Savills: Spain’s Commercial Property Market Outlook Is Improving

11 March 2015 – Property Wire

There are already signs that Spain’s residential property market is recovering and now a new report shows that its commercial markets are also growing.

International real estate advisor Savills is predicting CBD office yields in Madrid will move from 5% to 4% and 4.5% for super prime properties, as a lack of good quality stock puts pressure on pricing.

This follows strong investment volumes in Spain’s office market during 2014 in which €2.8 billion was transacted, triple the €990 million total in 2013.

The firm states that in terms of location, 60% of investment was made in Madrid, 30% in Barcelona and the remaining 10% in other locations throughout the country.

Savills reports that the growing amount of demand and the lack of supply continues to push achievable yields down in the CBD and the main business areas. Prime yields at the end of the year moved by 100 basis points, secondary areas by 75 basis points and out of town locations saw a change of 50 basis points.

‘Investors preference for Spain’s more mature market of Madrid is undeniable, accounting for a total of €1.65 billion. But the lack of good quality stock is putting pressure on yields,’ said Luis Espadas, director of investment at Savills Spain.

‘The yield in the CBD stands at 5%, and for super prime properties could achieve between 4% and 4.5%,’ he added.

The firm finds that SOCIMIs, the Spanish equivalent of REIT’s, were very active in the office market, with 27% of their total capital being invested in commercial property and 76% of that total in offices.

‘Whilst the SOCIMI and domestic investors were very active in 2014 this year we predict we will see large Latin American investors capitalizing on opportunities in the Spanish office market,’ said Pablo Pavia, director of investment at Savills Spain.

The Savills report also states that take up in the office market at the end of 2014 was 382,000 square meters, some 2.5% less than the previous year. However, 2013 take up was heavily distorted by the Vodafone letting of 50,000 square meters, and discounting that letting take-up grew 12% on the previous year.

Additionally, it points out that there are a number of large space requirements currently in the market, several of which are seeking space exceeding 5,000 square meters.

‘Thanks to signs of a recovery in Spain some occupiers are more willing to sign pre-lease agreements on speculative space in the CBD which in term is prompting major market players to carry out speculative developments. The increase in take up activity will cause rents in the best properties to continue to rise through 2015,’ said Ana Zavala, director of office agency at Savills.

According to Savills rents in the CBD are currently in excess of €25.50 per square meter and could reach €28 per square meter in 2015 given continued strong take up. The firm also predicts landlord will continue to undertake refurbishment projects in 2015, with three quarters of new space in the pipeline for the upcoming year related to refurbishment projects.

Original story: Property Wire

Edited by: Carmel Drake

Uro Property To Launch For €259M On MAB Tomorrow

11 March 2015 – Expansión

Uro Property Holding, the real estate investment company (Socimi), whose primary shareholders are Santander, Atisha (the former Sun Group) and CaixaBank, will begin its journey on the Alternative Investment Market (Mercado Alternativo Bursátil or MAB) tomorrow.

In total, the company will start trading 2.59 million shares, at a starting price of €100/share, bringing its market capitalisation to €259.7 million. Based on this market value, Uro Property will be the largest company on the MAB, exceeded only by Gowex (€572 million), which was suspended from trading at the beginning of July after accounting regularities surfaced at the company.

Uro Property will hereby become the 27th company to list on the alternative market, which is aimed at small and mid-market companies.

PwC has acted as the auditor of the company, whilst Renta 4 has been the registered advisor and will serve as the liquidity provider in this IPO.

Uro, which will list (its shares) through a fixing procedure, whereby prices will be published twice a day – at 12:00 and 16:00 – owns 1,136 branches, which it leases to Santander. In 2013, its income from the rental of all of its real estate assets amounted to €125.9 million.

Original story: Expansión (by D.E.)

Translation: Carmel Drake

Hispania And Barceló Create A Resort Hotel Socimi

25 February 2015 – Hispania Press Release

Hispania and Barceló create a resort hotel Socimi (REIT) with 16 hotels and an initial targeted investment of 421 million euro.

The first investment will be the acquisition of 3,946 keys (11 hotels and 1 shopping centre) plus the option to acquire additional assets reaching more than 6,000 keys (16 hotels) and 2 shopping centres currently owned by Grupo Barceló

Hispania will invest 339 million euro for an 80.5% stake in the new company, which will become a subsidiary of Hispania

The new REIT will be the first hotel REIT exclusively focused on holiday resort, targeting a minimum of 12,000 keys in Spain

Hispania Activos Inmobiliarios, S.A. has communicated to the Spanish Stock Market Regulator, CNMV, that its subsidiary Hispania Real SOCIMI, S.A.U, (hereinafter “Hispania”) has signed an agreement with Grupo Barceló (hereinafter, Barceló) for the creation of the first hotel REIT focused on the holiday resort segment; an industry in which Spain is one of the leaders worldwide.

Part of this agreement includes the acquisition by Hispania in an initial phase of 11 hotels (3,946 keys) and 1 shopping centre. Later on, Hispania will have the option to acquire 5 additional hotels (2,151 keys) along with a second shopping centre. The agreement is subject to the successful completion of the due diligence process.

Once the transaction is completed and the option on the 5 additional hotels executed, Hispania will have invested 339 million euro, obtaining an 80.5% stake in the new REIT. Grupo Barceló will maintain 19.5% with the option to reach up to 49% through future capital increases.

Barceló will remain as the operator of the acquired hotels through lease contracts with an initial term of 15 years.

The valuation of the 16 hotels and 2 shopping centres amounts to 421 million euro. It is expected that the REIT, following the execution of the option, will have an initial equity of 187 million euro and a syndicated loan amounting to 234 million euro. Hispania’s capital contribution will amount to a maximum amount of 151 million euro (total attributable investment of 339 million euro).

The initial asset portfolio will have pro forma rental income of approximately 45 million euro (40 million euro pro forma 2014).

The Barceló assets included in this agreement comprise most of its resort portfolio in Spain, located in the Canary Islands, Andalusia and the Balearic Islands; touristic destinations which have had a strong performance during the last few years and are expected to continue consolidating their position in the future. Out of the 16 hotels, more than 90% of the rooms available are 4* category and are leaders in their respective influence areas.

Hispania and Barceló have agreed to invest together an additional 35 million euro in the short term in order to complete the repositioning and updating of some of the properties.

“Spain is the third most important touristic destination in the world, preceded only by France and the United States”, commented Concha Osácar, Board Member of Hispania. “Spain has almost twice the number of resort keys than the United States, as well as a well-diversified tourist base, with British, German and French visitors representing more than 50% of the total. This illustrates the opportunities which the industry offers in Spain”.

The agreement signed between Hispania and Barceló will allow them to start an ambitious plan focused on increasing the portfolio of the new REIT, through hotel acquisitions or incorporations of existing hotels. The purpose is at least, to duplicate the size of the initial portfolio, creating a Spanish resort portfolio managed by different leading hotel operators.

According to Concha Osácar, “our objective and that of our partner Barceló, is that the new entity becomes the first listed REIT focused solely on hotel resorts, with a diversified portfolio in terms of hotel operators, and a steady income base, through lease contracts with a strong fixed income component and enough exposure to the future increase of the Spanish tourism market. The objective of the new REIT for Hispania and Barceló, is to become an instrument with which to attract institutional capital for the Spanish hotel industry, creating new sources of capital for the hotel industry”.

From Barceló’s perspective, “as a result of this transaction, we are creating a solid alliance with one of the most active investors in the industry”. According to Barceló’s CEO, Raúl González, “after this transaction we will be in leading position to benefit from the concentration process that should take place in the Spanish hotel industry”.

Hispania has invested a total of 112 million euros, including capex for 2015, in 6 hotels (5 acquired in 2014 and 1 in 2015) managed by different hotel operators (Meliá, NH and Vincci), which could be included into the new REIT; this decision will be made by the partners during the second half of 2015.

Hispania will have invested 100% of the net proceeds raised

With this agreement, Hispania will have committed a total investment of c. 800 million euros in a total of 44 assets since its IPO on 14 March 2014.

Original press release: Hispania

Edited by: Carmel Drake

Armabex Launches First REIT Directed To Small Homeowners

02/01/2015 – El Confidencial

New year, new REITs. The corporate form that is revolutionizing the real estate sector will have in the first half of this year a new tenant who promises to expand the tax advantages of these companies to any small and medium-sized property owner, but who lacks the minimum capital of five million euros needed to start a company of this type.

Armabex Managers is the company whose aim is not to go to the market to raise money to invest in real estate, as has been seen up until now, but to directly capture individual properties and, with this formulated portfolio, go public. As President of Armabex, Antonio Fernández, said, “We are the first vehicle based on property raising, since the first contributions will be made only with assets, not money.”

The new REIT is launching with a Valencian investor who will provide 120 homes valued at about 10 million euros, ensuring the viability of the project; various other owners, who have already expressed interest in joining the project before beginning to trade on the MAB in the first half of the new year, will also partake. The requirements to participate in this process are to provide a preset minimum equity of 120 billion euros in available housing, either without charges or where the mortgage represents less than 50% of the property, and that have been for rent during a minimum of six months in the last year.

“The main advantage of this REIT is that it allows small and medium-sized property owners, who have either inherited their properties or are professionals who have been building an asset portfolio consisting of apartments, to liquidate and get a return without worrying about all the management problems that these properties entail,” said Fernandez.

In principle, the REIT will limit its action to Madrid, Barcelona, Bilbao and Seville, where it will have a network of real estate agents who will market the properties. In addition, each year there will be four ‘windows’ of liquidity, which will allow the entry of new members via transfers of assets and, after the first year, one window for cash investments.

REAL ESTATE SECURITIZATION

“To ensure transparency, we are in negotiations with two large real estate consultants, to select one which will be responsible for valuing properties according to clearly defined standards,” Fernandez said. These valuations are carried out each year to update the value of homes and put them in value also in terms of the ‘windows’ as they being opening each year.

Each property owner will have a share in the company based on the valuation of their assets over the total of the REIT. Alongside the annual dividend, they will benefit from the returns Armabex expects to obtain through the revaluation of assets, since the company is being created at a low point in the market — which gives the company confidence that the value of these properties will increase with time — and the management that the company will carry out by buying and selling assets.

From the third year onwards, Fernandez plans to start divestments of homes that have been provided to the company and, with the money earned, to buy other apartments, in addition to acquisitions that will take place after the second fiscal year with cash investments. “Our goal is to ensure an annual coupon of between 150 and 250 points above the ten-year bond yield plus the profit obtained with revaluation of the REIT”.

Being a listed company, the investors that provide their homes, if they need liquidity, may sell shares directly in the market, allowing them to easily monetize an asset as illiquid as housing. “Basically, this is a securitization of real estate,” said the president of Armabex, convinced that this type of product can be a solution, for example, to deal with issues based on property inheritance.

Armabex was the first firm to request the incorporation of a REIT on the MAB (Alternative Stock Exchange Market). It was in March 2013 when Armabez, as a registered advisor, coordinated Promorent’s entrance into the market, which solidified in November. Now it has decided to take a step further and create its own listed real estate investment company, acting as a consultant.

Original article: El Confidencial (by R. Ugalde)

Translation: Aura REE

Spain’s Real Estate Sector Closed 2014 With A Record High

02/01/2015 – Expansión

The arrival of international funds and the implementation of large REITs have increased investments, with respect to previous years, up to 9 billion euros. Both the total figures and number of operations have skyrocketed. Well-located large shopping centers and office buildings have been the most desirable assets in 2014.

After more than five years of decline in business, the Spanish real estate sector predicted that recovery would arrive in the year 2014. However, the more optimistic reality has exceeded all expectations.

In anticipation of the year-end figures, this is already the second best year in the last decade, surpassed only by 2007, in the boom of the Spanish economy. “The market this year has been proportionally more active than in 2007. A higher number of assets have been purchased, and the prices, when compared with 2007 figures, are much higher,” explained representatives from the research department of JLL Spain.

So far this year, more than 6.18 billion euros have been invested in real estate for tertiary use (i.e. non-residential), according to Deloitte Real Estate.

This figure soars to 9 billion, according to the consultancy group, Aguirre Newman, if we take into account multiple debt portfolios whose securities were real estate assets, and the sale of land and housing.

These figures are double those recorded in 2013, 2012 and 2011, and are explained by a combination of several factors. “2014 was a year in which all the elements were present to favor real estate investment: the improvement of the overall economic situation, the emergence of new players with liquidity and the pressure to invest (the REITs), the return of funding and the need to sell certain closed funds,” says Javier Garcia-Mateo, director of Deloitte Real Estate.
New investors

The new players in the real estate sector, the REITs, are among the most influential reasons for investment growth. Only four major listed real estate companies, Merlin Properties, Hispania Real, Lar España and Axia Real Estate, have invested over 2.4 billion euros. Among their investments was the purchase of Marineda City, a shopping center located in La Coruña (Galicia), by Merlin Properties for 260 million euros, the largest purchase of a shopping center until December 24, 2014.

A few days ago, the British real estate company, Intu Properties, beat this record by paying 451 million euros for Puerto Venecia in Zaragoza. With these last transactions, investment in shopping centers in 2014 amounted to 3 billion euros, the same amount invested across the real estate sector in 2013.

Shopping centers are not the only commercial properties to be the star of large operations. Street storefronts have also been key players in investments. Thus, companies such as Mango bought property in Madrid and Bilbao to create large retail stores; while international funds, such as Axa Real Estate and Deka, bid for being the landlords of the main brands along the Gran Via in Madrid.

As for office buildings, investment has soared over 200% from January to September to 2.4 billion euros, according to CBRE. These figures are due to the purchase of portfolios such as the four buildings located in Barcelona and Madrid held by Blackstone, in addition to the other four buildings that the same fund bought from SAREB a few days ago.

Also noteworthy is the purchase of two properties in Barcelona — Torre Agbar and Paseo de Gracia 111 — which will be transformed into luxury hotels, and the numerous buildings sold by public administrations such as the Generalitat.

“A year of great investment activity has closed and the market should expect the same level of activity for the next year, albeit with some changes in the profile of investors,” says Jaime Pascual, Executive Managing Director of Aguirre Newman.

Original article: Expansión (by Rocío Ruiz)
Translation: Aura REE

Real Estate Sector To Close A Record Year In Spain

30/12/2014 – Expansión

BOOM INVESTOR / The arrival of international funds and launch of large investment REITs have increased investment over previous years to 9 billion euros. Both number of operations and total figures have soared. Large shopping malls and prime-location office buildings have been the most sought-after assets in 2014.

After more than five years of business decline, it was forecast that recovery would come to the Spanish real estate sector in 2014. However, the most optimistic scenario has played out in reality and exceeded all expectations.

Awaiting the year-end figures, this is already the second best year over the past decade, surpassed only by 2007, amidst the boom of the Spanish economy. “The market this year has been considerably more active than back in 2007. A larger number of assets and in higher volumes have been purchased, when compared to the 2007 prices,” explained experts from the Research division of JLL España.

So far this year, more than 6.18 billion euros have been invested in real estate for tertiary use (i.e. non-residential), according to Deloitte Real Estate.

This figure goes even further up to 9 billion, according to the Aguirre Newman consultancy, taking into account various debt portfolios secured with real estate assets as well as sale of land and housing.

These figures are double those recorded in 2013, 2012 and 2011 and attributable to a combination of several factors. “2014 was a year in which we had all the factors to foster investment: overall improvement of the economic situation, the rise of new players with liquidity and willingness to invest (the REITs), the return of funding and the need to sell certain close-ended funds,” says Javier Garcia-Mateo, director of Deloitte Real Estate.

New investors

Among the factors which most influenced the increase in investment are the new players in the sector: the REITs. Only four major listed real estate companies – Merlin Properties, Real Hispania, Lar Spain and Axia Real Estate, have invested over 2.4 billion euros. Among those investments made by December 24 was the purchase of the largest shopping mall in 2014: the Marineda City in La Coruña, by Merlin Properties for 260 million euros.

Just three days ago, the British realtor Intu Properties beat this record by paying €451 million for Puerto Venecia in Zaragoza. With these transactions, investment in shopping malls in 2014 amounted to €3 billion, the same amount invested in the entire real estate sector back in 2013.

The malls are not the only type of commercial property that has defined large-scale transactions. Street locations have also been blue-chip investment. Thus, companies such as Mango bought properties in Madrid and Bilbao to open large stores, while international funds, such as Axa Real Estate and Deka seek to be the landlords of the major brands on Gran Via in Madrid.

In the case of office space, investment has soared from January to September over 200%, up to 2.4 billion, according to CBRE. These figures are due to the purchase of portfolios, as for example, in addition to its four buildings in Barcelona and Madrid, Blackstone has acquired other four from SAREB a few days ago.

In terms of offices, it’s worth noting the purchase of two properties in Barcelona — Torre Agbar and Paseo de Gracia 111 — that will be turned into luxury hotels, as well as the numerous buildings sold by public administrations like that of the Generalitat.

“We are at the close of a fiscal year of a great deal of investing activities and we should expect the same level of activity for the next year on the market, though with certain changes in the investors’ profile,” states Jaime Pascual, CEO of Aguirre Newman.

Original article: Expansión (by Rocío Ruiz)

Translation: Aura REE

Formulas To Capitalize On Construction Sector Recovery In Spain

29/12/2014 – Cinco Dias

The housing market has completely transformed since the burst of the housing bubble; it has gone from what had long been an investment sector to avoid to one that is now giving way to new business models with interesting opportunities for private owners as well.

“2015 is going to be, as it has been since 2014, a good time to buy properties to rent,” says Julio Gil, president of the Real Estate Studies Foundation (EIF), who argues that with an average annual return of 4.5%, residential leasing has become “a much more controllable investment for a small-scale investor” and more advantageous than deposits, given the drop in interest rates to historic lows, or equities, and the ups and downs in strong market volatility.

From his point of view, moreover, this approach allows the individual to benefit from the progressive rise of the rental market — the crisis has reduced the traditional preference for homeownership among Spaniards — exploiting the gap left by large buyers.

Experts envisage new business models with investment opportunities in the housing market

Some international investment funds that have been entering the Spanish market over the last year and a half have also chosen to purchase residential property to lease, e.g. Blackstone that acquired 1,860 homes to rent in the Municipal Housing and Land Company of Madrid, or Azora and Goldman Sachs, who bought 2,935 homes from the Housing Institute of the Community of Madrid (Ivima). However, most have opted to implement this strategy in the tertiary sector.

“The prospects for rent growth are somewhat feeble, while still observing an upward trend in prime-location office rents” highlights a recent report from the real estate consulting firm Knight Frank, pointing to Madrid as one of the rising markets with returns ranging from 5.5% to 8% depending on the type of asset.

This market, however, is not off-limits for the small investor. Despite the stagnant results being seen throughout the first quarter, a handful of investment companies in the real estate market, the so-called REITs, have begun trading during this year. These investment vehicles, which spend 80% of their resources on investing in rental property, are exempt from taxes and their shareholders are only taxed on the dividends they earn.

“Their main targets are prime-location offices and shopping centers, although renting houses and hotels is also on their business plans,” states the latest UBS outlook report, noting that at its base scenario, “The annual return for investors will be in a range between 7% and 10% over a three to four years timeframe, a competitive return even compared to the broad Spanish equity market.”

In terms of prices, Swiss bank experts point out that the price of housing in Spain has fallen between 30% and 40% from its previous highs, a decline despite which “the price of houses in Spain is not cheap”.

In light of this development, they expect further reductions of between 1% to 3% in the coming year and price stagnation in subsequent years. Given this situation, on the whole, UBS notes that it sees no investment opportunity in the Spanish residential sector except the rental market.

Thus investment in housing in the wait of a strong appreciation in the medium term is what all consulted experts dismiss at any rate. With that in mind, real estate transactions are still associated with obtaining a mortgage loan for individuals without large financial resources.

Obtaining a mortgage is a path paved with requirements due to a persistent credit crunch but it is beginning to pick up on the bank windows with deals nearing Euribor plus 1.5% variable interest, and a close entanglement with the bank. The conditions are often particularly advantageous on still strong housing properties, appropriated by banks and SAREB and appearing on their balance sheets. A possible opportunity for those who decide to take advantage of the construction sector recovery in the new year.

Original article: Cinco Dias (by Juande Portillo)

Translation: Aura REE

Santander Copies ‘Hispania Model’ To Turn Banif Properties Into A REIT

26/12/2014 – El Confidencial

The growing REITs market just got a new tenant – Banif Properties fund, Santander’s historical vehicle that has just turned into a REIC (Real Estate Investment Company) as a first step towards becoming a REIT (Real Estate Investment Trust).

Hispania, managed by Azora, used the same model when it went public as an investment company, a title under which it conducted its first operations, such as the acquisition of Hotel Guadalmina. Then, later on, it developed its own REIT.

The main advantage of this formula –and one of the substantive reasons why they have convinced Santander– is its greater flexibility, as it allows the company to buy debt, an option that is prohibited to REITs. Thus, having established itself first as a real estate investment company, the new Banif may, for example, seize assets of other companies by acquiring their financial obligations, a growing business in which banks are the major players.

Subsequently, once they launch their own REIT, the now defunct real estate fund will benefit from the tax breaks that this legal framework offers property management companies and put an end to six long years of questioning over which was the most important real estate investment vehicle in Spain.

Despite the scandal this entailed back in 2009 – leaving thousands of investors locked in the background, after selling major assets such as the Plenilunio shopping mall and Edificio España in recent years and partially splitting with a monetary fund exactly a year ago – Banif Properties can still boast with assets worth €1.538 billion at the end of November, with a net asset value of €943 million.

On December 1st, just one day after the management fund, Inverco, endorsed these figures, Santander officially approved the conversion of Banif Properties into LURI 6 SII, a change that has already received the green light from Spain’s National Securities Market Commision (CNMV).

BANK TURN

Santander Real Estate will remain the management company of the future REIT, which is currently in the process of readjusting its activities to the new corporate reality. This is a difficult task, since the new REIT will have around 10,000 properties, in addition to the assets it can acquire via debt purchasing operations; it will also have a two-year period to go public in the stock market.

With the transformation of Banif Properties into a REIT, Santander is getting ahead of its competitors that are also working on converting their old real estate funds, but with different plans. An example of this is Sabadell, which is also planning on taking advantage of this opportunity to inject liquidity into certain assets that had been left dry during the crisis and that are under the management of its affiliate, Solvia.

The formula chosen by Santander will allow Banif Properties to purchase debts, something that is prohibited to conventional REITs

BBVA is another institution that has analyzed this possibility, while BNP has been working along the lines of forming such companies as a way to provide another offer for its private banking customers. Bankia just transformed its real estate fund into a corporation, which is a step towards becoming a REIT while it sells its assets selectively, as stated by The Confidential.

The size and importance of Banif Properties, however, makes Santander’s REIT a top player in the market. The institution, chaired by Ana Botín, is proving particularly active in the budding recovery of the national real estate sector, as it was made apparent with the purchase of Metrovacesa from Bankia, for example.

Original article: El Confidencial (by Ruth Ugalde)

Translation: Aura REE

Harbert Buys The Habaneras Shopping Center From Unibail

24/12/2014 – Expansión

Spain’s real estate sector has been buzzing with activity over the past few months, and it’s going to continue up to the very last days of the year with the close of a major sales transaction. As seen with the vast majority of operations in 2014, the purchaser of the property is a foreign fund; in this case, the American group, Harbert Management Corporation, has closed the acquisition of Habaneras shopping center in Torrevieja (Alicante).

Promoted by Metrovacesa, the shopping mall boasts 64,000 square meters and more than 24,000 meters of retail space. Unibail bought the mall, which is located next to Maquinista in Barcelona, from Metrovacesa for €423 million in 2008.

Last year, the property in Alicante received 3.7 million visitors, according to the Spanish Association of Shopping Centers.

Harbert has shelled out €65 million for the property, according to industry sources. The fund, managed by Knight Frank, has created a REIT.

Unibail is one of the largest owners and managers of shopping centers in Europe and Spain. The company boasts 14 shopping centers in Spain, including Splau in Barcelona; Bonaire in Valencia; and La Vaguada in Madrid. At the end of 2011, it invested €185 million when it bought the shopping center, Splau, in Barcelona, from Acciona, making it one of the largest operations in the sector that year.

The company, which is listed on the Paris and Amsterdam stock exchange, is currently in the midst of an asset turnover in Spain.

Habaneras is not the first center to be sold by Unibail this year. The Franco-Dutch company sold Albacenter shopping mall to Lar España for €28.4 million.

New Projects

The real estate company is not only selling, but also investing in projects, such as the expansion of La Maquinista in Barcelona, and the construction of a new shopping center in Mallorca, whose total investment exceeds €255 million.

Also, Unibail is currently one of the third finalists in the bid for the Madrid shopping center, Plenilunio, for which it is willing to pay around €330 million.

Original article: Expansión (by Rocío Ruiz)

Translation: Aura REE

The CNMV Permits Hispania´s €157 Million Takeover Bid of Realia

23/12/2014 – Expansión

Spain’s National Securities Market Commision (CNMV) has begun processing the public takeover bid that Hispania has proposed for the 100% takeover of Realia, a real estate company that is currently controlled by FCC and Bankia.

The REIT (Real Estate Investment Trust), owned by George Soros, has raised its offer at a price of €0.49 per share, bringing the amount of the transaction to €157.7 million. Nevertheless, the price is 20% less than the approximately €0.600 at which Realia currently trades.

The market watchdog has agreed to accept the bid application, but reminds the company that this admissibility “does not constitute a decision on the authorization of the takeover bid or any of its terms.” As indicated, this authorization will occur “in accordance with the terms and condition” under the law.

Last week, Hispania sent the application to the CNMV for authorization of the tender offer, as well as the prospectus of the operation and a guarantee for the full amount of the transaction issued by Santander and CaixaBank .

Hispania formally submitted its offer on the same terms and conditions announced late last November, and after reaching an agreement with the three funds currently listed as major creditors of Realia.

With this agreement, the REIT has already secured one of the two aspects that were conditions of the offer. The second requires the bid to achieve an acceptance of at least 55% of the real estate company’s capital.

Make it to the list of REITs

Hispania’s plans for Realia after the public takeover bid include converting the company into a listed REIT, which will continue to trade on the stock market and securing the position of the firm, owned by Soros, as a leading shareholder with a stake of up to 58% of its capital.

The new REIT, Realia, will focus on the management of its assets and proceed to sell the land and housing business that it still owns.

Realia is the subject of a possible takeover bid just one year after both the company and its two leading partners handed the sale over to Goldman Sachs. FCC and Bankia control 36.8% and 24.9% of its capital, respectively.

Original article: Expansión (by Europapress)

Translation: Aura REE