Vukile Looking to Launch Takeover of Lar España

10 September 2019

The South African firm, Vukile Property, is looking to take a stake in Socimi Lar España, a major investor in shopping centres, with 16 assets valued at 1.462 billion euros.

Vukile, which operates in Spain through Castellana Properties, has already arranged financing for the deal. UBS will represent the firm, while Lar España has hired Lazard.

Lar España was the first socimi to list on the continuous market and currently has a capitalisation of €615 million, a 36% discount to net asset value. Lar España’s largest shareholders, Pimco and Grupo Lar, are expected to insist on a 30% premium to the share price. The socimi ended the first semester with sales of €39 million and a net profit of 29 million euros.

Lar España has been focusing its investments on shopping centres, selling the office buildings it had in its portfolio, as well as logistic assets. In the last 18 months, the firm has raised €425 million, including the €120-million sale of a logistics portfolio to Blackstone and the €190-million sale of four office buildings in Madrid and Barcelona.

Lar España currently has fourteen assets in its portfolio, with a gross rental area of ​​580,000 m2 and a market value of €1.462 billion (June 30, 2019).

Original Story: Expansión – Rebeca Arroyo / Nicolás Sarriés.

Adaptation/Translation: Richard D. K. Turner

Lar Raises Dividend by 67% and Opens the Door to Corporate Operations

9 October 2018

The socimi will distribute €75 million in 2019 / The socimi will book 115 million euros with the delivery of its luxury flat development Lagasca, in Madrid, and roughly 110 million euros from the sale of its three office buildings.

Lar España is moving forward with its plan to focus on the retail market and pay-outs to its shareholders. The company, which expects to deliver the homes in the Lagasca99 luxury development (Madrid) before the end of the year, will raise its dividend to 75 million euros in 2019, compared to the 45 million euros it distributed last May and the €30 million in 2017.

The socimi will propose a dividend equivalent to 5% of the value of its assets (NAV), which will imply an outlay of about €50 million. The company will also pay an extraordinary dividend in 2019 associated with the sale of Lagasca99 for about in €25 million.

The president of Lar España, José Luis del Valle, highlighted, yesterday on Investor Day, the socimi’s evolution and the fulfilment of its strategic plan. “In a few months, we are going to become a socimi focused exclusively on retail. With approximately 550,000 square meters of commercial space, we are the largest operator in Spain, and we also have a specialised manager who is committed to the project.”

Sale of assets

Del Valle recalled that, of the disinvestments of non-strategic assets planned for the years to 2021, the company has already executed 47% in one year for €276 million. Another €115 million will be added to that figure from for the delivery of Lagasca99 and the sale of the three office buildings that the company still has in its portfolio – two in Madrid and one in Barcelona -, which will take place between this year and the beginning of 2019, for about €110 million. As Expansión announced on October 5: “Disinvestments are taking place above the purchase price and with capital gains compared to the last valuation.”

At the same time, it will continue with its investment plan with the purchase of assets for approximately €250 million. Lar bought the Rivas Futura business park in Madrid for €62 million and the Parque Abadía shopping mall in Toledo for €14 million. “We will continue to take advantage of opportunities and, where appropriate, we will address new developments such as Vidanova Parc, in Sagunto, which opened in September and O Lagoh, in Sevilla, which will open in mid-2019,” Miguel Pereda, board member and managing director of Grupo Lar.

Regarding future corporate operations, Del Valle recalled that Lar “is in the market and attractive.” He added: “I think the best thing for the shareholder is the execution of the current business plan, but we are in the market and we can evaluate buyer interest at any time.” Among the shareholders of Lar España, the manager Pimco stands out (19.6%), along with Group Lar (its manager, with 10%); and Franklin Templeton (7.9%).

Regarding potentially negative changes to the tax regime governing socimis, Del Valle found the enactment of such a measure to be unlikely: “There is no point in undoing a formula that has worked and is not part of the problem.”

Original Story: Expansión – Rebeca Arroyo

Translation: Richard Turner

Lar España Excites the Market with its Logistics Portfolio

23 April 2018 – Expansión

The Socimi, which owns five complexes in Guadalajara and Valencia, has received a dozen offers for its assets, all of them for a price of more than €75 million.

Some of the players that have bid for Lar España’s logistics portfolio include the US fund Blackstone, P3 Logistic Parks – a platform controlled by the Singapore sovereign fund -, Palm Capital, CBRE Global Investors, Ares Management and Nuveen, according to market sources speaking to Expansión.

In the logistics sector, the Socimi in which the fund manager Pimco holds a stake, owns four complexes in the municipality of Alovera (Guadalajara), in the heart of the Corredor del Henares.

Together, that site comprises ten logistics warehouses with a total constructed surface area of 142,630 m2 occupied by tenants such as Saint Gobain Isover Ibérica, Tech Data, Carrefour and Factor 5. In addition, the Socimi owns a logistics complex in Almussafes (Valencia) containing a logistics warehouse with a constructed surface area of 19,211 m2. That warehouse is occupied by Valautomoción, the supplier of car parts and accessories to Ford, which was acquired by Ferrostaal in 2015.

According to the latest figures published by the Socimi, its portfolio of logistics assets has a valuation of almost €90 million. Moreover, Lar owns around 200,000 m2 of space for a new logistics development in Cheste (Valencia), which it is not planning to sell until it has finished construction there, to make the investment profitable, according to information reported by the company at the time.

According to Lar’s accounts, the land, which it purchased less than a year ago from Bertolín, has doubled in value since the investment was made. The Socimi paid €2.2 million for the 112,813 m2 plot in Cheste in May 2017 and, at the end of last year, it had a market value of €5.2 million.

Other divestments

Lar España has launched an asset rotation plan to raise cash and undertake new investments in shopping centres After selling two office buildings to Colonial, both in Madrid, for €112 million, the company now has three office buildings in Madrid and Barcelona worth around €85 million.

Moreover, it expects to raise €110 million from the sale of its stake in the luxury residential development Lagasca 99 (Madrid), which it owns jointly with Pimco.

In parallel, the company is going to maintain its investment plan. It expects to allocate €220 million to new acquisitions in retail centres and parks and will invest €247 million in developments, especially commercial ones, and another €49 million on improving its assets.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Lar España Buys Rivas Futura Shopping Centre for €62M

6 February 2018 – Expansión

The Socimi in which Pimco holds a stake has purchased the Rivas Futura shopping complex, in the Madrilenian town of the same name, for €62 million.

Lar España has completed its first investment of 2018. The Socimi, whose largest shareholder is the fund manager Pimco, has completed the purchase of the Rivas Futura shopping complex, located in the Madrilenian town of Rivas.

Inaugurated in 2016, this complex was promoted by the real estate firm Avantis, and became a reference in Madrid, with a surface area spanning more than 55,000 m2 and first-class tenants such as Media Markt, Conforama and Toys R Us. Next to the retail park, the same real estate firm constructed a large office complex and a shopping centre called H2Ocio. Recently, that shopping centre also changed hands, with the manager CBRE Global Investors acquiring 70% of the property.

In 2008, Avantis’ liquidity problems meant that it had to find a new owner for the complex. The real estate subsidiary of Axa spent €81 million to buy the centre at that time. Years later, the fund Lone Star was awarded the park as part of Project Octopus, formed by loans from the German bank Eurohypo.

Now, the Socimi managed by the real estate group Lar has become its new owner, after paying €61.6 million to the most recent owner: Credit Suisse.

With this new investment, Lar España has become the largest operator of retail parks in Spain, with more than 150,000 m2 in its portfolio. Its flagship assets include the Megapark complex in Barakaldo, where the Socimi owns both the Megapark shopping centre and the factory outlet (acquired for €170 million), as well as the leisure area; that operation was closed at the end of October.

This purchase also represents the first acquisition of a commercial asset by the Socimi in Madrid, where it already owns a luxury housing development, Lagasca 99, as well as two office buildings. At the end of last year, Lar España put its office portfolio, comprising four assets and worth €170 million, up for sale. Since then, it has sold two of the assets, both located in Madrid and both sold to the same buyer: the real estate firm Colonial.

During the first nine months of 2017, Lar España generated profits of €72.2 million, up by 55% compared to a year earlier, after earning €57.2 million, up by 36%.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Large Funds Get Involved in Popular’s Criminal Lawsuit

31 January 2018 – Expansión

The large funds Pimco, Anchorage, Algebris and Cairn are participating in the criminal case that the Spanish High Court is investigating against the former directors of Popular.

These funds, which lost almost €850 million following the resolution of the bank, have appealed the resolution decision taken by the Single Resolution Board (JUR) before the European Court of Justice and the resolution of the Frob before the Spanish High Court. Specifically, Anchorage, Algebris and Ronit have appealed to the European Court of Justice and Pimco, Anchorage, Algebris, Ronit and Cairn have appealed to the Spanish High Court.

On 4 October 2017, judge Fernando Andreu admitted for processing the first lawsuits against the former directors of Popular and PwC. Most of them are focused on the capital increase made in 2016 and against Ángel Ron and his Board for improper management, falsification of documents and misappropriation. Lawsuits have also been filed against Emilio Saracho and the management of the most recent executive team.

The debtholders are being represented in Spain by Andersen Tax & Legal and SLJ Abogados and in the EU by Quinn Emanuel.

Richard East, Managing Partner at Quinn Emanuel, explains: “The plaintiffs filed serious accusations that the Spanish High Court has agreed to investigate. The funds want to be informed and to collaborate in this investigation to determine the existence of falsehoods in the process”.

Original story: Expansión (by Mercedes Serraller)

Translation: Carmel Drake

Lar España Puts Assets Worth €380M up for Sale

2 December 2017 – Expansión

After more than three years of actively making purchases, Lar España, the Socimi in which Pimco holds a stake, is entering a new phase. The firm, which presented the pillars of its 3-year business plan to analysts on Friday, announced that it is going to put assets worth €380 million up for sale. It expects to use the resources to distribute dividends, gain financial muscle to continue with the retail developments already underway and take advantage of potential purchase opportunities.

As part of this process, Lar will sell off its entire office portfolio, comprising four buildings, three in Madrid and one in Barcelona, worth €170 million in total. In September, the company sold one property located at number 336 Calle Arturo Soria (pictured above) to Colonial for €32.5 million.

To this figure, Lar España will have to add the €110 million that it expects to raise from the sale of its stake in the luxury housing development Lagasca 99, which it owns jointly with Pimco. The companies, which have already sold more than 70% of the development, plan to hand over the homes during the second or third quarter of next year. Moreover, the group plans to sell non-strategic assets, as well as those that have completed their cycle of maturity in the portfolio, for another €100 million.

In parallel, the group explained its investment plans for the assets in its portfolio. The firm is going to spend €247 million on capex. Of the total, 80% will be allocated to some of the retail developments underway, such as Vidanova Parc (Sagunto), which will open its doors in 2018 and Palmas Altas (Sevilla), which will be launched in 2019. The remaining 20% will be used to renew its existing asset portfolio.

In terms of new investments, the company has identified purchase opportunities amounting to €220 million in total and is already analysing almost 115,000 m2 for a number of operations, all retail spaces. Lar plans to close the year with assets worth €1.5 billion, of which 73% correspond to shopping centres.

In terms of the relationship with its manager, the President of Lar España, José Luis del Valle, expects to renew the contractual relationship with Grupo Lar, which is due to end in 2019. “They have been willing to adapt the contract to the development of the company and the markets”, said the group’s President. Last year, Lar’s managers agreed to lower their variable salaries and assume the difference between the share price on the stock market and the NAV, in an attempt to calm criticism from several investors.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Property Developers Start Buying Land Without Building Permits

11 October 2017 – Real Estate Press

Overseas real estate funds, with a major presence in the Spanish real estate market, are owners of large portfolios of land as well as of debt secured by land as collateral, and many are operating in association with Spanish property developers.

The estimates for this year indicate that 80,000 new homes will be built in total.

The funds Blackstone, Cerberus, Kennedy Wilson, TPG, Värde Partners and Apollo started to acquire servicers, created by the banks, when the real estate sector began to recover. Other funds, such as Lone Star, Centerbridge, HMC, Eurostone, Aquila, Oaktree, Castlelake, Värde and Pimco, have been backing residential development. In this way, they have become the new residential property developers that need land as their raw material.

Now, unlike in prior years, no one wants to risk buying land that still needs some kind of building permit approval to turn it into buildable land, due to the risks involved, and that is why the price of buildable land is rising.

Funds were able to acquire land in areas with high demand for housing, such as Madrid, País Vasco, Barcelona, the Costa del Sol and the Alicante coast, at low prices before residential activity started to recover. But over the last year, land prices have also been recovering in other large capital cities, such as Valencia, Zaragoza, Sevilla and Málaga.

