Qatari Sovereign Fund Becomes Colonial’s Largest Shareholder

8 November 2018 – Europa Press

Colonial has approved a capital increase at an extraordinary shareholders’ meeting, whereby enabling the Qatari Sovereign Fund to become the Socimi’s largest shareholder since it will see its stake in the company double to 20%.

Qatar is becoming the largest shareholder of the second largest Socimi in Spain, a firm that owns office buildings in Madrid, Barcelona and Paris worth €11 billion, through an agreement reached with Colonial to exchange the shares of its French subsidiary Société Foncière Lyonnaise (SFL).

Specifically, Colonial is going to give Qatar the own shares that it issues during the capital increase and, in exchange, the fund is going to hand over the 22% stake that it holds in SFL.

In this way, Qatar will double its presence in Colonial from its current position of 10% to the aforementioned figure of 20% and will become its largest shareholder. Meanwhile, the real estate firm will increase the controlling stake that it holds in SFL from 59% to 80.74%.

It is an operation worth €718 million, which Colonial is framing in the context of simplifying the group’s shareholder structure and of strengthening its position in SFL and in France, a company and market that it considers to be “strategic”.

The real estate company is tackling this transaction after completing the merger of the Socimi Axiare and at a time when it is immersed in a full growth strategy through investments in purchases and the new build developments.

In the case of Qatar, it is strengthening its position as the largest shareholder of the second largest listed real estate firm in the country, in line with the commitment that many large international funds are making to the Spanish real estate sector. Moreover, it will retain an indirect stake in SFL.

No changes on the board

These shareholder exchanges will not have any impact on the Board of Directors of Colonial, given that the Qatari fund will retain the two seats that it has had on the management board for a while, when it had a larger stake, according to a statement made by the President of the Socimi, Juan José Brugera, after the meeting.

Brugera said that the operation was approved unanimously by all of the shareholders, whereby ruling out any bad feeling on the part of Colonial’s largest shareholder until now, the Mexican group Finaccess, not only for losing its status (as the largest shareholder), but also for seeing its stake diluted from 18% to 16% as a result of the capital increase.

Original story: Europa Press

Translation: Carmel Drake

Colonial Will Increase its Share Capital by €180M to Finance Merger with Axiare

21 April 2018 – Expansión

The merger between Colonial and Axiare is moving ahead. The Socimi chaired by Juan José Brugera is expected to approve a capital increase at its next General Shareholders’ Meeting, scheduled for 24 May, to absorb the 13% stake in Axiare that it does not control yet. The capital increase will take place through the issue of 19.27 million new shares, which at current prices corresponds to a monetary value of around €181 million.

On 10 April 2018, the Boards of Directors of Colonial and Axiare approved the project to merge the two Socimis, which will give rise to a real estate giant with a portfolio of assets worth around €11 billion, which will place the new group very close to its rival Merlin, with assets of €11.254 billion.

This operation will go ahead after Colonial successfully completed its takeover of Axiare in February to acquire 87% of its share capital. The operation will involve the termination due to dissolution of Axiare and the block transfer of the Socimi’s assets to Colonial.

According to the approved exchange ratio, each existing shareholder of Axiare will receive 1.8554 shares in Colonial. To this end, the Catalan real estate company will submit to a vote by its shareholders the issue of a maximum of 19.27 million new ordinary shares with a nominal value of €2.50 each to pay for the merger exchange.

This operation will also be subject to a vote by the shareholders of Axiare, whose General Meeting is due to be held on 25 May on the first call and on 28 May on the second call, if the necessary quorum is not reached on the first call.

New Board

The items on the agenda for that General Shareholders’ Meeting include the appointment of Javier López Casado as a proprietary director, as a representative of Finaccess, which will then have two representatives on the Board after taking control of 18% of the group’s share capital. In this way, Axiare’s most senior governance body will comprise 11 members: four independent directors, two executive directors and five proprietary directors – two to represent the sovereign fund of Qatar, two to represent Finaccess and one to represent the Colombian firm Santo Domingo-.

On the other hand, Colonial is going to approve the distribution of a dividend amounting to €0.18 per share, up by 9%. The company is thus going to increase the remuneration to its investors with a third dividend payment after recovering it in 2016, following ten years of not paying the shareholders anything.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Finaccess Increases its Stake in Colonial to 18.23%

2 December 2017 – Expansión

The Mexican group Finaccess has reaffirmed its commitment to Colonial by investing another €154 million in the real estate company, which sees its total stake increase to €630 million based on the current market value. Following this acquisition, the group chaired by Carlos Fernández has increased its stake in the real estate company from 13.76% to 18.23% and has whereby retained its position as the company’s largest shareholder.

The operation forms part of the accelerated capital increase that Colonial carried out last week to raise financing for its takeover of Axiare.

Finaccess first acquired a stake in Colonial in the summer of 2016 through an operation that saw it exchange buildings for shares in the company. Since then, the Mexican firm has increased its stake in the real estate company on several occasions.

In addition to the Mexican company, the other two main shareholders of Colonial have also announced their commitment to support the group’s capital increase, up to a total of €250 million, which is why, following the purchase of Finaccess, there will be only €100 million left to raise. After Finaccess, the next largest stakes are held by the Qatar sovereign fund, which currently holds a 10.6% stake, and the Santo Domingo group, with a 7.3% stake. The Puig family, with a 5%, has declined to comment.

On Tuesday, Colonial closed a free capital increase that, together with the placement of its treasury shares, allowed it to raise €416.23 million. The operation followed the issue of €800 million in bonds placed last week. The two operations will contribute a total of €1.216 billion, compared with the €1.033 billion required. Colonial saw its share price close at €8 on Friday, after rising by 0.79% during trading.

Original story: Expansión (by M. Anglés)

Translation: Carmel Drake

Grupo Villar Mir Sells Final 1.51% Stake In Colonial

10 July 2017 – El Mundo

Grupo Villar Mir has definitively exited the share capital of the real estate company Colonial by selling the 1.51% stake that it still owned in the Socimi. The shareholding that has been sold is worth around €40 million on the basis of current market prices.

The corporation owned by Juan Miguel Villar Mir has thereby brought to an end its phase as a shareholder of the real estate company, which began in January 2014 – at its height, the Group was the largest shareholder, with a 24% stake. Villar Mir first invested in the real estate company Colonial when that firm was in the middle of its restructuring and clean up process, and it has exited it days after the firm returned to the Ibex 35 and became a Socimi.

Specifically, the corporation has sold the 5.42 million shares that it still owned directly in the real estate firm, through Espacio Activos Financieros, a package equivalent to a 1.51% stake of its share capital, according to the registers of Spain’s National Securities and Exchange Commission (CNMV).

Grupo Villar Mir also owned another 3.21% of Colonial indirectly, through various financial instruments. Those shares have been “loaned to hedge a financial operation”, according to the supervisor’s register.

In this way, the corporation concludes just over three years as a shareholder of Colonial, after leaving the Board of Directors in December 2016, when it decreased its stake in the company to just 3.3%.

Subsequently, in January 2017, it decreased its percentage to 1.5%, which is the stake that it is now selling.

Finaccess, current largest shareholder

Currently, the Mexican group Finaccess is the largest shareholder of Colonial; following its recent share purchase, it now owns 13.76% of the share capital. The Qatar sovereign fund is the second largest shareholder of the company chaired by Juan José Brugera, with a stake of 11.7%. The next largest shareholders are the Colombian firm Santo Domingo (6.1%) and the Puig family, which recently acquired a 5.10% stake.

On 19 June 2017, Colonial returned to the Madrid Stock Exchange’s Ibex 35, nine years after leaving the exclusive group. The firm owns a portfolio of office buildings for rent in the centre of Madrid, Barcelona and Paris, with a combined surface area of 866,000 m2 and a value of around €8,000 million.

With its return to the Ibex, Colonial completed the restructuring and clean-up process that it began in 2015. After that, it undertook a growth strategy through which it has now made investments amounting to €1,760 million through various operations, ranging from the purchase of assets to increasing its stake in its French subsidiary Société Foncière Lyonnaise (SFL), and acquiring capital in another Socimi, Axiare.

Original story: El Mundo

Translation: Carmel Drake

Colonial Analyses Possible Axiare Takeover Bid

21 November 2016 – Expansión

(…) Colonial, the real estate company whose shareholders include the Qatari sovereign fund, Villar Mir and the Mexican group Finaccess, has launched a process to evaluate the purchase of Axiare, in an operation that would involve the launch of a takeover bid.

According to financial sources, Colonial has engaged JPMorgan to analyse the process for buying its competitor as well as the options for financing the deal. In addition, the real estate company is reportedly sounding out several international investment banks regarding this operation. Axiare has a market capitalisation of €963 million.

The operation, known internally as Project Tiger, is being conducted with the maximum discretion, due to the concerns that Colonial’s recent share capital acquisition has generated amongst the Socimi’s management team.

On 17 October, the real estate company chaired by Juan José Brugera became Axiare’s largest shareholder, when it acquired 15.09% of its share capital, off market, from the management company Perry Partners. Until that point, Perry had been the Socimi’s largest shareholder, with a stake of around 19%. (…).

The fund manager generated significant profits from the sale of most of its stake in Colonial, given that it paid €10 per share when it acquired its stake and sold at €12.50 per share. Perry still holds a small stake in Axiare, which it wants to sell and Colonial is the best positioned investor.

Perry is not the only fund that acquired shares in the Socimi when it debuted on the stock market that is now willing to sell its stake (and generate significant profits in just over two years). In this way, several investors have approached Colonial with the intention of reaching an agreement similar to the one negotiated with Perry, according to sources close to the real estate company.

Meanwhile, Colonial has been focusing on growing in size for some time. Having resolved its financial problems of the past, and with a stable shareholder base, the real estate company has been undertaking investment operations amounting to around €500 million for several years. (…).

Nevertheless, its strategy to invest only in offices in Madrid, Barcelona and Paris, combined with the enormous buying pressure that currently exists in Spain’s two largest real estate markets, has caused Colonial to look for “more imaginative solutions”, such as the purchase of a 15% stake in Axiare.

The Socimi, which is obliged to distribute at least 85% of its profits to its shareholders, welcomed the entry of Colonial into its share capital initially.

Nevertheless, in recent weeks, the team led by Luis López de Herrera-Oria has strongly criticised the operation and has not hesitated in hiring legal advisors to analyse it. (…).

The reality is that Axiare’s share price has experienced several ups and downs since the entry of Colonial. Nevertheless, in recent days, its value has increased to exceed the threshold of €12.50 (the price paid by the real estate company), to reach €13.40 on Friday, having risen by 1.28% during trading. Since Colonial acquired its stake, Axiare’s shares have appreciated by 12%.

If Colonial ends up completing the takeover, it would take control of a new portfolio worth €1,049 million, in one fell swoop, which it would add to the €7,556 million that it currently manages (…). By way of context, following its merger with Testa and Metrovacesa, Merlin controls assets worth around €9,300 million.

Original story: Expansión (by R. Ruiz/D. Badía)

Translation: Carmel Drake

Colonial Pays Its First Dividend In 10 Years

5 July 2016 – Expansión

Colonial will distribute a gross dividend of €0.015 per share to its shareholders today.

Colonial is making dividend distributions again, ten years after it suspended such payments to its shareholders. The real estate company is rewarding its shareholders now that it has completed its recent restructuring and after closing 2015 with a profit of €415 million and a record number of lease contracts.

Colonial will thereby become the first real estate company of those that have managed to overcome the crisis to start paying dividends again, after it also became the first to achieve an investment grade rating from a ratings agency in 2015.

As such, with the recovery of payments to its shareholders, the company has definitively completed the process to clean up, restructure and return to growth that it embarked upon a few years ago and which involved the entry of new shareholders into its capital.

Currently, Colonial’s two largest shareholders are the Qatari sovereign fund, with a 13% stake and the Grupo Villar Mir, with a 9.2% stake, which will thereby receive €6.23 million and €4.43 million in dividends, respectively.

The company’s new third largest shareholder, the Mexican group Finaccess, will receive €4.3 million for the 8% stake that it just purchased in the company in exchange for a batch of assets.

The other high profile shareholders of the real estate company include the Andorran bank MoraBanc, which holds 7%, the Colombian group Santo Domingo (6.8%), the British billionaire Joseph Charles Lewis (5%), the Reig group with a 2.5% stake and several investment funds, which hold between 1.9% and 3% each.

Following the capital increase, which saw the entry of two new shareholders (Finaccess and Reig), and the dividend payment, Colonial is now waiting to carry out another item on the agenda approved at the last General Shareholders’ Meeting: a “reverse share split” of ten shares for one.

The company chaired by Juan José Brugera defines all of these operations within the growth strategy that it is currently undertaking, which has involved expanding the business focus, beyond its three traditional markets (Madrid, Barcelona and Paris) to analyse operations in other European capitals.

Original story: Expansión

Translation: Carmel Drake

Deloitte: Hispania & Lar Are The Most Profitable Socimis

7 June 2016 – El Confidencial

They have been accused of: buying up assets expensively, skewing the market by paying stratospheric prices, heating up the market on its way to recovery, when it still needs time for supply and demand to adjust…the Socimis have been accused of many things, but for all their successes and failures, the reality is that they are all managing to generate more profitability than other types of investments, such as fixed and variable income, with average operating yields (net gain over initial investment) of between around 4% and 6%.

And the story goes on and on, because if we add to those figures the fact that Socimis have an easier time when it comes to obtaining financing from financial institutions – they are being offered spreads of just 1.5% – such as in the bond market – an area that several Socimis (Colonial, Merlin and Lar) have already ventured into and which Hispania hopes to explore soon, – the final yield on their investments will amount to 10%-11%.

A recent study by Deloitte, which was published last Wednesday in the Foro MedCap organised by the Spanish Stock Exchange and Markets (BME), highlights the success that these investment vehicles are enjoying, after it has analysed the gains that they are making on their investments from several perspectives. As the table in the article shows, Hispania and Lar España are, in that order, the two companies that are achieving the highest operating returns in the sector with respect to their initial investments.

Colonial, the only large listed Spanish real estate company that has not adopted the Socimi structure yet because it has tax credits from prior year losses, appears slightly behind, with an operating yield of 3%. But as Alberto Valls, Partner of Financial Advisory at Deloitte, explained, this figure is distorted by the high weight that Colonial’s French subsidiary SFL has in its portfolio. SFL is an authentic jewel in the crown of this group but because it focuses on the high-end office market in Paris, it offers lower yields in exchange for holding better assets and it does not include the exchange operation with Finaccess, which the Group will approve on 28 June.

The other side of the coin: the stock market.

Merlin, Colonial, Hispania, Axiare and Lar have an aggregate net asset value (gross value less debt) of €7,576 million, in line with the combined market value of these companies, which stands at €7,655 million. Nevertheless, if we look at each company in detail, we see that Axiare is the Socimi that has managed to best to gain the trust of investors, listing as it does with a discount premium on its NAV of 11.5%, followed by Colonial, with a discount premium of 8%. In exchange, the stock market value of Lar is 8% lower than its asset value, a difference which amounts to -3.5% and -1.5% in the cases of Merlin and Hispania, respectively, figures that indicate that those companies still have some way to go on the stock market.

Despite that punishment, if we compare the evolution of these companies on the stock market over the last two years (all of these Socimis debuted on the stock exchange in 2014) with the performance of the Ibex, we see that, according to Deloitte’s report, whilst the sample of companies increased their values by 18%, Axiare’s share value rose by 34%, Hispania’s by 22%, Merlin and Colonial by 18%, and Lar by 6%. Despite this improved behaviour, the Spanish companies in the sector are lagging behind their European counterparts, given that the EPRA index, which groups together the main real estate companies in Europe, reported an (average) increase of 23%, exceeded only by Axiare.

From this international perspective, the experts agree that, far from heading for another (real estate) bubble, there is still a long way to go in our country and that the phenomenon unleashed in the last two years with the eruption of Socimis in the stock market, is also being experienced in other countries, encouraged by the real estate recovery, surplus liquidity and the need to find returns of around 4% with controlled risks in a zero and negative interest rate environment. (…).

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Colonial Plans To Increase Its Share Capital By €265M

26 May 2016 – Expansión

Colonial will undertake a capital increase amounting to €265 million to allow it to continue adding office buildings to its portfolio. In parallel, the Group is preparing to make investments amounting to €400 million, including the purchase of a 4.4% stake in its French subsidiary SFL (Société Fonciere Lyonnaise) and several buildings in Madrid and Barcelona.

The capital increase should be approved at the General Shareholders’ Meeting on 28 June and will serve to finance some of the asset acquisitions by allowing Colonial to make some payments in shares. Following this operation, the Group’s market capitalisation will exceed €2,300 million.

The expansion of its stake in SFL, where it will end up controlling 57.5% of the share capital, will be performed through the acquisition of a share package from the Reig Capital Group. Part of the payment will be realised in cash (€51 million) and the remainder, through the delivery of 90.8 million new shares in the real estate company. The Holding company owned by the Andorran businesswoman María Reig will thereby control 2.5% of Colonial’s share capital.

The share capital will also serve to pay for the purchase of two office buildings in Madrid, currently owned by the Mexican group Finaccess and valued at €202 million. The buildings in question are IBM’s headquarters in Madrid, located on Calle Santa Hortensia and the building located at number 73 on Calle Serrano. The former has a total surface area covering 47,000 sqm and is one of the seven largest office buildings in the capital, whilst the second, with a surface area of 4,200 sqm, has been highly valued due to its location and the quality of its facilities.

In return for integrating these two properties into its portfolio, Colonial will grant Finaccess 288.6 million new shares in the real estate company, which means that the group will control an 8% stake in Colonial.

In parallel to these operations, the real estate group chaired by Juan José Brugera (pictured above, centre) has completed the purchase of another office building in Madrid. It is located on José Abascal, 45 and has a surface area of 5,300 sqm. In this case, the consideration paid was €35 million.

The group has also purchased land in the 22@ district in Barcelona from the British fund Benson Elliott for more than €40 million. Colonial plans to construct a 17-storey office building with a surface area of 24,000 sqm on this land, which has not started to be marketed yet. The total investment of this project is budgeted to amount to €77 million.

The CEO of Colonial, Pere Viñolas, said yesterday that with this operation, the group will incorporate a surface area of 80,000 sqm and will be “20% larger than it is today”. The company expects that its revenues from rental income will also increase by 20% as a result.

Colonial’s indebtedness will increase by €111 million to €1,300 million. The Group’s consolidated debt, including SFL, amounts to €3,000 million and the company’s indebtedness ratio over asset value will amount to 41%.

Its market capitalisation increased by 1.5% yesterday to €0.677 per share.

Original story: Expansión (by Marisa Anglés)

Translation: Carmel Drake

Mexican Beer´s Kings Debut As Real Estate Investors in Spain

5/05/2014 – El Confidencial

Rich Mexican investors vie for real opportunities in Spain, following the suit of Carlos Slim. The latest first-time buyers were the former owners of Grupo Modelo, Mexican beer giant, that acquired IBM´s headquarters in Madrid for €130 million through their fund Finaccess.

The property of 47.000 square meters was acquired by Morgan Stanley in 2006 for €240 million. Due to lease renovation risk and the necessity to invest in the building (built in 1989), its price had to be lowered.

Apart from Carlos Slim who bought offices of La Caixa, many other investors decided to take advantage of the real estate fever observed in Spain recently. For example, ADO group acquired Avanza buses firm, Sigma – Campofrío, Fibra Uno bought offices of Banco Sabadell, BX+ taking a share in Banco Popular, whilst David Martinez in Banco Sabadell.

Great deal of the transactions involved property and many affluent investors are currently combing Spain in search of real estate cherry picks.

 

 

Original article: El Confidencial (by Carlos Hernanz)

Translation: AURA REE