El Corte Inglés Considers Creating a Socimi to List its Real Estate Assets on the Stock Market

15 February 2019 – Modaes.es

El Corte Inglés is looking for solutions for its portfolio of real estate assets. The Qatari sheikh Hamad Al Thani, the third largest shareholder in the Madrilenian department store group, has proposed the creation of a Socimi to manage the rental of its assets.

The plan proposed by Al Thani, who entered the company’s share capital last summer, involves creating a company in which El Corte Inglés would own a 51% stake. The remaining 49% of the shares would be listed on the stock market.

The Qatari investor already proposed this solution to the previous President of the group, Dimas Gimeno, but it was not successful then, according to El Economista. For the time being, the Board of Directors of El Corte Inglés has not received a formal petition regarding the plan.

The real estate portfolio of El Corte Inglés is worth €17.1 billion, according to a report from Tinsa. The department stores and hypermarkets are worth €15.0 billion, whilst the warehouses, offices and mixed-use buildings are worth €1.1 billion. Finally, the high street establishments are valued at €1 billion.

It is estimated that, in the event that the operation proposed by the sheikh goes ahead, the valuation of the assets could amount to half their current value, around €8.2 billion, according to Tinsa.

In parallel, the group is continuing to work on the sale of 130 real estate assets worth €2 billion in conjunction with the consultancy firm PwC. The property that El Corte Inglés wants to divest now comprises land, offices and buildings defined as non-strategic. Those assets also include some logistics centres.

The objective of these divestments is to reduce the group’s debt so that it can obtain a level of solvency that will allow it to raise financing in the capital markets at a lower price. In this sense, Núñez de la Rosa, the President of the group, has committed to reducing the group’s liabilities by €1 billion in twelve months.

Currently, the real estate portfolio of El Corte Inglés comprises 94 shopping centres, which account for 87% of the total value of the company’s assets. Two of those properties are valued at more than €500 million each, and another two are worth between €400 million and €500 million each.

The department store group recorded EBITDA of €335 million during the first half of 2018, up by 4.4% YoY. Between January and August, the company recorded turnover of €7.6 billion, up by 0.4% YoY.

Original story: Modaes.es

Translation: Carmel Drake

Adveo Puts 4 Warehouses Up For Sale for €40M

18 March 2018 – Eje Prime

Adveo is continuing with its divestments. The Spanish wholesale group, which specialises in office equipment and services, has put four warehouses up for sale, three of which are located in Spain, through which it hopes to raise €40 million.

The domestic assets are located in Madrid, País Vasco and La Rioja, whilst the fourth asset is located in Belgium. The proceeds from the divestment will be used to continue reducing the debt, according to sources at the company, whose liabilities amount to €190 million. The objective of the company is to reduce that figure by €10 million in 2018, according to Expansión.

In January, Adveo completed another sale in France. On that occasion, the group sold a warehouse to the company IDI Gazeley for €8 million, which, by virtue of the contract, is going to lease the logistics centre to the French subsidiary of the Spanish company.

All of these operations form part of the Strategic Plan for 2017-2029 designed by the group, which seeks to transform the company into “a service platform with logistics solutions adapted to the new reality of the business”, according to the company.

Original story: Eje Prime

Translation: Carmel Drake

Santander & Blackstone Launch Spain’s Largest Financing Deal Since the Crisis: €7bn

2 January 2018 – El Confidencial

The largest real estate operation in Europe is going to also bring with it the largest financing deal the sector has seen in recent times. The sale of €30 billion in Banco Popular assets that Banco Santander agreed with Blackstone last summer is going to mark another milestone in January when the two partners plan to close a mega-loan amounting to €7 billion.

This debt will be assumed by the joint venture created ad hoc to buy the portfolio of assets. It promises to be backed not only by Spanish entities but also by large international investment banks and funds that invest in debt, some of which may include entities owned by Blackstone. According to sources familiar with the operation, the net value of the assets amounts to around €10 billion.

To finance that property portfolio, the liability structure of the new company (the assets and liabilities of which will be equal by definition) will consist of 30% capital and 70% debt. Given that Blackstone is going to control 51% of the share capital and Santander 49%, each shareholder will have to contribute around €1.5 billion to the vehicle (the former will have to contribute slightly more given its slightly larger stake), whilst the remainder of the joint venture’s balance sheet will comprise the aforementioned €7 billion in debt that is expected to be signed this month.

The fact that the joint venture is going to have such a high percentage of debt allows the return on capital to increase: the lower that is, the greater the return with the same profits. That is what is called leverage and it is normal for it to be even higher in vehicles of this kind. By way of example, Sareb (the semi-public bad bank that absorbed the properties of the rescued savings banks) comprises 90% debt and just 10% capital.

Santander deconsolidates Popular’s real estate

After increasing the provisions against this portfolio to 63% in the case of foreclosed assets and to 75% in the case of the loans, the net valuation of all of the toxic real estate that the new company will own amounts to €9.7 billion. To that figure, we have to add the final valuation of Aliseda, the former real estate manager of Banco Popular, which also formed part of the operation. Almost half of the assets sold are land (€12.6 billion gross), followed by residential (€8 billion), retail (€2.1 billion), industrial warehouses (€1.5 billion) and hotels (€0.8 billion), as well as €4.9 billion split between offices, garages and other types of real estate assets.

This company was created because Santander wanted to remove (deconsolidate) Popular’s real estate from its balance sheet after it purchased the entity in June. It could have sold it in its entirety, but it chose to create a vehicle in which the majority was held by another shareholder – Blackstone, which fought off Lone Star and Apollo to win the auction and pay €5.1 billion – and retain a 49% stake. In this way, it will be able to obtain additional profits if the recovery continues in the real estate market and the company sells the assets for more than their current value. For the time being, it will have to inject the aforementioned share capital, amounting to €1.5 billion.

Although the small print of the conditions associated with this financing still needs to be confirmed, the deal underlines the growing business that is currently being seen in terms of real estate loans and debt funds. In the last month alone, Metrovacesa has closed a loan for €275 million and Testa has raised €800 million with the bonus of not having to mortgage any of its buildings.

Original story: El Confidencial (by E. Segovia & R. Ugalde)

Translation: Carmel Drake

Sacyr Wants To Clean Up Vallehermoso And Sell It Off Within 1 Year

11 September 2017 – El Confidencial

The appetite that international funds have unleashed for the Spanish real estate market has led Sacyr to redouble its negotiations with the creditor entities of its property developer subsidiary, Vallehermoso. The aim is to accelerate the settlement of that firm’s liabilities in order to sell off the last remains of the company, which is now just a shadow of what it used to be, but which is still a recognised brand in the market.

That is precisely the card that Sacyr wants to play: to take advantage of the appetite from the large overseas investors, to offer them a platform with extensive experience in the domestic property development market and which represents a household name for buyers. But, before reaching that point, it needs to complete the group’s financial clean-up.

The company chaired by Manuel Manrique acknowledges in its accounts for the first half of this year that “the negotiations with the creditor financial institutions progressed to decrease the debt significantly during the year”. Vallehermoso closed 2016 with financial commitments of €30 million, a similar figure to the previous year, but it managed to reduce its losses from €32.5 million to €7 million.

Sacyr is confident about its ability to pay off the liabilities of its subsidiary within one year and therefore be in a position to sell the company within the same time frame. Nevertheless, no formal sales mandate currently exists or is being organised, since all efforts are being focused on first achieving an agreement with the banks.

Vallehermoso’s current assets are worth €135 million, according to the latest appraisal performed by Gesvalt at the end of 2016. Of that amount, €129.9 million corresponds to land and €5.1 million to finished products and real estate investments. These figures are a far cry from the assets worth €7,000 million that the company held under its umbrella before the crisis, a giant that is already a distant memory and of which barely nothing remains after seven consecutive years of losses.

In fact, in February 2015, Sacyr was forced to come to the rescue of its subsidiary and inject €248.4 million to re-establish its equity balance, given that the property developer had closed the previous year on the verge of bankruptcy, with net assets amounting to less than half its share capital.

Nevertheless, since then, Vallehermoso has succeeded in convincing its creditor banks to accept discounts on the sales they are undertaking in order to accelerate the unblocking of finished assets, at the same time as sealing “daciones en pago” to also offload land, a strategy that Sacyr is confident of being able to redouble this year to finish cleaning up the company and getting it ready to sell (…).

A step-by-step liquidation 

In 2013 (…), the infrastructure group decided to deconsolidate its property developer subsidiary and account for it as an available-for-sale asset (…).

A year later, at the end of 2014, Sacyr transferred assets worth €1,000 million from Vallehermoso to Sareb in two consecutive operations, which meant the practical liquidation of the group (…).

Since then, Sacyr has held onto Vallehermoso as an available-for-sale asset. So far it has not managed to close the sale, but it is confident that it will be able to within the next few months, if the new round of conversations with its financial institutions yield the expected results.

Original story: El Confidencial (by R. Ugalde)

Translation: Carmel Drake

Sareb Rejects Reyal’s Proposed Payment Plan

1 June 2017 – Expansión

Reyal Urbis has taken another step closer to the precipice. Sareb, its main creditor, has voted against the agreement presented by the property developer to circumvent its liquidation. Yesterday, the deadline set by the judge for Reyal’s creditors to sign up to the proposed agreement came to an end and, according to market sources, the public company has rejected the plan submitted by Reyal Urbis, which filed for bankruptcy four years ago.

Sareb, the real estate company’s main creditor, with debt amounting to €1,000 million, had already expressed its doubts regarding Reyal’s payment plan. In the end, it has opposed the plan because it considers that the proposed discounts (on the debt), of between 88% and 93%, are too high and that the proposal to free up assets that are securing certain loans only serve to benefit Rafael Santamaría, the company’s President and majority shareholder.

Reyal’s other major creditors include Santander and funds such as Värde Partners, which are now working to find out the current value of the company’s assets, with a view to its possible liquidation. The US fund has been acquiring some of Reyal’s debt from overseas entities over the last few months and is now negotiating the purchase of more land, as Expansión revealed on 22 May. Värde’s aim is to take ownership of some of the real estate company’s plots of land and whereby strengthen its commitment to Spanish property, which has led it to buy Vía Célere and Aelca in recent times.

Another key player in the creditor pool is the Tax Authority, to which Reyal Urbis owes more than €400 million. The real estate company has offered to pay this debt using the funds it obtains from the sale of its assets, but it is proposing a very long term horizon.

At the end of 2016, Reyal Urbis’ liabilities amounted to €4,660 million and the group had negative own funds of €3,449 million. The assets, most of which are plots of land to be developed, were worth €1,170 million and its annual revenues amounted to less than €9 million. Reyal Urbis was created in 2007 following the merger of Reyal, led by Santamaría, and Urbis, the real estate arm of Banesto.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Reyal Urbis Records Losses Of €34M In Q1 2017

4 May 2017 – Expansión

The property developer Reyal Urbis has presented its results for the first quarter of 2017. During that period, the company, which is chaired by its largest shareholder, Rafael Santamaría (pictured above), generated revenues of €8.9 million, up by 2% compared to the same quarter in 2016. Nevertheless, it recorded losses of €34.35 million during the same period, down by 15%.

The results for the first quarter are the first set that the company has presented after it obtained approval, on 30 March, and following an appeal, for its proposed arrangement, through which it hopes to emerge from the creditors’ bankruptcy in which it has been immersed since February 2013. Four years ago, the property developer was involved in the second largest bankruptcy ever registered in Spain (the first largest was recorded by its competitor Martinsa Fadesa) with debt of around €4,000 million.

The proposal to emerge from bankruptcy, which was first presented in 2015 and then modified by legal requirements, includes the payment of the debt to its banking creditors using assets, to which a discount of more than 80% would be applied. Following the exchange, the property developer would reserve a portfolio of its best assets, including one shopping centre and several hotel establishments, which it would continue to operate if it were to overcome the bankruptcy.

In the case of the Tax Authorities, to which Reyal Urbis owes more than €400 million, the real estate company proposes the complete payment of the liability over the long-term. The creditors have until 30 May, the final deadline, to sign up to this agreement. The bankruptcy administration of the real estate company is being managed by BDO.

Reyal Urbis’ large creditors include Santander and Sareb. In the case of the public entity, an official decision has not been taken yet and the proposal is currently being evaluated. According to Reyal Urbis’ own records, the debt with Sareb amounts to €1,099 million. (…).

The agreement proposal requires approval by 75% of the syndicated lenders and 50% of the ordinary lenders, according to the bankruptcy law in force. (…).

As at 31 March 2017, the group’s liabilities amounted to more than €4,660 million, of which €3,900 million corresponded to debt with financial institutions (including Sareb), more than €122 million represented payments due to suppliers and another €480 million was owed to non-trade creditors.

According to Knight Frank, the group’s real estate assets are worth €1,170 million, of which €191 million correspond to rental assets. Ten years ago, Rafael Santamaría’s real estate company valued the entity’s portfolio at €10,500 million. (…).

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Martinsa’s Creditors Put 45 New Assets Up For Sale

30 April 2017 – Expansión

A year and a half after its liquidation was approved, the property developer Martinsa Fadesa is still working on the process, with the aim of returning to its creditors at least a small part of the more than €6,000 million that the company owed when it filed for bankruptcy.

To that end, the heads of the process have launched several auctions of the assets that Martinsa still owns, including homes in some of its macro-developments and plots of land for development, amongst others.

The latest initiative in this sense has been the creation of a special lot containing 45 assets, including finished homes, others under construction and a plot of land for development.

Highlights include a 2-bedroom home in Ayamonte (Huelva), measuring 95 m2, that has a terrace, private garden and parking space, which has an asking price of €108,290.

In Paterna (Valencia), Martinsa is selling homes and parking spaces alike at its Mas del Rosari development. For example, the real estate company is selling a social housing flat, measuring 90 m2, for a minimum price of €120,020.

This lot, the seventh to be created by the liquidators of the real estate company, also includes buildable land in El Saboyal de San Mateo de Gállego (Zaragoza), measuring almost 10,000 m2 and with a buildability of approximately 7,020 m2 for the construction of 39 semi-detached family homes. The initial price of the plot for auction amounts to €2.3 million.

To carry out the sale of these and other assets, those responsible for the liquidation, have created a website (martinsafadesaliquidacion.es), through which bids can be made for the real estate company’s plots of land, homes, storerooms and parking spaces. In the case of this latest batch, the deadline for participating is 8 May.

According to the latest data presented by Martinsa Fadesa, at the end of 2014 (the company formally requested to file for liquidation in March 2015), the hole in its balance sheet amounted to €4,603 million. Specifically, it owned assets worth €2,392 million to cover total liabilities of €6,995 million, of which €3,200 million corresponded to debt with financial institutions.

In December 2014, the real estate company chaired by its largest shareholder, Fernando Martín, presented a new proposal for its repayments after failing to fulfil the schedule set out in its first plan, approved in 2011, and which allowed it to emerge from the largest creditor bankruptcy ever seen in Spain. Then, Martinsa Fadesa had been negotiating with its financial creditors, including Sareb, CaixaBank, Popular and Abanca, for more than a year regarding a repayment plan for the more than €6,600 million that it owed.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Popular’s Bad Bank Will Not Have To Publish Historical Accounts

24 October 2016 – Expansión

The bank will adopt the exemption granted by the regulations governing stock market IPOs and as such will not have to publish its accounts for the last three years (given that such accounts do not exist). Nevertheless, the new company must show that it has a viable long term future.

The regulations governing stock market IPOs require companies wishing to list for the first time to present audited accounts for the last three years in their admissions prospectus. However, the real estate arm of Popular is unable to fulfil this requirement because it does not exist yet. Moreover, the aim is that when it is constituted, which should happen during the first few months of 2017 at the latest, its assets will be removed from the bank’s balance sheet (…).

Despite the lack of accounts for the previous three years, it will be possible for the entity to debut on the stock market because the regulations themselves state that IPOs may be authorised without fulfilling that requirement.


In the history of Spain’s stock markets, numerous companies have made use of this exemption, including the debut on the stock market of Bankia and Banca Cívica in the summer of 2011, and the more recently and plentiful Socimi debuts, which have chosen to list on the stock market without providing accounts because they did not exist at the time. (…).


From the perspective of the banking supervisor, it will be essential for the real estate company to make clear that it is not related to the bank in any way, for it to be able to authorise the deconsolidation from Popular Group’s balance sheet. To this end, the company’s liabilities must unequivocally reflect the independence of the two companies.

The liabilities shall comprise three major captions: capital, subordinated debt and other debt that the real estate company needs to balance the company’s assets.

The capital, whose amount is still to be determined, shall be paid in its entirety by Popular, which will distribute it immediately to its shareholders.

The subordinated debt will be acquired by Popular. Its amount may not be too high in order to ensure that it may not be concluded, under any circumstances, that the new company depends or may depend on Banco Popular. Finally, the bulk of the liabilities will comprise debt, which will be sold to institutional investors. The volume and price of that debt has not been determined yet.

On the asset side, properties with a book value of €6,000 million will be transferred, but they will be pass onto to the real estate company for a value of around €4,000 million.

The difference represents the provisions that Popular has already recognised or will recognise to reduce the value of the transfer to the figure that ends up being agreed upon. (…).

Once all of these figures have been reconciled, the company will still need to demonstrate that it is solvent by itself and that, therefore, the revenues forecast in the business plan will be sufficient for the real estate company to reduce its debt and generate positive results, which will allow it, in turn, to remunerate its shareholders through the payment of dividends. (…).

