Several Funds Acquire/Increase their Stakes in Hispania in the Midst of Blackstone’s Takeover Bid

11 June 2018 – Expansión

Blackstone’s takeover bid for Hispania has placed the Socimi firmly on the radar of investment funds. Since April when Blackstone announced its intention to launch a public share acquisition offer (OPA) for the Spanish Socimi, there have been continuous changes in the shareholding structure.

In terms of the funds who have been active, Fidelity has continued to back the company and has strengthened its stake to 9.64%. Prior to the takeover bid, the company’s stake remained at just over 7%.

Fidelity is the second largest shareholder of Hispania, behind Blackstone, which, after purchasing the stake owned by the Hungarian-born magnate George Soros, leads Hispania’s shareholder ranking, with a 16.56% stake.

Another one of the Socimi’s shareholders that has strengthened its weight since the takeover is Axa Investment Group, which now controls 4.14% compared to 3% before the takeover bid, and Bank of Montreal and BlackRock, which currently hold stakes of around 4.1% each, compared with 3.01% and 3.3%, respectively, that they used to control.

These shareholders constitute the hardcore nucleus of the company’s owners, together with the Mexican firm Canepa, which holds almost 6% through Tamerlane, and the Brazilian family office BW Gestao de Investimentos (BWG) with 3.7%.

New shareholders

In addition to the reference shareholders who have taken positions, Blackstone’s interest in Hispania has led to new interest from other shareholders.

The Norwegian fund, through its manager Norges Bank, has appeared to acquire 1.09% of the Socimi; Man Group, one of the largest hedge funds in the world, has bought 1.27%; and Kite Lake Capital Management has purchased 1.56%.

Blackstone’s takeover bid for 100% of Hispania at a price of €17.54 per share means that it is valuing the Socimi at €1,905 million. Hispania used to have a market capitalisation of €1,903 million and its shares closed trading on Friday at a price of €17.68 per share, slightly above the takeover price.

After Blackstone launched its takeover, Hispania’s Board of Directors engaged Goldman Sachs, UBS and JPMorgan as financial advisors and Freshfields and Uría Menéndez, as legal advisors, to analyse the terms of the offer and look for alternatives.

Expressions of interest

In a conversation with analysts in May, during the presentation of the group’s results, Cristina García-Peri, Director-General of Hispania, classified Blackstone as a “plausible” buyer, but she emphasised that other investors have been “very interested” in the Socimi and its hotel portfolio.

The American investment fund’s offer, whose brochure is pending approval by Spain’s National Securities and Markets Commission (CNMV) is conditional upon obtaining at least 50% plus one of the shares in Hispania. Moreover, the takeover is subject to a clause that prevents the sale of assets for an aggregated transaction value of more than 5% of the NAV (net asset value) (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Blackstone Formalises its “Hostile” Takeover Bid for Hispania

23 April 2018 – Valencia Plaza

Blackstone has submitted to Spain’s National Securities and Exchange Commission (CNMV) its request for authorisation for the takeover bid that it has launched over the Socimi Hispania, an operation worth €1.905 billion, which would see the US fund become the largest hotel owner in the country. The supervisor must now analyse whether the bid is admissible and, in the event that it deems that it is, assess the documentation for its approval. Only then will the period be opened for acceptance of the deal by the shareholders.

In this way, Blackstone has formalised its takeover bid for the hotel Socimi that it announced on 5 April, after it purchased 16.5% of the share capital from the investor George Soros and whereby became the company’s largest shareholder. The bid is effectively directed at the 83.5% of Hispania’s share capital that the fund does not yet control, by offering €17.45 per share, which brings the operation value to around €1.59 billion.

In the documentation submitted to the supervisor on Monday, Blackstone did not include any bank guarantee to secure that amount, although it did state that it would present such a guarantee within a period of seven working days that it has for that purpose. The consideration being offered by the fund represents a discount of 5.6% with respect to the share price of €18.50 at which Hispania was trading before the operation was announced publicly.

Blackstone is formalising the takeover bid after Hispania announced that it regarded the approach as hostile and that it will look for “alternatives” to the operation that improve the price proposed and, therefore, “maximise” value. The Socimi chaired by Rafael Miranda is pushing ahead with its intention to look for other options to the bid, given that prior to its formulation, and before it announced its intention to liquidate its assets by 2020, the firm had received expressions of interest from around half a dozen overseas investors.

For its part, Blackstone is looking to create a hotel asset ‘giant’, given that this deal would see it become the largest owner of this type of establishment in the country. The fund would add the 46 hotels that comprise the Socimi’s portfolio, most of which are located on the islands and in the main tourist areas of the country, to the fourteen establishments that it purchased last year from one of Banco Sabadell’s companies (HI Partners). Currently, and following the departure of Soros, Hispania’s main reference shareholders are overseas funds, including Fidelity, which owns a 7% stake, Conepa with 6%, and Bank of Montreal and BlackRock, with 3% each.

Original story: Valencia Plaza

Translation: Carmel Drake

Hispania’s Shareholders Approve Block Sale of its Office Portfolio for €600M+

4 April 2018 – Eje Prime

Hispania is putting the sale of its office portfolio back on the table. Today,  at its General Shareholders’ Meeting, the Socimi will submit to approval the block sale of its rental office portfolio, a set of 25 buildings worth €603 million. It is a divestment that the Socimi, in which George Soros holds a stake, launched a year ago, suspended in October 2017, and which it has now resumed.

Hispania’s assembly is also going to approve the distribution to shareholders of an extraordinary dividend of €1.97 gross per share linked to the completion of that divestment. The payment will be charged against the issue premium and will involve distributing €215 million in total. This dividend will be added to the ordinary remuneration to shareholders, which will amount to €0.87 per share this year, the first payment of which, amounting to €0.41295 gross per share, was already made in March.

Besides Soros, who holds a 16.6% stake in the firm, the other main shareholders are other overseas institutional investors, such as Fidelity, with a 7% stake, Conepa, with another 6% stake, and Bank of Montreal and BlackRock, with 3% each. The Socimi chaired by Rafael Miranda is framing the sale of its office portfolio within its strategy to focus on the hotel business.

Other items on the agenda at Hispania’s General Shareholders’ Meeting include the re-election of the directors to their roles as the Chairman of the firm and another five members, including Concepción Osácar, José Pedro Pérez-Llorca and Joaquín Ayuso. Hispania will also approve its accounts for 2017, which reported a net profit of €222.82 million, down by 27.7% compared to the previous year.

Original story: Eje Prime

Translation: Carmel Drake

Israeli Fund Adar Increases its Stake in Neinor to 9.2%

15 February 2018 – Eje Prime

Adar has taken more power in Neinor Homes. The Israeli fund manager Adar Capital Partners has increased its stake in the real estate firm to 9.2% from the 5.2% that it had held until now, whereby becoming the property developer’s largest shareholder.

What’s more, if we add the 2.6% stake that Adar controls indirectly through derivatives, then the percentage held by the fund in the company increases to 11.88%, which is worth €168 million at current prices, according to the registers of the National Securities and Exchange Commission (CNMV).

In this way, Adar Capital Partners has taken over Lone Star’s role as the largest shareholder of Neinor, after the US fund sold its stake in the real estate company that it had constituted, and exited its share capital.

Besides the Israeli manager, Neinor’s other reference shareholders include several other overseas institutional investors. In this way, Wellington Management Group holds an 8.6% stake, Fidelity owns 6.8%, Norges Bank holds 4.9% and Bank of Montreal has 3%.

Neinor currently has 71 housing developments underway across Spain, totalling 5,470 homes, after launching five new developments containing 528 homes during the third quarter of last year.

Original story: Eje Prime 

Translation: Carmel Drake

Norwegian Pension Fund Acquires 4.8% of Neinor Homes

17 January 2018 – Expansión

The Norwegian Pension Fund has acquired a 4.8% stake in the share capital of the property developer Neinor Homes. This package, acquired through the manager Norges Bank Investment Management has a market value of around €70 million. The sovereign fund of the Nordic country is positioning itself as one of the key investors in the company led by Juan Velayos, together with several other international funds, including Wellington Management Group, with an 8.5% stake; Fidelity (6.8%); Adar Capital Partners (5.2%); Invesco (5.01%); King Street Capital Management (3.9%); and the Bank of Montreal (3.25%).

The Norwegian Fund first acquired shares in the company when it debuted on the stock market last year and has taken advantage of the two accelerated placements made by the US fund Lone Star to strengthen its position in the share capital of the property developer. Lone Star exited the capital of the company, which it constituted three years ago with the purchase of the real estate subsidiary of Kutxabank, a week ago, after selling the 12.5% stake that it still controlled.

In March 2017, the US fund placed 40% of the shares that it owned on the market as part of the stock market debut, and in September, it sold off another 27% stake through an accelerated placement that generated proceeds of €395 million and decreased its participation to around 13%.

Incentives

Finally, a week ago, Lone Star sold an additional 12.5% stake for €173 million – also through an accelerated placement. Following that sale, Lone Star retained 350,918 shares in Neinor, representing approximately 0.4% of the firm’s share capital, which it is reserving in order to agree the requirements for the incentive plan for directors.

The company’s shares closed at a price of €18.54 yesterday, having fallen by 0.64%.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Lone Star Exits Neinor after Selling its 12.5% Stake for €174M

11 January 2018 – Expansión

Following this operation, the stake owned by the US fund in the property developer, which was its largest shareholder before its stock market debut, will be reduced to a token 0.4%.

Lone Star is folding up the sails in Neinor Homes, whose share capital it is almost completely exiting less than a year after the property developer’s debut on the stock market, which took place in March last year. The US fund has undertaken an accelerated placement of 9.85 million shares in Neinor, representing 12.5% of that firm’s share capital, amongst institutional investors.

Yesterday, the property developer closed trading at €18.04 per share after a decrease of 1.1%, which means that the package put up for sale was worth €177.8 million.

Nevertheless, today, Neinor has informed the National Securities and Exchange Commission (CNMV) that the price at which the placement was closed was €173.99 million, equivalent to €17.65 per share.

After completing this operation, Lone Star’s presence in Neinor, the company that it controlled 100% prior to the property developer’s debut on the stock market, will be reduced to a token 0.4%, equivalent to 350,918 shares that it is retaining to ensure that it agrees the conditions of an incentive plan for “certain directors and key employees”.

With the sale of this latest package, Lone Star is culminating a divestment process that it began in March last year with Neinor’s stock market debut, when the American fund placed 60% of the property developer’s shares on the market, for which it received revenues of around €800 million.

A few months later, in the middle of September, Lone Star divested another 27% of Neinor, receiving proceeds on that occasion of €394.6 million and obtaining profits of €166 million as a result.

Following the accelerated placement completed yesterday and entrusted to BNP Paribas, Citigroup, Credit Suisse and JP Morgan, the resources raised by the US fund from the sale of Neinor now exceed €1.37 billion in total.

Neinor, whose origins date back to 2015, when Lone Star acquired Kutxabank’s real estate assets, debuted on the stock market with a valuation of €1.34 billion. Currently, its market capitalisation amounts to €1.425 billion, up by 6.3% from that figure.

Neinor’s main shareholders include the investment firms Wellington, with an 8.5% stake; Fidelity, with around 6.8%; and Invesco, with 5%, according to the CNMV’s registers.

Original story: Expansión (by J. Díaz)

Translation: Carmel Drake

WeWork, The Co-Working Giant, Arrives In Spain

13 September 2017 – El Español

The co-working space giant WeWork, which is worth around $22,000 million, has finally arrived in Spain. And it already controls two offices in Barcelona and Madrid. The latter is going to open first, with a hosting service for small companies and independent professionals.

The offices in Madrid are located on Paseo de la Castellana, 43. This 9-storey newly-renovated office building, with a surface area of 6,000 m2, is owned by Colonial and used to house the headquarters of the consultancy firm PwC and also of Abengoa (which moved out in July 2016 to cut costs).

WeWork is not yet offering on its website the space that it has available in Barcelona. According to Ejeprime, it signed an agreement with the Catalan group Castellví in July to occupy a building in the 22@ district, where many of the main technological companies are concentrated.

The strategy that WeWork has adopted for its arrival in Spain is similar to the one that it has implemented in other markets: it does not own any real estate properties outright but rather reaches long-term agreements to lease them. Nevertheless, in May, it signed an alliance with an investment firm with the aim of acquiring real estate assets.

Who is WeWork?

WeWork is a project born in 2010 that offices flexible work spaces for workers. In Madrid, its launch prices start at €250 per month (in the case of individual desks for workers) and range up to €14,500 for private offices with up to 50 desks.

The company, which has a presence in another 17 countries, has raised more than $4,400 million, with investors ranging from fund managers, such as Fidelity and T Rowe Price, to banks such as Goldman Sachs and JP Morgan.

The most recent capital injection was received in August. In total, $4,400 million was contributed by the Japanese technological and telecommunications giant Softbank.

There has been debate over the valuation of the company in recent months. The $20,000 million figure represents 20 times its forecast revenues for 2017. That is much higher than those of its competitors such as Regus. The reason? It is not only a business that is growing quickly (by more than 80% if the forecasts for 2017 are fulfilled, according to CBInsight, with $1,000 million of revenues), but also because of its projection as a expert in how companies work with access to a vast quantity of data, as the magazine Wired pointed out in a recent report.

How does WeWork work?

