Tag: property portfolio

2018: The Year that Blackstone was Crowned the King of the Spanish Real Estate Sector

17 December 2018 – Eje Prime

Blackstone wants it all and it wants it now. That is the sensation that the US investment fund, the new king of the Spanish real estate market, is transmitting throughout the real estate sector. Its portfolio is worth more than €20 billion after an accelerated period of purchases during 2018.

One of the objectives of the US fund manager has been, precisely, to expand its network in the Spanish real estate sector by entering markets such as the logistics segment. At the beginning of December, the company closed its latest operation in the country with the purchase of a logistics portfolio from Neinver for €300 million.

Nevertheless, the deal involving the giant Neinver is by no means the most significant operation that Blackstone has undertaken this year. Over the last twelve months, the group has taken control of Hispania, to grow in the hotel sector; it has acquired 80% of Testa, to manage thousands of rental homes, and in the logistics sector, it has accumulated 1 million m2 of space with the 55 assets from Neinver and the purchase of an industrial portfolio from Lar España.

Blackstone has disbursed almost €4 billion in the Spanish real estate sector this year, a figure that far exceeds the €127.5 million that it spent on its first investment in the domestic market in 2013. Moreover, that debut was not free from controversy, given that the group purchased 18 residential developments, containing 1,860 social housing units, which the Town Hall of Madrid sold the fund through the Municipal Housing and Land Company of Madrid (Emvsa).

Five years later, Blackstone is one of the largest owners of residential assets in Spain and the leader of the hotel sector. It leapt to first position in the hotel market ranking this year following its successful takeover of the Socimi Hispania. The company paid €1.99 billion for that vehicle, managed by Azora. With that operation, the fund added 46 assets and almost 13,150 rooms in Spain to a portfolio that it started to grow in 2017 with the purchase of HI Partners, the hotel arm of Banco Sabadell, for €630 million. In total, the manager owns 63 assets and almost 18,000 hotel rooms across Spain.

Hispania also provided Blackstone with residential assets worth €230 million, as well as 25 office buildings whose market value exceeds €600 million. Also in that segment, the company added the iconic Planeta office building in Barcelona to its portfolio during 2018, which it purchased from the Lara family in July for €210 million.

Spain, 20% of its global portfolio

Today, Spain accounts for 20% of Blackstone’s global investment. In total, the US firm owns property worth almost USD 120,000 million (€105,387 million) around the world. This real estate giant has become the largest unlisted real estate company in Spain (…).

The superiority of Blackstone’s portfolio in Spain with respect to those of the large domestic real estate firms is clear. The two largest players, Merlin and Colonial, are ranked within the top 15 Socimis in Europe and, yet, their portfolios are worth just half of that of the fund, at €11.785 billion and €11.19 billion, respectively.

Santander’s best friend

As well as mixing with other real estate players, Blackstone has made friends with some of the Spanish financial institutions. The banks, big losers in the previous real estate cycle, have worked hard over the last two years to place their property with the highest bidder, taking advantage of the new boom in the residential market.

In this way, in 2017, Banco Santander agreed with Blackstone the largest operation involving the sale of toxic assets from the real estate sector in the country. The fund manager purchased 51% of Popular’s property, a portfolio with €30,000 million in assets.

The relationship with the bank owned by the Botín family has been strengthened in 2018 with Project Quasar, the real estate firm created by the financial institution and the fund. The joint venture received a capital injection amounting to €300 million in May. Through this vehicle, the transfer of Popular’s assets is being carried out.

In order to place this property into circulation, as part of the operation in 2017, Blackstone also acquired the bank’s servicer, Aliseda, led by Eduard Mendiluce (…), who also manages the Socimi Albirana.

Albirana Properties is one of four residential Socimis that Blackstone currently has listed on the Alternative Investment Market (MAB). The others are Fidere Patrimonio, Corona Patrimonial and Torbel Investments.

Original story: Eje Prime (by Jabier Izquierdo)

Translation: Carmel Drake

Barings Completes €23M Capital Increase & Prepares Socimi Debut

28 February 2018 – Eje Prime

Barings is not wasting any time in Spain and is taking advantage of the good health of the country to generate profits from its investments. The British fund has just carried out a €23.1 million capital increase for its Spanish subsidiary Barings Core Spain, which, according to market sources, it is preparing to convert into a Socimi and debut on the Alternative Investment Market (MAB) within the next few months.

Specifically, the company has increased its share capital to finance the purchase of new assets and to meet the company’s financing needs. Following this increase, which was published in the Official Gazette of the Mercantile Registry (Borme), the company’s resulting subscribed share capital amounts to €47.1 million.

Now, after a very active year in terms of acquisitions in the Spanish market, the group has decided to transform its company and turn it into a Socimi. Although the company is in the middle of carrying out that process, it does not yet have a final date for the completion of the transformation. The group is also working in parallel to prepare the future Socimi to start to trade on the alternative stock market.

In this way, all of the assets that form part of the Barings portfolio would move across to be managed by its Socimi. They include the recently acquired Berceo shopping centre, in Logroño (…).

Also in 2017, the British company backed commercial assets with the purchase of a prime retail outlet in Spain. Barings acquired the store at number 64 Calle Velázquez in Madrid. With a retail surface area of 1,638 m2, the establishment is currently occupied by Banco Popular.

In terms of logistics assets, last year, Barings also took responsibility for fattening up its property portfolio with those kinds of products. In April, the group purchased a logistics asset in Madrid from GLL Real Estate Partners for €35 million. The warehouse has a surface area of 56,000 m2 and is leased to Ceva (…).

Before the end of 2017, Barings also completed another purchase. In December, the international manager acquired two assets in Majadahonda (Madrid) for €17.6 million, owned until then by López-Real, and occupied by the Eroski supermarket chain. The fund purchased a storeroom and gas station, spanning a total surface area of 10,900 m2.

Last year, Barings also strengthened its management team in Spain. The fund announced that, as part of the on-going expansion of its European offer, it had appointed Carlos de Oya as Director of Asset Management in the Spanish market. Barings has one office in Spain, located at number 38 Calle Serrano, in Madrid.

Barings Real Estate Advisers is one of the largest diversified real estate investment managers in the world. The group is an active investor in private and listed markets, in both equities and debt, and provides fundamental, value-added and opportunistic investment and advisory services to institutional and other qualifying investors around the world. The group manages an asset portfolio worth €271 billion.

Original story: Eje Prime (by Custodio Pareja)

Translation: Carmel Drake

Mango’s Owner Sells H&M Store in Burgos for €12.6M

11 January 2018 – Eje Prime

The property will continue to be occupied by H&M after the operation. The Swedish retailer leases the 3,000 m2 building, which Mango purchased at the end of the economic crisis for €8 million.

Mutualidad General de Abogacía is adding new assets to its property portfolio. The company has acquired the building that houses the flagship store of the Swedish giant H&M in Burgos for €12.6 million, according to sources close to the operation. Until now, the property had formed part of the portfolio of Punto Na, the real estate company owned by the businessman Isak Andic, founder of the Catalan fashion chain Mango.

The property has a retail surface area of 3,000 m2, spread over four floors. The operation, which has been brokered by the real estate consultants Torit Allocation and Otto Capital, will allow Mutualidad General de Abogacía to fatten up its collection of retail assets, which account for 30% of the group’s total portfolio. Following the acquisition, the fashion chain H&M will continue to operate in the store, whereby guaranteeing the Mutua de los Abogados a profitable long-term tenant.

The building is located on the corner of number 1 Plaza de Santo Domingo and number 2 Calle Moneda, and has a façade measuring 66 m. The store is located next to several Inditex and Mango shops, as well as a large El Corte Inglés department store.

