Perry Will Pay Colonial A Bonus If It Launches Axiare Takeover

27 October 2016 – El Economista

Perry Partners has kept an ace up its sleeve during the sale of the 15.09% stake that it held in the Socimi Axiare to Inmobiliaria Colonial. The British fund, which is currently being wound up, is now playing a card that would allow the real estate company to record higher revenues (from the sale) if it decides to launch a takeover bid (OPA) for the Socimi, as explained by sources familiar with the negotiations.

The unstated objective of Colonial is to increase its stake in the Socimi’s share capital to acquire, at least, 25%, according to the same sources consulted, however the pressure in the market points to an offer or, at least, an effort to try and provoke one.

Meanwhile, the real estate company, chaired by Juan José Bruguera, said at the time that this purchase was a “quick and opportunistic gesture” by Colonial, which wants to strengthen its portfolio of prime office assets.

As this newspaper went to press, Axiare had notified the CNMV of its intention to look for investment banks and legal advisors “to analyse and study the possible effects of Inmobiliaria Colonial’s recent share purchase”.

This move by the Socimi’s Board of Directors may respond, according to sources in the sector, to the Board’s need to demonstrate that it is analysing the surprise operation, which clearly affects the company’s shareholders, given that Colonial is now Axiare’s majority shareholder. Similarly, Axiare may try to veto the inclusion of a board member from Colonial given that the firm is a competitor.

The move came on Friday 14 when the real estate company acquired 15.09% of the Socimi, off market, at a price of €12.50 per share, for a total investment of €135.6 million. Colonial paid a premium of 11.18% above the closing share price on Friday, but Banco Sabadell’s analysts said that the price represented an 8% discount compared to its estimate of Axiare’s NAV and an 11% discount on the target share price, which amounts to €14.10, compared with the closing share price on the day of the purchase (€11.18).

As a result of this operation, the real estate company will have a guaranteed flow of income in the form of dividends from Axiare, which, given its Socimi status, is obliged to distribute at least 80% of the profits from rental income to its shareholders. Colonial is hereby replicating the model that it has applied in France for years, where it is a shareholder of the Socimi Société Foncière Lyonnaise, with a 57.7% stake.

Original story: El Economista (by Rubén Esteller, Alba Brualla and Araceli Muñoz)

Translation: Carmel Drake

Colonial Acquires 15% Of Socimi Axiare For €136M

19 October 2016 – Expansión

Colonial is continuing with its investment policy. After spending €446 million on various purchases so far in 2016, it announced a new operation on Monday, this time with a financial component. The real estate company, chaired by Juan José Brugera (pictured above), has completed the acquisition of 15.1% of the share capital of the Socimi Axiare Patrimonio.

The operation has been closed at a price of €12.50 per share, above Axiare’s latest share price of €11.18 at the end of trading on Friday. Yesterday, the share price of the real estate company soared by more than 7% to close at €6.34 per share.

In total, Colonial has invested €135.58 million to acquire this 15.09% stake, which was previously held by the fund manager Perry Partners. That firm, which acquired its stake in Axiare in July 2014 when the Socimi debuted on the stock market, was the largest shareholder until now, with 19.9% of the share capital. Perry’s decision to sell forms part of its strategy to close its fund and has allowed it to generate juicy profits, given that it acquired its stake for €10/share.

Sources close to Axiare described the purchase as “very positive” and said that it reflects “confidence in the future of the company” given that the purchase price was higher than the average trading price.

Assets

As a result of this operation, Colonial has become the largest shareholder of a real estate company that has a very similar portfolio of assets to its own and at a time when the supply of prime offices in the market is scarce.

As at 30 June 2016, Axiare held assets worth €1,049 million, of which 68% related to offices, 19% to logistics assets and 13% to properties for commercial use. At a presentation to investors and analysts, Colonial explained the details of the operation, which it described as an “attractive option in the market” to acquire shares in a company “that specialises in offices” and whose asset value is mainly concentrated in Madrid and Barcelona (85%). (…).

During the first half of 2016, Axiare generated profits of €83.8 million, up by 168% compared to 2015, after it increased revenues by 27.6%.

During the same period, Colonial generated revenues of €137 million and profits of €230 million. Its portfolio was worth €7,556 million as at 30 June 2016.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake