Acciona Rules Out Socimi Creation & Replaces Walter de Luna As CEO

17 November 2016 – Expansión

Acciona has revised its real estate strategy after spending the last year working on its stock market debut and searching for a partner for its real estate division, which is worth more than €1,000 million.

The rethink has resulted in the departure of Acciona Inmobiliaria’s CEO, Walter de Luna (pictured above), the star recruit from Sareb, who joined the group owned by the Entrecanales family in 2014, with the aim of listing the company on the stock exchange, whereby taking advantage of the recovery in the market.

After 18 months working on a possible IPO and being advised by Morgan Stanley, Acciona has decided to cancel its stock market plans, due to an increase in the uncertainties and volatility surrounding such markets. That same uncertainty also put pay to its plans to list its renewable assets on an overseas stock market, through a yield (high dividend) vehicle in the USA.

The company has now redefined its strategy, which, in principle, sets aside the real estate activity and focuses on development. This change means that its rental portfolio (1,382 homes, 36 premises, two hotels, several office buildings and 155,000 m2 of land) will be moved into the main portfolio, as assets available for sale.

Acciona has just executed one divestment, with the sale to the Socimi Merlin of its 50% stake in the Arturo Soria Plaza shopping centre, for €44 million. Sources in the sector indicate that the construction company chaired by José Manuel Entrecanales is holding conversations with Merlin to sell other assets to the Socimi, such as Urbanizadora el Coto, which other investors have also expressed interest in.

The revenues obtained from the sale of Acciona’s rental assets will be used to invest in new developments. Acciona currently has a stock of around 300 homes, of which around one hundred are located in Mexico and Poland.

In 2015, Acciona carved out its pure property development business from its real estate business. Its rental homes, buildings and land were transferred into a new company called Acciona Real Estate, whose most recent valuation, according to the company, amounted to €630 million. In total, the division is worth €1,200 million.

The real estate company was born with a debt of €199 million. An important part of the subsidiary is Urbanizadora del Coto (rental homes and premises in Madrid), which Acciona purchased from the Cavero family in 2006.

According to the accounts for 2015, the real estate division saw its turnover fall by 45% to €51 million and its EBITDA decrease by €3 million to €6 million, compared with the previous year. Acciona’s share price closed down 1.2% yesterday at €63.80 per share.

Original story: Expansión (by C. Morán and R. Arroyo)

Translation: Carmel Drake

Lar Buys Gran Vía de Vigo Shopping Centre For €141M

8 July 2016 – Expansión

The Socimi Lar España is strengthening its position in the shopping centre market. The company has reached an agreement with the investment firm Oaktree to acquire the Gran Vía de Vigo shopping centre for €141 million. The deal is expected to be signed in Q4 2016.

Gran Vía de Vigo was acquired by Oaktree in 2014 for €115 million. This is the second purchase that Lar has made from the US fund in less than a year, after the Socimi bought the Megapark Barakaldo shopping centre in Vizcaya last October for €170 million.

The shopping centre – one of the largest in Galicia, along with Marineda City, in A Coruña – has a retail area of 41,246 sqm. The centre, opened in June 2006, spans three floors dedicated to retail space and another three for parking, with capacity for more than 1,700 cars.

Capital increase

In order to raise finance, the company has launched a capital increase amounting to €47 million through the issue of 30 million new shares with a subscription value of €4.92.

The company will use these funds to expand its current portfolio of assets. Specifically, Lar has identified investment opportunities in the market amounting to €838.5 million in total, including this shopping centre. 81% of those assets under analysis are shopping centres, 14% are offices and the remaining 5% are other types of properties.

The capital increase will be performed with subscription rights. The company indicates that, just like happened a year ago in its previous capital increase, a “solid base” of the existing shareholders have expressed their intention to execute those rights. The company’s main shareholders include the Spanish (fund) manager Bestinver, controlled by the Entrecanales family, as well as international funds, such as Pimco, BlackRock and Franklin Templeton.

JP Morgan and Morgan Stanley are acting as coordinating entities and they have underwritten the capital increase, together with Fidentiis.

The Chairman of Lar España, José Luis del Valle, indicated that this increase reflects “the strength and attractiveness” of the Socimi and adds value to its capacity to go to the capital markets with guarantees of success.

Lar España owns assets worth €1,003 million in total. Of those, €728 million corresponds to the acquisition of 13 retail spaces (shopping centres) in Madrid, Valencia, Sevilla, Alicante, Cantabria, Lugo, León, Vizcaya, Navarra, Guipúzcoa, Palencia, Albacete and Barcelona; €150 million relates to four office buildings in Madrid and one in Barcelona; €70 million corresponds to four logistics assets in Guadalajara and one in Valencia; and €55 million relates to a residential property on Calle Lagasca, 99 (Madrid).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Acciona Hires Morgan Stanley To Sell Its RE Arm

20 July 2015 – El Confidencial

Acciona has decided to translate its words into action and accelerate the sale of some of its assets to clean up its ailing accounts. And, to that end, the energy, construction and service company has entrusted the sale of its real estate division to Morgan Stanley, the US bank that closed some of the largest property-related transactions during the real estate boom.

The holding company, owned by the Entrecanales family…has appointed Morgan Stanley, which is led by Luis Isasi in Spain, to list or sell its property-related assets, which were valued at €1,042.6 million at the end of 2014, according to Grupo Acciona’s own accounts. Based on appraisals performed by Savills Consultores and the Instituto de Valoraciones, the portfolio would have a price of €712 million, with land being the largest single item.

Nevertheless, other sources close to the group say that the book value of all of the real estate assets – which include several hotels, university halls, office buildings and 900 homes for rent in Madrid – may reach €1,500 million. “They may sell off the portfolio in parts because some of the businesses have nothing to do with each other”, said Morgan Stanley.

Morgan Stanley is going to sound out the market to decide which is the best option – i.e. whether to launch an IPO through a Socimi or to find a buyer that would take on the whole business. The operation will be similar to the one recently closed by Sacyr for its subsidiary Testa, which was acquired by Merlin Properties, for just over €1,800 million. (…).

With this decision, Acciona begins the divestment of its non-strategic businesses, which it announced at the beginning of the year after recording the worst results in its history. The group owned by the Entrecanales family, which recorded losses of €1,972 million in 2013, managed turn things around in 2014 and make a profit of €185 million, thanks to cost saving initiatives, the suspension of investments and the sale to a third party of its international energy business – this improved trend has continued in 2015 to date. (…).

Of the sales that the company announced at the beginning of 2014 – Bestinver, Trasmediterránea, real estate and energy – only the last one has taken place and then only partially. This has prevented the group from reducing its debt, which remains very high and is even growing (€5,300 million net at 31 March 2015).

Original story: El Confidencial (by Agustín Marco)

Translation: Carmel Drake

KKR Considers Buying One Third Of Acciona’s RE Subsidiary

18 March 2015 – El Confidencial

The group owned by the Entrecanales family is looking for a partner to allow it to ‘ride the wave’ of the real estate recovery and has invited the US fund to be its travel companion.

KKR. The acronym of Kohlberg Kravis Roberts has become Acciona’s most important partner in recent times. Last June, the private equity giant purchased a third of the international renewable energy business owned by the Entrecanales family’s group for €417 million, and in a stroke, that allowed the Spanish group to clean up its accounts, fulfil its divestment plan six months early and rethink other sales that it had on the table, such as Bestinver and Acciona Inmobiliaria.

The sale of the latter became more attractive after the company was strengthened through the hiring of Walter de Luna, who was until then the number two at Sareb, as the CEO, and Luis Moreno, who was his right hand man at the bad bank; they joined the company with the clear challenge of designing a plan for growth. Nevertheless, that plan requires resources and, once again, Acciona’s American friend seems to be willing to help out.

According to knowledgeable sources, KKR is considering buying share capital in Acciona Inmobiliaria; and if the negotiations between the two parties go well, they will culminate in a third large transaction between the fund and the Spanish group, because, as well as having acquired the international renewable energy business from the construction company, KKR has also created a joint venture with the Spanish group, containing wind assets, the famous ‘yieldco’, which it expects to list on the Nasdaq soon.

In recent official presentations, Acciona itself has formally acknowledged the badly-kept secret that it is looking for a partner to inject the money it needs to reinvigorate its real estate subsidiary and thus be in a position to benefit from the recovery that is emerging in the sector, now that it has managed to sort out the direction of the parent company.

The book value of Acciona Inmobiliaria amounts to c. €1,500 million and market sources indicate that the goal of the Entrecanales family would be for the new partner to take ownership of around one third of its share capital. Nevertheless, other alternatives have also been put on the table (in the discussions with KKR), such as tackling projects together, since the Spanish group has (lots of) projects (in the pipeline) and the American fund has cash.

KKR’s commitment to Spain

Spain has become a priority market for KKR in Europe, where its Operations Director, the Spaniard Jesús Olmos, has been the main driver behind the firm’s growth in our country in recent years. He has led the investment of more than 2,400 million dollars in companies such as Saba, Telepizza, Uralita, Grupo Alfonso Gallardo, Port Aventura, T-Solar and, of course, Acciona. These transactions have been strengthened by the fund’s decision to open an office in Madrid and recruit Alejo Vidal-Quadras, who was the CEO of 3i España until last December.

Now, one of KKR’s next goals in our country is to position itself as a player of reference in the real estate sector, as well as to open its sphere of operation to investments in credit and to continue its growth in infrastructure.

Meanwhile, after seven years of crisis and various failed sale attempts, Acciona Inmobiliaria managed to recover in 2014 to record positive results; it closed last December with an EBITDA – earnings before interest, tax, depreciation and amortisation – of €3 million, compared with losses of €2 million a year earlier.

The group owned by the Entrecanales family values its subsidiary at €1,529 million, of which it considers around 70% (€1,199 million) to be gross gains by the group. By geographical region, 87% of the subsidiaries’ assets are located in Spain and only 13% are overseas; whereas if we analyse the subsidiary in terms of turnover, 45% relates to property (primarily residential), 37% corresponds to land in Spain, 8% is land overseas and development activity accounts for the remaining 10%.

Original story: El Confidencial (by R. Ugalde)

Translation: Carmel Drake