Punta Na acquired the building at the end of the economic crisis for €8 million. Until then, the building had been occupied by the historical Caja de Ahorros Municipal de Burgos (…).

In recent years, the owner of Mango has been growing his portfolio of assets by buying up retail premises. Although the businessman’s real estate company is Punto Na, Andic also operates in the retail sector with Punto Fa, which is the company through which he operates Mango.

Thus, like Amancio Ortega has done with Pontegadea, the founder of the Catalan fashion chain, owned assets worth €1.329 billion in 2016 and his objective was to continue to increase his portfolio by acquiring retail premises to lease them to large fashion retailers, which tend to sign long-term lease contracts (…).

The lawyers’ mutual society, a not-for-profit organisation that offers investment solutions for legal professionals, owns a large portfolio of properties all over Spain. The entity has 44 assets under management, spanning a total surface area of 271,816 m2, of which 89% are occupied by tenants (rental arrangements).

By type of assets, 53% of the portfolio comprises offices, 20% hotels, and the remaining 27% is split between retail premises, nursing homes, industrial assets and parking lots.

In terms of the geographical distribution, most of the portfolio’s real estate assets are located in the Community of Madrid, specifically, 29 assets. The other properties are located in Barcelona, where it owns 4 assets; plus it has around ten more buildings in Alicante, Almería, Bilbao, Granada, Málaga, Salamanca, Santander, Sevilla, Lérida, Valladolid and Vigo.

Original story: Eje Prime (by Custodio Pareja)

Translation: Carmel Drake

VBARE Appoints Fabrizio Agrimi As New CEO

20 November 2017 -Revista Centros Comerciales

On Monday, VBARE Iberian Properties Socimi (VBARE) announced the appointment of Fabrizio Agrimi (pictured below) as the new CEO of the Socimi. Agrimi is a grand connoisseur of the real estate sector and has extensive experience in investments, mergers and acquisitions, not only in Spain but also in the United Kingdom and Italy. He has worked for a number of high profile international companies and until May 2017 he was Managing Director and Partner at Altan Capital.

Prior to joining Altan Capital in 2007, Fabrizio Agrimi formed part of the Investments Department at Aguirre Newman (2004-2006), where he participated in the acquisition, management and sale of numerous real estate assets. Prior to that, he worked in Milan and London for the law firm Vita Samory, Fabrini e Associati (now part of Orrick) where he was a member of the M&A, Private Equity and Financial Services teams.

Fabrizio Agrimi holds an MBA from the ESADE business school (Barcelona) and a degree in Law from the University of Trento. Whilst at university, Fabrizio completed two international internships at the law firm Sebastià Roca i Associats (now part of Roca Junyent) in Barcelona and at the European Parliament in Luxembourg.

With this addition, VBARE strengthens its team and consolidates its base for growth. VBARE recently presented its results for the first nine months of the year, during which time it generated a profit of €2,177,000, resulting primarily from the appreciation in value of its real estate portfolio. Revenues from rental income amounted to €781,000, which represented an increase of 188% with respect to the same period last year. The total value of VBARE’s property portfolio amounts to €28.2 million, up by 17% compared to the end of 2016.

Original story: Revista Centros Comerciales

Translation: Carmel Drake

Popular Abandons Sunrise To Pursue Other RE Solutions

29 March 2017 – Cinco Días

Speculation about the future of Banco Popular has not dissipated following Emilio Saracho’s arrival as the entity’s new President on 20 February, although it is true that it has tempered slightly. The bank’s low solvency ratios, after it completed a major cleanup effort in 2016, are fueling those rumours and it seems that until the entity shows the market that it is capable of resurrecting itself like Ave Fénix, through some kind of major sales operation, then the market will not stop seeing it as an easy target.

Popular’s level of regulatory capital stood at 8.17% in December, below the 10.5% required by the ECB in January 2019 and also below the average for the sector. Most of its capital consumption is due to its high-risk level, itself a consequence of its large property portfolio, the main problem in all of this. However, a substantial number of the solutions designed by the former President, Ángel Ron, have now disappeared or have been modified. (…)

One project that has been buried almost completely, although it has barely been acknowledged that it is not going to be carried out, is Sunrise. That was Ron’s star project, to eliminate a large part of the entity’s real estate portfolio.

The idea was to transfer around €6,000 million in real estate assets to this vehicle, which was going to be deconsolidated from Banco Popular’s balance sheet, after securing a complex financing structure, and its subsequent debut on the stock market.

It seems that Saracho has not approved of that project since he arrived at the bank and has decided to shut it away in a drawer, never opened. Now questions are being asked about what will happen to Remigio Iglesias and Roberto Rey, two executives hired by Popular last year to serve as the President and CEO of Sunrise, respectively.

Another option still open to Popular is to turn to the European bad bank, which the ECB is expected to create, according to market sources. In fact, Popular’s share price was the most bullish on Tuesday, with an increase of 3.24%, after the European Banking Authority said that it was in favour of creating a European bad bank to solve the problematic loan phenomenon, a project that is also supported by the ECB.

Original story: Cinco Días (by Ángeles Gonzalo Alconada)

Translation: Carmel Drake

Popular’s RE Losses €992M Higher Than Expected In 2016

2 March 2017 – Expansión

Popular had to find almost €1,000 million more than it had planned in 2016, to cover over-valued loans and properties, and the impairment of its subsidiary, Targobank.

During its last capital increase, Banco Popular announced that it was going to carry out an upwards adjustment to its provisions of around €4,700 million. Nevertheless, the final figure for the definitive provisions amounted to €5,692 million, which led to a negative result (loss) of €3,485 million. The entity, which was chaired by Ángel Ron at the time, has justified the reasons for that €992 million deviation in its total provisions balance in its recently published annual report.

The largest item in terms of provisions not foreseen in the market by the former managers of Banco Popular was “non-recurring provisions for loans and properties”. In total, around €703 million had to be found, in addition to another €54 million in extra provisions to cover other portfolios of loans and properties on the bank’s balance sheet (in this case on a recurring basis).

The other major item in terms of provisions for impairment, which worsened Popular’s numbers by more than expected, related to its subsidiary, Targobank (the bank that it controls jointly with Crédit Mutuel). The significant losses incurred by the entity in 2016 (it recorded a negative result of €71 million) and its failure to comply with the business plan caused the impairment of 100% of the entity’s goodwill balance, which had amounted to €169 million.

Finally, the bank acknowledges that it also had to add another €66 million to its provision balance in 2016 (and post 100% of the corresponding entry in the income statement for the year) in relation to “pensions, restructuring costs and other items”.

In addition to the unforeseen provision-related items, Banco Popular says in its annual report that the high level of provisions recorded in 2016 is due “to a large extent” to the clean-up procedures that were carried out as a result of the new accounting circular 4/2016, issued by the Bank of Spain, known in the sector as Annex IX, which came into force last autumn.

The majority of the clean-up effort focused on the property portfolio, as well as on loans to sectors linked to real estate. According to information presented in the entity’s accounts, this adjustment translated into an impairment in the value of the real estate assets (in other words, provisions) of around €4,025 million last year. The remaining €1,666 million of the new provisions for bad debts were allocated to cover impairments in the bank’s main business. (…).

Original story: Expansión (by Nicolás M. Sarriés)

Translation: Carmel Drake

Ortega Acquires Torre Cepsa For €490M

3 October 2016 – La Opinión A Coruña

On Friday, the founder of Inditex, Amancio Ortega, completed the acquisition of Torre Cepsa in Madrid, for around €490 million, according to sources close to the operation. Ortega submitted his offer through his real estate company Pontegadea to IPIC, the Abu Dhabi state fund, owner of the oil and gas company Cepsa, which has leased the property, owned until now by Bankia, since 2013.

