Santander Launches The Sale Of Its Landlord URO Property

11 November 2016 – El Confidencial

Banco Santander and the other shareholders of URO Property, the Socimi that owns 755 of the Cantabrian-based entity’s branches, have formally launched the sale of the company, with a view to finding a white knight to acquire most of the Socimi’s shares.

According to three sources close to the operation, Citi was given the mandate to open an organised process on 19 September, with a view to closing the operation before the end of the first half of 2017.

The US entity had already been engaged in May to analyse the possible alternatives for a change in the shareholder structure and now that interest from sovereign and pension funds, insurance companies, fixed income investors and several real estate companies, has been confirmed, the formal process has been launched.

Citi, Santander and URO all declined to comment on the announcement.

The Socimi is attractive because it represents a low risk investment, with guaranteed returns and the certainty of dividend distributions. Those characteristics make it an object of desire for large sovereign funds and very conservative vehicles, the main candidates that Santander and its partner shareholders are targetting for this divestment process.

In addition, URO’s shareholders are open to exploring formulas such as the one that Santander has just successfully carried out with Metrovacesa, including merging the Socimi with another large landlord of commercial premises, according to the sources.

In addition to the activity undertaken by the bank chaired by Ana Botín, several other entities have also sold off large batches of branches in recent years, including BBVA, which sold 800 branches to Tree Inversiones Inmobiliarios, now part of Merlin, and Sabadell, which sold a portfolio of 228 branches and 133 parking spaces to Moor Park, which, in turn, subsequently sold the portfolio to the Mexican businessman Moisés El-Mann.

URO is currently very limited in terms of its business operations, due to the clauses included in the bond issue, amounting to €1,300 million, which it undertook in the spring of 2015, a month after it sold 381 of Santander’s branches to Axa.

Those two operations were a complete success from a financial point of view because they granted the Socimi the stability that it had been seeking for so long, but they also reduced its room for maneouvre, as the entity was forced to use the rental income from 666 of Santander’s branches to guarantee the issue, and also pledge another 80 branches (…).

Santander and CaixaBank will continue to hold stakes in URO

According to URO, the net book value of its current portfolio of branches amounts to €1,585 million, based on its most recent official accounts corresponding to the month of June, whilst its market capitalisation on the Alternative Investment Market (MAB) amounts to €197.5 million.

The decision to activate a formal sales process represents the company’s response to the desire expressed by several of its shareholders to exit from its share capital, now that the “lock-up period” has come to an end.

URO’s creditor entities, led by Santander and CaixaBank (which hold stakes of 22.78% and 14.5%, respectively), decided to execute their debts and take over control of the company in 2014. Both plan to continue as shareholders in the Socimi following the sale, although they are hoping to take advantage of this move to adopt smaller positions.

Other shareholders include BNP Paribas, one of the entities that wants to sell, which controls 9.18%; whilst the former shareholders of URO, Sun Capital (renamed Atisha Holding) and Pearl Group (now Phoenix Life) hold 18.92% and 14.90%, respectively. Other entities, such as Barclays and several hedge funds, which hold stakes of less than 5%, also want to exit. (…).

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

The fund Fibra acquires 278 Sabadell branches from Moor Park for 300 million Euros

The British fund Moor Park Capital Partners has decided to close up its first investment in Spain. The firm, with headquarters in London, has reached an agreement to transfer 278 branches leased to Banco Sabadell.

The properties belong to a package of 378 real estate assets acquired by Moor Park in April 2010 from Banco Sabadell through an operation of sale & leaseback, that is, the institution sold the branches and, at the same time, closed a leasing deal to stay as a tenant.

At that time, the British fund paid 403 million Euros for the nearly 400 branches with an initial yield of 6,65%. Now, after two previous sale operations, Moor Park will obtain between 300 and 330 million Euros for the 278 branches, according to sources close to the operation.

A figure that would need to be added to the earnings obtained for the sale of a hundred branches transferred at the end of 2010 and 2011. Moor Park decided to split up the package and place it among small and medium sized investors. However, it also closed an operation with a great investor, Amancio Ortega, who acquired through its real estate company Pontegadea a lot of offices for 55 million Euros in December 2010.

The objective of the British fund was to sell branches in order to obtain 200 million Euros, however, according to real estate sources, up to the sale of its last package of 278 branches, it had obtained 70 million Euros.

The nearly 300 properties generate an annual rent of 25 million Euros, according to these same sources, and are scattered all throughout Spain and mainly, in Madrid and Barcelona.

As it happened with Moor Park when it acquired these branches, the new owner enters the Spanish market with this operation. It is Fibra Uno, a Mexican institutional fund that works as a Reit. That is, it is a listed company devoted to the rental of properties, whose earnings have to be divided between the shareholders.

On the 30th June, the accounting value of these properties reached 51.100 million of Mexican pesos (2945 million Euros). Its portfolio includes 316 properties, located mainly in the south and center of Mexico. The assets have an industrial, commercial and office use.

This is the first great operation carried out by a South American fund which, after years focusing its acquisitions in the United States, has started to invest in Spain. At the end of June, a group of Venezuelan investors acquired a building located at the Recoletos Street in Madrid for more than 20 million Euros from the real estate company Renta Corporación. The agreement between Moor Park and Fibra Uno has been closed a few weeks ago, after finishing the negotiations which started on the last month of May. However the acquisition will not be closed officially until the 15th September.

The operation has also been approved by Banco Sabadell. The Catalan institution has confirmed its interest to maintain the branches as they are strategic ones. The properties have a lease agreement for 35 years, with a minimum 25 years, guaranteed by Sabadell.

In this first great operation of sale & leaseback in 2013, the consulting company CBRE ad the law firm Clifford Chance have acted as consultants for Moor Park; while the acquirer has been advised by Banco Santander on the financial side, the law firm Uría y Menéndez on the legal and tax side and Deloitte on the real estate aspects.

Sabadell´s share dropped yesterday by 4,59% down to 1,848 Euros.