Original story: Expansión (by Salvador Arancibia)

Translation: Carmel Drake

Setback For Sareb: Suspension Of “In Tempo” Foreclosure

24 October 2016 – El Mundo

The soap opera involving In Tempo, the tallest residential building in Spain, continues. And the latest episode represents a real setback for Sareb, the main creditor of Olga Urbana, the company that went bankrupt after constructing the famous skyscraper in Benidorm.

Commercial Court number 1 in Alicante, which is handling Olga Urbana’s bankruptcy, has suspended the foreclosure of the property, which, in theory, was going to be awarded to Sareb, after it submitted the only and highest bid, amounting to €58.5 million. The judge has ruled in favour of the appeals submitted by Olga Urbana’s smaller creditors against the aspirations of the bad bank, which had been hoping to take over the building after it spent the summer contending that it had submitted the only official bid.

Nevertheless, according to the ruling dated 13 October, the magistrate considers that In Tempo cannot be awarded until the bankruptcy incidents that are affecting the process have been resolved. As soon as firm rulings have been issued regarding these incidents, the foreclosure will be approved, but not before. This represents a serious setback for Sareb: it had planned to foreclose the 190m tall building and then resell it,  whereby recovering some or all of its debt, which amounts to €108 million in total.

The bad bank will now have to wait until the bankruptcy incidents have been legally resolved. The claims have been filed by Olga Urbana’s small creditors, who consider that the liquidation plan would be harmful for them, given that, in their opinion, they would not recover any of their debt; these companies maintain that Sareb should not hold preferential creditor status, which gives it the right to recover its debt first.

According to these creditors (which include the construction company Kono, the arquitect Robert Pérez Guerras and the former administrator of Olga Urbana, Isidre Boronat), Sareb was an administrator of Olga Urbana and therefore, is responsible for the creditor bankruptcy of the company, which went bust at the end of 2014 with liabilities amounting to €137 million.

The creditors argue that the bad bank should be the last party to recover its money (…). In this way, the small creditors would recover their money before Sareb.

Given that this question has not been decided yet, the judge handling the bankruptcy has opted to wait for clarification as to whether Sareb is a preferential creditor or not, because a premature foreclosure could affect the interests of the other creditors. Meanwhile, Sareb maintains that the foreclosure of the building, which has been valued at €90 million, forms part of the liquidation plan, and would not be harmful to the other creditors.

Original story: El Mundo (by F. D. G.)

Translation: Carmel Drake

S&P Assigns Investment Grade Rating (BBB-) To Colonial

13 May 2015 – El Mundo

Within the next few months, Colonial will launch its first bond issue amounting to more than €1,000 million.

The company is seeking to refinance some of its debt (€1,040 million, i.e. 40.5% of its total liabilities).

The company Colonial has obtained a ‘BBB-’ rating from Standard & Poors, making it the first Spanish real estate company to achieve an ‘investment grade’ rating. It intends to use (that rating) to debut on the capital markets in the coming months with a bond issue of more than €1,000 million.

Through this operation, the real estate company, in which the Villar Mir Group holds a stake, is seeking to refinance €1,040 million of debt, i.e. 40.5% of the company’s liabilities.

Specifically, it is seeking to take advantage of the conditions in the market to extend the maturity period (of its debt) and reduce its financing costs, according to market sources.

Colonial has engaged Morgan Stanley, BBVA, Banco Sabadell, CaixaBank, Crédit Agricole, ING and JP Morgan to coordinate the operation.

The company will begin a ‘road show’ within the next few days in the main European markets, to analyse demand for the up-coming launch of what would also be the first bond issue by a Spanish real estate company.

Colonial will specify the amount and other terms and conditions of the operation once it has completed the so-called ‘demand evaluation’ phase, according to a communication made to Spain’s National Securities Market Commission (CNMV).

Phase of growth

The real estate company will therefore debut on the capital markets at the same time as it embarks on its new growth strategy, having completed its restructuring, refinancing and recapitalisation plan at the beginning of last year, through which it reduced its debt and opened up its share capital to new shareholders.

As part of the new phase, Colonial has expressed its interest in Realia and has also said that it would be willing to evaluate a possible purchase of Testa, the real estate subsidiary of Sacyr, in the event that the group decides to sell the company rather than list (some of) it on the stock exchange.

These corporate movements are taking place during the current period of recovery in the real estate sector in Spain, after several years of decreases – the recovery has attracted interest from international investors.

Colonial owns a portfolio of office buildings for rent in the prime business districts of Paris, Madrid and Barcelona, which together have (a surface area of) almost one million square metres. Through this debt restructuring program, the real estate company is seeking to ensure not only that its assets are ‘prime’, but also its liabilities.

Original story: El Mundo

Translation: Carmel Drake