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

Santander Uses Uro Property’s First Dividend To Pay Off Debts

6 July 2015 – El Confidencial

Just four months after Uro Property’s IPO on the stock market, the landlord of 1,136 Santander branches, has approved its first dividends and the entity chaired by Ana Botín has used the funds to pay off some of the Socimi’s debts. And that is because Santander is not only the Socimi’s tenant, it is also the main shareholder of the company, previously known as Samos, which it inherited after the company’s bankruptcy due to its inability to pay off debts amounting to more than €2,000 million.

The foreclosure by the banks was orchestrated, primarily, through the company Zitoli, which currently holds 85% of the share capital, whilst Santander owns the remaining 15% as a result of its financing of the mezzanine debt. The two partners have agreed to use the shareholder remuneration that Uro Property has just authorised, amounting to €154.3 million, to repay its debts and continue the clean up of the Socimi.

This decision has been orchestrated through the issue of demand notes, securities that will be capitalised, taking advantage of a capital increase to pay off loans, which will take place this summer, just after 30 July, when the dividend payment will be made. From that moment on, Ziloti and Santander will devote 57% of the remuneration due to them, almost €88 million, to continue with the plan to clean up the Socimi.

The Cantabrian entity has the leading role in this process, since through its indirect shareholding via Ziloti, as well as the direct stake it holds from the inherited mezzanine loan, it holds 24% of the share capital. The next largest shareholder is CaixaBank, with a 15% stake, BNP Paribas with a 8.81% stake and Société Générale, with a 3.14% stake. Moreover, several hedge funds and entities such as Barclays and Bayerische Landesbankhold hold stakes of less than 1%; whilst the former shareholders, Sun Capital, now known as Atisha Holding, and Pearl Group, now Phoenix Life, hold 21.7% and 14.38% stakes, respectively.

These vehicles created the current Uro Property together with Drago Capital, the fund led by Oriol Pujol, which is currently being investigated by the Tax Authorities and from whom the Socimi has made every effort to distance itself. That former link is the main threat that hangs over the entity and could severely jeopardise the efforts being made by it, under the guidelines set out by its creditors to clean up its balance sheet.

In fact, the Socimi is one of 64 individuals and legal entities that have been denounced by the Tax Ministry for “the alleged commission of a crime involving money laundering and fraud”.

Whilst the Courts continue with their investigations, the banks are also progressing quickly with their roadmap designed to financially restructure the Socimi and find an exit for those creditors that do not want to continue to hold shares in the company. One of the main steps taken to that end, besides the listing of Uro Property on the stock exchange, was the sale of 381 branches to Axa for €308 million, which was approved in April, and the issue of bonds amounting to €1,300 million.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Uro Property To Issue Bonds To Secure €1,300M Funding

27 April 2015 – El Confidencial

The Socimi has launched its road show to issue 25-year debt that will allow it to repay all of its banking loans. The placement will be conducted in Holland through a special vehicle.

Uro Property has stepped on the accelerator to adjust its financial structure and position itself so as to compete head to head with the major Socimis in the market. Following its sale of 381 Banco Santander branches to AXA Real Estate (last month), the company chaired by Carlos Martínez Campos and led by Simon Blaxland, has launched a bond issue with a view to securing funds amounting to €1,300 million.

Through this placement, the Socimi wants to refinance all of its bank debt, which amounted to €1,424 million before the transaction with AXA, but which will be reduced by the corresponding proportion following the sale to the French group, since all of the funds (raised from the sale) will be used to repay its financial commitments.

This will be the first major bond transaction carried out by a Spanish Socimi. It forms part of the general move by these companies to return to the stock markets in search of liquidity and whereby take advantage of the window of opportunity that has opened up in stock markets around the world.

Holland is the market chosen by Uro to conduct its bond issue, which will be undertaken through the ad hoc creation of a special vehicle to issue the debt. Uro will verify investors’ appetite during the international road show, which the company has now launched; its objective is to reduce its current spread by 200-300 basis points and adjust the lifespan of the issuing vehicle to reflect the average life of Santander’s rental assets, i.e. around 25 years, although there will also be shorter terms.

The agreement with AXA has proved to be a lifeline for the Socimi, since it has resulted in the materialisation of the asset values assigned by CBRE. When Uro first listed on the MAB on 12 March, the real estate consultancy firm valued the company’s total portfolio at €2,000 million. Less than two months later, the French group, which owns one of the largest real estate investment vehicles in Europe, has paid 10% whereby giving credibility to Uro’s core assets.

Following the transaction with AXA, Uro now owns 755 Banco Santander branches, which have a combined surface area of more than 340,000 square metres and are valued at more than €1,700 million. Moreover, the branches that Uro has retained are the most desirable (prime) and are mainly located in Madrid and Barcelona, which explains why, despite having sold around one third of its assets (in terms of the number of branches), in terms of value, the sale only represents 15%.

Next steps

With all eyes on the closure of the (bond) issue in May, Uro is working on its road map, with a view to freeing up all of its bank loans and therefore, being able to address the company’s next objective, namely its listing on the stock exchange next year.

The Socimi’s major shareholder is Santander, which holds 24% of Uro’s share capital, whilst CaixaBank holds 14.98%, BNP Paribas owns 8.81% and Societe Generale holds 3.14%. Moreover, several hedge funds and entities such as Barclays and Bayerische Landesbank hold smaller stakes, of less than 1%, whilst the company’s former shareholders, Sun Capital, which is now known as Atisha Holding, and the Pearl Group, now Phoenix Life, hold 21.7% and 14.38%, respectively.

All of these shareholders have committed to continue to hold the Socimi’s share capital, for the next 12 months at least, although it is possible that, if an agreement is made between the shareholders, this period, known as the lock-up, may decrease if the circumstances in the market dictate that a move to obtain liquidity should be launched before the planned schedule, to pave the way for the stock market listing.

Uro’s IPO on the MAB was carried out to comply with the rules established for Socimis, which requires them to become listed vehicles within a maximum period of two years. Although Santander’s landlord still had time before the end of that term, it decided to list in March precisely because it wanted to pave the way for its bond issue, since investors always look more favourably upon debt issued by listed vehicles.

Nevertheless, since that was not its natural market and since at the time, it regarded the step more as a requirement than a vocation, it limited its placement on the Alternative Investment Market to the minimum legal requirement of €2 million. In contrast, once it has finished adjusting its financial structure and is able to begin actively working on its stock exchange listing, the company will have the opportunity to raise capital, which it will use to finance purchases, like other Socimis have done, given that all of the funds raised from its current bond issue will be used to repay its debt.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Santander’s Landlord Finalises The Sale Of 400 Branches

5 March 2015 – El Confidencial

Uro Property, the name given to the company formerly known as Samos, will begin trading on the MAB (‘Mercado Alternativo Bursátil’ or Alternative Investment Market) with the minimum legal amount, given that its ultimate aim is to move onto the main stock market.

Another one of the Socimi giants is counting down the hours until its goes public. Uro Property, the name give to the company formerly known as Samos, and the company through which several investment funds advised by Oleguer Pujol purchased a one third stake in Santander’s branches, will list on the MAB within the next few days and will continue to put the pieces in place to fulfil its aim of listing on the main stock market, with a healthier financial structure.

With this challenge in mind, the company chaired by Carlos Martínez Campos and led by Simon Blaxland is finalising the sale of 400 of the 1,316 branches that it owns, a transaction that it is already negotiating with an institutional investor and that will allow it to repay some of its €1,424 million loans ahead of time. This debt was already financed last year, when Samos’s creditor entities, led by Santander and CaixaBank, took control of the company, by capitalising €424 million of mezzanine debt and creating Uro.

This transaction turned Santander into the main shareholder of the Socimi, with a 24% stake, whilst CaixaBank took ownership of 14.89%; BNP Paribas holds a 8.81% stake and Société Générale holds 3.14%. In addition, several hedge funds and other entities, including Barclays and Bayerische Landesbank were left with stakes of less than 1%; whilst the former shareholders, Sun Capital, now known as Atisha Holding and the Pearl Group, now Phoenix Life, hold 21.7% and 14.38%, respectively.

All of the shareholders have committed to retaining their stakes for a minimum period of 12 months, during which time Uro Property is confident that it will close a new financing deal that will allow it to reduce its spread from its current level of 300 basis points to closer to 200 basis points.

In fact, the listing on MAB is seen as another step in this process, given that by law, all of the Socimis are obliged to go public within a period of two years. Although Uro Property’s deadline in this sense does not expire until after 2015, it has chosen to go public as soon as possible precisely because it believes that its status as a listed company will facilitate its refinancing.

This explains why Santander’s landlord is going to limit its initial placement to the minimum established by law: two million euros, a paltry figure, considering that its assets have been valued by CB Richard Ellis to amount to €2,000 million and given that forecasts suggest its market value amounts to around €500 million.

An independent audit to separate the company from Pujol

Renta 4 has been hired as the liquidity provider, whilst EY has performed the valuation of the company ahead of the placement. Aware that all eyes are focused on it, given its historical ties with Oleguer Pujol, the company commissioned Deloitte to conduct an independent audit (the auditor of the Socimi’s accounts is PwC), which certified that the maximum investment made in the Socimi by the son of the former President of Cataluña amounted to €67,000.

The Socimi has signed a new lease agreement with Santander, which has committed to occupy the properties for a minimum period of 25 years, and it may extend that period by 14 more years for a third of the assets, which the bank, chaired by Ana Botín, has identified as more strategic for its business. In return, the company has been granted the right to review the portfolio each year, as well as the ability to exchange some branches for others, provided these exchanges do not represent more than 1% per year, under any circumstances.

Santander will pay Uro rent amounting to €125 million net, since the bank itself will bear all of the costs relating to the properties. This guaranteed income, together with the refinancing deal signed last year, allowed the Socimi to generate profits in 2014. Moreover, with the new financial structure that it is negotiating, which it is hoped will extend the current six year maturity period, the Socimi is confident that it will significantly improve its results; this is key for a vehicle such as this, whose main attraction is the fact that it is obliged to distribute the majority of its profits in the form of dividends.

Uro will be able to begin working on its plans to list on the main stock market and expand its portfolio of assets from 2016, in line with the steps being taken by its competitors, such as Merlin, which acquired BBVA’s offices.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake