A Swap from ING & CaixaBank: the Last Stumbling Block in the Sale of Santander’s HQ to AGC

27 July 2018 – Voz Pópuli

The sale of the company that owns Santander’s Ciudad Financiera is closer than ever to becoming a reality. The approval of the liquidation plan by a Madrilenian court set September as the deadline for offers. Nevertheless, there are still disputes to be resolved.

The main stumbling block now is a lawsuit in London against a swap (financial derivative) granted by five entities: Royal Bank of Scotland (RBS), CaixaBank, ING, HSH Nordbank and AG Bayerische Landesbank. The lawsuit, filed years ago, is based on a claim that RBS manipulated the interbank – LIBOR and Euribor – market. The lawsuit amounts to €800 million, given that the swap has cost around €90 million per year since 2008, according to financial sources consulted by this newspaper.

The discussion in Spain focuses on the fact that some of the creditors of Santander’s headquarters fear that the new owner of the company (Marme Inversiones 2007) will decide to shelve that lawsuit. It would require an agreement between the new Marme and the five banks party to the swap in exchange for renegotiating the derivative, which expires in 2023.

AGC’s offer

Those €800 million, if the process in London proves successful, could mean that all of the creditors recover their money. In particular, the original shareholder, the Brit Glen Maud, and the company Edgeworth Capital, owned by the Iranian investor Robert Tchenguiz, who took positions during the bankruptcy.

Other sources consulted indicate that there is a commitment from the main interested party in the Ciudad Financiera, the Arab fund AGC Equity Partners, to keep the Marme litigation case open.

Currently, the only offer on the table is the one presented by AGC in 2016 for between €2.5 billion and €2.8 billion, depending on the variables that are included. A year earlier, Aabar Investments, the owner of Cepsa, and Edgeworth, also submitted bids. But they were not accepted.

As we wait to see what will happen over the next two months, AGC leads the rest of the candidates to acquire Santander’s headquarters.

One of the possible counter-offers could come from Edgeworth, which negotiated a €2 billion loan with JPMorgan to participate in the liquidation plan. It also proposed that the company exit from bankruptcy without the need to be liquidated.

This operation would generate a sale with significant gains for the funds that entered the process by buying Marme’s debt from financial institutions. They include Blackstone, Canyon and Monarch.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Several Funds Acquire/Increase their Stakes in Hispania in the Midst of Blackstone’s Takeover Bid

11 June 2018 – Expansión

Blackstone’s takeover bid for Hispania has placed the Socimi firmly on the radar of investment funds. Since April when Blackstone announced its intention to launch a public share acquisition offer (OPA) for the Spanish Socimi, there have been continuous changes in the shareholding structure.

In terms of the funds who have been active, Fidelity has continued to back the company and has strengthened its stake to 9.64%. Prior to the takeover bid, the company’s stake remained at just over 7%.

Fidelity is the second largest shareholder of Hispania, behind Blackstone, which, after purchasing the stake owned by the Hungarian-born magnate George Soros, leads Hispania’s shareholder ranking, with a 16.56% stake.

Another one of the Socimi’s shareholders that has strengthened its weight since the takeover is Axa Investment Group, which now controls 4.14% compared to 3% before the takeover bid, and Bank of Montreal and BlackRock, which currently hold stakes of around 4.1% each, compared with 3.01% and 3.3%, respectively, that they used to control.

These shareholders constitute the hardcore nucleus of the company’s owners, together with the Mexican firm Canepa, which holds almost 6% through Tamerlane, and the Brazilian family office BW Gestao de Investimentos (BWG) with 3.7%.

New shareholders

In addition to the reference shareholders who have taken positions, Blackstone’s interest in Hispania has led to new interest from other shareholders.

The Norwegian fund, through its manager Norges Bank, has appeared to acquire 1.09% of the Socimi; Man Group, one of the largest hedge funds in the world, has bought 1.27%; and Kite Lake Capital Management has purchased 1.56%.

Blackstone’s takeover bid for 100% of Hispania at a price of €17.54 per share means that it is valuing the Socimi at €1,905 million. Hispania used to have a market capitalisation of €1,903 million and its shares closed trading on Friday at a price of €17.68 per share, slightly above the takeover price.

After Blackstone launched its takeover, Hispania’s Board of Directors engaged Goldman Sachs, UBS and JPMorgan as financial advisors and Freshfields and Uría Menéndez, as legal advisors, to analyse the terms of the offer and look for alternatives.

Expressions of interest

In a conversation with analysts in May, during the presentation of the group’s results, Cristina García-Peri, Director-General of Hispania, classified Blackstone as a “plausible” buyer, but she emphasised that other investors have been “very interested” in the Socimi and its hotel portfolio.

The American investment fund’s offer, whose brochure is pending approval by Spain’s National Securities and Markets Commission (CNMV) is conditional upon obtaining at least 50% plus one of the shares in Hispania. Moreover, the takeover is subject to a clause that prevents the sale of assets for an aggregated transaction value of more than 5% of the NAV (net asset value) (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Haya Real Estate Issues €475M In Guaranteed Bonds

10 November 2017 – Expansión

Debt market debut / The real estate and financial asset manager Haya Real Estate is reconfiguring its liabilities with its first bond issue

The real estate and financial asset manager Haya Real Estate, owned by the private equity fund Cerberus, has debuted on the debt market by placing €475 million in guaranteed senior bonds.

The operation has been divided into two tranches. The first, amounting to €250 million, has been placed at a fixed rate of 5.25% and the second (amounting to €225 million), has been placed at a variable rate, linked to three-month Euribor +5,125%. The floating coupon has a zero clause for Euribor in such a way that negative interest is not computed. Currently, three-year Euribor is at minimum levels of -0.32%. The firm guarantees the payment of these issues with shares in the company itself and its service contracts.

Haya Real Estate has been assigned a B- rating by S&P and a B3 rating by Moody’s, which means it is considered high yield. Market sources maintain that demand for the issue was equivalent to more than twice the amount awarded in the end. The strong investor appetite has allowed Haya Real Estate to increase the amount of the issue, given that initially, it was planning to raise €450 million. To bring the issue to a successful conclusion, the firm engaged the services of Morgan Stanley, JPMorgan, Bankia and Santander.

Haya Real Estate will use the funds to repay a syndicated loan, to distribute a dividend to Cerberus, to hold onto cash and to pay the commissions and fees associated with the issue. In addition, it will return money that Cerberus lent it to acquire Liberbank’s real estate asset manager, for which it paid €85 million.

“Cerberus lent us the money until we were able to close the bond issue because the syndicated loan terms were more restrictive”, explained Bárbara Zubiría, Financial Director at the company.

Original story: Expansión (by Andrés Stumpf)

Translation: Carmel Drake

Popular Puts €1,500M Macro RE Portfolio Up For Sale

6 June 2017 – Voz Pópuli

(…). The entity chaired by Emilio Saracho (pictured above) has launched an express plan to sell its problem assets and one of the key elements is the sale of the largest real estate portfolio to come onto the market in Spain since 2015. The portfolio of properties has been designed by KPMG, and has an initial value of between €1,500 million and €2,000 million, according to financial sources consulted by Vozpópuli. This is part of the plan that the entity is presenting to the ECB today to regain the confidence of the regulators. (…).

In addition, Saracho has spent the last few days meeting with investment banks to see how to accelerate the unblocking of Popular’s problem assets. (…).

The sale of problem assets is critical for Banco Popular regardless of its future. The heavy weight of those assets (worth €37,000 million) is the source of this entity’s problems, which have been further compounded in recent months by its capital and liquidity troubles and the risk of claims. (…).

For this reason, Banco Popular needs to accelerate the sale of the €36,800 million that it owns in toxic assets as soon as possible. Above all, it needs to focus on its foreclosed assets, which have the lowest level of coverage (38.5%) and which most concern the market and potential buyers. To bring the provisioning level of its properties in line with the levels adopted by BBVA and Santander, Popular would need to recognise (additional provisions of) around €1,500 million to €2,000 million.

Under the spotlight

With the sale of portfolios such as the one being advised by KPMG, Banco Popular would reduce some of its problems. Even so, financial sources doubt that the short term future of the entity is going to be determined by operations such as this one (…). Rather, they add, that this is a way of getting ahead with the work, regardless of the solution.

In this sense, the banks that are considering submitting a bid for Banco Popular have been making contact with opportunistic funds and investment banks over the last few weeks to work out how to share out the Spanish entity: the good bank could go to Santander, BBVA and Bankia, and the problem assets could go to overseas investors.

The key to accelerating the unblocking of the real estate assets is the prices that Banco Popular can accept on the basis of its provisions. Currently, the foreclosed assets are recognised on the balance sheet at 60% of their initial values, well above the values demanded by the opportunistic funds, which are closer to 30-40% of their initial values (…).

The portfolio that Popular is preparing represents one of the largest currently up for sale in Europe and the fourth largest to go on the market in Spain ever, after: Project Hércules, involving €6,400 million in problematic mortgages from Catalunya Banc, which was acquired by Blackstone; Project Octopus, containing €4,500 million in Eurohypo loans, which were purchased by Lone Star and JPMorgan; and Project Big Bang, which saw Bankia put most of its foreclosed assets up for sale, in a deal that it negotiated to the end with Cerberus, but which failed to close.

The two main favourites to acquire this latest portfolio are Blackstone and Apollo, the two funds that have been buying Popular’s other portfolios to date, albeit smaller ones, averaging around €400 million to €500 million. The entity currently has another process underway, involving a €500 million portfolio, which is being coordinated by Irea, and in which the following entities are competing: Oaktree, Apollo, Bank of America and Bain Capital.

Original story: Voz Pópuli (by Jorge Zuloaga)

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

German Fund Patrizia To Invest €1,000M In Spain

8 April 2015 – Expansión

Real estate / The fund Patrizia Immobilien has arrived in Spain and wants to purchase a real estate company.

The Spanish recovery has become a magnet for large international investors. The latest player to be seduced by the market is the German real estate fund Patrizia Immobilien, one of the largest property managers on the European stage. The fund is listed on the stock exchange, is worth more than €1,100 million and manages (assets amounting to) almost €15,000 million at the global level, on behalf of large institutional investors.

To guide its entry (into the Spanish market), Patrizia has hired KPMG’s Head of M&A Real Estate, Borja Goday (pictured above). The executive was previously CEO at Sotogrande, partner in Spain of the fund O’Connor Capital Partners and an analyst at JPMorgan.

The German fund intends to expand its workforce by hiring up to seven professionals over the next few weeks, in order to establish an initial team to make the first acquisitions in Spain. But this could be just the tip of the iceberg, since Patrizia Immobilien may invest more than €1,000 million in Spain over the next few years, provided it finds the right opportunities. The company prefers not to share exact figures, but recognises that a large portion of the €2,500 million it plans to invest (globally) in 2015 may flow into the Spanish market.

“We are not a fund that just buys assets; we differentiate ourselves from other investors because we are expert managers. Furthermore, we are not planning to be in Spain for 4 or 5 years only, but rather for several decades”, says Goday. Whilst at KPMG, the executive was a member of the financial-real estate team that leads the sector rankings, and which participated in transactions such as the sale of Bankia Habitat to Cerberus, the sale of Sotogrande and the first major transfer (of assets) from Sareb.

In search of a stake in a real estate company

Patrizia’s (initial) aim is to close a transaction in the short term, and the fund is particularly interested in taking a controlling stake in a real estate company. Given the volume of investments that it manages, the fund could have even presented itself as a candidate in the bidding for Realia.

With a transaction of that kind, Patrizia would immediately assume the management capacity necessary to become a national player, in line with its objectives, and also take on a portfolio of assets with which it would begin to compete with its competitors. Before a purchase of that kind materialises, the investor will manage the assets that it purchases in Spain in collaboration with its team in Germany, where it has 800 employees.

As well as a possible takeover, the German fund is also evaluating the purchase of asset portfolios, primarily focused on residential and office buildings. The investor also has sub-funds that specialise in the purchase of individual assets, which may target buildings on Paseo de la Castellana in Madrid or on Paseo de Gracia in Barcelona.

The entry of Patrizia represents that arrival of a new type of investor in Spain. Following the arrival of opportunistic funds, such as Lone Star, Fortress, Cerberus and Apollo, (in recent years), which have purchased real estate companies with the aim of listing them on the stock exchange over the next few years, now, more conservative funds are arriving, which seem to be interested in settling here for the long term.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

Hispania, Merlin, Lar And Axia Invest €2.4 Billion In Less Than A Year

26/12/2014 – Expansión

SINCE MARCH / The four largest real estate companies listed on the continuous market (known as ‘the trading floor’ or simply, ‘the Floor’ in the US) have bought offices, homes and shopping centers, spending all the capital from their IPOs.

From non-existent to becoming an industry benchmark – listed REITs have become a big business in record time with a total worth of €2.4 billion. Lar España, Hispania Real, Merlin and Axia Real Estate Properties – the four REITs that have made their debut this year on the continuous market – managed to raise 2.5 billion euros in their respective IPOs since March. Nine months later, they have already invested 2.438 billion, exceeding all forecasts.

The successful adaptation of these ‘Anglo-saxon’ REITs started with their going public. The leaders of these companies convinced international funds like Pimco and T. Rowe, prominent financiers such as John Paulson and George Soros as well as investment firms like UBS, JPMorgan and Citigroup, to invest in real estate companies that were founded without any assets. Only Merlin Properties, which went public on June 30, had a preliminary contract to acquire the company Tree Investments, which owns 880 branches and five of BBVA’s office buildings.

Merlin is the REIT that has invested the most and the fastest. Thanks to several large-scale transactions, it has already spent 1.188 of the €1.25 billion it raised in its IPO. Thus, in addition to 739.5 million euros spent on BBVA buildings, Merlin also closed the biggest deal made by a REIT on a single property: the Marineda shopping center in La Coruña, Galicia, for 260 million euros. It also paid 130 million for five office buildings.

The quick closing of these operations has led those in charge of Merlin to start working on raising new funds to undertake further purchases. To do this, they have chosen to refinance the bridging loan they requested before forming the REIT in order to buy the BBVA properties. The company, which has been negotiating for months, could sign the agreement in the first quarter of 2015, financial sources point out.

Hispania

Created by the Spanish consulting firm, Azora, specializing in the management of rental and student housing, Hispania Real Estate Assets company made its debut on the stock market with a corporate structure that was different from that of other REITs. Soon after, the company created a subsidiary, Hispania Real, under this same framework, through which it has channeled much of its purchases.

Among the REITs, Hispania Real boasts the most diversified portfolio, with several office buildings, more than 400 homes, several hotels and the majority stake in several companies, including La Once’s real estate company, Oncisa.

Hispania’s last major transaction has surprised the entire industry: the acquisition of Realia. After allying with Fortress, King Street and Goldman Sachs, the three biggest creditors in real estate history, Hispania Real has launched a voluntary public takeover offer for 100% of Realia at €0.49 per share, i.e. €150 million. Having spent what was left of the 550 million obtained in March to go public in buying 50% of Realia’s debt, it has requested two lines of credit from Santander and CaixaBank worth 250 million euros in order to guarantee the purchase of the company.
While awaiting the close of this acquisition, Hispania is analyzing new 1.5-billion operations, including the purchase of a group of 16 hotels from the Barceló hotel chain for $425 million, as reported by EXPANSION on December 2.
Today, at a special meeting, shareholders will be asked to make a capital increase to address current and future projects.

Funding for projects

The other two REITs present in the continuous market (there are three other smaller REITs trading on the alternative investment market: Promorent, Entrecampos Cuatro and Mercal) — Lar España and Axia Real Estate — have invested €738 million in real estate.

For Axia, which raised 360 million euros in its IPO in July, has not only invested everything it had raised from international funds, but has also resorted to bank financing for its last operation: a portfolio of Credit Suisse real estate assets, which includes four offices and a retail space, costing a total of 180 million euros.
Lar España, which still has 63.57 million of the 400 million it raised, has also resorted to bank financing to acquire an office building in Madrid. In its market debut, the heads of Lar España said they would benefit from an additional 400 million euros from bank financing to deal with their operations.
New companies will soon be added to the list of REITs on the stock exchange. Among those confirmed are GMP and Bulwin, managed by the listed Quabit. Other companies are forecast to join the ranks as well, especially those managed by large international funds that have channeled purchases in Spain through REITs.

Original article: Expansión (by Rocío Ruiz)

Translation: Aura REE

Ibercaja Looks At Selling Its Property Platform To A Foreign Investment Fund

11/08/2014 – Expansión

The Basque group is seeking to show the value of the business in order to emerge stronger from of the European stress tests. BMN and Cajamar earned €50 and €225 million, respectively, in similar sales.

Ibercaja Bank is looking toward the market to raise capital. The financial group, which encompasses the assets of Ibercaja and Caja 3, is looking into selling its property platform to a foreign fund. This possible transaction is in addition to the efforts to look for new shareholders, led by JPMorgan, as previously announced by EXPANSIÓN.

According to financial sources, the transaction is an attempt by Ibercaja to emerge stronger from the European stress tests. For the same reason, the bank has boosted its half-year results with the sale of the bulk of its debt portfolio, for a value of €424 million.

The sale of the property business is still in a very initial phase and it will not be until September that the decision will be taken as to whether or not to give the transaction the green light. Nevertheless, Ibercaja has already contracted the investment bank, if necessary, to expedite and complete the sale between October and November. The Aragonese group would make no comment.

In this case, the bank would follow the example of other competitors and would be the eighth Spanish group to sell its real estate business, after Santander, Popular, CaixaBank, Bankia, Catalunya Banc, BMN and Cajamar.

Valuations

According to sources consulted among the foreign investment funds, the sale of Ibercaja’s bricks and mortar platform parallels those of Cajamar, which was sold to Cerberus for €225 million; and that of BMN, for which Centerbridge paid 50 million euros.

The price of this type of transaction is flexible. What is sold is the platform and a management contract lasting ten years. The higher the commission fixed for the period, the more upfront capital is offered by the funds, and vice versa.

Nevertheless, the value of this property business is expected to be less than that of Cajamar, given that Caja 3 transferred a large part of its problematic assets to Sareb last year. In total, it handed over to the company presided by Belén Romana assets valued, after discounts, at 2,212 million.

Besides that, Ibercaja had at the end of 2013 around 3,400 million euros in finance set aside for construction and property development and €1,146 million in foreclosed assets. Caja 3, meanwhile, had 422 million euros in loans to developers and €182 million in foreclosed assets.

Search for shareholders

In parallel with this transaction, in June Ibercaja began the search for foreign investors through JPMorgan. The group is looking to raise up to €300 million in capital, as a first step towards listing on the stock market and ending up with less than 50% of the bank’s share capital, as required by the most recent Savings Bank Act for entities that do not wish to create a reserve fund. According to financial sources, Ibercaja and the investment funds have, for the time being, rather differing viewpoints and the capital increase is not expected to be completed in the short term.

Original article: Expansión (by Jorge Zuloaga)
Translation: Aura REE

Sacyr Hires JP Morgan, Morgan Stanley & Garrigues to Effect Testa´s Capital Enlargement

29/05/2014 – Expansion

 The company chaired by Manuel Manrique has announced not long ago intention to open Testa´s capital for new investors and stakeholders, as well as improve the branch´s solvency through capital enlargement.

In a notice sent the the CNMV (Spain´s Stock Market Commission) Sacyr wrote it is exploring the possibility without specifying the amount or time.

Testa is also weighting up Public Stock Offering (PSO) for €500 million. The steps will be discussed at the nearest shareholders´meeting to take place on 2nd July.

Together with the enlargement, Sacyr holding presently 99.5% of the company would lose a part of the stake but without losing control over Testa.

The affiliate possesses in its portfolio one of the towers in the northern part of the Paseo de la Castellana street in Madrid, as well as office buildings in prime areas of the capital and Barcelona, hotels, shopping malls, logistics platforms, nursing homes and houses for rent.

 

 

Original article: Expansión (after Europa Press)

Translation: AURA REE

Lone Star & JPMorgan Acquire Octopus of Eurohypo For €3.5 Bn

20/05/2014 – Expansion

The sale of the large loan portfolio of Eurohypo raised the real estate fever of investors to the limits. Yesterday, the German giant Commerzbank  announced coming to a pre-agreement with Lone Star and JPMorgan on transfer of the credits for €3.5 billion.

At the auction, the winners outbid the offer submitted by the Blackstone and Deutsche Bank consortium. Lone Star and JPMorgan bought the “Octopus” portfolio with a 25% discount on its nominal value (€4.5 billion).

It is worth to remind that the loan package contains such precious collateral property as the Ritz or the Gran Meliá Fénix hotels, the Zielo de Pozuelo or the La Vaguada shopping centers in Madrid and the MN4 in Valencia, as well as debt of large real estate managers like Bami, Inmobiliaria Chamartín, Testa or Realia.

 

Original article: Expansión (by Jorge Zuloaga)

Translation: AURA REE