Tag: due diligence

Partners Group Negotiates the Purchase of 5 More Office Buildings from Meridia Capital

10 January 2020 – El Confidencial

The Swiss manager Partners Group is in talks with Meridia Capital, led by the Catalan businessman Javier Faus, with a view to purchasing half of the office portfolio that Meridia put up for sale at the end of last year.

The two players enjoy a close relationship following a deal closed last April, which saw Partners acquire a portfolio of 18 offices from Meridia for €215 million, and the Socimi continuing to manage the portfolio.

A similar arrangement could be sought this time around. The portfolio on the table in 2020 comprises a dozen offices in Madrid and Barcelona worth around €200 million, although Partners is only interested in half of the properties.

Both parties declined to comment on the reports of a potential sale, however, sources in the know confirmed that a due diligence process has begun on five of the assets.

Original story: El Confidencial (by Ruth Ugalde)

Translation/Summary: Carmel Drake

Vitruvio to Complete a €14.5M Capital Increase Ahead of its Takeover of Única

5 February 2019 – Eje Prime

Vitruvio is preparing to launch its takeover bid for Única. The Socimi is planning to complete a €14.5 million capital increase to finance the operation, which will be complemented by the exchange of shares plus available cash from the company.

In addition, the company has now completed the two due diligence processes on the Madrilenian Socimi – specifically, the technical and legal due diligences, and both of them have proved positive. “That was the last step that needed to be completed before submitting the offer to the reference shareholders of Única, which is extendable to all of the shareholders”, explained sources at Vitruvio speaking to Eje Prime.

Vitruvio is planning to close the operation for around €32 million. After adding €45 million in properties from Única, the group will be managing a portfolio of rental assets worth €160 million.

According to explanations provided by the Socimi in a statement sent to the Alternative Investment Market (MAB), the capital increase will finance part of the acquisition, fulfil the maximum indebtedness limit of 33% and make way for the entry of new investors.

The rest of the operation will be paid for with €8.1 million of available cash as well as financing available to Vitruvio for the purchase, and another €9.7 million, which will be paid for with shares representing 30% of Única.

The capital increase will be proposed at the next shareholders meeting in March at a price of €14.50 per share. “Vitruvio will propose the capital increase at the latest NAV per share, whereby avoiding any dilution of the shareholders”, explained the company.

Única Real Estate was founded in 2015 by the former CEO of Metrovacesa, Eduardo Paraja, and specialises in the acquisition and leasing of commercial premises in the Community of Madrid.

Vitruvio, meanwhile, has a diversified portfolio comprising offices, homes and commercial premises. Together, the two companies own 71 properties, and generate revenues and EBITDA of €9.3 million and €6.3 million, respectively.

Original story: Eje Prime (by I. P. Gestal)

Translation: Carmel Drake

Sabadell Puts ‘Solvia Desarrollos Inmobiliarios’ Up for Sale

19 January 2019 – El Periódico 

Banco Sabadell has launched the sales process of Solvia Desarrollos Inmobiliarios (SDIN), the company that owns the bank’s land and which carries out its real estate development projects in Spain. On Friday, the entity placed the sales brochure for the firm in the hands of possible buyers, including international real estate funds, such as Cerberus, Blackstone, Värde and Oaktree, amongst others, according to confirmation provided by real estate sources. The process, regarding which the bank itself has declined to comment, could go on until April. The time necessary for buyers to express their interest and conduct analysis of the company for sale.

The process to sell the development company is beginning just a month after the bank chaired by Josep Oliu completed the sale of 80% of its servicer – real estate manager – to Lindorff Holding Spain, a company that belongs to the Swedish fund Intrum, after it fought off competition from the funds Cerberus and Centricus, which were also bidding for the real estate subsidiary. In that operation, Solvia was valued at €300 million. The price corresponded to 80% of the stake in the company, which could be increased by a maximum amount of €40 million if certain conditions, relating to the performance of some of Solvia’s lines of business, are met. The completion of the operation is scheduled for the second half of 2019.

Maturity period

SDIN is in the maturity period for its sale, according to sources familiar with the operation. The firm has a stock of more than 300 buildable plots, which are worth around €1.2 billion and has almost 130 developments underway across different parts of Spain, with more than 5,000 homes under construction. The size of the portfolio of SDIN, which is led by Francisco Pérez (pictured above), places it in the second league in the sector ranking, just behind the listed property developers, led by Metrovacesa, Neinor, Aedas and Vía Célere. Only Sareb has more assets (…).

Original story: El Periódico (by Max Jiménez)

Translation: Carmel Drake

Holdreit Negotiates Sale of the Socimi Kingbook & its Exclusion from the MAB Before June

23 May 2018 – Eje Prime

Besides the purchase of assets and their subsequent management, Spain’s Socimis are also gradually starting to enter the business of corporate operations. Such is the case of Holdreit, which is negotiating with an investor to sell 100% of its Socimi specialising in gas stations, Kingbook, according to sources at the company speaking to Eje Prime. If the operation is closed before the end of June, the new owner will exclude the Socimi from the Alternative Investment Market (MAB), where its shares are currently traded.

The Socimi, owned by Holdreit, the company’s sole shareholder and controlled by GL Europe Reit (60%) and JZ Real Estate (40%), has been subjected to a due diligence process by an investor, whose name has not been revealed.

The purpose of this study is to purchase 100% of the shares in Kingbook Inversiones Socimi. “This offer is being analysed by both the shareholder and the Board of Directors, and the month of June 2018 has been set as the period for the acceptance and signing of the operation. During that time, all of the due diligence and legal work is expected to be completed successfully”, explain sources at the group.

In the event that the aforementioned due diligence process is concluded satisfactorily and “in the best interests of the company, the sole shareholder will request the exclusion from trading of all of the shares no later than 30 June 2018”, they explain. In this way, Kingbook would cease to trade on the MAB.

The Company’s Board of Directors has agreed to ask Renta 4 to begin the appropriate procedures to obtain a one-off exoneration from compliance with its “selling obligations under the liquidity contract signed with the company” from the Market Supervisory Committee, as a step prior to the sale of all of Kingbook’s shares.

The group’s complicated financial situation could be one of the reasons for the sale of the Socimi. At the beginning of the month, Kingbook injected additional funding of €1.4 million in order to “reduce the company’s demandable liability and increase its own funds”. Following that increase, the company’s share capital amounted to €10.9 million.

This move by Kingbook comes after the Socimi increased its share capital by €21.6 million last November to offset losses. The company explained that the Socimi has been generating losses since it started operations. As at 30 September 2017, the result for the year was negative, with losses of €1.25 million (…).

Nevertheless, Kingbook owns a solid portfolio of assets that could prove attractive to a new investor. The company owns land worth €10.3 million and buildings worth €20 million (…).

Moreover, last year, Kingbook added more than a dozen service stations to its real estate portfolio. (…). In total, Kingbook spent €7.5 million on new acquisitions during 2017.

The Socimi currently manages 57 real estate assets through which fuel distribution activities are carried out, and it owns one hotel and one industrial warehouse for rent.

Original story: Eje Prime (by C. Pareja)

Translation: Carmel Drake

British Fund Signal Capital Partners Offers €30M+ for Duro Felguera’s HQ

7 February 2018 – Eje Prime

The sale of the headquarters of Duro Felguera in Madrid could be on the verge of being signed. The Asturian company has received an offer for more than €30 million from the British investment fund Signal Capital Partners. And the company has already requested a due diligence, according to El Economista.

Before Signal, the Duro Felguera building, located at number 7 Calle Vía de los Poblados in the Spanish capital, had been courted by two other interested parties: Banco Sabadell and Sandra Ortega, one of the daughters of the Inditex founder.

Two months ago, the Spanish bank offered €33 million for the building, but it seems that neither its bid nor the €38 million that Sandra Ortega (…) placed on the table convinced the Asturian group. In the case of Ortega, the economic proposal was accompanied by one condition: the rental of the asset for ten years, at a price of €2 million per year and a seven-year deposit, according to Vozpopuli.

Duro Felguera, which is on the brink of filing for creditors’ bankruptcy, has until 15 April to reach an agreement with the banks to restructure its debt, which exceeds €900 million. For that reason, the company is particularly keen to complete the sale of this asset.

If the fund reaches an agreement, it would represent Signal Capital Partners’ second operation in Spain. In 2017, it took part in the purchase and remodelling of Aparthotel Orquidea, an establishment located in Ibiza, with a surface area of 12,000 m2 and 198 rooms.

Original story: Eje Prime

Translation: Carmel Drake

NH Rejects Barceló’s Offer But is Willing to Consider Other Proposals

11 January 2018 – Expansión

Yesterday, the Board of Directors of the NH Hotel Group revealed its position regarding the proposal made by Barceló to merge the two businesses. And, although it expressed its “unanimous” rejection of the offer, it did say it was willing to consider future “strategic opportunities” within the framework of “the consolidation trends that are prevailing in the sector”.

“The Board has carefully considered the fact that the proposed structure – a merger – would not allow for the creation of value for our shareholders over and above that already forecast for NH operating independently”. In its analysis, the Board does not consider appropriate “either the intrinsic value assigned to NH by the Barceló Group’s offer, or its scope or the exchange ratio offered”, according to the explanation presented to the CNMV.

The Co-President of Barceló, Simón Pedro Barceló, sent a letter addressed to NH’s Board of Directors in November, proposing the integration of the two groups to create a “national champion” with more than 600 hotels and 110,000 rooms around the world, as Expansión revealed on 20 November.

The Mallorcan group proposed taking control of 60% of the resultant (merged) company and for the remaining 40% to end up in the hands of the shareholders of the NH Hotel Group. It also set the price of the latter at €7.08 per share, which meant valuing the company at €2.48 billion.

Exchange ratio

For NH’s most senior governing body, which met yesterday for the second time to analyse the proposal made by its competitor, the exchange ratio proposed by Barceló does not reflect the relative valuation of the two companies, nor does it incorporate a control premium over NH’s share value or take into account the potential appreciation in the firm’s share price operating independently. Moreover, NH’s directors emphasised that the offer does not open a window of liquidity for its shareholders. The offer – which is non-binding and conditional upon a due diligence (detailed analysis) – proposes an integration with NH Hotel in exchange for shares issued by the latter, with the resultant company being listed. This operation, therefore, would effectively allow Barceló – which is owned by the third generation of the family of the same name – to debut on the stock market.

“The Board has valued very negatively the fact that the offer from Grupo Barceló lacks liquidity for NH’s shareholders”, reiterated the Board of the listed company.

NH’s Board of Directors includes Alfredo Fernández Agras, representative of Oceanwood (with 12% of NH’s share capital); José Antonio Castro and Jordi Ferrer Graupera, both representatives of Hesperia, with a 9.1% stake; and Ramón Aragonés, CEO of NH. By contrast, HNA does not have a presence on the Board, despite being the majority shareholder, with a 29.5% stake. The Chinese giant was expelled (from the Board) in June 2016 due to a conflict of interest after it signed a purchase agreement with Carlson Rezidor, which competes with the Spanish firm in certain European countries.

Sources at Barceló expressed their respect regarding NH’s decision, although they acknowledged that the position adopted by their rival left them with “a bitter taste since they had not been able to convince the Board of the good intentions behind the operation”. And they added: “We think that the offer was good for the Spanish hotel industry, the shareholders of NH and Barceló and the economy of the country as a whole, which would have benefitted from having a national champion to go out and compete seriously overseas”.

In response to NH’s rejection, Barceló “said the discussion was over”. According to sources at the company, “no other proposals are possible”.

The decision of NH’s Board of Directors was made public at the end of trading. NH’s shares finished trading yesterday at a price of €6.115 per share, after rising by 1.83%. Since Barceló expressed its interest in NH, the share price of the latter has increased by 22% (…).

NH closed 2016 with sales of €1.475 billion, an EBITDA of €181 million and a net profit of €30.8 million. The group’s strategic plan for the next three years forecasts a recurring profit of €100 million and an EBITDA of up to €290 million in 2019.

Meanwhile, Barceló closed 2016 with turnover of €2.855 billion, net sales of €1.98 billion, an EBITDA of €339 million and a net profit of €125 million.

At the operating level, NH has 380 hotels and 59,000 rooms in more than thirty countries, whilst Barceló owns more than 230 hotels in 22 countries and almost 52,000 rooms.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Neinor Expands Overseas & Finalises Purchase of 3 Plots in Lisbon

26 December 2017 – El Confidencial

The dream of making the leap overseas is increasingly closer to becoming a reality for Neinor. The property developer led by Juan Velayos is holding advanced talks to acquire three plots of land in Lisbon, according to sources familiar with the deal. Provided nothing goes awry, the deal is expected to close between the end of January and the beginning of February.

With this move, the company will fulfil its objective of entering the Portuguese market, where it first placed its focus several months ago in order to take advantage of the recovery happening in the country. The evolution there is expected to be similar to the recovery that Spain has been enjoying in recent times.

Neinor’s objective is to acquire sufficient plots of land to enable it to build 300 homes per year, a volume that would justify the opening of a dedicated office in Lisbon.

The acquisitions that the property developer currently has on the table would justify its debut in the neighbouring country, although the same sources also indicate that, currently, Neinor is in the “due diligence” phase and that all three plots must pass the test for it to go ahead with the agreement.

Although the entry into the Portuguese capital would represent Neinor’s international debut, the property developer regards the move in the context of the entire Iberian Peninsula representing a single market, albeit taking account of the Portuguese cultural, legal and regulatory rules.

In light of this commitment to urban housing, Neinor and its main shareholder, Lone Star, have taken the decision to not transfer to the property developer the plots of land that the fund acquired two years ago in the Algarve from Catalunya Banc.

The plots in question house the Vilamoura tourist complex, which spans a surface area of almost 2,000 hectares and a buildable area of 700,000 m2. More than 5,000 apartments and homes are going to be constructed there and the US fund engaged CBRE last autumn to start selling them.

During the first nine months of 2017, Neinor invested €275 million in buildable land, which means that it now has land for the immediate development of around 12,000 homes. It also generated revenues of €169.4 million, with a gross margin of €40.7 million.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Santander Negotiates With Blackstone Re Sale Of Popular’s RE

2 August 2017 – Expansión

A month after announcing that it was putting Popular’s toxic real estate up for sale, Santander has chosen the fund with which it wants to negotiate. The bank is looking to sell a portfolio of Popular’s foreclosed assets and doubtful real estate debts with a gross value of €30,000 million. It will be the largest sale of a toxic real estate portfolio in Spain in recent years. And the process is already taking shape, in the hope that Brussels will give the definitive green light to the Cantabrian bank’s acquisition of Popular, due at the end of this month.

Yesterday, Santander announced that it will negotiate exclusively with Blackstone from now on to sell a majority stake in the vehicle in which it placed the toxic property inherited following the purchase of the entity wound up by the European authorities. Santander’s initial idea is to sell 51% of this vehicle, which will allow the group to deconsolidate those real estate assets from its balance sheet. The assets and doubtful loans that Blackstone plans to acquire will be managed by Aliseda. That company already administers Popular’s real estate assets and is 100% owned by Santander after the bank repurchased the 51% stake held by Kennedy Wilson and Värde Partners a month ago.

After buying Popular, whose merger will be completed over the course of the next two years, Santander has increased its exposure to real estate risk to €41,048 million, according to the latest available data. Popular’s real estate risk amounts to almost €37,000 million, including its stakes in real estate companies, which amount to around €7,000 million.

Several offers

According to a statement made to the CNMV yesterday, Santander has received binding offers from “several investors” over the last few days for one of the largest portfolios ever to go onto the market in Spain, and also in Europe. The operation sparked immediate interest amongst the large international funds when Santander announced that it was putting Popular’s real estate up for sale on 30 June. In addition to Blackstone, Apollo, TPG, GreenOak and Goldman Sachs, amongst others, approached the bank to find out more.

Financial sources indicate that Apollo and Lone Star fought hard until the end to acquire the majority of Popular’s toxic real estate. In the last few days, some of the interested funds have asked Santander, which is being advised by Morgan Stanley, for more time to conduct due diligences (…).

The rapid sale of Popular’s real estate portfolio, which is being piloted by the Deputy Director General of Santander, Javier García-Carranza, could result in revenues of €5,000 million, according to estimates in the sector. Santander has recognised provisions of €7,900 million to increase the coverage ratio of Popular’s real estate to 69%, well above the sector average (52%). This means the bank can afford to get rid of the real estate portfolio at significant discounts and thereby recognise gains (…).

Original story: Expansión (by R. Sampedro)

Translation: Carmel Drake

Neinor Buys 7,000m2 Plot Of Land In Valencia

5 April 2017 – Expansión

Neinor Homes is stepping on the accelerator and strengthening its presence in Spain by entering a new region. The property developer – which debuted on the stock market on Wednesday 29 March –  has completed the purchase of its first plot of land in Valencia, with a buildable surface area of 7,000 m2, where it will construct 54 homes. This acquisition allows the company, which is controlled by the US fund Lone Star, to expand its operations to Valencia, where it is considering opening a local office.

According to the company, the market in Valencia displays the characteristics that it demands for its investments: a shortage of structural supply, a lack of competition, positive population growth and unsatisfied demand. For this reason, it is looking for “new opportunities in the city”.

Since the beginning of January, the company has invested €51.5 million in the purchase of buildable land in Sitges, Gerona, Sabadell, Mairena de Aljarafe (Sevilla), Sazares (Málaga), Madrid and Valencia. These plots will allow the developer to build more than 700 homes on almost 90,000 m2 of land.

The CEO of Neinor, Juan Velayos (pictured above), said that the purchases made during the first quarter place the company on the road to exceed its annual objective in terms of acquisitions, set at €200 million. “It is a confirmation that we are still able to buy carefully selected plots of land from non-natural landowners, such as banks and companies without any development activity”.

In this way, sources at Neinor underlined that each one of these operations exceeds the profitability objectives set by the property developer and that they were closed only after rigorous legal, technical and commercial due diligence had been completed.

The firm has 1 million m2 of land in its portfolio, with a gross value of €1,120 million, on which it plans to construct more than 9,000 homes.

At the end of February, the company had 60 active developments – already started or planned to be launched – in País Vasco, Madrid, Cataluña, Andalucía and the Community of Valencia, on which it plans to construct 4,002 homes.

The property developer plans to reach cruising speed in 2020, with the completion and delivery of between 3,500 and 4,000 homes per year.

The company, which plans to announce its results on 26 April, closed last year with revenues of €228.6 million and a gross operating profit (EBITDA) of €9.6 million.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Santander & Bankia Join CaixaBank In €700M Loan To Realia

6 February 2017 – Expansión

The process to negotiate the refinancing of Realia is still underway. In the latest development, Santander and Bankia have announced that they will join CaixaBank in a new syndicated loan, amounting to around €700 million, which will allow the Spanish real estate company, which is controlled by the Mexican businessman Carlos Slim, to pay off its existing debt.

In this way, in addition to Caixabank, which will lead the new loan for the subsidiary Realia Patrimonio, Santander and Bankia have approved this operation. They are now looking for three more banks to join the agreement, since the idea is that six financial institutions will comprise the new syndicate, according to sources familiar with the process.

To this end, the coordinator has made contact with around thirty banks, including most major banks in Spain, as well as some foreign entities that have headquarters in Spain, such as ING, Crédit Agricole, Société Générale, Deutsche Bank, Aareal Bank and Natixis. Financial sources indicate that the players most interested in joining the process are Abanca, Sabadell, Bankinter and Popular.

The sales document containing the results of the due diligence was published on Thursday and it is hoped that the loan contract will be signed in April, which is when the real estate company’s existing debt, amounting to €680 million, is due to expire. CaixaBank engaged Deloitte in December, on behalf of the other financial institutions, to perform a feasibility analysis of the group’s properties, as well as a comprehensive due diligence; meanwhile, the law firm Uría will be responsible for drafting the new syndicated loan financing contract.

The negotiations to agree the terms of a new syndicated loan form part of the firm’s objective to fulfil its financial viability plan and reduce its level of indebtedness.

In April 2007, Realia Patrimonio carried out a restructuring of its financial debt by subscribing to a syndicated loan with two entities – Caja Madrid and Banesto. They subsequently assigned some of their exposure to 14 others entities, whereby taking the total number of FIs in the lender group to 16, for an initial maximum amount of €1,087 million, and Realia has been paying off the balance ever since. Moreover, these entities have since transferred some of the debt to other companies.

Within the framework of this strategy, at the end of 2015, Realia signed a refinancing agreement with the debt-holding entities of its residential activity – another one of the company’s business lines – whose capital pending repayment amounted to more than €800 million.

Following the restructuring of the residential business debt and after incorporating the debt outstanding on the participation loan that Inversora Carso purchased from Sareb, Realia’s gross financial debt position stood at €941 million at the end of Q3 2016, down by 46% compared to the same period in 2015.

Original story: Expansión (by R.Arroyo)

Translation: Carmel Drake