Tag: divestments

Mapfre to Invest in Property due to Low Interest Rates

7 March 2019 – Expansión

Mapfre has announced its intention to invest in more real estate in light of the low interest rates in the global markets. The insurance group ended 2018 with real estate investments worth €2.9 billion, accounting for 4.3% of its total investments, having invested heavily in the renovation of its asset portfolio during the year.

Given the scarce supply and illiquidity of the real estate markets in Madrid and Barcelona, the firm has already created two companies headquartered in Luxembourg to invest in properties in Paris and Germany. It also plans to acquire real estate in Amsterdam, Brussels, Milan and Luxembourg.

Moreover, it has teamed up with the German real estate fund manager GLL, with whom it aims to invest up to €300 million in properties in some of the main European cities.

The objective of the insurance company is to generate returns of between 4% and 6% p.a. on a recurring basis and to diversify its portfolio.

The firm did also divest some properties last year, in Portugal, Chile and Palma de Mallorca, which together with the appreciation of other assets, resulted in net gains for the group of €47 million.

Most of Mapfre’s investment portfolio comprises public and corporate fixed income securities, which had balances of €49.3 billion and €8.9 billion, equivalent to 56% and 18% of its total portfolio, respectively, at year end 2018. Equities accounted for €2.4 billion (4.9%) and investment funds €1.3 billion (2.7%).

Original story: Expansión (by E. del Pozo)

Translation: Carmel Drake

Blackstone Buys Lar’s Logistics Portfolio for €120M

18 July 2018 – Expansión

Blackstone has purchased the Socimi Lar España’s logistics portfolio, comprising five warehouses and a plot of land for development, for €119.7 million. That sum represents an appreciation of 83% with respect to the purchase price of €65.6 million.

Specifically, four of the warehouses acquired are located in Alovera (Guadalajara), one is located on the Juan Carlos I Industrial Park in Almussafes (Valencia), whilst the land to be developed for logistics use is located in Cheste (Valencia).

The five logistics warehouses span a combined surface area of 162,000 m2 and have an occupancy rate of 100% – all of them have stable rental contracts. Meanwhile, the surface area in Cheste spans 182,000 m2.

The warehouses in Alovera were acquired between August 2014 and May 2015 and the property in Almussafes was purchased in May 2015. The advisors to Lar España on the operation have been CBRE, Pérez Llorca and Hill International.

Asset rotation

This operation forms part of the asset rotation process that the company launched last year. Specifically, the Socimi’s first divestment came in September 2017, with the sale of an office building in Arturo Soria, and since then, it has carried out two other sales.

Together, the divestments carried out by Lar España to date amount to €265 million, more than half the €470 million in divestments forecast in the business plan to 2021.

The President of Lar España, José Luis del Valle, said that the company’s plan involves selling those assets that are not strategic to focus on the retail portfolio.

In addition to the asset sales, the company’s business plan involves investing €220 million in shopping centres and retail parks. Within the context of that plan, Lar purchased the Rivas Futura shopping centre for €62 million and the Abadía shopping arcade for €14 million.

In parallel, the Socimi plans to invest €247 million in commercial developments and €49 million to improve its retail assets.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Kutxabank Prepares the Sale of Residential Land Worth €700M

26 February 2018 – Eje Prime

Kutxabank is awakening from its lethargy in the Spanish real estate sector. The Basque bank, which resulted from the merger of three savings banks from the region (Kutxa, BBK and Caja Vital), wants to get rid of 40% of its portfolio of toxic assets, which would mean launching onto the market a portfolio of land and promotions worth between €500 million and €700 million.

This operation will be the second most important divestment to be undertaken by the financial entity, after it sold its real estate arm, Neinor Homes, to the fund Lone Star, back in 2015 for €930 million.

The objective of the bank is to take advantage of the good times that the residential market in Spain is currently enjoying to place its assets with international funds and new property developers, according to Vozpópuli.

This option that Kutxabank is considering comes at a time when the sector is complaining about the lack of developable land, which means that it is likely that the bank will easily find groups interested in acquiring its land. The plots are largely inherited from the merged Cajasur, a Cordoban entity that BBK integrated in 2010.

If it carries out the transaction, Kutxabank would join Santander and BBVA on the roadmap of Spanish banks with respect to real estate. The sale of a large part of the property held by two of the country’s major financial institutions last year, both to US funds, set a course that other smaller banks are now starting to follow.

Original story: Eje Prime

Translation: Carmel Drake

Cajamar Puts €200M Debt Portfolio Up For Sale

23 October 2017 – Expansión

Cajamar, the largest credit cooperative in Spain, with €39,943 million in assets, has placed a package of 1,450 delinquent loans on the market worth €200 million. The majority of the loans have been granted to small- and medium-sized companies and are secured by mortgage guarantees.

By autonomous region, 75% of the portfolio is located in the Community of Valencia and Andalucía; and the remaining 25% is situated in Murcia, Cataluña, the Community of Madrid and Castilla y León.

It is the first package of non-performing assets that Cajamar has put up for sale this year. In 2016, the entity completed two divestments of this kind. The first, closed during the second quarter, comprised doubtful and non-performing loans, as well as foreclosed properties, amounting to €524 million in total. The second, sold during the fourth quarter, contained non-performing loans only, amounting to €206 million.

As at 30 June, Cajamar held €3,885 million in doubtful loans and had a default rate of 12.38%. It had €3,776 million in real estate assets on its balance sheet. Of those, 50% are finished homes and 25% correspond to land. The group has prioritised sales through the retail channel, for which it enlists the support of its assets sales platform, Haya Real Estate.

The entity has just launched a commercial campaign that offers more than 4,000 properties with discounts of up to 40%. They include one-bedroom apartments in Alhaurín el Grande (Granada) with prices starting at €46,000.

Operating range

Cajamar has 1,090 branches across Spain, a workforce of 5,743 employees and 3.5 million clients. During the first half of the year, it earned €44.29 million. It holds an agreement in insurance with Generali, another in investment funds with Trea and it sells consumer loans from Cetelem.

Above all, the entity is dedicated to meeting the financing needs of small and medium-sized companies in the agri-food sector.

Original story: Expansión (by R. Lander)

Translation: Carmel Drake

Portobello Capital Buys Blue Sea Hotels For c. €70M

9 March 2017 – El Economista

The private equity fund Portobello is on a roll. According to sources consulted by El Economista, the firm has purchased the hotel chain Blue Sea for around €70 million.

The transaction involves the acquisition of 17 hotel establishments, located mainly in the Canary Islands and the Balearic Islands, plus two that the hotel chain owns in Morocco (one in Berkane and one in Marrakech). The hotel chain’s turnover amounts to around €50 million. Sebastiá Catalá will continue to lead the company – he will also retain his 5% stake – meanwhile, Portobello has recruited Franciso Gimena (ex-Globalia) for the role of Vice President.

As a result of this operation, the fund controlled by Íñigo Sánchez-Asiaín, Juan Luis Ramírez, Ramón Cerdeiras and Luis Peñarrocha will make its debut in the tourist sector, a business that it has been interested in for a while, given the positive performance of the market in Spain. In this regard, the country received 75.3 million tourist visitors last year – which represents an increase of 9.9% with respect to 2015 – of which, almost 25% opted to visit the Balearic and Canary Islands, where Blue Sea has its star hotels. The hotel chain also has a presence in Madrid, Torremolinos (Málaga) and Benidorm (Alicante).

PE house on a roll

Portobello Capital is enjoying one of its best periods since it was founded in 2011 by former partners of Ibersuizas. Its first investment vehicle has been invested in its entirety in record time – in fact, the firm has received several awards in recent months for its operations – and it has now completed several divestments, such as of its geriatric business (Vitalia Plus), which it sold on Monday to the fund CVC Capital Partners for between €200 million and €250 million.

Original story: El Economista (by Araceli Muñoz)

Translation: Carmel Drake

Project Normandy: Sabadell Sells NPL Portfolio To Oaktree

9 January 2017 – Catalunya Press

Oaktree, the US fund has won the latest auction of problem assets by Banco Sabadell, as part of Project Normandy. The US fund will pay €250 million for a portfolio of overdue real estate loans worth €950 million.

Oaktree will acquire the assets for a discount of between 25% and 30%, however, the finishing touches still need to be agreed for the operation, which means that it may not be formalised for another month or so.

Oaktree will absorb 500 loans to property developers, amongst others, than Sabadell inherited when it purchased CAM. The loans are secured by property developments, retail premises and land, but their borrowers ran aground following the outbreak of the crisis. Two different strategies are now being pursued: restructure the loan in exchange for a reduction below the price paid (above 25-30%); and/or acquire the assets by legal means and join forces with local property developers (in some cases the same developers whose assets are being repossessed) to carry out the project.

Thanks to Project Normandy, Sabadell has cleaned up more than €8,000 million of problem assets from its balance sheet, whereby reducing the balance from €26,000 million to less than €18,000 million.

In addition to Banco Sabadell, other entities such as Sareb have also closed divestments in recent weeks.

Original story: Catalunya Press

Translation: Carmel Drake

Interview With Ismael Clemente, CEO of Merlin Properties

29 November 2016 – Expansión

On 21 December 2015, Merlin Properties became the first real estate company to enter the selective Ibex 35 since the burst of the real estate bubble. And for just over a month now, it has led the ranking of the largest Spanish real estate groups, following its merger with Metrovacesa. The Socimi, led by Ismael Clemente, has marked this milestone just two years after making its debut on the stock market.

In an interview with Expansión, the CEO of Merlin Properties, Ismael Clemente, has confirmed that he is committed to ensuring that the banks that have just become shareholders of the Socimi will stay for the long haul. He is also commited to maintaining a high level of shareholder remuneration.

Following the integration with Metrovacesa, Merlin has increased its real estate portfolio to €9,500 million and has incorporated three new shareholders: Santander, which is now its largest shareholder, with a 22.2% stake; BBVA, with 6.4%; and Popular, with 2.8%.

“There is no formal commitment that the market is not already aware of. But, from a factual standpoint, we think that, given where Santander and BBVA have placed their stakes (in industrial investments), they will hold onto their share capital for much longer than the market expects, because they can see that we are a company with great potential and a strong dividend yield, which we will maintain over the medium term”, said Clemente.

The Director said that the banks are the new high profile shareholders of the Socimi, but added that they are not interfering with the management of the business. In this sense, Clemente commends the appointment of the directors who will control the banks’ stakes and, specifically, that of Rodrigo Echenique, the former Chairman of Metrovacesa and the Chairman of the Board of Directors of the new Merlin. (…). “He is much more gifted than I am in terms of his experience and professional career”.

Clemente says that the historical shareholders “have reacted well” to the incorporation of the banks into Merlin’s capital. (…).

The Director revealed that the Socimi’s shareholder remuneration policy will continue with a stable dividend, through the sum of ordinary and extraordinary payments – in the event that divestments take place – and will maintain a high pay out, based on cash flow.

Debt reduction

Clemente explains that the company is not planning to undertake any more capital increases in the short term. “We do not know what stage of the market we are in. We are unsure as to whether the share price will continue to reflect a discount compared to NAV (net asset value) or will return to a premium” (…).

In addition, the Socimi has set itself the objective of reducing its level of indebtedness. To this end, it has launched several bond issues this year. In October, it placed €800 million of bonds to allow it to finance Metrovacesa’s bridge loan amounting to €500 million and to pay off some other debts.

“We do not have any significant maturities until 2021 and, from here, a stable calendar of maturities will begin, which we will have to refinance like any other company in the sector.

In terms of the behaviour of the Socimi’s share price, Clemente acknowledges that, since December last year, the firm has entered a “very negative dynamic”, which he blames on the political instability in Spain. (…).

Nevertheless, Clemente is steadfast (…) adding: “We can only work to improve NAV per share. What’s more, we have a generous dividend working in our favour”.

Original story: Expansión (by Rocío Ruiz and Rebeca Arroyo)

Translation: Carmel Drake

Ismael Clemente: “We Will Probably Sell Testa, Or List It”

7 July 2016 – El Economista

After spending a few hours in the company of Ismael Clemente, CEO of Merlin Properties, it is easy to understand how the Socimi that debuted on the stock exchange on 29 June 2014, has managed to become the largest real estate company in Spain in just two years. Clemente’s charisma is clear. His closeness and humility are engaging, not least because they differentiate him from the typical profile of senior managers. All of that, together with his knowledge about the sector, his professionalism and the team that surrounds him, have combined together perfectly to enable Merlin to become what it is today.

A few weeks ago, the company announced an agreement with Metrovacesa, which will see the merger of the two companies to create a giant in terms of assets, with almost €10,000 million. That announcement came just a few days after Merlin had completed the process to purchase Testa, for which it paid €1,800 million.

After those two major transactions, what is the company’s strategy now?

We are going to continue the tone we have adopted over the last year and a half. We will be very active in the logistics segment and relatively quiet elsewhere. Right now, we are not finding much value from participating in individual asset auctions, particularly when the values are small. But, we are still attentive to groups of assets whose size puts off possible competitors and where we can obtain good prices due to complexity or restructuring.

We have also been participating in the process to buy Torre Cepsa, but we are not competitive enough. Really, over the last year, we have been quiet in the market, but all the while, we have been keeping an eye on operations such as the one involving Metrovacesa, in order to create value for our shareholders. If we come across another opportunity, we may go for it, but if you look at the market, there are limited opportunities. It would be a miracle if a new portfolio were to appear that isn’t already on our radar.

What plans do you have for your subsidiary Testa Residencial?

We want to convert it into a company that has its own life and that operates independently in the market, with its own independent management team and its own independent shareholder base. Several paths would enable us to achieve this objective. On the one hand, it could be done by an indirect listing. We have the option of taking our stake in Testa Residencial, which amounts to 34%, and passing it onto Merlin’s shareholders as a kind of dividend.

In this way, the stake would be pulverized immediately. That is one option, but the standard route would be an independent IPO. We are also evaluating the option of a sale or merger transaction with one of the housing operators. The large German housing operators are not currently operating in Spain, but a company of this size would likely spark their interest. (…)

Of the 4,700 homes currently in Testa Residencial’s portfolio, between 700 and 900 are susceptible to sale.

Before this operation was announced, Merlin’s objectives included selling off the residential and hotel arms of its business.

Have those intentions changed?

Residential is still a non-strategic segment for us and the stake that we hold in Testa Residencial will not be on our balance sheet in ten years time. Hotels are not strategic for us either and we will look for an exit from them over the long term. (…)

Does Merlin plan to get rid of any other assets?

(…). Right now it is hard to quantify, but we expect to sell between €50 million and €100 million of our assets. (…).

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake

Sareb Reduces Its Assets By Just 6% In 3 Years

9 May 2016 – El Economista

Sareb has reduced the number of assets it owns by just 6.1% since its creation at the beginning of 2013. In the last three years, the company chaired by Jaime Echegoyen has decreased its volume of properties and loans by 12,091 units, representing 6.1% of the total, and so still held 186,120 assets at the end of last year, according to its annual report approved by the General Shareholders’ Meeting.

The firm, which was created using the toxic assets of the entities that received state aid, has twelve years left to sell off its remaining assets, which are valued at €43,000 million, after the sales it has already completed and the impairment in its appraisal values as a result of price decreases.

The small reduction in the number of loans and properties is due, in part, to the transformation of the portfolio into more liquid assets. Since it was created, Sareb has been converting loans in homes and land, so as to bring them onto the market more quickly in the face of their non-payment. In this way, the volume of financing lines to property developers has decreased by around 10,000, to just over 80,000, whilst the number of properties has been reduced by around 2,000, despite the fact that its divestments since the creation of its semi-public capital exceed 30,000.

Sareb’s General Shareholders’ Meeting approved the accounts from last year, which are weighed down by the new provisioning circular. Moreover, it authorised the exchange of subordinated debt for capital to strengthen its solvency, after recording significant losses in prior years. The company will convert €2,170 million in total. Following this operation, the State – through the Frob – will slightly strengthen its stake, since it holds more debt that the other shareholders. It will go from owning 45% of the shares to 45.9%.

In addition, several insurance companies will acquire small stakes in the company’s share capital, given that, until now, they only held subordinated bonds. The remaining shareholders – the banks – will see their shareholdings diluted slightly. Santander will continue as the main private shareholder.

Original story: El Economista (by F. Tadeo)

Translation: Carmel Drake

Aliseda Refinances Bank Debt To Lower Costs

15 December 2015 – Expansión

Loan / Popular, Bankia, Santander and Sabadell are leading a five-year syndicated loan to the real estate management company, amounting to €450 million.

Cheaper debt and new money to manage its needs over the next few years without any hardship. Resources are cheap at the moment, banks are willing to lend and companies are taking advantage of the environment to line their pockets and face up to the recovery. Few companies are letting the opportunity pass them by and Aliseda is not one of them.

The real estate services company, owned 51% by Värde Partners and Kennedy Wilson and 49% by Banco Popular, has just closed a five-year financing agreement that reflects all of the benefits of the new lending era in Spain. Eight banks have put €450 million on the table, in a syndicated loan that has two objectives.

The first is to refinance the €350 million debt that Aliseda took on when Popular sold the management of its real estate assets to two funds specialising in the subject. That financing agreement was signed at the end of 2013 and the interest that the firm paid on it was in line with market rates at the time. It is true that it wasn’t the worst time to be raising funds (the lows of the crisis and the credit freeze had already passed), but nor was it the best time.

Since then, Aliseda has been trying to refinance its loan (…). The financing granted in 2013 did not mature until 2018, but the company has decided to repay it early and replace it with a new lower-cost product. The result is a loan, due to mature in 2020, for which it will pay an interest rate of 350 basis points above Euribor, according to market sources, which represents a decrease with respect to its previous rate, given that the final cost will amount to approx. 3.5%.

New money

The second objective for the company, which manages loans granted to real estate developers and construction companies, as well as the assets foreclosed by Popular (its total portfolio amounts to €30,000 million) was to raise new funding. And it has achieved it.

And Aliseda is exceeding its objectives for asset sales this year; it had accumulated €1,588 million of divestments by the end of the third quarter. The goal for 2015 is to reach €2,000 million, although the company expects to exceed that threshold.

But Aliseda does not want to continue only with the management and sale of Popular’s assets; rather it is looking for new business lines and projects for the future. As such, it has decided to promote its own homes. And for that, it needed this additional funding.

Eight banks have provided the money. Naturally, Popular has led the loan and is the entity providing the most funding, although Bankia, Santander and Banco Sabadell have each signed a tranche amounting to more than 10% of the syndicated balance. BBVA is providing a very similar stake, along with Bankinter, whilst ING and Crédit Agricole are taking on smaller exposures.

Six of these banks were involved in the original financing agreement in 2013; only CaixaBank has left the original group; meanwhile, Bankia and ING have taken their place as new lenders.

Original story: Expansión (by Inés Abril)

Translation: Carmel Drake