Merlin Closes A €1,034M Capital Increase To Buy Testa

16 July 2015 – Expansión

Yesterday, the Socimi Merlin Properties announced a €1,033.7 million capital increase, representing 66% of its current share capital. The operation will allow it to finance the purchase of Testa, the subsidiary of Sacyr, which it has bought for €1,986 million.

The capital increase will have preferential subscription rights and will involve the issuance of 129,212 million shares, with a value of €8 and a premium of €7 per share. Last April, the Socimi chaired by Ismael Clemente closed its first capital increase amounting to €613.8 million, with the issuance of 64,605,999 new shares, to finance the purchase of real estate assets, offices and retail premises.

Merlín debuted on the Madrid stock exchange in June 2014 with a market capitalisation of €1,250 million, at €10 per share. Yesterday, it closed trading at €11.50 per share, up 1.86%, and its market capitalisation amounted to €2,228.9 million. Merlin’s main shareholders, which include UBS, Marketfield, EJF apital, BNP Paribas Asset Management and the fund Gruss Capital, are expected to participate in the capital increase.

The integration of Testa and Merlin will create a real estate giant with assets worth around €5,500 million, gross annual income of €290 million and a market capitalisation of close to €4,400 million.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake

Sacyr Sells Its Subsidiary Testa To Merlin For €1,793M

9 June 2015 – Expansión

Strategy / The construction company cleans up its balance sheet with this transaction and improves its financial position, with a view to growing its international construction and concessions businesses.

Yesterday, Sacyr agreed the sale of its property subsidiary, Testa, to the Socimi Merlin Properties for €1,793 million. The group chaired by Manuel Manrique (pictured above right), which has been advised by the bank Lazard, has opted for Merlin’s proposal after rejecting the bids made by other investors such as the US fund Blackstone and the real estate company Colonial.

The agreement forms part of an “accordion operation”, in which Testa will simultaneously make a contribution to its shareholders of €1,196 million, through an ordinary dividend of €527 million and a reduction in share capital of €669 million. Through this transaction, Sacyr and Testa will normalise their balance sheets.

The sale comes just two days before Sacyr’s AGM, to be held on Thursday, where the Chairman of the group, Manuel Manrique, will reveal the foundations of the new industrial plan based on international construction and the development of concessions.

The largest Socimi

Merlin is the largest Socimi (listed real estate asset investment company) on the Spanish stock exchange, with a market capitalisation of €2,208 million and a portfolio of assets worth €2,594 million. The company debuted on the stock exchange on 30 June last year with €1,250 million of share capital from investors such as UBS, Marketfield and Gruss Capital.

Merlin, the real estate company controlled and chaired by Ismael Clemente (pictured above left), wanted to expand its assets with the purchase of a significant stake in a company in the RE sector and set its sights on Testa a while ago. Sacyr’s subsidiary closed yesterday with a market capitalisation of €2,906 million.

Sacyr holds a 99.93% stake in Testa; the remaining shares are listed on the stock exchange. The company has been looking for a partner for several months, to inject capital into its subsidiary. The search for an ally led Sacyr to consider an IPO of Testa’s shares aimed at institutional investors in order to strengthen its subsidiary’s balance sheet. The initial objective was to place 30% of the shares, but the construction company increased the option to 100%, once it had assessed the appetite of investors.

Merlin has more than enough financial muscle to handle this operation. In April, the company announced a capital increase amounting to €613.7 million. The real estate company, which earned €19.2 million during the first three months of 2015, has already invested the €1,250 million it secured from its debut on the stock exchange.

Testa owns real estate assets valued at €3,180 million, according to the most recent appraisal completed on 31 December 2014. Its properties include the Torre Sacyr, in the Cuatro Torres Business Area in Madrid, and Diagonal, 605 in Barcelona. It also owns two office buildings on Paseo de la Castellana, at numbers 193 and 83, where the construction group has its headquarters. Furthermore, it is the owner of several shopping centres in Malaga and on the Balearic Islands, and also owns residential blocks for rent. In 2014, Testa recorded turnover of €187.9 million.

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Original story: Expansión (by R. Ruiz and C. Morán)

Translation: Carmel Drake

Merlin Makes A Proposal To Buy A 30% Stake In Testa

20 April 2015 – Expansión

Strategic alliance / The listed real estate company, which is increasing its share capital by €614 million, has made a proposal to the construction group Sacyr to acquire 30% of its subsidiary, which will also become a Socimi.

The scarcity of well-located real estate has led many investors to design imaginative solutions in order to invest. That is the case of Merlin Properties. The largest Socimi (listed real estate investment company or ‘sociedad cotizada de inversión en activos inmobiliarios’) on the stock exchange, with a market capitalisation of €1,714.6 million and an asset portfolio worth €2,417 million, wants to increase its assets through the purchase of a significant stake in a company and it has focused its attention on Testa, the equity subsidiary of the Sacyr group.

Testa is almost entirely owned by Sacyr (99.93% stake). The remaining shares are listed on the stock exchange. For the last few months, the company chaired by Manuel Manrique has been looking for a partner to inject capital into the subsidiary. The search by its ally eventually led Sacyr to propose a public offering of shares (OPS or ‘oferta pública de suscripción’) aimed at institutional investors in order to strengthen Testa’s balance sheet. The goal is to place 30%.

Although the stock exchange placement has already been proposed, the possibility that Merlin will acquire that percentage for around €500 million and become the preferred partner in Testa is gaining momentum, according to sources close to the process.

Both companies would lead the real estate company’s new phase, whereby Sacyr intends to convert Testa into a Socimi and so benefit from the tax advantages afforded by that company structure. This option would also allow Merlin to acquire a stake in Testa and comply with the regulations that permit Socimis to own subsidiaries or stakes in other companies of that type.

Merlin’s interest in acquiring a stake in Testa has not put a stop to the OPS for the moment. The amount of the transaction, whereby the construction group would end up controlling a 70% stake, is valued at around €500 million, according to various analysts.

The Socimi chaired by Ismael Clemente, has more than enough financial muscle to handle any transaction. On Wednesday, Merlin announced a capital increase worth €613.7 million. The real estate company will complete this transaction less than a year after it was first listed on the stock exchange, since it has already invested the €1,250 million it secured on its debut in the market. Now, the Socimi, owned by UBS, Marketfield and Gruss Capital, is evaluating new investments amounting to €2,000 million. “The company has a portfolio of projects and potential investments amounting to approximately €1,950 million, of which €170 million correspond to assets and investments being analysed on an exclusive basis or as part of a due diligence process; and another €1,780 million relating to assets and investments in the analysis phase”, says the company in an admission prospectus for the new shares published yesterday in the CNMV. The capital increase will carry preferential subscription rights and will take place between 18 April and 2 May.

Assets

Testa owns real estate assets worth €3,180 million, according to the latest appraisal performed as at 31 December 2014. These include the Torre Sacyr, in the Cuatro Torres Business Area complex in Madrid and Diagonal, 605 in Bacelona. The company owns two office buildings on the Paseo de la Castellana (in Madrid), at numbers 193 and 83, where the construction group has its headquarters. Moreover, it owns a number of shopping centres in Malaga and the Balearic Islands, as well as residential housing blocks, which it rents out. In 2014, it recorded a turnover of €187.9 million.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake

Merlin Increases Its Capital By €614M To Fund New Purchases

16 April 2015 – Expansión

Yesterday, the listed real estate investment company (‘sociedad cotizada de inversión inmobiliaria’ or Socimi) Merlin Properties announced a capital increase amounting to €613.7 million. According to the Socimi, the aim of the operation is to (raise finance) to continue with its purchase of real estate assets.

The increase will be conducted through the issue of 64.6 million new shares with a nominal value of one euro and a premium of €8.50, said the company. The current shareholders, which include large funds and fund managers such as Marketfield and UBS, will have pre-emptive purchase rights. Two rights will be required to subscribe each new share. It is hoped that CNMV will publish the prospectus today following its approval.

The increase in the share capital of Merlin Properties comes less than a year after its IPO on 30 June 2014.

The company, which first floated on the stock exchange with capital of €1,250 milllion and a pre-agreement to purchase almost 900 branches and a number of banking offices from BBVA, has already invested all of its own funds and has also made use of bank financing to fund additional purchases. One of the most desirable assets in its portfolio is the Marineda shopping centre in La Coruña, which it acquired for €260 million.

Rising share price

At the General Shareholders’ Meeting, which was held just a few weeks ago, Ismael Clemente, the Chairman of the Socimi, said that the company was working on investment transactions with a value of up to €2,000 million, including office buildings, asset portfolios and shares in companies.

The Socimi closed 2014 with rental income of €56.6 million, a gross operating profit of €38 million and a net profit of €49.7 million. Yesterday, the real estate company’s shares closed at €13.10, up 0.77%.

Merlin’s recent purchases include the acquisition of an office building on Calle Alcalá in Madrid and a logistics warehouse in Coslada (Madrid), for which it paid almost €58 million in total.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake