Galil Capital Raises Financing Worth €4.5M to Continue its Growth

12 July 2018 – Eje Prime

A larger cushion for Galil Capital’s growth plans. The Socimi has signed a double operation to raise more funds. On the one hand, the company has signed a bank loan amounting to €2.5 million and, on the other hand, it has agreed a €2 million loan with its majority shareholder. “With these operations, the company is strengthening its financial capability to fulfil its strategy of new real estate acquisitions and capex projects”, say sources at the company.

The mortgage loan amounting to €2.5 million will have to be repaid in 2038 and has a one-year (repayment) grace period. The agreed interest rate amounts to 2.1% until July 2019 and will revert to Euribor plus 2.1% for the remainder of the period, according to a statement filed by the company with the Alternative Investment Market (MAB). By way of collateral for the loan, Galil has granted a mortgage right over the property that it owns at number 23 Calle Bejar in Madrid.

The loan from the majority shareholder, amounting to €2 million, will have to be repaid in December 2019 and the interest rate, in that case, amounts to 3%. The company is led by Jerry Mandel, a former executive of Merrill Lynch, but the majority shareholder is Gil Avraham Shwed, who controls 54.81% of the share capital.

Galil Capital owns a portfolio comprising six properties, all of which are residential use buildings located in Madrid and Barcelona. The valuation of the six assets amounts to €31.36 million.

The Socimi’s plans when it debuted on the MAB involved carrying out two acquisitions during the course of 2018. Nevertheless, the Socimi has not undertaken any operations during the first half of the year.

The company is looking for residential buildings in Barcelona and Madrid, above all small and medium-sized buildings (with between ten and fifty assets per building), although it does not rule out investing “at least 25% of its funds in commercial assets in Madrid and Barcelona as well as in properties outside of those two cities”.

Original story: Eje Prime

Translation: Carmel Drake

Bain Relaunches Habitat to Compete with the Large Real Estate Firms

30 January 2018 – Expansión

With 2.5 million m2 of land and the US investment fund Bain Capital Credit as its largest shareholder, the historical real estate company is working to regain its position as one of the largest property developers in the country.

Founded in 1953, the property developer Habitat is facing a new stage hand in hand with its new shareholder: the US investment firm Bain Capital Credit.

This firm – the subsidiary of a fund created in Boston by the former Republican White House candidate Mitt Romney amongst others – completed the purchase of Habitat on 22 December after fighting off competition from other investment firms such as Oaktree and Apollo.

The arrival of the new shareholder gave oxygen to one of the historical real estate companies in the sector. Created by the Catalan businessman Josep Maria Figueras and Josep Ildefons, the company purchased the real estate arm of Ferrovial in 2006 for €2 billion. Two years later, it filed for creditor bankruptcy with a debt amounting to more than €2.8 billion.

With a proposal to pay up to 80% of the amount owed, the property developer emerged from insolvency in April 2010. Nevertheless, the economic crisis was still raging in Spain, and that caused the Figueras family, led by the son of the founder, Bruno, to lose control of Habitat to funds such as Goldman Sachs, Bank of America Merrill Lynch and Capstone, amongst others. And it was they who hung the ‘for sale’ sign up over the company last summer (…).

Habitat owns a land portfolio spanning 2.5 million m2, which makes it the second largest owner of this precious asset in the country, behind only Metrovacesa (which owns 6 million m2) and ahead of companies such as Neinor, Aedas and Vía Célere. Its portfolio is split almost equally between developable land and plots that require management, say sources at the company.

To this portfolio, new acquisitions that Habitat is currently evaluating will soon be added, either through purchases from third parties or incorporations of foreclosed assets and loans from Bain’s portfolio. Habitat’s objective is to look for opportunities in the major markets where it is already present, namely: Madrid, Barcelona and Sevilla.

Managing the land portfolio is not the firm’s only task for 2018. This year, the company also plans to deliver the first of more than 1,000 homes that it currently has up for sale. Of those 1,000 homes, more than 700 are currently under construction and of those, more than 80% have already been sold.

Deliveries

Thanks to these deliveries – the first 60 units in Alcobendas (Madrid) will be handed over during the first quarter of the year – the company expects to increase its revenue so that the figure for 2017 will be similar to that recorded in 2016 (€44.5 million).

For this new period, Bain Capital will keep in place the management team that joined the company last year. In this way, the most senior executive will be Eduardo Carreño, the Director General of Habitat, who has been managing the executive functions of the real estate company since the departure of Bruno Figueras in June 2016.

In January, the company moved its headquarters to Madrid, although it will continue to hold onto its offices in Barcelona as a regional delegation.

Amongst the alternatives that Bain is considering for its future divestment of Habitat include its placement on the stock market, as Lone Star did with Neinor Homes, or a merger with another group.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

NH’s Board Will Assess Potential Merger with Barceló on 20 December

2 December 2017 – Expansión

Advisors / NH Hotel Group and Grupo Barceló have made initial contact through their advisor banks, Merrill Lynch and Banco Santander, respectively.

Progress is being made in what is shaping up to be the mega-operation of the decade in the hotel sector in Spain. The members of the most senior governing body of NH Hotel Group have agreed to meet on 20 December to study a possible merger with the firm’s rival Grupo Barceló.

At the meeting, NH’s Board of Directors will address the proposal made by its rival to integrate the businesses of the two groups and create a “national giant” with more than 600 hotels and 109,000 rooms around the world. This hotel giant would be controlled by Barceló (60% stake), and the current shareholders of NH would hold the remaining 40% share, as Expansión revealed on 20 November.

NH’s directors will consider preliminary reports from Merrill Lynch at this first meeting. The bank has been chosen by the hotel group’s management committee to analyse the operation.

The letter signed by Simón Pedro Barceló, Co-President of Grupo Barceló’s Board of Directors, is dated 14 November, which is when NH’s Board of Directors last met to approve the firm’s quarterly accounts. Nevertheless, the operation in question was not discussed at that meeting.

In his letter, Barceló proposed a period of up to three months to complete the preliminary work and submit a transaction proposal for approval by the governing bodies of both companies. Barceló, which in its offer letter values NH at €2,480 million, has engaged Banco Santander to analyse the operation. The financial advisors of the two companies are now in contact.

Stock price increase

NH’s shares have soared in value by more than 20% since Barceló announced its intention to integrate the two companies.

Barceló’s proposal values each NH share at €7.08, which would represent a premium of 17% over the current list price of €6.03. The endorsement of the market for this operation, as well as the first valuations of the advisor bank, will be one of the matters that the members of the Board will take into account.

NH’s most senior governing body is chaired by Alfredo Fernández Agras, who represents the British fund Oceanwood (which holds a 12% stake in NH). Moreover, its members include Ramón Aragonés –CEO of NH–, José Antonio Castro Sousa and Jordi Ferrer Graupera, both representatives of Hesperia.

The group chaired by Castro – a priori, one of the people who is most opposed to the agreement – announced on Monday that it had early repaid a loan granted by Santander for €122.7 million guaranteed by 31,870,384 NH shares, representing 9.1% of the share capital (its stake in the group).

To repay that loan, which was due to expire on 23 December 2017, the company has signed a new financing agreement with Société Générale for €97.55 million, guaranteed by the same shares, explain financial sources to Expansión.

By contrast, HNA does not have any representatives on the Board of Directors, even though it is the company’s largest shareholder, with a 29.5% stake.

The Chinese conglomerate was expelled in June 2016 due to a conflict of interest after it made an agreement to buy Carlson Rezidor, which competes with the Spanish firm in several European countries.

In its place, Paul Daniel Johnson, Fernando Lacadena Azpeitia, María Grecna and José María Cantero de Montes-Jovellar were appointed, at the request of the funds, to serve as independent directors. José María López-Elola González and José María Sagardoy also feature in that category.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

FCC Wins Legal Ruling Against Blackstone & Goldman Sachs

1 December 2016 – Expansión

A judge from the Commercial Court in Barcelona has dismissed the lawsuit filed by GSO, one of the funds owned by Blackstone, and by Goldman Sachs against the legal agreement approved for the refinancing of FCC‘s debt. As a result of the agreement, the construction company had managed to refinance a tranche of its debt (€1,350 million) at a significant discount (but GSO and Goldmans opposed the deal).

Although the refinancing was backed by 93% of FCC’s creditors, Blackstone and Goldman Sachs opposed the operation and appealed to the courts for damages caused amounting to around €295 million. The judge has now rejected their claim, which cannot be appealed to a higher court.

In January 2015, the Commercial Court of Barcelona validated the judicial approval, which allowed the Spanish construction company to apply a discount and reduce the cost of a tranche of its corporate debt amounting to €1,350 million.

The law firm Linklaters advised FCC in the financial restructuring process and has defended the interests of the construction group against the lawsuit filed by the funds. Uría also acted on behalf of the banks (Bankia, BBVA and CaixaBank), who participated in the lawsuit as a party affected by the appeal, whilst a lawyer from Jones Day defended the interests of GSO and Goldman Sachs.

93% of the banking syndicate accepted the new financing conditions, which basically involved accepting a discount of 15% through the repayment of debt amounting to €900 million using €765 million raised during the company’s most recent capital increase. The outstanding loan balance, around €450 million, is being repaid at (an interest rate of) 5%.

The opposing creditors included overseas investment funds such as Blackstone (GSO) and credit institutions such as Burlington and Ice Focus. The foreign banks included Goldmans, Barclays, Credit Suisse and Merrill Lynch, amongst others. GSO and Goldmans ended up taking the case to court, but the judge has ruled against them.

The claimants tried to link the lawsuit in Barcelona with an appeal in London where another group of FCC creditors has filed a case for the early repayment of their investment through the issue of convertible bonds amounting to €450 million because they considered that the Spanish company had breached one of the suspensive clauses of the contract relating to the non-payment of debt (default). Blackstone (through GSO Capital) was one of the London-based claimants. Given the legal protected afforded to bondholders in London, FCC was obliged to suspend the process to convert bonds amounting to €32.75 million.

In the ruling in Spain, the judge in Barcelona rejected the existence of a link between the resolution regarding the early execution of the bonds and the validity of the restructuring of FCC’s debt.

Original story: Expansión (by C. Morán and G. Trindade)

Translation: Carmel Drake

Colonial Completes €600M 8-Year Bond Issue

24 October 2016 – Expansión

The real estate company Colonial has completed a bond issue amounting to €600 million with a maturity of eight years and an annual coupon of 1.45%, according to a statement made by the group to the CNMV.

The company will allocate some of the amount raised from this operation to the repayment of bonds issued in May amounting to €750 million; they have a maturity of four years and an annual coupon of 1.863%.

The subscription and payment of the latest issue will likely take place on 28 October. For this operation, Colonial has engaged Deutsche Bank – London Branch, BNP Paribas, Crédit Agricole, JPMorgan, Mediobanca, Merrill Lynch and Natixis.

The company’s return to the debt market comes just days after it announced the acquisition of a stake in Axiare. Specifically, Colonial purchased 15.1% of the Socimi for €135.6 million.

Original story: Expansión (by R.Arroyo)

Translation: Carmel Drake