OHL Negotiates the Sale of Canalejas for €200M to Raise Liquidity

15 April 2019 – Expansión

The construction group OHL is considering selling its 50% stake in the Canalejas complex in order to raise cash. The other half was acquired by the PokerStars founder, Mark Scheinberg, in February 2017.

Canalejas, which is located in the centre of Madrid, just a stone’s throw from Puerta del Sol, and which is going to house Spain’s first Four Seasons hotel, with 200 rooms and a 15,000 m2 high-end shopping arcade, is one of the jewel’s in OHL’s crown. Nevertheless, the construction company chaired by Juan Villar-Mir de Fuentes, needs funding to undertake new projects and return to growth, and so it is considering selling its 50% stake in the complex.

Although no formal competitive process has been opened, sources report that preliminary conversations are being held with interested investors, including one international fund.

Canalejas spans a surface area of 50,000 m2 and its development has involved the investment of €525 million. The complex is due to open in the final quarter of this year.

Original story: Expansión (by R. Arroyo & C. Morán)

Translation/Summary: Carmel Drake

Mazabi’s Socimi Silicius Acquires an Office Building on c/Velázquez (Madrid)

21 May 2018 – Press Release

Silicius Inmuebles en Rentabilidad, the Socimi managed by Mazabi, has purchased an office building in the heart of Madrid’s CBD, on Calle Velázquez, 123.

The property, which has been renovated recently, meets the requirements of the investment policy established by the shareholders and represents another step in the Socimi’s growth phase, ahead of its debut on the stock market. The acquisition has been conducted entirely using own funds.

In the heart of Madrid’s CBD, the property has an above ground gross leasable area (GLA) of 2,346 m2 (offices and a commercial premise) plus 30 parking spaces. Currently, the 1st, 2nd and 3rd floors are available for rent; they are completely open plan and have a surface area of 300 m2 each. This is a highly visible property thanks to its location at the junctions of Calles Velázquez and María de Molina, and the floors enjoy lots of light (with 15 windows per floor). The property is currently in the pre-certification phase of obtaining a sustainability stamp.

This is a firm step forward for the Socimi as it advances its growth phase. The company, which specialises in long-term rental assets, is continuing its growth phase with the acquisition and contribution of new assets to its existing portfolio, following its policy to invest in diversified assets that generate stable rental income.

The Director-General of Silicius, Juan Diaz de Bustamante, said that “the purchase of this asset is a good example of the ideal asset for our portfolio, given that it meets the necessary requirements set out in our principles: to back conservative investments over the long term, as well as to ensure diversification and asset liquidity in order to pay an annual dividend to shareholders”.

With a very defined investment policy, Silicius is currently evaluating the purchase or contribution of properties worth approximately €500 million (commercial premises, out-of-town stores, shopping centres, office and hotels in Spain). The volume of investment/contribution per property amounts to between €5 million and €30 million.

Currently, Silicus owns assets worth €120 million, which generate annual rental income of approximately €6 million. The company’s assets include several commercial premises in “prime” locations with long-term tenants (Paseo de la Castellana, Velázquez, Blanca de Navarra and Paseo de Yeserías), a multi-tenant office building on c/Virgen de los Peligros (in the historical centre of Madrid), an office building on Calle Obenque, 4 in Madrid (with a façade overlooking the A-2) and a hotel with a long-term lease in Conil de la Frontera (Cádiz).

Silicius is a Socimi, managed by Mazabi, specialising in the purchase and active management of profitable assets that generate stable rental income over the long term for investors, providing them with an annual dividend (…).

Original story: Press Release

Translation: Carmel Drake

Saba Delays AGM by 1 Month to Finalise New Ownership Structure

3 May 2018 – Expansión

Never before has an ordinary general meeting of Saba’s shareholders raised so much expectation. The parking lot company, in which Criteria Caixa holds a 50.1% stake, has delayed the shareholders’ meeting that it had planned to hold in Barcelona on 9 May, postponing it until 12 June. The reason is that the shareholders still need to agree on the changes in their stakes in the parking lot company.

Its been a while since Torreal, which owns 20% of Saba; KKR, which holds 18.5%; and ProA, which owns 10.5%, expressed their intention of divesting their stakes in the company, a move that is logical for funds, which typically rotate their portfolios every few years.

But Criteria Caixa, which is in a position to buy, in light of the proceeds amounting to €3 billion that it is going to receive over the next few months when it sells its stake in Abertis, has initiated conversations with the other three major shareholders to take control of the company. The remaining 1.2% of the shares, which are owned by small investors, proceed from the time when Saba belonged to Abertis.

In parallel, Criteria is also planning to hold a Board Meeting at the end of this month to define the final position of its investment portfolio. Sources consulted assure that a decision will be taken at that meeting as to whether to take over complete control of the company led by Josep Martínez Vila or to sell its stake. In theory, all indicators are that Criteria Caixa will become Saba’s sole shareholder.

Finishing touches

During the extra month that they will now have, the shareholders are going to close all of the details to approve the changes in their shareholding. Meanwhile, Saba has justified the change of date in “the greater social interest and for reasons beyond its control”. Nevertheless, some parties were in favour of holding the meeting and organising another extraordinary meeting later on, once the shareholder restructuring has been agreed.

The aspects to be discussed include the distribution of a dividend amounting to €19.95 million, charged against the issue premium; the approval of the results; and, as the fifth item on the agenda, the re-election and appointment of the directors.

Criteria is going through a time of enormous liquidity due to the funds that it is going to receive when it sells the 18% stake that it holds in Abertis and because it has not participated in any large operations since it divested its 10% stake in Gas Natural Fenosa, for which it obtained €1.8 billion.

Saba, chaired by Salvador Alemany, is worth around €1.4 billion, on the basis of a multiple of between 12 and 14 times its EBITDA, which amounts to around €100 million. The company manages 195,000 parking spaces and, in 2016 – the most recent year for which data is available – it recorded revenues of €205 million (+17%) and obtained EBITDA of €94 million (+10%) (…).

Original story: Expansión (by Artur Zanón)

Translation: Carmel Drake

Bankia, BBVA & Abanca At War with Sareb for “Breach of Contract”

30 January 2018 – El Independiente

Bankia, BBVA and Abanca are at war with Sareb. The three entities are not willing to sacrifice their own results just because the bonds issued by the ‘bad bank’, which they received as payment for the real estate assets that they transferred to it, are now generating a negative return when, according to the conditions established, the coupon should not have been allowed to fall below 0%.

The conflict is in the middle of an arbitration process to determine whether the banks will be forced to accept that Sareb has decided to change the price of those bonds, explain sources familiar with the negotiations, speaking to El Independiente. The affected entities accuse “Sareb of a breach of contract”.

Sareb was created to take on 200,000 financial and real estate assets from the banks in exchange for which it issued €50.781 billion in 1-, 2- and 3-year bonds, which are renewed each time they mature. The interest rate on those bonds comprises two variable components: the 3-month euribor rate – which is currently trading at -0.32% – and the Treasury interest rate over the term in question. On the secondary market, that interest rate currently amounts to -0.43%, -0.21% and 0.03% for one, two and three years, respectively.

Of the €50.781 billion issued, Bankia granted the company assets worth €22.317 billion, Catalunya Bank – now absorbed by BBVA – contributed €6.708 billion and Novagalicia – which now belongs to the Venezuelan group Abanca – just over €5.0 billion.

Officially, the bonds were issued with a coupon that included a floor clause to prevent the interest rate from being negative depending on the conditions in the market. That floor had its own raison d’etre: so that the securities could be used by the entities to approach the ECB to request liquidity, given that, until last year, the bonds had to trade with positive coupons in order to be discounted by the central bank.

Nevertheless, a regulatory change in the middle of 2017 means that the banks can now use this debt as collateral even when those coupons are negative. This argument is enabling Sareb to refuse to maintain the floor clause that kept the coupons at 0%. And Bankia, BBVA and Abanca are not willing to assume that cost.

An executive familiar with the conflict explains it like this: “Sareb agreed that,  in exchange for the real estate assets that the banks transferred to it at the end of 2012, it would pay them a specific amount, not in cash but in bonds. Now it says that it is going to pay less and so, naturally, the banks need to defend their interests and those of their shareholders”.

Of the more than €50 billion in Sareb bonds issued to pay for the 200,000 real estate assets – 80% in loans and credits to property developers and 20% in properties – which nine entities transferred to it, the outstanding balance now amounts to €37.9 billion. In this way, the company has repaid almost €13 billion. Moreover, it has also paid interest on that debt of almost €2.8 billion.

Original story: El Independiente (by Ana Antón and Pablo García)

Translation: Carmel Drake

Chinese Conglomerate HNA Wants to Sell its Stake in NH Hotels

19 January 2018 – El Mundo

The largest shareholder of NH Hotels, the Chinese conglomerate HNA, is considering the possibility of divesting its stake in the Spanish hotel group. It has engaged the entities JPMorgan and Benedetto Gartland to identify possible buyers for its 29.3% participation in the Spanish hotel chain.

The Chinese investor group has submitted this information to the National Securities and Markets Commission (CNMV), explaining that it has engaged the aforementioned entities “to review its shareholding position in the NH Hotel Group”, which it holds through its company Tangla Spain, “which includes the identification of possible buyers for its stake”.

It was only a week ago that the Board of NH unanimously rejected the merger proposed by the Barceló group. This possible sale could be driven by the need for liquidity but the rejection decision may have precipitated the move by the Chinese firm.

The Chinese investor group had entered NH in 2013 with an initial participation of 20% through the subscription of a capital increase amounting to €234.28 million, which it increased to 29.5% in November 2015, after purchasing the 8.33% stake that the entity Intesa Sanpaolo held in the listed hotel chain.

Nevertheless, the disagreements arose shortly after its entry into the Spanish group’s share capital. The purchase of Carlson Rezidor, a rival of the Spanish hotel group in certain markets, resulted in the exclusion of the Chinese company from NH’s Board due to a conflict of interest. The letters confirming these disagreements were made public and the parties even came to a head in the courts.

HNA needs to obtain liquidity to pay off a debt that it took out in 2015, after carrying out several acquisitions worth USD 40 billion (€32.65 billion). And in December, it announced its intention to sell assets worth US 6 billion (€4.897 billion).

By the middle of November, the Asian conglomerate had sold 1.14% of its share capital in the Spanish hotel group, which meant divesting 4 million shares, whereby obtaining some liquidity.

Based on the current composition of NH’s shareholders, HNA is followed by the investment fund Oceanwood, with 12%, and the Hesperia Investor Group, with 9%.

Original story: El Mundo (by Silvia Fernández)

Translation: Carmel Drake

Acciona Puts 5 Non-Strategic Assets Up For Sale

17 January 2018 – Eje Prime

Acciona is starting the year by strengthening its residential real estate business. According to market sources, the company is finalising the sales mandate for five office buildings that are non-strategic for its real estate arm. According to the same sources, the mandate for this sale has been entrusted to JLL.

The properties are located in Barcelona, Sabadell and Zaragoza, and together they span a total surface area 15,000 m², according to El Economista. Depending on the interest that these assets spark, they may be sold as a portfolio or individually.

This move forms part of Acciona’s strategy to generate value from its real estate assets through the sale of offices and hotels to obtain liquidity and whereby accelerate its house-building business.

The company explained its plans in a report issued to the CNMV regarding its accounts for 2016 when the companies real estate assets were worth €1.1 billion.

With 25 years of experience, the real estate arm of Acciona has built 9,000 homes to date, located in Spain, Portugal, Poland and Mexico.

Original story: Eje Prime

Translation: Carmel Drake

NH Rejects Barceló’s Offer But is Willing to Consider Other Proposals

11 January 2018 – Expansión

Yesterday, the Board of Directors of the NH Hotel Group revealed its position regarding the proposal made by Barceló to merge the two businesses. And, although it expressed its “unanimous” rejection of the offer, it did say it was willing to consider future “strategic opportunities” within the framework of “the consolidation trends that are prevailing in the sector”.

“The Board has carefully considered the fact that the proposed structure – a merger – would not allow for the creation of value for our shareholders over and above that already forecast for NH operating independently”. In its analysis, the Board does not consider appropriate “either the intrinsic value assigned to NH by the Barceló Group’s offer, or its scope or the exchange ratio offered”, according to the explanation presented to the CNMV.

The Co-President of Barceló, Simón Pedro Barceló, sent a letter addressed to NH’s Board of Directors in November, proposing the integration of the two groups to create a “national champion” with more than 600 hotels and 110,000 rooms around the world, as Expansión revealed on 20 November.

The Mallorcan group proposed taking control of 60% of the resultant (merged) company and for the remaining 40% to end up in the hands of the shareholders of the NH Hotel Group. It also set the price of the latter at €7.08 per share, which meant valuing the company at €2.48 billion.

Exchange ratio

For NH’s most senior governing body, which met yesterday for the second time to analyse the proposal made by its competitor, the exchange ratio proposed by Barceló does not reflect the relative valuation of the two companies, nor does it incorporate a control premium over NH’s share value or take into account the potential appreciation in the firm’s share price operating independently. Moreover, NH’s directors emphasised that the offer does not open a window of liquidity for its shareholders. The offer – which is non-binding and conditional upon a due diligence (detailed analysis) – proposes an integration with NH Hotel in exchange for shares issued by the latter, with the resultant company being listed. This operation, therefore, would effectively allow Barceló – which is owned by the third generation of the family of the same name – to debut on the stock market.

“The Board has valued very negatively the fact that the offer from Grupo Barceló lacks liquidity for NH’s shareholders”, reiterated the Board of the listed company.

NH’s Board of Directors includes Alfredo Fernández Agras, representative of Oceanwood (with 12% of NH’s share capital); José Antonio Castro and Jordi Ferrer Graupera, both representatives of Hesperia, with a 9.1% stake; and Ramón Aragonés, CEO of NH. By contrast, HNA does not have a presence on the Board, despite being the majority shareholder, with a 29.5% stake. The Chinese giant was expelled (from the Board) in June 2016 due to a conflict of interest after it signed a purchase agreement with Carlson Rezidor, which competes with the Spanish firm in certain European countries.

Sources at Barceló expressed their respect regarding NH’s decision, although they acknowledged that the position adopted by their rival left them with “a bitter taste since they had not been able to convince the Board of the good intentions behind the operation”. And they added: “We think that the offer was good for the Spanish hotel industry, the shareholders of NH and Barceló and the economy of the country as a whole, which would have benefitted from having a national champion to go out and compete seriously overseas”.

In response to NH’s rejection, Barceló “said the discussion was over”. According to sources at the company, “no other proposals are possible”.

The decision of NH’s Board of Directors was made public at the end of trading. NH’s shares finished trading yesterday at a price of €6.115 per share, after rising by 1.83%. Since Barceló expressed its interest in NH, the share price of the latter has increased by 22% (…).

NH closed 2016 with sales of €1.475 billion, an EBITDA of €181 million and a net profit of €30.8 million. The group’s strategic plan for the next three years forecasts a recurring profit of €100 million and an EBITDA of up to €290 million in 2019.

Meanwhile, Barceló closed 2016 with turnover of €2.855 billion, net sales of €1.98 billion, an EBITDA of €339 million and a net profit of €125 million.

At the operating level, NH has 380 hotels and 59,000 rooms in more than thirty countries, whilst Barceló owns more than 230 hotels in 22 countries and almost 52,000 rooms.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Blackstone Negotiates Purchase of Grupo Alua’s Hotels

18 December 2017 – Expansión

The US investment fund Blackstone wants to strengthen its position in the hotel segment in Spain. After acquiring Sabadell’s hotel portfolio in October for €630 million, Blackstone is now analysing the acquisition of the hotel portfolio owned by Alua Hotels & Resorts to strengthen its presence in the market.

Sources in the sector explain to Expansión that the US fund has been negotiating with the owners of Alua for several months regarding the operation and, although it is not the only player bidding for its portfolio, it is one of the best positioned to close the deal. The portfolio owned by Alua Hotels & Resorts currently includes seven hotels with more than 1,700 rooms located in different parts of the Balearic and Canary Islands.

Specifically, Alua owns four establishments in Palma de Mallorca: the AlauSoul Palma, with 120 rooms; the AluaSoul Mallorca Resort, with 371 rooms; the AluaSoul Alcudia Bay, with 171 rooms; and the AluaSun Torrenova, with 256 rooms.

Management agreement

In addition, it owns the AluaSoul (in Ibiza), with 290 rooms; the Hotel Parque San Antonio (in Tenerife), with 252 rooms; and the Hotel Ambar Beach, (in Fuerteventura) with 244 rooms.

Alua Hotels & Resorts –previously known as Feel Hotels Group– was created in 2015, inspired by the European private equity firm Alchemy Special Opportunities and by Javier Águila, former Director of Orizonia, following the purchase of six hotels, with more than 1,200 rooms, in Mallorca and Ibiza. The portfolio used to be owned by Marina Hotels (…).

Moreover, Alua Hotels & Resorts manages five Intertur Hotels acquired in May 2017 by KKR and Dunas Capital. Those establishments, which comprise 1,120 rooms in Mallorca and Ibiza, were worth just over €120 million.

The agreement reached between KKR, Dunas Capital and Alua Hotels & Resorts considered the repositioning and modernisation of the five establishments and the management of the hotels by Alua following the entry into force of the agreement and their marketing under its brand in 2018.

Alua Hotels & Resorts, which last year recorded turnover of €28 million, has more than 1,200 employees.

Record investment

The tourism boom in Spain, the appetite for real estate and the liquidity in the market are continuing to encourage hotel investment, which may reach €3 billion by the end of the year; that would represent a new record for this segment (…).

Moreover, if these negotiations prove successful, the operation would allow Blackstone to shore up its position in Spain. The US fund has become one of the stars of the real estate sector this year, having closed some of the most high-profile transactions in recent months (…).

Of the (14) hotels that Blackstone purchased from Sabadell, six are located in the Canary Islands (two in Tenerife and four in Gran Canaria) and the rest are located in Cataluña (in Sitges and Roses), the Community of Valencia (in Benidorm and Valencia), Málaga (two) and another two in Mallorca and Madrid (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

CaixaBank Hires KPMG to Accelerate Sale of Rental Homes Worth €3bn

29 November 2017 – El Confidencial

Spanish financial entities have put their foot down on the accelerator to remove a decade’s worth of real estate crises from their balance sheets. The starting gun was fired by Banco Santander in the summer, when it transferred 51% of the €30 billion in toxic assets that it had inherited from Popular to Blackstone; and yesterday, another milestone was marked by the agreement announced between BBVA and Cerberus, which will allow the bank to deconsolidate more than €12 billion in foreclosed assets.

The next major step may involve CaixaBank after the entity engaged KPMG to try to accelerate the sale of a significant batch of real estate assets, with a net value of €12.1 billion. Specifically, the professional services firm is already working on organising one or more processes to allow the sale of some of the €3 billion that the bank owns in rental assets, according to sources familiar with the process.

That portfolio contains almost 40,000 units and, if it ends up being sold, will represent one of the most significant divestments made by the entity to date. Sources at CaixaBank acknowledge that they are working with KPMG and admit that one of the services that the firm is rendering “may include the sale of certain foreclosed rental assets” but they point out that it would only for a portion of the aforementioned €3 billion.

The sale to Testa of 135 homes, announced in September, fits within this strategy – a small appetiser ahead of the main course that the bank led by Gonzalo Gortázar really wants to serve. Its efforts are aimed at trying to taking advantage of the excess liquidity held by the large funds and the current attractiveness of Socimis to find an exit for its foreclosed rental assets.

Despite CaixaBank’s interest in reducing its real estate exposure, something that both the Bank of Spain and the European Central Bank are asking the entire sector to do, the entity is choosing to be cautious. It is pushing ahead one step at a time, according to market sources, who say that the bank is working to redefine the future of its whole real estate division.

New route map

CaixaBank’s real estate activity is currently divided into two large subsidiaries, Building Center, the real estate company that owns the bulk of the entity’s foreclosed assets; and Servihabitat, a platform (servicer), in which the bank holds a 49% stake, whilst the other 51% is owned by the fund TPG.

The second company, which has been given the mandate to manage the bank’s properties, but not ownership of them, has just hired Iheb Nafa as its new CEO, to replace Julián Cabanillas. It has also engaged McKinsey and Oliver Wyman to analyse all of its future options; any change would require the firm to reach an agreement with TPG; moreover, that giant may be interested in increasing its stake in Servihabitat.

CaixaBank has net real estate assets amounting to €12.1 billion according to its most recent quarterly report as at 30 September. All of this “property” is included in the area known as Non-Core Real Estate, which generated losses of €330 million during the first nine months of the year. The jewel in that crown is the real estate company Building Center, owner of the majority of the foreclosed assets, whose accounting coverage ratio stands at 49%.

Sources in the sector expect the bank to make its big move within the next year, and for it to be in line with those already made by BBVA and Santander. For the time being, the entity is limiting its expectations to the field of research, by indicating that “KPMG, Oliver Wyman and McKinsey are redefining operating processes to improve logistics and efficiency”.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Sevilla’s Chamber of Commerce Completes Sale of 2 Plots to Helena Rivero

2 November 2017 – ABC de Sevilla

This week, according to sources consulted by ABC, Sevilla’s Chamber of Commerce has sold two plots of land next to the Antares Club and on the Eusa campus to the family of the Jerez businessman Joaquín Rivero, who died in September 2016. The operation was agreed in November 2016 but was subject to the obtaining of municipal licences for the various projects. On the Eusa land, Helena Rivero’s investor group plans to build a university hall of residence for 400 students. Next to Antares, Helena Rivero is still deciding what to do with the 1,700 m2 plot, which has permission for the construction of a hotel given that it has been allocated for tertiary use.

In this way, the Chamber of Commerce, chaired by Francisco Herrero, will obtain a sizeable liquidity injection thanks to an operation that was closed for around €7.5 million. The negotiations for the sale of these plots were initiated by Joaquín Rivero Valcarce, the real estate businessman who chaired Bami. Following the death of the businessman in 2016, his only daughter, Helena, decided to push ahead with the operation.

Nevertheless, the sale of the two plots in question was subject to the Town Hall of Sevilla granting the necessary authorisations to build on the Eusa and Antares plots. Once municipal authorisation had been obtained to build a university hall of residence on Eusa’s plot, which has been allocated for social/educational use, the sale of the land was closed this week, according to the same sources. The sale had previously received the green light from the plenary of the Chamber of Commerce and the Junta de Andalucía, which oversees the region’s chambers of commerce.

A multi-national firm will operate the hall of residence

In terms of the university residence planned for Eusa, the plot sold to Helena Rivero’s investor group has a surface area of 2,200 m2 and permission to build up to 11,000 m2. According to sources consulted by ABC, a leading European multi-national in the hall of residence sector, which is listed on the stock market, will take over the operation of the building.

The other plot, measuring 1,700 m2 has been allocated for tertiary use – it is currently home to the exhibition hall, auditorium and parking lot of the Antares sports centre. On that plot, the company managed by the Rivero family may be able to build a hotel with a maximum buildable area of 6,000 m2, equivalent to around 100 rooms.

The hotel was promoted initially by Antares and it was precisely that project that led the company to file for creditors’ bankruptcy when the real estate bubble burst and it was unable to refinance a mortgage loan that it had requested from La Caixa in 2008 to build a four-star establishment in El Porvenir. Antares Andalucía had managed to reclassify the 1,740m2 plot, and so it was valued at €10.2 million in 2007.

In the end, the mercantile judge authorised the sale of the assets of the Antares Club, with their charges and levies, as well as of the brands “Antares Andalucía” and “Encuentros 2000”, to the Chamber of Commerce – through Eusa. The Chamber spent €4 million on the operation, including taking on a €3.2 million mortgage with CaixaBank.

With this sale of the two plots, the Chamber of Commerce will now have sufficient revenues to undertake projects in its two business units: Eusa and the Antares Club. The Chamber of Commerce plans to completely renovate the Antares Club, given that it is more than 30 years ago, and move its training activities to the SGAE building in La Cartuja. That building has a surface area of 35,000 m2, including an auditorium measuring 22,000 m2.

Original story: ABC de Sevilla (by M. J. Pereira)

Translation: Carmel Drake