Tag: non-operator

14 February 2017 – Expansión

The Socimi wants to sell of the office buildings that it has in Barcelona to focus on hotels.

Divest to keep growing. That is the objective that the Socimi Hispania Activos Inmobiliarios has set itself for the year ahead.

The road map will be presented at the real estate company’s next general shareholders’ meeting, scheduled to take place in April. It is expected that the Socimi, in which the investor George Soros holds a stake, will ask its shareholders to extend this vehicle’s investment period, to focus on the purchase of hotels, and whereby move away from its initial strategy, which covered all kinds of assets for rent.

The Socimi, created and managed by the firm Azora, was designed to have an investment period of three years, which is due to come to an end this year. Its directors will ask its shareholders – including Soros, with his 16.7% stake; BlackRock (3.3%); and John Paulson (2.8%) – to extend the life of this vehicle, which now specialises in hotels.

To this end, the Socimi, which owns 25 office buildings, with a combined surface area of more than 153,000 m2, has decided to explore the sale of its office portfolio in Barcelona.

Hispania owns five buildings in Barcelona with a leasable surface area of around 39,000 m2 and with an average occupancy rate of 93% as at 30 September 2016. The assets include Edificio Cristal, with a GLA of 11,088m2, leased to ACS and Xerox, as well as the Les Gloriès complex, which comprises three buildings, two of which are fully occupied and one, which has an occupancy rate of more than 90%.

Hispania paid €80.3 million for these properties, although their book value as at 30 September 2016 amounted to more than €91 million, following investments made by the company.

Four months later, the Socimi has requested a new valuation of this batch and its aim is to generate around €120 million from the sale, say sources in the sector.

In addition to these properties in Barcelona, the Socimi owns another 20 properties: 19 in Madrid and one in Málaga. Hispania plans to sell the first batch within the next few months and hold onto the rest for the duration of 2017.

Block sale

Hispania could receive proceeds of around €500 million from the sale of its office portfolio. Nevertheless, a block sale would considerably reduce the number of potential buyers, due to the heterogeneity of the portfolio, which includes some properties with an occupancy rate of less than 50%, as well as one building that is not located in either of the two major Spanish markets (Madrid and Barcelona), which would deter some of the more institutional investment funds. (…).

The company has said that it will focus its next investments on hotel assets. Currently, Hispania owns 37 establishments with 10,407 rooms, making it the largest non-operator hotel owner in Spain. The company’s aim is to continue investing in establishments on the coast to reposition them. One of its most recent operations forms part of this strategy: the purchase of four hotels in the Canary Islands for €92 million. (…).

After debuting on the stock market in May 2016, with share capital of €550 million and no assets on its balance sheet, this real estate company – which adopted the Socimi structure in May 2016 – has managed to create a portfolio worth €1,684 million, with a capitalisation of €1,250 million.

During the first nine months of 2016, Hispania generated revenues of €100 million and profits of €136.7 million.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake