Sabadell Engages Lazard To Evaluate Future Of HI Partners

29 August 2017 – Expansión

Banco Sabadell is studying the best solution for its hotel manager HI Partners. To this end, the financial entity has engaged the investment bank Lazard to analyse the private sale of its subsidiary or to search for a shareholder to acquire a majority stake in the company, according to market sources.

In this way, Sabadell is opening a window of opportunity to those who may be interested in taking full or majority control of its hotel management company, whilst it continues, in parallel with the IPO of the same entity.

These two options will allow Sabadell to make cash on the one hand and undo its positions, taking advantage of the current investor appetite in the real estate sector and, specifically, the interest in hotel assets, and secondly, to find a partner to take a majority stake and whereby deconsolidate the business from its balance sheet.

The operation, known in the market as a dual-track deal, allows the company to launch a sale and the search for interested parties in parallel to and at the same time as it undertakes the stock market debut process.

In this way, Lazard’s commission is independent of the contract that HI Partners signed to evaluate the feasibility of listing the company on the stock market.

Opportunities

Sources at the bank consulted by Expansión have indicated that this represents a “very preliminary sounding out” of the various deconsolidation and value-generating options. (…).

In this sense, the CEO of Sabadell, Jaime Guardiola, said during the presentation of the bank’s most recent results that the vocation of the financial entity is not to remain as managers over the long term: “we want to exit and we have a very good opportunity ahead of us”, he explained.

HI Partners is led by Alejandro Hernández-Puértolas (pictured above centre), CEO of the company, who, together with Sergio Carrascosa (pictured above left) and Santiago Fisas (pictured above right), two other former executives of Reig Capital, comprise the management team.

The group was created in 2015 following the transfer of around twenty hotels by Banco Sabadell. The financial entity had foreclosed those assets during the crisis following the non-payment of debts. Moreover, HI Partners is responsible for managing the bank’s hotel debt.

IPO

To control these assets, the hotel investment and management arm of Banco Sabadell created two companies: one to hold the best hotels in the chain, HI Partners Holdco Value, and another containing smaller hotels in secondary locations, HI Partners Holdco Gestión Activa, with the intention of improving their management to then sell them on.

For the time being, Sabadell is not ruling out any of the options and is continuing to analyse the debut of its hotel management and investment subsidiary on the stock market.

Before the summer, the bank engaged the investment banks Citi, JPMorgan and Credit Suisse to sound out the market and analyse the feasibility of listing its hotel management subsidiary on the stock market (…).

In the event that the bank decides to debut the company on the stock market, the operation will focus on the company that controls the most strategic assets: 14 high-end hotels located in the main tourist areas and which, as at 30 June, had a combined appraisal value of €689 million, with more than 3,700 rooms in the portfolio.

Original story: Expansión (by R. Arroyo and J. Orihuel)

Translation: Carmel Drake

Vbare Debuts On The MAB With Almost 200 Rental Homes

27 December 2016 – Idealista

With just a few days left until the end of the year, the stock market is still receiving new Socimis. The trickle of debuts is incessant and on this occasion, the star of the show is Vbare Iberian Properties, a vehicle that owns a portfolio of residential rental assets.

The company has debuted on the stock market at a price of €12.90 per share, which represents a market capitalisation of €20.6 million, according to the consultancy firm Grant Thornton, and as such has become the twenty-eighth Socimi to trade on the MAB.

According to idealista.com, the company is backed by foreign capital (one of its main shareholders is the Israeli investment firm Value Base) and it has 183 real estate assets in its portfolio. Almost all of them are homes, but the Socimi also owns some garage spaces and some storerooms.

All of the properties are rented out and are located in the Community of Madrid. They are worth €20.84 million in total, according to Aguirre Newman. Half of the homes are located in Madrid capital, although the company also owns other homes in the municipalities of Aranjuez, Móstoles, Parla and Torrejón de Ardoz. In total, they have a useful surface area of more than 2,000 m2, comprise between one and four bedrooms and have an average occupancy rate of 72%.

One of the objectives that Vbare has set itself for the future is to raise more funds to allow it to expand its asset portfolio and to make the jump onto the main stock market, where some of the largest Socimis are already listed (Lar, Hispania and Axiare; meanwhile, Merlin Properties is listed on the Ibex).

In its market debut prospectus, the Socimi explained that it wants to centre its portfolio on residential real estate assets, aimed at middle-class tenants and located in the metropolitan areas of Spain’s major cities. In other words, areas with significant demand and with future development prospects in the short and medium term.

“Our properties are currently located in the metropolitan area of Madrid, this represents our first phase of investment. Progressively, the Socimi plans to diversify its asset portfolio by acquiring properties in the metropolitan areas of the main provincial capitals in Barcelona, Málaga, Valencia, Alicante, Bilbao, Sevilla, Zaragoza, Palma de Mallorca and La Coruña, which represent the company’s core business”.

Original story: Idealista

Translation: Carmel Drake

Acciona’s Future – Positive Outlook But What Next?

12 June 2015 – Expansión

Acciona’s Chairman, José Manuel Entrecanales, says that the Group’s restructuring has been completed and that the company is now looking to re-launch itself.

The construction and services group Acciona, which held its annual general shareholders’ meeting yesterday, expects to take a decision regarding the future of its energy and real estate activities before the end of the year. It is exploring the option of listing some or all of its business on the stock market in 2016, according to José Manuel Entrecanales, who spoke at the end of yesterday’s meeting. His comments come just a few weeks after Acciona announced that it is considering adopting the Socimi format for its real estate division. Socimis have operating assets that generate yields, and whereby often promise high dividends.

New partners

As an alternative to the real estate listing, or in parallel to it, Entrecanales is also considering ushering in a new shareholder. The Group has already gone down that route for its renewable assets outside of Spain, for which it has signed a partnership with KKR.

Regarding renewables, Entrecanales confirmed that the group is now analysing several alternatives to the ones it was initially considering. The option of publicly listing its overseas renewable assets on the US stock exchange, once KKR acquired 33% of those assets, has been parked for the time being. Now, it is analysing the possibility of listing all of its assets, including the Spanish ones, and even doing so on the Spanish stock market.

Entrecanales said that the options for going public in the USA or Europe are well matched at the moment. He also indicated that the new proposal has been made in conjunction with KKR.

Entrecanales said to the shareholders that “both the real estate and energy activities may be susceptible to independent access to the equity markets”, although he said that the process is being subjected to internal review.

Transmediterránea and Bestinver

As for the future of the Transmediterránea subsidiary, the Chairman of Acciona said that the outlook is now “optimistic” after the restructuring that has been undertaken and that, as a result, the group has decided to “defer any corporate transactions involving sales, mergers or the entry of new shareholders, at least until the results clearly reflect the true value of the company”

Regarding the other subsidiary, Bestinver, which suffered from the “sudden” exit of its management team last year, Entrecanales said that it has overcome its “troubles” and that the company now has the management team it needs to “face a bright future”.

As such, Entrecanales envisages a new phase of growth and expansion for the group, after going through what he refers to as a “hard stage” over the last two years, during which time the group “has faced one of the toughest challenges in its history”.

Entrecanales downplayed the latest incident that took place this week, when the company was excluded from the Ibex 35 due to its low trading volumes. “It is not a big deal” said Entrecanales. He has no plans to adopt any special measures to try to return the company to the Ibex, such as for example, undertaking a share split to give more liquidity to the securities.

Original story: Expansión (by Miguel Angel Patiño)

Translation: Carmel Drake

Tourist Sector Hits Back At Airbnb, HomeAway & Niumba

18 May 2015 – Expansión

The sector is demanding a stronger institutional fight against the intermediaries. The Government says that each region is responsible for its own response.

The main Spanish tourism companies have teamed up in an offensive with the aim of limiting the power of the proliferation of unregulated tourist rental accommodation, which do not pay taxes and do not meet the safety, hygiene and space requirements and other guarantees offered by legal accommodation. The sector wants to curb the platforms (websites such as Airbnb, 9flats, Wimdu, Rentalia, Niumba and HomeAway, amongst others) that make money by acting as intermediaries. And to that end, it has been pressuring the Spanish Government for some time to prohibit them, since they think that the autonomous communities are not fulfilling their regulatory duties.

Over the last few months, the tourism association Exceltur, whose members include prestigious companies such as NH, Melia, Iberia, American Express, Hotusa and Globalia, has been holding conversations with the Secretary of State for Tourism (who reports into the Ministry for Industry, Energy and Tourism). Exceltur thinks that the Executive “could do a lot more” to regulate the operations of these rental companies, which it considers are unfair competition and which threaten its business. The main trade association for Spanish hoteliers, Cehat, estimates that between 2010 and 2013, the number of customers staying at these establishments increased by 300%, and it calculates that the number of foreign tourists who use them represents more than 20% of the total.

To support its position, Exceltur has commission the consultancy firm EY (Ernst & Young) to conduct a study analysing the impact that this illegal rental accommodation is having on the tourism sector as a whole, not just on the hotel segment. To date, EY has prepared a report about the consequences for the Balearic Islands if this rental accommodation continues to grow at its current rate over the next ten years. According to its calculations, the hotel sector would lose between 5,000 and 13,000 jobs and forgo a gross added value of between €211 million and €529 million.

Regional jurisdiction

The Government says that tourism is a regional jurisdiction, and so the Central Administration cannot do much beyond trying to standardise the regional regulations as much as possible. Moreover, the upcoming regional and general elections are likely to scupper any attempt at reform.

To date, the regions that have endeavoured to do the most to regulate tourist rental accommodation are Madrid and Cataluña, although the former received a blow from the National Competition and Markets Commission (CNMC) in March when it ruled that the Madrid law (which only allows accommodation to be rented provided the minimum stay is five days) is a barrier to free competition.

Meanwhile, the Catalan Generalitat requires intermediary websites to ensure that each property offered for rent has a kind of identification number plate to accredit it as accommodation with its license in order. Last summer, Cataluña imposed a fine of €300,000 on the web portal Airbnb for allegedly failing to comply with that standard.

On an international level, cities are taking a variety of decisions. Thus, for example, New York has declared war on tourist rental accommodation, with coordinated teams of tax inspectors, police and lawyers; and the town hall of Amsterdam has just approved an agreement with Airbnb, which requries the platform to coordinate the collection of the tourist tax that is applicable to the activities of its users.

The so-called “collaborative economy” represents a real headache for legislators, both in Spain and across Europe. In Spain, Article 16 of the Law for Information Society Services (2002) states that intermediaries (such as Airbnb, Uber and others) are not liable for the possible unlawfulness of the people they host, unless they have specific knowledge thereof. Meanwhile, the European Commission is drafting a directive that may ease restrictions on the European market and facilitate the activity of these platforms.

Original story: Expansión (by Yago González)

Translation: Carmel Drake

RE Companies Gain Strength On Stock Market

11 May 2015 – Expansión

Markets / Colonial is the clearest bet for experts with a medium or long-term outlook

Seven years after the start of the crisis, almost twenty real estate companies are still trading on the stock exchange on a daily basis. A depleted army of survivors from the burst of the huge property bubble, which have now been joined by the Socimis – the newly created companies that specialise in real estate and enjoy significant tax benefits. They are revitalising a sector that has made an unprecedented journey across the desert, resulting in a loss in value of more than €40,000 million in stock exchange terms.

Together, the listed real estate companies (excluding those that have been suspended from trading, such as Martinsa Fadesa and Reyal Urbis), currently have a market value of around €9,000 million. That figure is light years away from the record figure of more than €50,000 million recorded in 2007. Today, the companies in the sector are smaller, their shares are much less liquid and their prices are more volatile.

Strong revaluation

After a long, tough period of adjustment, which is still underway in many cases, the sector has started to recover in 2015. The share price of every real estate company has increased this year (from minimal lows), with the exception of the smallest Socimi in the market (Promorent) and they have accumulated an average gain of 25%. Is this increase in share prices convincing? Is it time to allow real estate companies back into (our investment) portfolios?

Experts agree that it is too soon to bet heavily on the real estate companies, since they still represent risky investments, due to their high degree of indebtedness, plus their results do not entice investors to take positions. Nevertheless, they believe that the option of incorporating property companies into (investment) portfolios on a step-by-step basis is appealing, to take advantage of the potential reactivation of the real estate business in the heat of the economic recovery.

“It is not yet the best time to invest in a significant way in real estate. That ideal time will come during the final phase of the growth cycle of the Spanish economy, which is still in a process of recovery”, says Jaime Díez, from XTB, who says, nevertheless that “now may be a good time to start entering the sector, but in a moderate way, with portfolios investing 5% to 10% of their total funds in such companies. Over the long term, it will be interesting but we should always bear in mind that it is a high risk bet”.

Risk profile

Depending on the profile of the investor, Victoria Torre, from Self Bank, recommends investing no more than 5% to 20% of a portfolio in real estate assets. “If we consider an investment in the sector, we would do it from a medium-long term perspective”, she says, noting that there are “various factors that point to the recovery of the business, such as the slight increase in mortgage lending, the recovery in sales, the reduction in the housing stock and the increase in house prices”. In any case, analysts are very selective. Díez believes that the real estate company Colonial is the clearest bet amongst the traditional real estate companies, which have accumulated significant increases so far this year. Quabit’s share price has increased by almost 100%; Inmobiliaria del Sur (which has just signed an agreement with Anida, the real estate arm of BBVA, to develop a large housing development project in Sevilla) has increased its share price by almost 60%; Urbas by 53%; Realia by 41%; and Renta Corporación by 34%. Moreover, Colonial itself and Testa (which is contemplating a full/partial IPO) have both accumulated double-digit gains.

Original story: Expansión (by E. G.)

Translation: Carmel Drake