Nevertheless, the potential that these entities see in the residential development segment has allowed them to reduce the urban planning risk in more mature markets, such as Madrid and Barcelona, until now, and start to place their focus on plots that still have not received building permit approval. Moreover, there is no shortage of people who are demanding that the administrations adopt their expansive urban planning policies once again.

Original story: Real Estate Press

Translation: Carmel Drake

Large Funds Thrash It Out To Buy Residential Land

9 October 2017 – El Periodico

The 10 largest property developers in the country are in a position to start work on the construction of around 20,000 new homes in 2018. That volume of output is possible thanks to the collection of buildable urban land that they have managed to accumulate over the last year. The large Spanish property developers – many of which are owned, at least in part, by investment funds – as well as overseas funds themselves, are competing, at an almost frenetic pace, to acquire plots of land on which they will be able to build without modifying the classification (to residential use).

“Overseas investors are very present in the new Spanish real estate landscape, be it as owners, debt holders, servicers or property developers investing together with other local property developers, both in the renovation of existing buildings and the construction of new ones, as well as in the rental sector and through the constitution of Socimis”, says Samuel Población, Director of Residential and Land at the real estate consultancy firm CBRE. The consultancy indicates that at the end of 2016, the large property developers in Spain owned €8,000 million in assets for construction.

80,000 homes in 2017

The real estate sector is expecting the output of new homes to reach 80,000 units in 2017. That figure is still below the short-term goals. “We should be producing 150,000 homes (per year), although we will not achieve pace that for another three years”, says Juan Velayos, CEO at Neinor Homes, one of the real estate companies – whose main shareholders are investment funds – that has purchased the most land over the last two years. “We set ourselves a land investment target of €380 million for 2017 and 2018, but we have already covered most of that budget this year”, he adds. His firm is currently working on the construction of 5,000 homes in Spain and hopes to achieve a completion rate of 3,500 units per year.

The funds Blackstone, Cerberus, Kennedy Wilson, TPG, Värde Partners and Apollo started to acquired the commercial and management platforms that the banks had created (the servicers) when the real estate sector started to recover in 2013. In parallel, the overseas funds Lone Star, Centerbridge, HMC, Eurostone, Aquila, Oaktree, Castlelake, Värde and Pimco are strongly backing residential development. In this way, they have become the new house builders. And they cannot build if they don’t own land.

The problem is that, for various reasons, the administrations are not producing raw material. “No reclassifications (of land) are being performed, because someone will always get hurt”, says Lluis Marsà, President of the Association of Property Developers and Constructors (APCE). “We do not take the risk of buying non-buildable land that has to be transformed because the production costs are rising, the risk soars”, says Velayos.

Nevertheless, that situation has the benefit that agents in the sector are adjusting output to the maximum in order to maintain returns despite the new quality standards for homes, which are higher than in the past. “One of the positive effects of the profound transformation of the sector, with the arrival of new players, is the greater degree of control over the finances and execution periods that we are seeing”, says Población.

Investors adding value

The profile of funds has evolved quickly from opportunistic to value added (…). The focus of these firms is to acquire plots in areas where demand for housing is high, such as Madrid, País Vasco, Barcelona, the Costa del Sol and the Alicante coast. But during 2017, there has also been a positive recovery in land operations in other large capitals such as Valencia, Zaragoza, Sevilla and Málaga (…).

Original story: El Periodico (by Max Jiménez Botías)

Translation: Carmel Drake

Europa Capital Buys Gran Vía de Alicante For €52M

2 October 2017 – Expansión

Spanish shopping centres continue to be objects of desire for international investors and, specifically, for private equity funds. One of the latest to back this segment is the British fund Europa Capital, which has just closed an agreement with the real estate subsidiary of Deutsche Bank, Rreef, to acquire Gran Vía de Alicante, one of the largest shopping centres in the area.

Market sources have explained to Expansión that the operation has been closed for €52 million. The real estate consultancy JLL has advised the vendor in the process, whilst LyC and Savills have advised Europa Capital.

According to the same sources, the sales process, which opened in March, sparked interest amongst numerous investors, including Eurofund Capital Partners and Patron Capital, as well as Carmila, the subsidiary of Carrefour.

This shopping centre first opened its doors in 1998 and was renovated in 2012. The asset has a gross leasable area of 37,314 m2, spread over three floors, and includes a hypermarket occupied by Carrefour, which does not form part of the perimeter of this operation. The asset also includes a car park with 1,600 parking spaces.

Specifically, more than 70% of the asset’s surface area is leased to fashion brands such as Primark, Lefties, Pull&Bear, H&M, Bershka, Massimo Dutti and Deichmann. Moreover, the shopping centre’s other tenants include restaurant brands such as Foster’s Hollywood and Lizarrán.

Visitors

Last year, the shopping centre received 5.3 million visitors, up by 2.7% compared to the previous year. Gran Vía Alicante has increased the number of visitors almost continuously since Primark opened a store in the centre five years ago. That also resulted in a rise in sales, which exceeded €32 million last year, representing a YoY increase of 5.3%.

The asset, located at number two Calle José García Sellés, competes with Plaza Mar 2 – the largest shopping centre in the municipality – with a gross leasable area of 43,684 m2.

Other shopping centres located close to Gran Vía Alicante include Parque Vistahermosa, measuring 34,000 m2; San Vicente Outlet Park, measuring 36,500 m2; and Puerta de Alicante, measuring 34,500 m2.

Other operations

The purchase of Gran Vía Alicante by Europa Capital follows other operations closed recently in the region.

In this way, last year, TPG purchased the L’Aljub de Elche centre for €100 million for TH Real Estate. Meanwhile, Lar España acquired the Portal de la Marina shopping centre in Ondara (Alicante) for €14.5 million, and the Socimi in which Pimco holds a stake bought the Vistahermosa retail complex, which is located very close to the centre in Alicante, for €42.5 million.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

International Funds Reactivate RE Sector By Building Thousands Of Homes

2 October 2017 – Expansión

After years of drought, the residential real estate market is starting to show signs of recovery, with a significant increase both in investment in land as well as in the construction of new developments. In this new phase, international investment funds have become a major player, with more than €1,000 million invested in the Spanish residential sector and thousands of homes under construction. “Interest from these types of funds in the residential property development market is the result of the recovery that the segment is experiencing, as a consequence of a clear improvement in the underlying macroeconomic indicators”, says Borja Ortega, Director of Capital Markets at JLL.

For its investments in Spain, large international funds such as Värde, Castlelake, Lone Star and Morgan Stanley have opted for alliances with local operators (…). “This formula (…) is very beneficial for the market as it combines access to capital and international sources of financing with knowledge and experience of the local real estate development sector”, says Ortega.

“In most cases, the international fund provides the bulk of the capital, whilst the local partner participates in each project with a smaller percentage investment, but bringing to the table its expertise in terms of the acquisition of land and the construction of developments”, highlights Samuel Población, National Director of Residential and Land at CBRE España.

Lone Star stands out amongst the major investors. The fund, led in Spain by Juan Pepa, has invested more than €1,000 million in launching Neinor Homes, the first property developer to debut on the stock market in almost a decade. Another key player, Castlelake, is willing to spend a similar figure on the creation of another real estate giant, in this case, Aedas, which will also make its debut on the stock market soon.

Alongside them, Värde, which channels its investments in the residential sector through two companies: Vía Célere and Aelca. These three funds lead the national ranking, with 11,189 homes under construction and almost 5 million m2 of land.

Property developments

The giants Lone Star, Morgan Stanley, Castlelake and Värde are not the only players to be investing in housing in Spain. The German fund ASG is another one of the most active investors. Through its Spanish subsidiary, ASG Iberia, it is currently working on the construction of 2,000 homes, across six sites, including in San Juan (Alicante), Alcalá de Henares (Madrid) and Málaga (…).

Other active players include Stoneweg; Harbert Management Corporation (HMC), which has teamed up with the Spanish management company Momentum; the German institutional fund Patrizia; and Pimco, which joined forces with the Socimi Lar España (…).

Other partnerships are purely financial. Such is the case of the agreement between Avenue Capital and Quabit, where the fund has granted two lines of credit, amounting to €100 million in total, to the property developer to buy land.

Pressure

According to CBRE, investment in residential assets exceeded €600 million between January and September. And, according to the experts, that figure is going to continue growing. “We will continue seeing interest from international funds, given that the outlook for growth in the sector is strong for the next three to four years. The funds already present will continue with their activity and it is probable that others (not yet present) will also join in, given that the investment pressure is high”, says Población.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake