Apollo Negotiates Purchase of 14 Offices in Madrid from Merlin

23 October 2018 – Expansión

Apollo is maintaining its interest in the Spanish real estate sector and is considering increasing its footprint in the capital with the purchase of an office portfolio from Merlin. Specifically, the US investment fund is analysing the acquisition of a portfolio comprising 14 office buildings and business complexes located, for the most part, in secondary business areas of Madrid, according to market sources speaking to Expansión.

When consulted on the matter, both Merlin and Apollo declined to comment about the operation.

The offices, which together span a gross leasable area of 126,900 m2, were worth more than €300 million at the end of June 2018. The buildings are located in well-known business districts of Madrid, such as Sanchinarro, Manoteras, Arturo Soria and Avenida de la Ilustración, amongst others. Merlin inherited most of the assets following the integration of Metrovacesa’s real estate business, after the merger of the two groups in 2016.

The assets that Apollo is considering buying include the office building located at number 94 Calle Santiago de Compostela, next to Avenida de la Ilustración, which has a surface area of 13,130 m2; the Euronova business park in Tres Cantos, which has a surface area of 32,663 m2; a property located on Travesía de Costa Brava, in Mirasierra, measuring more than 16,000 m2 and leased to El Corte Inglés; and an office complex comprising two buildings on Calle Francisca Delgado, in Alcobendas, with a combined surface area of 10,896 m2.

Interest

If this operation goes ahead, Apollo, which has put Altamira up for sale, would be committed to Spain again. The investment fund, which made its debut in the country through the European Principal Finance Fund II – the vehicle that acquired 85% of Altamira at the beginning of 2014 and Evo Banco soon after – recently launched the third version of that European fund.

Specifically, as Expansión revealed on 8 October, Apollo has launched the European Principal Finance Fund III, containing almost $5 billion (€4.35 billion based on the current exchange rate). Some of that amount will be allocated to Spain (…).

Original story: Expansión (by R. Arroyo & D. Badía)

Translation: Carmel Drake

Sikone Investments 2015 Starts Work on the Renovation of its Office Complex in Madrid

17 October 2018 – Eje Prime

Foxá 25 is on the verge of revealing a new image. The owner of the building, Sikone Investments 2015, has just started work on the renovation of the office complex, which has a surface area of 6,700 m2 and which is located in the Castellana Norte district of the Spanish capital, very close to the Cuatro Torres skyscrapers.

The renovation work is expected to take eight months. Nevertheless, the main tenant of the property, which is going to occupy nine of the thirteen floors, will move in sooner than that, during the month of December, according to reports from the construction firm in charge of the project.

The objective of the renovation is to completely modify the interior design of the office area to create a flexible space that can be adapted to the current needs and demands of the Madrid office market.

Original story: Eje Prime

Translation: Carmel Drake

Telefónica Seeks Use for 11,000 m2 of Offices After Failure to Find Tenant

2 October 2018

The telecommunications company put its North Building 3 up for lease a year ago. As yet, the company has found no takers willing to pay 16 euros per square meter per month.

It was heralded as a major real estate transaction: Telefónica announced that it was looking for a tenant or tenants for one of the buildings in the tower complex comprising its headquarters in Madrid that were left unoccupied after the company’s restructuring in recent years. The firm is now looking for a use for the 11,000 square-meter space after it failed to find a tenant willing to pay the 16 euros per square meter per month requested.

In April of last year, the telecoms operator contacted Spain’s leading real estate consultancies asking them to bid on a contract to lease the company’s unused offices. Cushman & Wakefield was one of the firm’s chosen to find a tenant to monetise the empty building. The property has five floors (four upper floors and one below ground), 180 interior parking spaces and 11,112 square meters.

The market price for the leasing contract was stipulated at 16 euros per square meter per month, along with 5.50 euros/m2/month for condominium fees. Telefónica’s plan was to generate annual revenues of 2.1 million euros and income from condominium fees of 733,000 euros, a total of almost three million euros in rent.

However, official sources at the company confirmed that no interested parties have offered to take up residence in the building. China’s Huawei has demonstrated an interest but was unable to complete the move to the District, located in the area of Las Tablas, in the north of Madrid.

Building sales

Leasing the property is still considering a possible but, in the meantime, the telecoms firm presided over by José María Álvarez-Pallete is still looking other possible uses. “[We] are analysing different internal projects,” the provider stated, declining to rule out any alternatives. The firm had already considered using the space to house tech start-ups, both in-house and externally financed.

Sources at the company insist that they have not set a specific deadline to find a use for the building. The next-door North 2 is also currently unoccupied, and the possibility of leasing had also been considered previously.

During the last two years, Telefónica has sold several buildings in the city of Madrid. One in the neighbourhood of Argüelles went for about 25 million euros; another near the well-known Plaza de España sold for about €32 million, and its former headquarters in Rios Rosas Street raised €150 million euros for the telecoms and broadband provider.

The District, 10 years as Telefónica’s headquarters

The Telefónica District, formerly known as District C, was inaugurated in 2008, after three years of construction in an area of 370,000 square meters. The operator concentrated its activities in its new headquarters in a total investment of more than 500 million euros.

The need to transfer thousands of employees who had previously worked at dozens of sites left many facilities empty, some of which had been leased and many others owned. The latter were, for the most part, sold to try to finance some of the investment in the District.

Original Story: La Información – Jesús Martínez

Translation: Richard Turner

Starwood Wins the Bid to Acquire the San Fernando Business Park for €120M

22 May 2018 – Eje Prime

Starwood Capital has sealed the purchase of a new asset in Madrid. The private equity fund has reached an agreement with Oaktree to acquire the San Fernando Business Park for €120 million. The operation, according to market sources, is pending the finishing touches, but technically has now been completed.

In this way, Starwood has broken into the Spanish office market by outbidding other international investors, such as the PE house Carlyle, which had expressed interest in the asset, according to Expansión.

San Fernando Business Park ended up in the hands of Oaktree three years ago. It was then that the US fund purchased a portfolio of unpaid debt worth €750 million from the German bad bank FMS Wertmanagement (FMS WM).

That portfolio included, in addition to this office complex, luxury hotels such as the Arts Hotel in Barcelona and another hotel in Cascais (Portugal); five shopping centres, including the Madrilenian Plaza Éboli and Heron City Las Rozas; several storeroom buildings; and some residential and industrial assets.

Original story: Eje Prime 

Translation: Carmel Drake

JP Morgan Negotiates €2bn Loan with Owner of Santander’s HQ

22 February 2018 – Voz Pópuli

There’s a new player in the complicated game of chess involving the bankruptcy and liquidation of the owner of Banco Santander’s headquarters, the Ciudad Financiera, in Madrid. One of the largest investment banks in the world, JP Morgan, is negotiating a €2 billion loan to unblock the bankruptcy proceedings, according to financial sources consulted by Vozpópuli. JP Morgan declined to comment about the rumours in the market. Market sources indicate that the loan has not been granted yet.

In this way, the US entity would support one of the shareholders, the company Edgeworth Capital, owned by the Iranian businessman Robert Tchenguiz. That banker is trying to get Marme Inversiones 2007, the company that owns the office complex, to emerge from bankruptcy without having to file for liquidation. To this end, it has asked Mercantile Court number 9 in Madrid to give it the green light to negotiate an early termination for payments with the creditors.

That is where JPMorgan comes in. Tchenguiz has managed to convince the entity to consider financing almost €2 billion, which would have to be used to repay all of the creditors, including several banks such as CaixaBank, ING, RBS and Santander itself, as well as funds such as GSO (owned by Blackstone), Canyon, Burlington, Värde Partners, Centerbridge and Monarch.

Many of these creditors, above all the funds that purchased debt at a discount, agree with Tchenguiz. But not the other shareholder, the British magnate Glenn Maud, who is preparing to make a rival offer, or Santander, which is leaning towards the proposal put forward by the Arab fund AGC.

Status of proceedings

After years of bankruptcy and hundreds of resources, the situation is closer than ever to being unblocked. In fact, the court has already given the green light to the liquidation plan for Marme Inversiones 2007. The problem is that two other parent companies, Delma and Ramblas, are still immersed in bankruptcy proceedings. A resolution is expected before the summer.

Unless there is a new legal war, all indications are that the financial situation of the owner of the Ciudad Financiera will be resolved this year.

Along with the proposal from Tchenguiz, the fund AGC and the consortium Madison-Maud-GCA are studying putting between €2.7 billion and €2.8 billion on the table for Santander’s headquarters, within the liquidation process.

Together with JPMorgan, Goldman Sachs is also positioning itself in this operation. It has been advising Santander for months on the solution that may be found to resolve the situation of its headquarters.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Insur to Invest €70M in Office Complex in South of Madrid

31 January 2018 – Eje Prime

Insur is committed to the world of work. The Andalucían group is going to invest €70 million in the south of Madrid to build an office complex that will have a total surface area of 30,000 m2. The project will involve the construction of two buildings alongside Madrid Río.

The company chaired by Ricardo Pumar plans to inaugurate the complex at the end of 2019. The Madrid Río area, where the offices are going to be built, is one of the most sought-after by the real estate sector at the moment. This is evidenced by the Operación Calderón, which will constitute one of the most important real estate operations in recent times in Madrid when it is completed in June.

Insur’s development in the Spanish capital is going to be undertaken through an alliance with two financial partners, in which the group holds a 50% stake. This investment in prime offices will also strengthen the company’s real estate arm, which is looking to diversify both by geography and by segment.

Indeed, this week, the property developer announced the segregation of its property development and real estate businesses. In this sense, Insur has opened a new line of business with its inclusion in the hotel sector, where it already owns three buildings under development, including one establishment in Zahara de los Atunes (Cádiz), which will have 500 rooms. The other two properties will be located in Córdoba and Sevilla and will be operated by Hotusa.

Moreover, the real estate company is looking for opportunities to build out-of-town retail spaces in Spain to expand its real estate portfolio, which is currently worth €294 million.

The objective of Grupo Insur for 2018 is to strengthen its real estate arm, without forgetting about the residential sector. In fact, in that segment, it is going to invest between €75 million and €80 million until 2020 buying up developable land. Currently, the property developer has 2,039 homes under construction and owns a land portfolio with the capacity to build another 2,652 more residential properties.

Original story: Eje Prime

Translation: Carmel Drake

Duro Felguera Puts Its Non-Core Properties Up For Sale

4 November 2016 – Expansión

Liquidity crisis / The engineering group has two large corporate headquarters in Madrid and Gijón, which it is looking to sell to cover its financial commitments whilst it resolves several legal disputes overseas.

Duro Felguera explained yesterday during the presentation of its results for the 9 months to September 2016 that it has ordered the sale of its “non-productive assets” to avoid the deterioration of its cash balance whilst it resolves legal disputes overseas for unpaid invoices amounting to more than €300 million. According to the sources consulted, the assets under analysis include the company’s two major headquarters in Madrid and Gijón, the proceeds from which could amount to several tens of millions of euros.

For the time being, the company has issued a sales mandate but has not specified which formula it will use for the divestment. In recent years, many of Spain’s large corporations have sold their headquarters through sale and leaseback contracts, whereby the company sells the property but remains as the tenant for a certain number of years. Ferrovial, Acciona, Prisa, Telefónica, Santander, Gas Natural and Endesa, amongst others, have all used this formula in recent years.

Duro Felguera’s office building in Madrid has been on the company’s balance sheet for two years, after it acquired it for €20 million in 2014. The previous owner was the real estate company GMP. The headquarters is located on Vía de los Poblados, in the north of Madrid, alongside the M-40 ring road and the Campo de las Naciones business park.

Duro Felguera’s headquarters in Madrid has a useful surface area of 13,791 m2. It is an eight-storey building – five of the floors are used for offices, two are used for parking and one contains an undercover space for storage and other facilities.

In Gijón, the company chaired by Ángel Antonio del Valle owns of one of the best complexes in the city’s Scientific and Technological Park. That building has a surface area of more than 9,000 m2.

Legal disputes

Duro Felguera will have to use the proceeds from its divestments to cover several urgent obligations. In December, for example, the company is due to repay a loan amounting to €35 million.

In parallel, the group is looking to encompass its financial commitments into the process of recovering its unpaid invoices overseas. Yesterday, the company stated that “it is holding negotiations with various credit institutions (Bankia, Santander, Popular, BBVA, Sabadell and CaixaBank) to adjust the maturity dates of its debt to bring them in line with the expected resolution dates of these conflicts.

In Australia, the group is fighting against one of its client, the Korean firm Samsung C&T, for overruns on the mining project Roy Hill. The court of arbitrage in Singapore calculates that DF may recover almost €140 million (the last invoice amounted to €40 million, plus €90 million in avals). The Australian courts are claiming €46 million, of which €9 million has been already recovered. In Argentina, Duro is claiming another €150 million for overruns at the power plant in Vuelta Obligado. Finally, in Venezuela, the Government led by Nicolás Maduro still owes the Spanish group €101 million.

Original story: Expansión (by C. Morán)

Translation: Carmel Drake

Realia Puts “Los Cubos” Building Up For Sale For €57M

2 November 2016 – Expansión

Realia, the real estate company controlled by Carlos Slim, has decided to cash in one of its most iconic assets. The company has put the office building known as Los Cubos, in Madrid, up for sale.

The property, which owes its name to its unique architecture, has a leasable surface area of 18,324 m2 and 334 parking spaces. The building has been empty since the end of 2015.

Its location, alongside the M-30 and next to the headquarters of companies such as Iberia and Alstom – which occupy an adjacent office complex owned by Colonial and its unique design make it attractive in the market, even though it does not have any tenants, say sources in the market.

Realia has decided to put the property on the market for €57 million – in other words, for around €3,000/m2 -, although it is also considering a possible project to renovate it, according to sources in the sector. Realia bought the building, which was constructed in 1981, in July 2004 from the insurance company Allianz for €60 million.

Possible interested parties include large Socimis such as Axiare, Hispania and Lar España, which have experience buying and renovating empty properties of this kind, as well as international funds looking for investment opportunities in Spain, who are struggling to find available properties in the centre of Madrid and Barcelona, say real estate sources.

This is Realia’s first divestment in the Spanish market in recent years. In 2014, the real estate company sold its stake in the French Socimi Siic de Paris. Realia received €559 million from the sale of its 59% stake, which it used to reduce its debt by around €1,000 million.

As at 30 September 2016, the group’s financial debt amounted to €900 million, down by 20% compared with the same time last year.

During the first nine months of the year, Realia generated revenues of €71.7 million and profits of €89 million. Excluding extraordinary items, its recurring profit amounted to €17.6 million.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Inbisa To Renovate Alta Diagonal Building In Barcelona

28 July 2016 – Mis Oficinas

Inbisa, through its construction company BYCO, has been awarded the tender to renovate the urbanisation of the Alta Diagonal building, located on Avenida Diagonal in Barcelona. This office complex belongs to Deka Immobilien, a German investment fund, whose history spans more than 40 years, specialising in real estate assets, managing 293 properties in 23 countries.

This renovation, which will be performed on a surface area covering 2,000 sqm, completes a series of improvements and refurbishments that Deka Immobilien has performed on the building and its surrounding area, with the aim of strengthening its position in the prime office market in Barcelona. To that end, it is going to renovate the quality of the materials in the property, to bring the urbanisation into line with the rest of the complex.

“The construction work is going to be carried out within a short timeframe of 2 months, taking advantage of a quiet period for the property. The work will cover a surface area of 2,000 sqm, whereby completing the renovation work already carried out at the entrances and on the façade, as well as in the private and public urbanisation to the rear, in Avenida Sarrià”, said the Heads of Inbisa.

Original story: Mis Oficinas

Translation: Carmel Drake

Gas Natural Is Asking €250M For Its RE Gems In Madrid

6 July 2016 – Expansión

Gas Natural Fenosa has engaged the real estate consultancy firms CBRE (formerly Richard Ellis) and Cushman & Wakefield to accelerate the sale of its real estate jewels in Madrid, in an operation that will set a record for the energy group and which may result in the largest operation in the sale & leaseback segment in recent years. The gas company has started to market four corporate office complexes that it owns in the capital, containing 57,000 qm of office space and 1,695 parking spaces.

Specifically, the assets up for sale are: the group of buildings that currenly house the group’s operating headquarters in Madrid, located on Avenida de San Luis 77; another property on Avenida de América, 38; the Acanto complex, also on Avenida de América, at number 11; and the Antonio López complex, on calle Antonio López 193. Sources in the real estate sector indicate that the operation may exceed €250 million and become one of the most high profile sale & leaseback transactions in recent years. (…).

Sources state that the consultancy firms engaged by Gas Natural have already started making contact with real estate companies and investment funds that specialise in sale & leaseback transactions, with a view to closing the operations within the next few months. Specifically, interested parties have until the end of July to submit offers. Then, after selecting the best offers, a final award phase will be conducted, which should be completed before the end of the year. (…).

The sale of those assets at this time not only coincides with the recovery of the real estate sector, it also fits with Gas Natural’s new strategic plan, revealed just a couple of months ago. (…).

Since the end of 2014, Telefónica has also undertaken several operations to sell buildings under the sale & leaseback formula, and Eroski did the same earlier this year. Nevertheless, those operations were smaller than the one currently being entertained by Gas Natural in Madrid.

The new accounting regulation, which puts an end to sales with subsequent lease back as an off-balance financing structure, could mean the end of this option for companies looking to optimise their real estate assets.

Under IFRS 16, companies are obliged to record rental payments as debt, except those due within a term of less than one year or that represent an asset with little value. This standard, which will replace the existing IAS 17, removes the dual accounting model for lessees, which distinguishes between financial lease contracts, recorded on balance sheet, and operating leases, where the future lease payments do not have to be recognised.

Although the law does not come into effect until 2019, companies should analyse their lease contracts in advance and make new estimates, which should be updated regularly.

Original story: Expansión (by R.Arroyo and M.A.Patiño)

Translation: Carmel Drake