The building, one of the four towers in the north of Paseo de la Castellana, has a surface area measuring more than 109,000 sqm, including offices covering a gross leasable area of 56,250 sqm and a five-storey car park measuring 37,500 sqm.

The operation was completed in two phases. In the first phase, Khadem Al Qubaisi, the former director general of IPIC, exercised his purchase option, worth around €400 million to acquire the building. He then immediately sold the property onto Pontegadea for €490 million.

In October 2013, Bankia signed an agreement to lease the tower, designed by Norman Foster, which houses the corporate headquarters of Cepsa. The contract had an eight-year term, extendable for another seven years on a year by year basis. But it included a future purchase option, which the tenant had the right to exercise for a price to be determined at the time of the operation, on the basis of objective criteria agreed in advance.

As such, Amancio Ortega has acquired his second skyscraper on La Castellana, following his purchase of Torre Picasso, in 2011, for €400 million. The richest man in Spain and the second wealthiest man in the world also owns number 32 on Madrid’s Gran Vía, which makes him the landlord of some of Zara’s key rival brands such as Mango, H&M and Primark.

This purchase expands Ortega’s property portfolio, which used to be worth around €6,000 million – and is now worth more, if only because of the significant income that will result in terms of rental payments -. And the buildings that Pontegadea buys have a clear profile: iconic, historical buildings, dedicated to commercial and office use that can be rented to companies and institutions that are significant because of their size or solvency. The firm has a genuine real estate empire in Madrid, Barcelona and the main capital cities of Europe and the USA, but in recent months, it has also started to set its sights on Asia. (…).

Pontegadea’s bid was most favoured by IPIC even though it was not the highest – it had received others for €530 million – but the fund ruled those out because it preferred the liquidity and seriousness of Ortega’s offer.

Original story: La Opinión A Coruña

Translation: Carmel Drake

S&P Confirms Merlin’s Investment Grade Rating

21 April 2016 – El Mundo

Standard & Poor’s (S&P) has ratified the BBB rating that it assigned to Merlin Properties back in February, after the Socimi successfully closed its recent €850 million bond issue, according to reports from the company.

The ratings agency considers that Merlin’s investment grade reflects the “optimal risk profile” of the Socimi, which is further supported by a portfolio of property assets worth around €6,100 million.

The firm also assigns a stable outlook to the rating for the company led by Ismael Clemente, because it considers that its “large and diversified” property portfolio constitutes a “source of recurring revenue generation”.

“The assets are also well located, which allows the company to benefit from the recovery in the real estate sector that Spain is currently enjoying”, added the ratings agency.

The ratings firm has also assigned the same BBB rating to the €850 million bond issue that the Socimi recently placed. Through this operation, the company will restructure one tranche of the debt that it inherited from Testa when it acquired the company from Sacyr.

Moreover, S&P leaves the door open to a possible increase in Merlin’s rating, in the event that the Socimi adopts a “more conservative” financing policy, however it also warns of a downgrade in the event that its debt exceeds the threshold of 50% of the value of its assets.

Original story: El Mundo

Translation: Carmel Drake

Uro Property’s Profits Amounted To €67M In 2015

19 April 2016 – Expansión

Uro Property, the Socimi that owns a quarter of Santander’s branch network on Spain, recorded profits of €67 million in 2015, down by 82% compared with 2014, after it sold some of the branches to Axa.

This operation, which saw Uro go from owning 1,136 branches of the bank chaired by Ana Botín, to 755 branches, generated net profits of €27 million for the Socimi. The transfer price for the 381 branches was €308 million. In addition, the company has another 40 branches up for sale after they were returned by Santander; BNP Real Estate has been appointed to coordinate the sale.

The second major milestone for Uro Property in 2015 was the refinancing of its debt and the cancelation of a swap (insurance against interest rates), which generated losses of €65 million in 2014. As a result, the Socimi reduced the financing costs on its €1,300 million debt balance from 6% to 3.35%.

Despite these achievements, Uro Property’s profit in 2015 was 82% lower than in 2014 as it incurred higher extraordinary revenues in the prior year. In this way, the valuation of its property portfolio generated profits of €183 million two years ago. In addition, the Socimi also recorded extraordinary revenues of €198 million due to the conversion of a mezzanine tranche (young or high risk debt) with a discount on its original value.

Uro Property saw an improvement in the valuation of its properties in 2015, up by 5%, from €1,804 million to €1,916 million, excluding the impact of the branches sold to Axa.

The Socimi will distribute €54 million of the €65 million profit as a dividend, equivalent to 80% of its profits, as required by the legislation that governs these companies. Of this amount, €18 million was already paid to shareholders in December and another €36 million will be distributed in July.

Investigation

Meanwhile, Uro Property is being investigated by the Tax Authorities, which have started disciplinary proceedings. According to the company’s accounts, this investigation is due to “a transcription error”, for which the Treasury has proposed a fine of €7.29 million. Uro has appealed that decision and has not recognised any provisions in its accounts for the time being.

Uro is the company that used to be Samos, which acquired 1,152 Santander branches in 2007 under a sale & lease back arrangement. Its high level of debt meant that the creditor bank acquired some of its share capital in 2014.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

Metrovacesa Incorporates €1,000M Of Assets From Its S/H Banks

16 March 2016 – Expansión

Operation / Santander, BBVA and Banco Popular transfer nine office buildings in Madrid and Barcelona to their investee. The real estate company’s real estate portfolio will expand by 25% as a result of the deal.

Metrovacesa is fattening up its asset portfolio thanks to its shareholders. Santander, BBVA and Banco Popular have transferred nine office buildings in Madrid and Barcelona worth €1,000 million to the real estate company. Santander is the major shareholder in Metrovacesa, with a 72% stake, followed by BBVA (19.4%) and Banco Popular (8%).

The operation, performed through a non-monetary capital increase, forms part of the process launched by the company at the end of last year to restructure its debt. In particular, the maturity date of debt linked to its property development business, which falls during in Q3 2016.

By virtue of this process, Metrovacesa created a new company to take possession of its land and property development businesses. Meanwhile, the existing company has oriented itself towards with property sector, in other words, towards offices, shopping centres and homes that generate rental income. When the operation was signed, Metrovacesa held a portfolio covering 1.1 million m2.

Now, its asset book has been strengthened with additional office space covering 130,000 m2, which means that its portfolio in that segment has grown by 25%, to 650,000 m2 of gross leasable area. The nine office buildings include: the Ática XIX Business Park in Pozuelo de Alarcón, covering a surface area of 15,411 m2; the Cerro de los Gamos building, also in Pozuelo, which measures 35,473 m2; and the Trianon Business Park in Vía de los Poblados. Madrid is home to seven of the nine assets; the other two are in Barcelona.

Metrovacesa plans to launch the marketing of the properties in the short-term and whereby take advantage of the changing cycle currently happening in the office market. (…).

Investment

Madrid and Barcelona as the two major focuses for activity. Last year, the capital accounted for 83% of total investment, whilst the remaining 17% was spent in the Catalan capital.

The incorporation of these assets into Metrovacesa’s perimeter represents the completion of the first phase of the operation to carve-out the company into two entities. In this first non-monetary capital increase, the shareholding banks have contributed assets. Subsequently, the entities will capitalise debt and exchange it for shares in the company through another increase. Finally, the third operation, which will be of a monetary nature, will give Metrovacesa’s minority shareholders, who still hold 0.073% of the share capital, the option to sell their stakes. Once that process has been completed, the carve-out will be executed.

Metrovacesa’s property portfolio, which is worth around €4,100 million, includes not only office buildings, but also other assets such as shopping centres – including, the TresAguas centre in Alcorcón, Madrid – and several hotels, such as Barceló’s project in Torre Madrid.

Original story: Expansión

Translation: Carmel Drake