The company has already created a Spanish company: WeWork Community Workspace SL. It was constituted at the end of June and its administrators include Mike Nolan, the company’s Head of Global Business Planning and Abraham Safdie, Vice-President of the International Business.

Its tax structure is very similar to that of other companies in the sector, such as Uber and Yahoo: the parent company that controls the subsidiary, WeWork Companies International BV, has its centre of operations in the Netherlands, a country with a very favourable tax regime and used by multinationals to reduce their tax bill.

Original story: El Español (by J.M.G)

Translation: Carmel Drake

Hispania Sells Its Portfolio of Offices to Swiss Life

9 August 2017

 

The Ázcarraga 3 building in the Chamartín district (Madrid)

The Spanish REIT, which counts George Soros as an investor, is close to finalizing the sale of about twenty office buildings to focus on its hotel business.

Everything is ready for the sale of Hispania’s portfolio of offices, one of the most anticipated deals in the real estate market. Absent any last-minute hiccups, the Spanish REIT, which counts George Soros as an investor, will sign an agreement with Swiss Life for the sale of some twenty office buildings for about 510 million euros, according to EXPANSIÓN’s sources.

Hispania’s office portfolio is distributed between Madrid, where 16 buildings are located, as well as two offices in two buildings and one asset under development, Barcelona and Málaga, with five and one building each.

The real estate consultants CBRE, JLL and the law firm Freshfields have advised Hispania, while Swiss Life has been advised by Aguirre Newman and Garrigues.  The deal is expected to be finalized in the coming weeks, or even days.

According to the latest information provided by Hispania, the Spanish REIT’s portfolio of offices had a value of 584 million euros at the end of the first semester of 2017. This assessment included the Aurelio Menéndez building, sold in June to a family office for 37.5 million euros. Hispania plans on keeping its commitment to execute pending works on the asset, which it expects to complete in November, at which time the sale of the building will be finalized.

Not including Aurelio Menéndez, Hispania has offices with almost 182,000 square meters of gross leasable area, of which almost 21,300 meters are in Madrid’s financial district. It also has another 116,852 square meters in office buildings in the prime secondary zone. Hispania has 39,506 square meters in Barcelona and 4,288 square meters in Malaga.

According to the latest information published by Hispania, the occupancy level in these buildings is 84%, with an average monthly income of 13.8 euros per square meter.

Hispania acknowledged this morning in a relevant fact to the market that is negotiating the sale of office assets and added that it maintains contacts with, among others, Swiss Life, although it added that it has not yet reached any agreement on the matter.

Divestment

With this operation, the company managed by the Azora Group goes one step further in its strategy to divest itself of residential and office assets to focus on the hotel business, in which it will continue to invest before putting those assets up for sale as well.

In this regard, in February Hispania announced its intention to continue with its initial objective of selling all its assets, individually, in portfolios or through a sale or change of control in the company, before March 2020, six years after the company was floated. Under this strategy, shareholders decided to extend the investment period until 31 December.

In addition to George Soros, who controls 16.7% of the REIT through Soros Fund Management, Fidelity Management and Research (7%), Tamerlane (6%), BW Gestão de Investimentos (3,6%), BlackRock (3.3%) and AXA Investments (3%) are also investors.

Original Story: Expansion – R. Arroyo / S. Saiz

Translation: Richard Turner

Neinor Plans To Build 400+ Homes/Year In Cataluña

30 April 2017 – El Confidencial

Neinor is the new kid on the block. Cataluña has traditionally been a territory reserved for local, family-owned property developers. However, the crisis of 2009 left a large gap in the market: it swept aside groups such as Promociones Habitat (Figueras) and Espais. And it reduced companies such as Vertix to their knees. Only Núñez i Navarro and, to a lesser extent, La Llave de Oró (Marsá) were able to resist the onslaught. But now, Neinor has arrived. And it not only occupies the podium, its property developments and investments to date already make it the largest property developer in Cataluña. (…).

Neinor has 28 plots of land in Cataluña and has already started construction work on 17 of them, with a corresponding investment of €400 million. These figures place it way ahead of all of the local developers. Sources in the real estate sector indicate that Neinor plans to construct more than 400 homes per year in Cataluña. No other developer will even come close to that pace. Nor did Núñez i Navarro, ever, even at the height of its reign.

Neinor Homes debuted on the stock market in March, with plans to grow a purely residential property development business – a very different initiative from the proposals made by the Socimis. The stock market listing has created a group worth more than €1,300 million, in which the major shareholder is the fund Lone Star, with a 39.5% stake. Moreover, other international funds such as Fidelity, FMR and Invesco have stakes ranging between 3% and 5%. Anglo-Saxon capitalism pure and simple, the complete opposite of the approach adopted by the traditional Catalan property developers, which were always wary of the stock market and its pitfalls.

Now, Neinor forecasts that Cataluña will account for a quarter of its property development activity in Spain. When the 28 developments are underway, Neinor will be building 1,951 units in total in the Catalan market alone.

Of the 880 units up for sale, 668 homes have already been purchased off-plan. In practice, that represents 76% of the total, a very high percentage for the sector, which demonstrates the buyer pressure at a time when demand is a lot higher than supply in Cataluña. According to Tinsa, new house prices rose by 8.2% in the Catalan market during 2016.

Barcelona – unfinished business

Despite this start, the city of Barcelona, with its endemic shortage of land, represents Neinor’s unfinished business. The firm has just one development in the Catalan capital, almost all of which has been sold and completed. (…).

Nevertheless, Neinor is trying to consolidate its position in the city and is currently evaluating several purchases, according to sources at the company.

Given its lack of presence in Barcelona, Neinor is pushing ahead with projects in nearby cities such as Sitges and Sant Cugat. Its most important project is in Plaza Europa, in L’Hospitalet de Llobregat (Cataluña’s second largest city), where it is planning to build two blocks of flats. Like in the case of its other developments, one of those towers has already been sold off-plan.

Second homes

Neinor is also planning to build second homes in Cataluña, like it is already doing in other markets, such as in Málaga. Nevertheless, it wants to limit those projects to 20% of the total volume that it builds in the Catalan market. (…).

Original story: El Confidencial (by Marcos Lamelas)

Translation: Carmel Drake

Hispania Gets Ready To Debut On The Bond Market

17 January 2017 – Cinco Días

The Socimi Hispania is planning to join the bond issues undertaken in recent months by other major players in the sector, including Merlin and Colonial, with the aim of diversifying its financing. To this end, it has already started to sound out the ratings agencies. Its objective is to obtain an investment grade rating for its securities.

Hispania Activos Inmobiliarios is studying the option of debuting on the capital markets with a bond issue to refinance some of its gross debt, which currently amounts to €631 million, according to sources familiar with the operation.

The Socimi has already started the process to request a rating from the ratings agencies, with the aim of launching the operation during the first few months of the year.

The firm has made contact with the three large players –Standard & Poor’s, Moody’s and Fitch–, although it will not need a rating from all of them, rather from just one of them or two at most. The aim is to achieve an investment grade rating – BBB – or Baa3 – , which would allow it to debut on the capital markets at a reasonable cost.

Hispania, in which the magnate George Soros owns a 16% stake, will thereby join the other bond issues undertaken recently by other companies in the sector.

The Socimi Merlin Properties – which forms part of the Ibex 35 – went to the market in October with a 10-year bond placement amounting to €800 million. The current yield on that debt is 2.3%. It has a Baa2 rating, which is one notch above the limit that separates junk bonds from investment grade securities, according to Moody’s nomenclature. Moreover, Merlin has assumed another €1,550 million in bonds from two bond issues made by Metrovacesa, with which it completed its merger at the end of October. (…).

Hispania’s current debt has an average maturity period of 7.2 years and €497 million of the balance is due to be repaid from 2022 onwards. The current average debt cost is 2.7%. Hispania also has hedges in place to avoid any surprises if interest rates rise. 96% of its debt is guaranteed. (…).

In general terms, the optimal balance sheet structure of these types of companies rests on three pillars: bank debt with an additional guarantee – in the majority of cases, properties from the company’s portfolio – , unsecured financial loans and listed debt.

With the proceeds that it raises from the bond issue, Hispania plans to repay some of its current debt balance. It would thereby take advantage of the good conditions in the market with liquidity and the environment of low interest rates. This company, created in 2014 under the special tax regime for Socimis, is led by Concha Osácar and Fernando Gumuzio, and is managed by Azora. In addition to Soros, its shareholders include the funds Fidelity, FMR, Tamerlane and BlackRock.

Hotel specialist

Hispania’s portfolio of real estate assets closed the third quarter of 2016 with an appraisal value of €1,680 million. The Socimi owns 36 hotels in Spain with 10,407 rooms. 68% of the value of those assets is located in the Canary Islands and 64% is managed by Barceló, with which it has signed a strategic alliance. The Socimi recently purchased three properties in the Cala San Miguel in Ibiza (pictured above) for €32 million.

Original story: Cinco Días (by A. Simón and R.M. Simón)

Translation: Carmel Drake