accumulated in Spain and which continues to weigh down on the results of the financial sector, will be absorbed.

Nevertheless and despite the high levels of unemployment, demand could increase significantly from 2016, according to 51% of the financial institutions that have participated in the study.

The sector is divided in its assessment of how this demand will behave and there is no consensus as to whether there has been a change in the mindsets of young people following this economic crisis. 50% of the banks surveyed (plus Sareb) believe that young people (aged less than 35 years) in Spain will continue to prefer to buy a home rather than rent one and most of the rest (44%) think that there will be a change in the home buying trend and that young Spaniards will chose to rent rather than buy as we learn from the past.

Nevertheless, there is complete consensus amongst respondents as to the involvement of financial institutions in supporting the recovery of the real estate market and the importance of their role as lenders, given that the other methods that are currently being used to close transactions – such as direct lending or investment by specialist funds – are necessary but not sufficient for the sector to fully recover.

There is also strong consensus (85%) that the old financing model of high leverage, which generated the property boom in Spain will not be repeated.

Construction reduces its weight over total GDP

According to estimates by the National Construction Confederation (Confederación Nacional de la Construcción or CNC), the construction sector accounted for around 23% of Spain’s GDP in 2007; by 2013, that weight had decreased by more than half (to 10%). The study, conducted by KPMG’s Real Estate team, concludes that 82% of the players involved in this business (banks, Sareb, companies, investors and the public sector) believe that construction’s contribution to national wealth will exceed 10% within five years, however it will have to reach 15% for it to really constitute a recovery. The majority of the participants in the survey agree that employment will be generated in the sector over the next five years. More than half think that the construction sector will provide work for more than 7% of the active population and more than a third believe that this figure will amount to 10%. But everyone agrees that the figure will not reach the level (14%) seen before the crisis.

Original story: El Mundo (by María Vega)

Translation: Carmel Drake