Tag: investment grade

S&P Increases Colonial’s Credit Rating to BBB+

18 October 2018 – Expansión

Standard & Poor’s has increased the rating assigned to Colonial from BBB to BBB+ within the investment grade category.

The credit agency has ruled out possible revisions of that rating by assigning a stable outlook for the company.

Colonial managed to increase its rating after reaching an agreement with Qatar, whereby the sovereign fund of that country became the company’s largest shareholder by acquiring 20% of its share capital through an exchange of shares.

By virtue of that operation, the Spanish Socimi consolidated its controlling position in its French subsidiary Société Foncière Lyonnaise (SFL), given that Qatar granted it the 22% stake that it owned in that company, allowing it to increase its share of the capital to 80%, in exchange for shares in the Spanish real estate company proceeding from a non-monetary capital increase.

S&P also reviewed Colonial’s rating upward after the Socimi completed the merger of another Socimi Axiare and closed the sale of a portfolio of offices owned by that company which did not fit with its business strategy.

Original story: Expansión 

Translation: Carmel Drake

Colonial’s Board Approves Conversion Of Company Into A Socimi

25 May 2017 – Expansión

Colonial is going to propose to its shareholders that the firm turn itself into a listed real estate investment company (Socimi), according to a statement issued on Tuesday by the group to Spain’s National Securities and Exchange Commission (CNMV).

The company has explained that the measure, which has already been adopted by the Board of Directors, will be subjected to a vote at the next General Shareholders’ Meeting, scheduled to be held on 29 June.

The real estate company explained that becoming a Socimi “would not involve any change in the group’s corporate strategy or in its business plan” and that, by contrast, it would mean that the profits and cash flow would increase “significantly”.

Specifically, Colonial wants to adopt this structure retrospectively, with effect from 1 January 2017.

In addition, the company states that becoming a Socimi would have a positive impact of €72 million on its own funds, as it would allow it to pull back some of the provisions accounted for in 2016.

Colonial also highlights that with this step, the effective tax rate would be reduced to 0% and also, that the group would be able to continue using a “tax shield”, amounting to more than €1,300 million to structure investment or divestment operations.

Moody’s assigns a Baa2 rating to Colonial

On the other hand, on Tuesday, the agency Moody’s assigned a credit rating of Baa2 (investment grade) to Colonial, with a stable outlook.

In this sense, it is worth noting that the company already saw its rating improve on 19 April this year, when S&P increased its debt rating to BBB (investment grade) from BBB- (low investment grade), also with a stable outlook, to become the Spanish real estate company with the highest credit rating in the sector.

Original story: Expansión

Translation: Carmel Drake

Hispania Gets Ready To Debut On The Bond Market

17 January 2017 – Cinco Días

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

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

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

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

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

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

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

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

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

Hotel specialist

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

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

Translation: Carmel Drake

Moody’s Assigns Merlin An Investment Grade Rating

19 October 2016 – Expansión

The ratings agency Moody’s has granted Merlin a Baa2 rating, in other words, investment grade. The agency Standard & Poor’s (S&P) also assigned the Socimi’s debt an investment grade rating in February. Merlin is just a few days away from closing its merger with Metrovacesa, which will result in the creation of the largest real estate asset company in Spain.

This rating represents a boost for Merlin’s plans to return to the capital markets soon with a new bond issue. It placed bonds amounting to €850 million in April.

With this rating from Moody’s, the Socimi has become the highest rated Spanish real estate company. The agency highlighted the position of leadership that the Socimi will have in the Spanish market following its merger with Metrovacesa, as well as the diversity of its assets.

Original story: Expansión

Translation: Carmel Drake

S&P Confirms Merlin’s Investment Grade Rating

21 April 2016 – El Mundo

Standard & Poor’s (S&P) has ratified the BBB rating that it assigned to Merlin Properties back in February, after the Socimi successfully closed its recent €850 million bond issue, according to reports from the company.

The ratings agency considers that Merlin’s investment grade reflects the “optimal risk profile” of the Socimi, which is further supported by a portfolio of property assets worth around €6,100 million.

The firm also assigns a stable outlook to the rating for the company led by Ismael Clemente, because it considers that its “large and diversified” property portfolio constitutes a “source of recurring revenue generation”.

“The assets are also well located, which allows the company to benefit from the recovery in the real estate sector that Spain is currently enjoying”, added the ratings agency.

The ratings firm has also assigned the same BBB rating to the €850 million bond issue that the Socimi recently placed. Through this operation, the company will restructure one tranche of the debt that it inherited from Testa when it acquired the company from Sacyr.

Moreover, S&P leaves the door open to a possible increase in Merlin’s rating, in the event that the Socimi adopts a “more conservative” financing policy, however it also warns of a downgrade in the event that its debt exceeds the threshold of 50% of the value of its assets.

Original story: El Mundo

Translation: Carmel Drake

Saint Croix Socimi To Debut On The MARF

1 October 2015 – Expansión

The Socimi Sainx Croix, owned by the Colomer family, registered its first fixed income program yesterday, for up to €80 million on the Alternative Fixed Income Market (‘Mercado Alternativo de Renta Fija’ or MARF), a financing option launched by the Government in 2013 to facilitate SMEs’ access to capital markets. In this way, Saint Croix became the first Socimi to turn to this market in search of financing.

According to a statement by the BME yesterday, Saint Croix plans to allocate the funds that it will raise through this bond issue to the acquisition of new assets and the maintenance of existing assets in its current portfolio.

Renta 4 coordinated the management and structuring of the plan and will act as the underwriter for the bond issues that are carried out. Axesor Ratings has assigned the issuer a BBB rating with a stable outlook, in other words, it is classified it as investment grade. Ramón y Cajal Abogados was engaged to provide legal advice for the design and registration of the program.

Saint Croix Holding, which relocated its headquarters to Luxembourg from Spain in 2014, owns 150,000 m2 of rentable space, with a total value of €284 million as at 30 June 2015. Its assets include several hotels, located in Huelva and Madrid, as well as the headquarters of CLH. The Socimi’s owners, the Colomer family, also own the real estate company Pryconsa.

The Socimi has included an explicit warning to investors in the bond issue brochure, about the political risks in Spain, making a clear reference to Cataluña (see page 32).

MARF

This  is a new debut for the MARF. In total, according to data from the BME, thirteen companies have decided to issue bonds through this market. Copasa, Pikolin, Tecnocom and Barceló are a few of the companies that have already successfully launched operations on this market.

Original story: Expansión (by D.B., M.S. and R.R.)

Translation: Carmel Drake