Catalan Occidente Merges its RE Subsidiaries to Cut Costs

7 March 2019 – Expansión

Catalana Occidente is looking to cut costs by merging some of its recent real estate purchases, without impacting the entity’s business model.

Last year, the insurance company acquired Chezsuccess, owner of the Luxa Business Park in Barcelona, home to the headquarters of Amazon and WeWork, for €90 million. That firm has subsequently been renamed GCO Activos Inmobiliarios.

Catalana Occidente also bought Legión Empresarial, owner of the WIP office building in Barcelona’s 22@ district, for €20 million.

Now it is merging its two subsidiaries, which means that all of the acquired assets will be grouped together in GCO Activos Inmobiliarios.

In total, the insurance group’s real estate assets were worth €1.4 billion at the end of 2018, accounting for 12% of its investment portfolio. Fixed income securities represented 59% (€6.6 billion) of the total and equities 11% (€1.3 billion).

Original story: Expansión (by E.d.P)

Translation: Carmel Drake

Colonial’s Profits Fell by 23% in 2018 to €525M

26 February 2019 – El Confidencial

Colonial closed 2018 with revenues from rental income of €347 million, up by 23% compared to a year earlier. Nevertheless, the Socimi’s profit decreased by 23% to €525 million, given that in 2017, the firm recorded a gain from the sale of a building in Paris – In & Out – for €445 million and was converted into a Socimi. The buildings contributed by the merger with Axiare generated €56 million, equivalent to 16.1% of the total.

These are Colonial’s first results following the completion of its merger with Axiare, the Socimi over which it launched a €1.45 billion takeover in November 2017, and in a year in which it also increased its stake in the French firm Société Foncière Lyonnaise (SFL).

In a relevant fact sent to the CNMV, the Socimi also announced that it ended the year with assets worth €11.3 billion – distributed across the centres of Paris, Barcelona and Madrid – up by 22%, following the integration of Axiare onto its balance sheet. Excluding the effect of that integration, the increase would have amounted to 8% (…).

“Following an excellent year, we are confident of achieving a very satisfactory performance in the market and of generating rental income of €500 million over the next three or four years”, explained the CEO of Colonial, Pere Viñolas, who added that the company’s recurring profit, after excluding extraordinary items and asset revaluations, amounted to €101 million and represented an increase of 22%.

In operational terms, last year, Colonial signed 103 rental contracts, spanning a total surface area of 175,000 m2, which will generate rental income of €43 million p.a. (…).

In financial terms, at the end of 2018, Colonial recorded net debt of €4.7 billion at the end of 2018, up by 52% with respect to 2017 (€3.1 billion) before the purchase of Axiare. That liability accounts for 39% of the firm’s asset value (…).

Original story: El Confidencial (by E.S.)

Translation: Carmel Drake

Colonial Earns €254M in H1 Following the Integration of Axiare

30 July 2018 – Eje Prime

Colonial recorded a net attributable profit of €254 million following the merger of Axiare. That represented a decrease of 42% for the Catalan real estate company, although it did increase its net recurrent profit, which excludes the impact of the merger, by 12% to €41 million, according to a statement filed by the company with Spain’s National Securities and Exchange Commission (CNMV).

The Socimi led by Pere Viñolas recorded revenues from rental income of €170 million to June, up by 21%. Meanwhile, the value of Colonial’s asset portfolio amounted to €11.19 billion, up by 29% with respect to the same period last year.

In terms of its value on the stock market (the group is listed on the main exchange), the new Colonial, following the integration of Axiare, achieved a market capitalisation of more than €4.4 billion at the end of the first half of the year.

Original story: Eje Prime

Translation: Carmel Drake

Värde Will Integrate Aelca into Vía Célere to Strengthen the Latter’s IPO

21 July 2018 – El Economista

A new merger operation is on the horizon in the real estate sector, and it is going to star Vía Célere and Aelca. According to confirmation from several sources in the sector speaking to this newspaper, the two entities’ common shareholder, the fund Värde, is working in an active way to integrate the two companies with the aim of strengthening the structure of Vía Célere ahead of its upcoming stock market debut.

The fund and its partners in the real estate company (Marathon, Attestor, Bank of America Merrill Lynch, JPMorgan and Barclays) are currently holding conversations with the founders of Aelca to carry out an operation in which the assets of the property developer would be integrated into Vía Célere’s portfolio. According to the same sources, Värde, which owns around 80% of each real estate company, wants to close a preliminary agreement within the next two weeks, although the operation may not actually be executed until October and November.

The objective of the fund is to close the integration before the end of the year, in such a way that the company will be ready to carry out its debut on the stock market when the next sales opportunity presents itself. Following the debuts of Neinor, Aedas and Metrovacesa, the market has almost exhausted its appetite for the real estate sector, plus there has been some high volatility on the stock market due to political instability.

These circumstances have meant that the fund has not been able to liquidate its investment in Vía Célere so far this year, as it had planned, although, sources at the company say that no specific date had ever been set for the IPO. In the case of Aelca, its founders and shareholders, Javier Gómez and José Juan Martín, have been aiming (to list their firm) in 2019, a step that may now be taken under the umbrella of the Vía Célere brand.

With this move, once listed on the stock market, the firm launched and presided by Juan Antonio Gómez Pintado will be positioned as the property developer with the largest market capitalisation, amounting to €2.3 billion. Similarly, according to the same sources, the target for the delivery of homes by the new company would increase to around 5,000 units per year, thus reaching the figures planned by its competitor Metrovacesa, which also forecasts such volumes for 2021.

Before designing the integration process for the two property developers, Värde has also studied the possible merger of Vía Célere with one of the other large listed companies, although, that formula was giving rise to a giant with a volume of business that was not seen in the property development sector even in the boom years.

With the merger of the two property companies now on the cards, the new Vía Célere will have a land bank with capacity for the development of around 23,000 homes. To this figure, the plots that Sareb will inject into Aelca will have to be added, with an approximate value of €800 million, in the event that the property developer ends up reaching an agreement with the bad bank.

The American fund reached an agreement with the Avintia group in the summer of 2016 to acquire Aelca for around €50 million. Almost simultaneously, Värde launched Dospuntos from the leftovers of the former Parquesol, the real estate subsidiary of the Sanjose Group.

Six months later, it closed the purchase of the property developer led by Gómez Pintado for around €90 million to integrate it with Dospuntos and create a new giant in the sector, retaining the Vía Célere brand, which has become the fund’s new darling.

Created shortly before the real estate bubble burst, the real estate company is one of the few that managed to survive the crisis and if Värde’s plans do crystallise, it could position itself as the largest listed property developer in the country.

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake

Vitruvio Acquires Commercial Premise in Madrid for €1.5M

5 June 2018 – Eje Prime

Vitruvio is gaining strength in the centre of Madrid. The Socimi has just completed the purchase of a commercial premise in Madrid for €1.5 million. With this acquisition, the real estate group now owns 100% of the building located at number 52 Calle Fernández de la Hoz, which it acquired in 2016, according to the company. Vitruvio also recently completed the renovation of the building.

The commercial premise that Vitruvio has just purchased has a commercial surface area of 314 m2 and until now was occupied by a Bankia bank branch. “The acquisition has not required external financing, but rather has been paid for using the company’s own funds”, say sources at the Socimi.

The acquisition forms part of the transformation strategy that the company has carried out on the building on Fernández de la Hoz to improve the rental income generated by the asset when it purchased it in 2016”, they explain.

“The building has been renovated, to create modern and attractive office space so that the future tenants will be able to benefit from the location of the property in an open and modern space”, they maintain. “Therefore, adding the commercial premise means improving the representativeness of the entrance and improving the space for the tenants of the offices”.

After starting the year with this purchase (in April, it ruled out the acquisition of another building that it was evaluating), the Socimi is looking ahead with 2018 with optimism after recording strong results in 2017. The company closed last year with a 91% increase in its profits to €1.1 million, and a real estate portfolio worth more than €107 million.

That growth was due in large part to the integration of CPI, a real estate investment vehicle created by Consulnor (the manager in which Banca March holds a 48% stake), as revealed by Eje Prime last September.

Meanwhile, rental income at the end of the quarter amounted to €5.1 million, which represented a return of 4.8% on the most recent valuation. Once the building work has been completed on the properties on c/Sagasta and c/Fernández de la Hoz, the income will increase to more than €6 million, which will result in a yield of around 6%. Specifically, the return on Vitruvio’s residential premises amounted to 3.8% in 2017; on its offices to 6.2%; on its commercial premises to 6.4%; and on its industrial premises to 9.3%.

At the end of the year, Vitruvio managed 36 assets and 126 tenants, of which 118 accounted for less than 3% of its income. In terms of asset composition: 38% of the Socimi’s portfolio comprises residential properties; 28% commercial; 22% offices; and 12% industrial.

The company concentrates the bulk of its assets in Madrid, which account for 78% of the portfolio, followed by Vizcaya (10%) and Barcelona (4%). Portfolio highlights include the property at number 24 Calle Sagasta in Madrid, worth €18.8 million and the building on Calle Ayala 101, worth €10.3 million.

In the last quarter, Vitruvio refinanced a significant part of its debt. The group obtained a €19 million loan with a fourteen-year term and an interest rate of 1.95%.

Original story: Eje Prime (by C. Pareja)

Translation: Carmel Drake

Vitruvio Doubles its Real Estate Portfolio to €107M

1 May 2018 – Expansión

The Socimi is growing its real estate portfolio following the integration of CPI (the investment vehicle of Banca March’s manager), the entry of the Borbón family and several purchases.

The Socimi Vitruvio closed last year with a 91% increase in profits and a 95% leap in revenues. “Vitruvio closed a very positive 2017 with a 130% increase in EBITDA, and the doubling of its size, as well as of its number of properties and tenants. And all of that, whilst maintaining a very low level of indebtedness: from 35% in December to 24.6% at the end of the first quarter”, highlighted Joaquín López-Chicheri, CEO of Vitruvio.

This outstanding growth is due, to a large extent, to the integration of CPI, a real estate investment vehicle created by Consulnor (the manager in which Banca March holds a 48% stake).

The agreement, which was closed at the end of 2016 and formalised during the second quarter of last year, involved the incorporation of around twenty properties into Vitruvio’s portfolio, which closed the year with 36 assets worth €107 million. “We doubled the number of assets in the portfolio and their value between 2016 and 2017. Moreover, the average appreciate in the value of the portfolio was 7.85%, plus dividends”, explained the senior executive.

Dividend

In total, the listed real estate company (which has been trading on the MAB since July 2016) recorded revenues of €4.1 million, an EBITDA of €2.3 million and a profit of €1.1 million.

On 11 May 2018, Vitruvio is going to pay an interim dividend of €0.05 gross per share against its profits for 2018, as part of its quarterly dividend payment policy. In 2017, it paid 15% more than expected, distributing dividends amounting to €1.014 million in total.

“Vitruvio is the Socimi with the most disperse shareholding, excluding the Socimis owned by banks, with 206 shareholders at the end of 2017 and 284 as at 31 March 2018”, said López-Chicheri.

Currently, Vitruvio’s real estate portfolio is split between residential (38%), commercial (28%), offices (22%) and logistics assets. By location, 78% are situated in the central area of Madrid capital, 10% in Vizcaya and 4% in Barcelona.

Brand new projects

Following the strong results recorded in 2017, the Socimi plans to continue its good run, with a further increase in revenues, thanks to the incorporation of two high-profile assets, which are currently undergoing renovation: Sagasta 24 (pictured above) and Fernández de La Hoz 52, where building work is going to be completed this month (May). “The rental of both buildings is going to multiply turnover next year. In the case of Sagasta, we expect revenues to increase by four-fold, whilst in the case of Fernández de la Hoz, where the investment has been much lower, we estimate that the increase will be 1.7 times”.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Haya Real Estate Wins Contract to Manage Assets Worth €15bn+ For Bankia-BMN

9 April 2018 – Expansión

The negotiations between Haya Real Estate, the Spanish subsidiary of the US fund Cerberus, and Bankia, regarding the management of the latter’s real estate assets, are on the verge of completion. In fact, the parties have already established the perimeter of the new agreement: Haya is going to manage real estate assets worth between €15 billion and €17 billion, in gross terms, on behalf of Bankia and BMN, according to sources in the know.

After receiving the legal approvals to merge the also public company BMN at the end of December, Bankia decided to break the agreement it had signed with Cerberus regarding its property, as well as the agreement that BMN had signed with Lindorff. To do that, it had to pay a “three-figure” indemnity. Other sources in the sector estimate that the compensation payment will have amounted to around €100 million for each fund.

These indemnities depend on who initiates the termination decision, which in this case was Bankia following its integration of BMN.

Open to third parties

The process to take on the management of the real estate assets linked to the resultant entity was subsequently opened up to third parties.

Cerberus will have paid a higher amount than the forecast estimated by Bankia, which took advantage of the merger with BMN to renegotiate upwards a new contract in light of the good times that the real estate sector in Spain is currently enjoying.

Haya Real Estate (Cerberus) took over the management of Bankia’s assets worth more than €12 billion in 2013. At that time, the fund paid between €40 million and €90 million, a range conditioned by the fulfilment of the planned property sales.

The old contract was due to expire in 2023. Now, Haya is going to be Bankia-BMN’s servicer until 2028, according to the sources. Meanwhile, sources at Bankia indicate that the parties are finalising the negotiations and that the finishing touches to the operation have not been agreed yet.

BMN teamed up with Aktua in 2014. The former real estate arm of Banesto is now controlled by the Norwegian fund Lindorff.

Haya Real Estate has become a major player in the real estate sector in Spain. In recent years, it has teamed up with Sareb, BBVA, Cajamar and Liberbank, amongst other entities.

Cerberus’s platform in Spain managed €40.2 billion in assets at the end of 2017, up by 2% compared to the previous year. Having fought off competition from Lindorff in the bid to become the only company to manage the real estate assets of Bankia and BMN, Haya has cleared the way for its stock market debut. The Spanish subsidiary of Cerberus has engaged Rothschild to prepare its IPO.

Bankia will hold its General Shareholders’ Meeting in Valencia tomorrow. The focus will focus on the ERE (collective dismissal) following the integration of BMN and the rumours of a merger with BBVA.

Original story: Expansión (by R. Sampedro)

Translation: Carmel Drake

Cerberus Wins Bid To Manage & Sell Bankia’s Expanded Real Estate Portfolio

5 March 2018 – La Información

Cerberus has fought off competition from Lindorff to become one of the new Bankia’s partners, responsible for managing and selling its portfolio of foreclosed assets, which now exceeds €5 billion. The group chaired by José Ignacio Goirigolzarri has opted to continue with its existing partner in the end, to the detriment of the partner that has been working with BMN since 2014, for reasons that may go beyond the mere economic bid offered by both, indicate reliable sources.

Bankia’s alliance with Cerberus dates back to 2013, when it acquired its real estate firm Habitat on which it built Haya Real Estate, the servicer, which is now finalising its debut on the stock market after having also been awarded contracts to manage the portfolios of BBVA, Liberbank, Cajamar and Sareb (…).

At that time, almost all of Spain’s financial institutions opted to divest their “servicers” in light of the need to accelerate the sale of their toxic assets and the large appetite of specialist funds to grow in size and contracts. BMN’s story is similar. In 2014, it sold its real estate asset company Inmare to Aktua for €40 million. Aktua was Banesto’s former real estate servicer company, which Lindorff acquired from Centerbridge Partners in a close battle with Apollo and Activum SG Capital Management in 2016.

The Norwegian fund, which is itself currently immersed in an integration process with Intrum Justitia, thus took over the management of the real estate assets of the banking group led by Caja Murcia, as well as of those transferred by BMN to Sareb. The entity now also works for Ibercaja and with certain portfolios from entities such as Santander.

Haya Real Estate and Lindorff’s contracts with their respective clients are similar because they both impose a decade-long period of exclusivity, forcing Bankia to review its position following the absorption of BMN, just like with other types of joint ventures. The bank is going to proceed first to break the contracts and indemnify each partner for a sum estimated to amount to €100 million, according to Expansión, and then it plans to close a new agreement with the winning party. Both partners may have submitted similar bids although it is understood that Aktua offered an exclusively commercial service whilst the agreement with Haya Real Estate included the absorption of the workforce.

The transfer of employees

The new Bankia Group’s property portfolio has a gross value of €5.1 billion, as at the end of 2017, compared with €3.5 billion registered a year earlier excluding BMN’s exposure. The entity has a cushion of provisions that covers 35.9% of its portfolio value in such a way that it could afford to dispose of the portfolio at 64.1% of its initial value without incurring losses. The bulk – 62% – are homes associated with foreclosed mortgages and another 16% are properties received for debt in construction or property development – 48% of that proportion corresponds to land -.

BFA’s subsidiary reduced its problematic assets by 9.9% YoY last year – excluding the incorporation of BMN’s exposure onto its balance sheet – thanks, above all, to sales amounting to €427 million (€5.55 million corresponded to gains) and a 15.3% reduction in doubtful risks.

With the integration of BMN, the bank is being forced to review and rethink all of the contracts where exclusive suppliers operate in both networks. It has already resolved one relating to life insurance, which will see it discontinue BMN’s relationship with Aviva – it will pay that firm €225 million by way of compensation – in favour of Mapfre, which was also victorious in 2016 when the bank came across another duplicate alliance, for the first time (with the same British insurance company, which was also a historical ally of Bancaja). It still needs to settle a similar agreement with Caser, and put the finishing touches to its deals with Lindorff and Cerberus.

Original story: La Información (by Eva Contreras)

Translation: Carmel Drake

Kutxabank Prepares the Sale of Residential Land Worth €700M

26 February 2018 – Eje Prime

Kutxabank is awakening from its lethargy in the Spanish real estate sector. The Basque bank, which resulted from the merger of three savings banks from the region (Kutxa, BBK and Caja Vital), wants to get rid of 40% of its portfolio of toxic assets, which would mean launching onto the market a portfolio of land and promotions worth between €500 million and €700 million.

This operation will be the second most important divestment to be undertaken by the financial entity, after it sold its real estate arm, Neinor Homes, to the fund Lone Star, back in 2015 for €930 million.

The objective of the bank is to take advantage of the good times that the residential market in Spain is currently enjoying to place its assets with international funds and new property developers, according to Vozpópuli.

This option that Kutxabank is considering comes at a time when the sector is complaining about the lack of developable land, which means that it is likely that the bank will easily find groups interested in acquiring its land. The plots are largely inherited from the merged Cajasur, a Cordoban entity that BBK integrated in 2010.

If it carries out the transaction, Kutxabank would join Santander and BBVA on the roadmap of Spanish banks with respect to real estate. The sale of a large part of the property held by two of the country’s major financial institutions last year, both to US funds, set a course that other smaller banks are now starting to follow.

Original story: Eje Prime

Translation: Carmel Drake

Colonial Concludes that Axiare Holds Non-Strategic Assets Worth €300M

26 February 2018 – El Confidencial

Axiare has assets susceptible to divestment worth €300 million”. That is according to the President of Inmobiliaria Colonial, Juan José Brugera (pictured below, left), and his CEO, Pere Viñolas (pictured below, right), at the presentation of the company’s results.

“We are least interested in the Socimi’s logistics and retail assets, but that does not mean that we are going to sell off all of those assets or that said divestment is going to be undertaken this year. We have not yet been able to determine whether the assets will be sold in the end or when, due to the fact that we are not yet involved in the ordinary management of the company”, they said.

What assets are we talking about? As at September 2017, Axiare held logistics assets with a net value (GAV) of €192.6 million, spanning more than 466,235 m2. The vast majority are located in Madrid and the rest in Barcelona and other markets. To give us an idea, Axiare’s portfolio at the end of the third quarter of last year comprised 74% offices (50% in prime areas), 18% logistics platforms and 8% commercial assets (…)

Colonial, which registered a record net profit of €683 million in 2017, more than doubling (+149%) the figure obtained in the previous year, boosted by growth in the rental income of its office buildings and the appreciation in value of its assets, also estimates making net future investments of between €300 million and €400 million, in line with those undertaken to date.

In other words, between investments and investments, the net result is going to hover around the €300 million mark. These investments are going to focus on those markets where the firms already have a presence and so they will strongly back Madrid, Barcelona and Paris. Moreover, they are expected to be financed, to a large extent, through the traditional mature asset rotation policy. “We are going to continue investing, and also selling”, said both directors.

The merger will be ready in H2 2018

In this way, the real estate company is going to continue with the organic growth strategy that it has been pursuing since 2015, whilst working on the integration process with Axiare, which it estimates will take between four and five months to complete. As such, Colonial expects to close its merger with the Socimi during the second half of the year, which will materialise through a share exchange to take around 13.1% of the firm that it does not control yet.

“Of the possible alternatives, a merger is the most likely”, although both Bruguera and Viñolas have said that all of the options are currently being evaluated and that there will not be any decision in this regard until the second half of the year. Similarly, they said that they are “in conversations with Axiare to join its Board of Directors”, where they do not have a presence yet even though they increased their stake to 86.86% through the takeover, so as to take part in the Socimi’s management whilst the merger goes ahead (…).

New real estate giant

For the time being, the integration between Colonial and Axiare, which constitutes the first merger between the new generation of Socimis, will give rise to a company with real estate assets worth €11.079 billion, thus surpassing Merlin Properties. Of those assets, €9.282 billion will correspond to office buildings that Colonial owns in the centre of Madrid, Barcelona and Paris, spanning a surface area of 1.36 million m2, and the remaining €1.797 billion will correspond to assets contributed by Axiare, most of which are also offices, according to the year-end valuations completed by both companies.

In addition, the two companies generated a joint net profit of €700 million and turnover from rental income of €355 million in 2017. Nevertheless, Colonial calculates that the combined group’s revenues will increase to €500 million once the projects it currently has under development come onto the market.

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake