Supreme Court Places Thousands Of Homes In Legal Limbo

1 July 2016 – Expansión

The town plans for Gijón, Vigo and Marbella are the latest to join the long list of projects that the High Court has declared null and void, placing thousands of homes into legal uncertainty.

The real estate bubble is still causing problems years after it burst. In the last five years, the Supreme Court has ratified the annulment of several general town plans (PGOU) all over Spain, decisions that have continued in the last year with the High Court bringing down the plans in three other places, specifically, in Vigo, Marbella and Gijón.

These rulings make thousands of homes illegal, given that they were constructed in accordance with PGOU guidelines that are now considered null and void. What will happen to them now? Although the risk of demolition exists, it is minimal and the next step for the municipal companies is to draft and approve new PGOUs that include a process to normalise these buildings, which currently find themselves in a kind of legal limbo.

However, that is not the only negative consequence of this escalation in litigation, as reflected in the round table organised by two partners at Ontier, Jaime Díaz de Bustamante and Jorge Álvarez, together with Susana Rodríguez, Managing Director at the consultancy firm Aguirre Newman, and Antonio Pleguezuelo, Director of Town Planning at the same firm.

“The cascade of PGOU annulments is generating a considerable lack of legal certainty”, said Díaz de Bustamante, who insisted that this situation “deters international investors, who cannot afford to allocate their capital to an urban development plan that is subject to unstable regulation”.

But, what are the reasons behind all of these rulings from the Supreme Court, which are nullifying PGOUs all over the country? According to the experts consulted, one of the main reasons is the lack of communication and coordination between the different administrations involved in the preparation of the urban plans.

In this sense, Jorge Álvarez and Antonio Pleguezuelo requested greater coordination between autonomous communities and the central Government when it comes to defining the rules that are going to be applied, as that would result in greater certainty, in their view.

Delays in the process

Nevertheless, more concern and unease in the sector is leading to delays in the approval of urban plans, which, in some cases, is even resulting in changes in government.

For this reason, the experts at Ontier and Aguirre Newman insist on the importance of reducing the regulations relating to PGOUs. “The bureaucracy surrounding these plans need to be reduced so that they can be approved more quickly and adapted to the social reality”, explained Díaz de Bustamante.

Not surprisingly, most of the PGOUs that have been declared void by the Supreme Court in recent years had defects relating to the processing of the different reports required or to the sectoral processes, almost all of which are provided for by state law.

Original story: Expansión (by Laura Saiz)

Translation: Carmel Drake

Slim Launches Voluntary Takeover For 100% Of Realia

28 January 2016 – Expansión

The Mexican multi-millionaire Carlos Slim has launched a takeover bid for 100% of the real estate company Realia, in which he already holds a 30.4% stake, at a price of €0.80 per share. The voluntary offer represents a premium of 17.6% with respect to the trading value yesterday, when the share price remained stable (at €0.68/share).

In March last year, after acquiring Bankia’s stake in the real estate company, the Mexican businessman, who is also the majority shareholder of FCC, in which he holds a 27.4% stake, launched a takeover for 100% of the real estate company Realia, at a price of €0.58 per share, for which the Socimi Hispania also made a bid. In turn, FCC holds a 36.9% stake in Realia.

On this occasion, Slim, through his company Inmobiliaria Carso, has decided to formulate his offer on the understanding that a strategic plan will have to be prepared for the Realia group, in order to clean up the company and turn it into a business with a stable level of recurring income, that is balanced with its debt, according to a report submitted to Spain’s National Securities Market Commission (CNMV) yesterday.

On the other hand, by launching a voluntary takeover in this way, Slim avoids the need for the CNMV to set an equitable price, which in all probability could be higher. Carso has been advised by the law firm Ontier.

The Mexican businessman considers, in addition, that by formulating a takeover at an equitable price, a new window of liquidity will be opened for the minority shareholders, which will allow them to take a decision as to whether to continue in the company or sell their stakes. The operation is subject to approval by the CNMV.

On 8 February 2015, the Mexican multi-millionaire advised the CNMV that his stake in Realia exceeded 30%, following the subscription of shares under the framework of the capital increase, which the real estate company launched for €87 million.

At the time, he announced that he was going to request a waiver from the obligation to launch a takeover for 100% of the company, although in the end, he has decided to submit a voluntary takeover bid.

Nevertheless, and despite having exceeded the 30% stake in the company’s share capital, which requires the launch of a takeover for 100% of the company, Slim believes that the criteria for the aforementioned waiver apply in this case.

He says that he has not appointed the majority of the Board members or of the Executive Committee, he has not exercised any of the voting rights that apply to holders of stakes of more than 30% in Realia. Furthermore, none of the events established in Article 5 of the takeover law that would attribute additional voting rights in Realia to his company, have taken place, besides those already mentioned.

The Mexican businessman ranked in second place on the Forbes list of the richest people in the world.

Original story: Expansión (by M. Anglés)

Translation: Carmel Drake

Slim Set To Acquire Realia After Hispania Withdraws Its Bid

24 July 2015 – Expansión

The Mexican businessman, who already owns 25% of the real estate company, has now been given free rein to make an agreement with Realia’s creditors.

The takeover war for Realia came to an end on Wednesday, one day before the deadline for its approval. The Socimi Hispania Real, a subsidiary of the listed company Hispania, announced on Wednesday that it was withdrawing its public bid to acquire Realia’s shares, which it had launched in November 2014.

Hispania’s Board of Directors have decided to withdraw, rather than improve, their bid of €0.49 per share, despite the offer (€0.58 per shares) submitted by their competitor, the Mexican businessman Carlos Slim, through his real estate company Carso.

Hispania’s decision leaves Realia’s shareholders with just one alternative, the one presented by Slim, who already controls 24.9% of the real estate company, after he purchased the stake previously owned by Bankia.

Nevertheless, it seems unlikely that this bid will be successful either. According to sources close to the process, the percentage of shareholders agreeing to Carso’s bid did not exceed 1% of the capital on Wednesday, a situation that would not only not harm Slim’s interests, but that would actually benefit him by preventing the creditors from executing Realia’s debt.

Lower price

The offer presented in March by the Mexican businessman falls well below the listed price of the real estate company. The company’s shares closed trading on Wednesday at €0.705, despite having fallen by 2.08%, to place the market capitalisation of the company at €216.7 million. Slim’s bid price values Realia at €30 million less.

The change in control of Realia would result in the early repayment of the €1,170 million debt held by the real estate company. Almost €800 million of that amount was loaned by the funds Fortress, King Street and Goldman Sachs. Those three creditors had made an agreement with Hispania to not enter into negotiations with any other candidate regarding the purchase of Realia for 10 months. Now that the Socimi has withdrawn its takeover offer, that agreement is void.

That loan is due to be repaid at the end of 2016. If Slim does not acquire more than 30% of Realia, then the change of control clause will not be invoked and no early repayment will be required.

Even if he does not manage to buy more shares, Slim may still be able to control Realia with the support of FCC, in which he is primary shareholder, with a 25.6% stake. The construction company, which owns 36.9% of Realia, has said that it would not sell its stake in the event of a takeover.

In his takeover prospectus, Slim – who is being advised in this process by the law firm Ontier – considered the possibility of negotiating with the creditor funds to capitalise some of the loan, amongst other options – he also considered undertaking a capital increase, whereby allowing new shareholders to enter and diluting his own shareholding.

During the first quarter of 2015, Realia generated turnover of €23.3 million, i.e. 33.9% less than in 2014, whilst its net profit amounted to €170,000, compared with a loss of €7.6 million in the previous year.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake