Sabadell To Invest €450M In Its Hotel Arm

4 December 2015 – Expansión

Hotel Investments Partnership (HI Partners), the hotel management and investment arm of Banco Sabadell, is backing itself forward to become one of the main players in the Spanish hotel sector. The firm wants to become one of the largest hotel owners in Spain, involving itself in the management of hotels and improving their income statements. “There is a significant opportunity in the market for the creation of large portfolios of hotel assets”, says Alejandro Hernández-Puértolas (pictured above, centre), CEO of HI Partners.

The company will invest €450 million over the next three years to refurbish and increase the value of its hotels, an amount that will be completely financed by Sabadell during this first phase.

The bank controls 99% of the company’s capital and Hernández-Puértolas and two other partners, Sergio Carrascosa and Santiago Fisas (pictured above, left and right, respectively), own the remaining 1%. Enric Rovira, Deputy CEO of the Sabadell, is the President of HI Partners, which has a dedicated team comprising 22 professionals and is managed independently of the bank.

Creation of two vehicles

Sabadell transferred 22 hotels with 1,600 rooms to HI Partners, after it had accumulated them on its balance sheet during the crisis as the result of foreclosures due to unpaid debts. Moreover, the entity has entrusted the team with the management of a portfolio of hotel debt amounting to €800 million, which as around one hundred assets associated with it. According to Hernández-Puértolas, around thirty of these hotels may be transferred to HI Partners over the next few years, increasing the number of rooms owned by the investment company from 1,600 to 8,000. Meanwhile, HI Partners is also analysing the purchase of assets in the market that are not linked to the bank.

For the management of this real estate portfolio, HI Partners has just constituted two new companies: HI Partners Holdco Value Added and HI Partners Holdco Gestión Activa. The first vehicle will be the focus of most of the company’s efforts and will receive around 90% of the investment. It will take ownership of the best hotels in the portfolio, notably the largest properties, those situated in premium areas and those capable of generating significant yields once they have been refurbished. This company currently owns three assets: the Hotel Prestige Coral Playa, located on the Costa Brava; the Silken Málaga – which HI has just purchased from Urvasco -; and the new hotel that the company is constructing on Calle Atocha in Madrid, which will be managed by the Axel chain.

The thirty-odd hotels to be transferred to HI Partners from Sabadell’s debt portfolio are also expected to be incorporated into the Value Added company. The challenge is for that vehicle to generate an EBITDA of €35 million in 2018 and of €70 million in 2021.

Meanwhile, HI Partners Holdco Gestión Activa now owns 19 hotels, the majority of which are smaller properties, located in secondary areas. The objective is to divest the majority of these establishments, although the firm wants optimise their management first. As such, it expects to sign agreements with several hotel operators to this end.

Original story: Expansión (by Sergi Saborit)

Translation: Carmel Drake

Colonial Earns 64% Less & Neutralises Effect Of Asentia

30 July 2015 – El Economista

The real estate company Colonial has closed the first half of the year with earnings of €202 million, down by 63.8% with respect to the same period last year, when it recorded earnings of €559 million, due to the deconsolidation of Asentia, its bad bank.

In a statement, Colonial said that its recurring net profit for the first half of the year, i.e. the profit generated by the real estate company’s ordinary activities, amounted to €11 million in H1 2015, an increase of 39.2% compared with the first six months of 2014.

Although Colonial’s accounts for H1 2014 included a positive extraordinary item for Asentia amounting to €704 million, the accounts in H1 2015 also included a €348 million revaluation of the company’s assets. Colonial said that the value of its assets has increased by 21% in twelve months.

Colonial’s business model is simple – essentially, it purchases buildings in prime areas of Barcelona, Madrid and Paris, renovates them for rental and then collects the corresponding rental income. Most of the company’s assets are leased as offices.

In terms of revenues, the real estate company, whose main shareholder is Grupo Villar Mir with its 24% stake, earned €111 million during the first six months of 2015, up by 6%.

So far this year, Colonial has invested €165 million in the acquisition of buildings, including three properties in the centre of Madrid and one in the centre of Paris.

To illustrate the strong performance of the business, Colonial highlights that during the first six months of the year, it has signed rental contracts for space covering 107,692 m2, which is equivalent to the entire surface area that it signed contracts last year as a whole.

Original story: El Economista

Translation: Carmel Drake

Acciona’s Future – Positive Outlook But What Next?

12 June 2015 – Expansión

Acciona’s Chairman, José Manuel Entrecanales, says that the Group’s restructuring has been completed and that the company is now looking to re-launch itself.

The construction and services group Acciona, which held its annual general shareholders’ meeting yesterday, expects to take a decision regarding the future of its energy and real estate activities before the end of the year. It is exploring the option of listing some or all of its business on the stock market in 2016, according to José Manuel Entrecanales, who spoke at the end of yesterday’s meeting. His comments come just a few weeks after Acciona announced that it is considering adopting the Socimi format for its real estate division. Socimis have operating assets that generate yields, and whereby often promise high dividends.

New partners

As an alternative to the real estate listing, or in parallel to it, Entrecanales is also considering ushering in a new shareholder. The Group has already gone down that route for its renewable assets outside of Spain, for which it has signed a partnership with KKR.

Regarding renewables, Entrecanales confirmed that the group is now analysing several alternatives to the ones it was initially considering. The option of publicly listing its overseas renewable assets on the US stock exchange, once KKR acquired 33% of those assets, has been parked for the time being. Now, it is analysing the possibility of listing all of its assets, including the Spanish ones, and even doing so on the Spanish stock market.

Entrecanales said that the options for going public in the USA or Europe are well matched at the moment. He also indicated that the new proposal has been made in conjunction with KKR.

Entrecanales said to the shareholders that “both the real estate and energy activities may be susceptible to independent access to the equity markets”, although he said that the process is being subjected to internal review.

Transmediterránea and Bestinver

As for the future of the Transmediterránea subsidiary, the Chairman of Acciona said that the outlook is now “optimistic” after the restructuring that has been undertaken and that, as a result, the group has decided to “defer any corporate transactions involving sales, mergers or the entry of new shareholders, at least until the results clearly reflect the true value of the company”

Regarding the other subsidiary, Bestinver, which suffered from the “sudden” exit of its management team last year, Entrecanales said that it has overcome its “troubles” and that the company now has the management team it needs to “face a bright future”.

As such, Entrecanales envisages a new phase of growth and expansion for the group, after going through what he refers to as a “hard stage” over the last two years, during which time the group “has faced one of the toughest challenges in its history”.

Entrecanales downplayed the latest incident that took place this week, when the company was excluded from the Ibex 35 due to its low trading volumes. “It is not a big deal” said Entrecanales. He has no plans to adopt any special measures to try to return the company to the Ibex, such as for example, undertaking a share split to give more liquidity to the securities.

Original story: Expansión (by Miguel Angel Patiño)

Translation: Carmel Drake

Listed RE Companies Worth More Than €9,000M

12 June 2015 – Expansión

The real estate sector is in fashion on the stock market. Merlin’s recent agreement to purchase Testa is in itself testament to that. After years of decline, the expected growth of this sector has encouraged many investors, including large property magnates such as George Soros and Carlos Slim, to look for opportunities in RE shares, which were hit very hard during the crisis.

The fourteen real estate companies that are currently listed on the Spanish stock market – excluding those that have been suspended from trading – have all recorded gains in 2015, with increases exceeding 30% in the cases of Quabit, Inmobiliaria Sur, Realia and Montebalito. The positive sentiment in the sector has enabled the joint market capitalisation of the twelve listed Spanish real estate companies to reach €9,009 million, up 31% from the €6,821 million recorded at the beginning of the year. That is the highest figure recorded since 2009, but it falls far short of the €30,000 million that the 14 listed real estate companies in Spain were trading at when the crisis began in July 2007.

The recent resurgence in the Spanish real estate sector has been very closely related to the debut on the stock exchange of the Socimis – companies that are dedicated to the business of real estate rental and focus on paying dividends to their shareholders. In fact, the largest real estate company by market capitalisation on the Spanish stock exchange is a Socimi, Merlin, with a value of €2,248 million, which may increase when it finalises its purchase of Testa. The company, which began trading on 30 June 2014, has increased in value by more than 28% since its IPO, and some analysts have already placed it in the pool of possible securities to join the Ibex 35. The real estate sector has not been represented in the selective index since Colonial’s departure in April 2008.

Moreover, Colonial is now the second largest company in the sector, with a market capitalisation of €2,205 million. The company has benefitted in recent years from the entry of important investors (into its share capital), led by the Villar Mir Group. Its value has increased by more than 140% since 2014.

Original story: Expansión (by A. Monzón)

Translation: Carmel Drake

Colonial Repays €1,040M Loan Early & In Full

8 June 2015 – Expansión

Colonial, the real estate company in which Villar Mir owns a stake, has repaid the syndicated loan that it held amounting to €1,040 million, ahead of time and in full. It used the funds raised from its €1,250 million bond issue, closed at the end of May, to finance the repayment.

Original story: Expansión

Translation: Carmel Drake