Tag: indebtedness

Excem Debuts on the MAB with a Market Value of €16.8M

9 July 2018 – Expansión

The Socimi dedicated to the rental of rooms for young people is going to make its stock market debut at a price of €1.40 per share. The Socimi is going to debut with a portfolio of 28 homes, which contain 181 rooms for rent, all located in the centre of Madrid.

The real estate firm Excem, which was constituted in 2015, has the aim of investing in urban properties located in central areas of Madrid, Barcelona and other main cities in Spain. It targets properties that are suitable for renovation and redecoration and subsequently leases out rooms to students and young professionals.

Currently, the Socimi is looking to extend its activity in the capital to other cities with “high demand and limited supply of these types of assets for rent”, including Barcelona, Sevilla, Valencia, Málaga, Bilbao and Santiago de Compostela, according to information provided in the explanatory prospectus that accompanies its debut on the MAB.

Around 40% of the company is controlled by Excem, a group owned by the Hatchwell family. In fact, the Socimi is chaired by David Hatchwell, who started his professional career in Goldman Sachs and HSBC before joining the group.

With the aim of undertaking its investment and growth strategy, Excem’s Socimi has conducted a number of capital increases since 2016 and has mortgaged all 28 of the homes that it holds in its portfolio.

At the moment, it has an indebtedness level equivalent to 38.5% of the value of its assets, well below the leverage limit of 70% that the company has imposed on itself.

“HOMIII.COM”.

The Socimi markets the rental of its homes through its own online platform (www.homiii.com) and by subleasing through other specialist companies. Since September last year, it has had an agreement with Uniplaces, a company from the United Kingdom specialising in reserving accommodation for students in a number of European cities. According to the prospectus, at the end of March, the firm had 175 lease contracts for its rooms (96.7% of its portfolio) with different tenants.

By virtue of the contracts, the tenants pay a monthly rent and make a contribution towards shared utilities (water, electricity, gas, internet and central heating) after handing over a deposit equivalent to one month’s worth of both concepts by way of guarantee.

Excem has the aim of achieving a gross return on each asset of between 4% and 6%, a percentage calculated as gross income from rental over the investment made. The Socimi has been created with the option of setting itself an expiry date, given that it does not rule out selling its properties once the minimum period of three years established for Socimis has come to an end, or dissolving the company after the seventh year, “depending on what the shareholders agree on the basis of the performance of the company, as well as the current and future properties in the portfolio”.

Original story: Expansión 

Translation: Carmel Drake

Sareb Sold Almost 5,000 Properties During Q1, Up by 12%

14 May 2018 – Eje Prime

Sareb sold almost 5,000 properties during Q1. During the first three months of the year, the bad bank placed 4,782 units, of which 2,358 corresponded to own properties and 2,424 to loan collateral properties that were transferred from the balance sheet of property developers, according to a statement issued by the company. Compared to the first quarter of 2017, that sales figure represented an increase of 12%.

88% of Sareb’s sales between January and March involved homes, whilst 7% corresponded to the sale of plots of land and the remaining 5% to the sale of commercial assets that the bad bank held relating to the tertiary market.

Similarly, the real estate company has announced the proposal to its General Shareholders’ Meeting to appoint Juan Ignacio Ruiz de Alda as a new board member, as a representative of the Restructuring Fund (Frob). The executive, with experience at Metrovacesa and Banco Santander, amongst other companies, would take over from Lucía Calvo, who left the company in January.

In 2017, Sareb ended the year with a real estate portfolio worth €37,179 million and €3,050 million of repaid debt, meaning that the company had managed to reduce its indebtedness by 25% during its first five years of life.

Original story: Eje Prime

Translation: Carmel Drake

Témpore Properties Appoints Directors & Finalises its IPO

6 March 2018 – Expansión

Témpore Properties, the Socimi created by Sareb, has started the countdown to its debut on the stock market. It will make the leap within the next few weeks, possibly before Easter, once the bureaucratic procedures have been completed. It will list on the Alternative Investment Market (MAB), like the vast majority of the 50 Socimis whose shares already trade on the stock market.

The company has been created with a selection of 1,500 assets, of which 1,383 are urban residential properties that generate returns of 3% per annum. The remainder are storerooms and garages. The combined value of the assets amounts to €175 million. Témpore’s size places it in the low-medium bracket in the sector, excluding Socimis backed by family capital. Its perimeter may be increased depending on the needs of Sareb, which has been backing property development in recent times. “Other Socimis do not have that option”, explain sources at the bad bank.

Azora is the manager of the Socimi and Renta 4 and Clifford Chance are advising the IPO process.

Yesterday, the Board of Témpore Properties held its first meeting after approving agreements relating to the entity’s internal operation and the listing process. The Socimi is chaired by Juan Ramón Dios Rial, Director of Real Estate Development and Promotion at Sareb. During the course of his career, Mr Dios has held various positions at TSB Bank, Citigroup, General Electric Capital Bank and Barclays España.

The Board of Directors comprises five members: three independent directors, one executive director and one proprietary director. They are Juan Ramón Dios, Nicolás Díaz Saldaña, Socorro Fernández, Rafael de Mena and Galo Juan Sastre.

Appointments

Témpore Properties is going to be led by Nicolás Díaz Saldaña, who has been the Director of Rental Mangement at Sareb until now. He will serve as the CEO and will sit on the Board as an executive director. Previously, he worked at BBVA, was Director of the International Team at Metrovacesa and CEO of the French Socimi Gecina. The company’s Finance Director is going to be Pelayo Barriga, who has been performing the same role at Sareb until now.

With Témpore Properties, the managers of Sareb are intending to open a window into the rental market, which is proving more profitable than property sales in certain segments. Moreover, through this route, the bad bank is going to be able to access new private capital and slightly reduce its high level of indebtedness.

By law, Socimis are obliged to remunerate their shareholders, and so Sareb can expect to receive dividends from Témpore.

Original story: Expansión (by R. Lander)

Translation: Carmel Drake

Merlin Earned €1.1bn in 2017 & Will Pay A Complementary Dividend

28 February 2018 – Expansión

The Socimi in which Santander and BBVA hold stakes doubled its earnings last year to €1.1 billion, compared with €582.6 million the previous year.

The Socimi Merlin Properties closed 2017 with revenues of €484.3 million, up by 34% compared to the previous year. Of that figure, €469.4 million stemmed from gross rental income.

Operating profits grew by 49% to €1.215 billion, whilst recurring EBITDA reached €396.6 million, up by 29% compared to 2016.

At the end of the year, the company owned a portfolio worth €11.254 billion, up by 15% compared to the previous year and 10% larger in terms of comparable surface area. Of that figure, €5.219 billion corresponds to its office portfolio, the value of which grew by 4.1% like for like.

At the end of the year, Merlin had gross financial debt amounting to €5.413 billion, placing its level of indebtedness (LTV) at 43.6%, compared with 45.5% a year ago. The CEO of Merlin, Ismael Clemente, said that he was satisfied with that reduction and assured that his firm would continue working to reduce the liability (…).

For this year, the company has set itself the objective of repositioning its assets, such as the case of Torre Gloriès (Barcelona), whose marketing is forecast to begin during the first half of the year. In the case of new acquisitions, the directors of Merlin indicated that they are going to be “very selective” in their purchases, with the focus placed primarily on Portugal and logistics assets.

Complementary dividend

The real estate investment company has announced an increase in its complementary dividend, payable in May, of 26 cents per share, which will be added to the 20 cents already allocated to the account. In total, shareholder remuneration for this year is going to grow by 15% to reach 46 cents, compared with the 40 cents disbursed in the previous year.

Merlin revealed that for the year ahead, corresponding to the accounts for 2018, it is going to distribute a minimum of €235 million amongst its shareholders, a disbursement that it will pay in full in cash, which will correspond to more than €0.50 per share. This remuneration will be distributed partly as a dividend and partly as a refund of the share premium.

Executive salaries

The real estate company in which Santander and BBVA hold stakes also published the salaries of its main executives. In this way, it was revealed that the CEO, Ismael Clemente, was paid €2.557 million last year, compared to €2.155 million in 2016. Of that figure, €1 million corresponds to his salary, whilst €1.55 million corresponds to his bonus.

Meanwhile, Miguel Ollero, also CEO of Merlin Properties, was paid €2.5 million in 2017, compared to €2.1 million the previous year; meanwhile, the directors Rodrigo Echenique, Francisco Javier García-Carranza and Agustín Vidal did not receive any remuneration whatsoever for their roles on the Socimi’s Board of Directors.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Morenés & Pepa Launch a New RE Fund with Warren Buffet

19 January 2018 – El Confidencial

Juan Pepa (pictured above left), the man who brought Lone Star to Spain, and Felipe Morenés, the son of Ana Botín and executive of the Texan fund for five years, are working together again. The two directors have just launched Stoneshield Capital, a firm that plans to invest €300 million in the Spanish real estate sector.

According to sources in the know, the two partners already have €200 million of capital, money that proceeds from: their own assets, some of Lone Star’s institutional investors and the famous financier Warren Buffet, who has decided to back them in this venture, although the parties involved did not want to confirm that information.

Unlike in the case of Lone Star, which has an opportunistic profile, Morenés and Pepa now want to focus on more conservative operations, which will limit the level of indebtedness of the new fund to around 50%, meaning that its investor capacity will reach the aforementioned €300 million.

The plans of these two partners are already very well advanced, with several operations on the table under analysis, and with the aim of investing all of that money in just a year, in other words, during the course of 2018, to take advantage of the current cycle.

Although the bulk of Stoneshield’s operations will be carried out in the residential segment, the firm is also interested in acquiring hotels, offices and commercial assets, according to the same sources.

Agreed departure

In November, in an email sent only to his circle of trust, Pepa announced that he was leaving Lone Star and that he would be taking a two-month sabbatical in his home country, Argentina, although in that email he also hinted that after Christmas he would be back in the news in Spain.

Letting that time pass was one of the commitments that Pepa agreed with Lone Star. That firm was already pursuing its exit strategy when, last summer, Santander put Popular’s €30 billion real estate asset portfolio on the market.

The Texan fund, led by Pepa and Morenés, fought to the end to acquire those assets, which would have resulted in Lone Star’s continuation in Spain. But Blackstone’s triumph meant that the fund decided to continue with its policy to close the cycle and so Pepa and Morenés opted to put their own plans into play.

Then, according to the sources, the two parties agreed to wait for Lone Star to complete its divestment from Neinor before moving actively in the Spanish market. The US fund sold its final 12.5% stake in the real estate company last week.

Morenés, meanwhile, has also left Lone Star, according to Vozpópuli, and the two partners are now working to create a team of around 10 people with whom they plan to operate with the same speed and element of surprise that characterised Lone Star when it first arrived in Spain.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Núñez i Navarro Invests €4.2M In Office Refurb

1 December 2017 – Eje Prime

Núñez i Navarro is strengthening its commitment to the office sector. On Thursday, the real estate developer presented a new office project in L’Hospitalet de Llobregat (Barcelona). The building in question is the Marina Factory, whose remodelling is going to involve an investment of €4.2 million.

The work on the property will be completed in March next year, after 19 months. The asset, located at number 450 Rambla Marina, has six floors measuring 1,200 m2 and 1,430 m2 and two retail premises. In total, it has capacity to house 1,000 people throughout its 10,000 m2.

The Marina Factory is located in an up-and-coming area of L’Hospitalet de Llobregat. The boost from Plaza Europa, which is two kilometres away from the office, has converted the area into a first-rate office district, with companies such as the perfume group Puig, the consultancy firm KPMG and the group Gallina Blanca choosing to locate there.

Núñez i Navarro is one of the largest Catalan property developers and one of the companies in the sector that has best overcome the crisis, with a policy of low indebtedness.

Original story: Eje Prime

Translation: Carmel Drake

NH Early Redeems A Bond Issue To Reduce Its Debt By €100M

31 October 2017 – Expansión

The NH hotel chain has reduced its debt by €100 million after early redeeming the entirety of a debt obligation issue made in 2013. The issue, amounting to €250 million in total, was due to mature in 2019.

NH has explained that the redemption will be performed on 30 November and will be charged against available cash and, temporarily, through short-term credit lines. Following the operation, the company’s long-term gross financial debt will stand at around €740 million.

The hotel group has explained that this operation will allow it to achieve a net interest saving of around €9.6 million between 30 November (2017) and 1 November 2019, the obligations’ maturity date.

“The redemption and cancellation of the obligations represents a significant milestone in the company’s strategic plan, and seeks to reduce the gross amount and average cost of its indebtedness over the long-term, as well as to prolong its average life”, says NH.

Specifically, with this redemption and without considering the temporary use of short-term credit lines, the average cost of NH’s debt will reduce from 4.2% to 3.8%, whilst its average life will lengthen from 4.4 years to 4.7 years.

Moreover, as a consequence of this redemption, the syndicated credit line signed in 2016 for a limit of €250 million will continue to be available in its entirety, and its maturity is extended automatically until 2021.

In this way, NH is finalising the process to refinance its long-term debt and will hold onto a €250 million convertible bond, which is due to mature in November 2018, as medium-term debt.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Silicius Socimi Raises €29M In Financing To Accelerate Asset Purchases

4 October 2017 – Press release

Silicius has signed a long-term financing agreement in order to continue with the acquisition of several new profitable assets ahead of its debut on the stock market in 2018.

The Socimi managed by Mazabi has taken another step forward. The company, which specialises in long-term profitable assets, is preparing a new phase of growth with the acquisition and incorporation into its existing portfolio of new assets, in accordance with its policy to invest in assets that generate stable returns.

Silicius has signed its first financing agreement with two Spanish banks for a combined amount of €29 million. The average maturity period for the financing is 12.5 years. Over the next few months, the company will secure another €13 million of financing, which it will use to make new acquisitions and invest in Capex for its existing properties.

Since this is the first loan that Silicius has signed, the company’s objective was to obtain financing conditions that “match” its long-term Business Plan and allow the payment of an annual dividend to its shareholders.

According to Juan Diaz de Bustamante, Director General of Silicius, “The company’s average indebtedness may not exceed 25-30% if we are to maintain the objective of paying a stable dividend to our shareholders”.

Silicius is governed by the following principles: conservative investments over the long term, the liquidity of our assets, the payment of an annual dividend and low indebtedness.

Currently, Silicius owns assets worth €120 million and its expected annual revenues amount to €6 million. Its assets all generate stable income over the long-term, with a combination of some of the investments held in value-added products.

The objective of Silicius is to make its debut on the stock market in 2018 with a value of between €250 million and €300 million through the incorporation of investor partners and real estate projects considered “suitable”. Once listed, the aim is to incorporate institutional shareholders to achieve the minimum objective of €400 million, the amount necessary to consider the Socimi’s shares liquid. The target investors are “family offices” and “institutional investors” looking to invest in exchange for an annual dividend payment and liquidity through listed shares.

Original story: Press release

Translation: Carmel Drake

Hotel Investors Switch Their Focus To Spain’s Second Cities

20 July 2017 – Expansión

Hotels have become of the star assets of the real estate sector with Socimis and investment funds lining up to buy them. And the forecasts show that these actors are set to consolidate their presence in Spain, gaining ground on the hotel groups – which will continue their commitment to a strategy focused increasingly more on management and less on ownership – and will analyse new secondary locations, in light of price rises and the decreasing yields in prime cities.

According to the Hotel Asset Management 2017 report, prepared by Magma HC, three-star hotels captured the attention of investors last year, given that they represent the most attractive asset for implementing repositioning models and improving prices. Specifically, 38% of the transactions closed in 2016 involved three-star hotels, 28% related to four-star properties, 24% to low-cost establishments and the remaining 9% to five-star hotels.

Albert Grau, Managing Partner at Magma HC, explained yesterday that the transaction market will shift its focus to the holiday segment, over the next few months, due to the (high) value of assets in prime urban destinations, such as Barcelona, Madrid, Málaga, San Sebastián and Palma de Mallorca, which are at levels that compromise their future profitability.

Although in previous years, the urban hotel market was the most sought-after by investors, in 2016, it accounted for just 33% of operations, whereas the holiday segment increased to account for 66% of the total. “Prices in cities such as Madrid and Barcelona have peaked, and purchases to generate wealth or profitability are complicated given the numbers”, said Grau.

By contrast, he considers that Spain’s secondary cities offer “great opportunities” for investors thanks to the significant potential that they hold and the fact that there are well-located assets there at “very attractive” prices.

However, the partner at Magma HC considers that the sector is a long way from a bubble, thanks to the greater professionalisation and the new requirements in terms of indebtedness levels.

Moreover, the report highlights that the Spanish hotel sector can expect to see new operations between hotel groups, such as between Starwood and Marriott, Fairmont and Grupo Accord and the purchase of Sidorme by B&B Hotels.

Commitment to rent

In terms of the business model, the most popular formula is still rental. Grau underlines that, given the strong performance of the market, owners who took the decision to bet on variable rentals are now receiving greater returns. In addition, the partner at Magma HC believes that the period of rent renegotiations, seen in previous years, is now over.

According to Magma HC’s report, hotel groups own 37% of their assets, lease 33% of them, manage 18% and operate 13% as franchises.

Grau explains that “more Anglo-Saxon” operations – management and franchising – are not growing, but continue to have a specific weight in the market and there is a growing trend to adopt them increasingly more, in line with international standards.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Sareb To Create A Socimi For Its Rental Properties

19 May 2017 – Expansión

Sareb is preparing to create a Socimi through which it will manage its rental business. That is according to Luis de Guindos, the Minister for the Economy, Industry and Competitivity, who made the announcement yesterday. He stated that the Government is considering creating a real estate investment company, which it would “place on the market before the end of the year”. De Guindos made these declarations at a symposium about Spain’s role in the reworking of the EU, organised by the Association for the Advancement of Management (APD).

The objective of this strategy is three-fold. On the one hand, Sareb would obtain new income, through the dividends that its Socimi would generate from renting out its assets. On the other hand, the debut of this subsidiary on the stock market would allow the entity to raise capital, which could be used to reduce Sareb’s indebtedness. According to De Guindos, we should take into account that Sareb has already divested more than 20% of its assets. Finally, through the Socimi, Sareb would have a structure to accelerate its sales, given that it could place entire blocks of flats in the hands of the Socimi.

Several unknowns

The Minister of the Economy said that this strategy is supported by “the current, strong performance of the market”, which is turning its focus towards the rental segment, and as such, Socimis are generating significant returns from their assets. Nevertheless, the new Socimi presents several unknowns, such as how many assets may be transferred to the new entity. It is also worth remembering that the majority of the properties that Sareb manages are located in peripheral areas or in new urban developments, where the rental market is complicated. Nevertheless, the regulations governing this type of company require 80% of the revenues to come from rental properties, and so Sareb would have to be very careful when it comes to choosing the assets to transfer. De Guindos did not indicate how much private capital he hopes to raise through this initiative, how much weight individual shareholders would have in the Socimi or what percentage take would be assumed by institutional investors.

Sources at Sareb indicate that the entity has 4,600 homes, but has still not decided how many of those would be transferred to the Socimi, aside from stating that “it would be a small percentage”.

Asset sales

Over the last five years, since it was created, Sareb has divested 20% of its assets. That percentage is small still and makes it difficult to fulfil the entity’s mandate, which requires it to liquidate all of the assets that were transferred to it by the banks in a period of 15 years and in an orderly manner. Moreover, it is worth noting that Sareb has already sold the properties that were easiest to place, with the aim of boosting the market, which means that now it is left with those properties that have the least possibilities.

Although the volume of real estate transactions grew at an annual rate of 16.1% during the first quarter, according to data from INE, and the stock of unsold homes is starting to run out in certain areas, prices are still falling in certain segments of the market and sales are not being closed.

Finally, the launch of the Socimi would come in parallel to the decision taken by Sareb to start building an average of 1,500 homes per year until its liquidation, even through it estimates that the figure would be much higher during the next three years, reaching up to 4,000 homes.

Original story: Expansión (by Pablo Cerezal)

Translation: Carmel Drake