ECI Sells Building On Plaza Magdalena In Sevilla To Stoneweg

26 October 2017 –

El Corte Inglés is pushing ahead with the divestment of its real estate. The department store group has sold a building on Plaza Magdalena in Sevilla to the fund Stoneweg for €10 million, according to reports by Eje Prime.

The asset, which used to house one of the group’s department stores, until 2012, was constructed in the 1950s. Stoneweg plans to completely renovate the building and turn it into a hotel, as part of its diversification strategy, whereby adding that activity along with logistics to its residential business.

Comprising five floors, the building was inaugurated in October 1959, as the first headquarters of Galerías Preciados and at the time, it was a pioneer in the new techniques of department store selling in Sevilla. A decade later, it closed its doors for a refit to become a furniture store under the same company, which opened a second building in San Pablo around the same time.

El Corte Inglés purchased both buildings in 1995 as part of the operation to acquire the assets of Galerías Preciados in Spain and it maintained it as a centre for the sale of household products and furniture, until five years ago. The Madrilenian group currently operates from another centre in the same square.

In 2016, El Corte Inglés launched a project to sell some of its properties located in various Spanish cities, with a combined valuation of more than €400 million.

One of the most recent operations carried out by the company in this regard was the sale in September of 40% of the company Iberiafon, owner of Torre Serrano in Madrid, for €50 million.

The group closed 2016 with revenues up by 1.9%, to €15,505 million and a net result of €161.86 million, up by 2.4% compared to the previous year.

Original story: (by C. Pareja)

Translation: Carmel Drake

Merlin Rationalises Its Portfolio & Backs Logistics Sector

7 April 2017 – Expansión

Following two years of intensive investments, Merlin is now preparing to rationalise its portfolio and extract greater value from its assets. The Socimi led by Ismael Clemente (pictured above) has set itself the challenge of improving the occupancy rates of its offices and shopping centres, as well as strengthening its presence in the logistics sector.

In February, the company announced its plans to increase its stock by more than 500,000 m2. The company has also started to rotate its assets and, following the deconsolidation of the residential business, it closed the sale of its hotel portfolio to Foncière des Murs for €535 million at the end of December.

Another one of the firm’s objectives is to maintain a balanced level of debt. In this way, last October, it placed €800 million in 10-year bonds to cover a bridge loan to Metrovacesa.

Original story: Expansión 

Translation: Carmel Drake

Merlin Considers Creating New Hotel Socimi

15 November 2016 – Expansión

Merlin is going all out following its merger with Metrovacesa and is now busy exploring new market niches. The new real estate giant is analysing alternative options for the sale of its non-strategic assets, and now that it has set the future of its residential business on course, it is searching for a solution for its hotel portfolio – one option includes creating a new specialist Socimi to compete in the market.

“We will analyse the book value of our assets and we will determine whether a block sale from the portfolio is possible. If not, because the cost of capital of the potential buyers is very high, then we will probably opt for a solution that is similar to the one we have applied to the residential business. We will create a subsidiary, we will look for partners and we will constitute a company, in which we hold a majority, minority or equal stake, to serve as an owner of urban hotels”, explains Ismael Clemente, CEO of Merlin.

Following the integration with Metrovecesa, Merlin has gone from having 12 hotels worth €398 million, to owning 24 hotels with a gross value of €654 million. In this way, the new Merlin has multiplied the value of its hotel assets by 1.6x following the integration. By number of rooms, the union between Merlin and Metrovacesa has given rise to a giant hotel company with almost 4,500 rooms and a gross yield of 5.8%, according to the most recent data available.

In terms of its main rival in the sector, Hispania, Clemente says that “if there are any solutions that we can find together, we would be delighted to explore them”.

Merlin is now beginning a new phase in its journey, having created a business with assets worth €9,500 million in just two years. (…).

The listed real estate company, the only one to feature in the Ibex 35 following Colonial’s departure in 2008, faces a difficult year ahead with the major task of integrating Merlin and Metrovacesa’s teams. “By the end of the first quarter, the integrated team will work together in one location, which will not be where either of them are currently based”.

In addition, one of Merlin’s other challenges for 2017 is to dramatically improve the occupancy rate of the offices that it has inherited from Metrovacesa, as well as to perform a “significant” intervention in the shopping centres of both companies. (…).

Growth in housing

In terms of its plans for Testa – the subsidiary that owns the Socimi’s rental homes – Clemente says that, at the moment, the firm is holding conversations with other companies, as well as with its shareholder banks, with the aim of increasing its portfolio by incorporating new assets.

“We think that this vehicle has the potential to become a major player in the professional market for residential rental properties in Spain. The vehicle could own between 9,000 and 10,000 homes by the end of 2017”. (…).

Original story: Expansión (by R.Arroyo and R.Ruiz)

Translation: Carmel Drake

La Finca Goes On Market For €700M: A Chinese Fund Is Interested

22 September 2016 – Ok Diario

Procisa, the property developer behind the business and residential complex La Finca, located in the northwest of Madrid, has put the “For Sale” sign up. Its Board of Directors is now listening to offers for the purchase of 100% of the company’s share capital, which is currently controlled by the heirs of Luis García Cereceda, founder of the family empire who died in 2010. There are already several investors interested in negotiating the purchase of the group.

According to sources close to the company’s Board of Directors, the objective right now is to continue depreciating the assets and to close the sale before the crisis that the company is undergoing hinders the operation.

According to data from the Commercial Registry, the value of Procisa’s assets decreased to €890 million at the end of 2014 (the last year for which accounts are available), an figure that falls well below the more than €1,000 million recorded in 2010. In fact, according to the sources consulted, the firm is currently reported to be worth around €700 million, a figure that concerns the company’s directors.

The key behind the success of this operation is for the majority shareholder, Susana García Cereceda, to give her approval for the sale of 100% of Procisa, something which has been denied until now. In fact, in June, the General Shareholders’ Meeting approved the carve out of the company into several companies, to allow the US fund Värde, which is investing in the Spanish real estate market, to enter the business. The majority shareholder wanted Värde to acquire 40% of the office business and for the entirety of the residential business to remain in the hands of the García Cereceda family.

According to the plans designed by the main shareholder, Procisa’s assets were going to be distributed between the new company La Finca Global Assets (which was going to manage the rental of offices and retail premises), the company Finca Somosaguas Golf (which was going to focus on building a luxury residential area under the Casablanca brand) and La Finca Promociones y Conciertos Inmobiliarios (into which the other assets and debts from the current Procisa company were going to be integrated).

Nevertheless, that operation was blocked by the Commercial Court number 11 of Madrid, in light of the opposition filed by Yolanda García, the sister of Susana and owner of 49% of Procisa. It was in this context that the company’s change of strategy arose, which is now “to listen to offers” in order to complete the sale of all of the company’s share capital. (…).

According to sources, a Chinese investment fund is already willing to make an offer for Procisa, although the sources consulted preferred not to give any more clues about the deal so as not to jeopardise the potential sale. The trump card that the company’s Board of Director have to close the operation is the recovery of the Spanish real estate sector, and the fact that a number of major companies are located in La Finca, both Spanish and multinationals. In addition, the company owns a luxury residential area, which has great potential to appreciate over the medium term.

Original story: Ok Diario (by L. Ramírez and Jaime Acero)

Translation: Carmel Drake

Quabit’s Losses Decreased By 45% In H1 2016

16 August 2016 – Expansión

Quabit has closed the first half of the year with a net loss of €3.29 million, representing a reduction of 45% compared with H1 2015. The firm chaired by Félix Abándades has multiplied its revenues five-fold, to €21.1 million, and has reduced its net debt by 4% to €216.8 million as at the end of June.

The real estate group recorded gross operating losses of €3.45 million, which represents a reduction of 41% with respect to the negative balance recorded during the same period in 2015.

Quabit – which is in the middle of a five year business plan – underlined the fact that both the generation of revenues as well as of profits will “happen gradually” as its residential projects progress. They have a maturity period of between 24 to 36 months, which means that, during the first two years of the plan, the company’s EBITDA will remain negative.

The group added that, during this period, it will be possible to obtain profits through discounts on its debt and the gradual activation of tax credits. Quabit has agreed payment conditions on its debt that will allow it to register profits from discounts on its debt amounting to €55 million. It also has unregistered tax credits on its balance sheet amounting to €183 million.

On Friday, the company’s share price fell by 0.31% on the stock exchange to €1.74.

Original story: Expansión (by R. Arroyo)

Translation: Carmel Drake

Domo Socimi: An Example Of The Boom In Residential Business

11 February 2016 – Expansion

An example of the boom in residential business and new opportunities offered by the development and promotion of housing is Domo Socimi. This company, incorporated in June 2015, is presented as the first in Spain that creates value by offering investors the opportunity to participate and capture the profitability of the entire real estate cycle from the purchase of land, through construction, rental and the subsequent sale. Domo Socimi, with a goal of attracting 50 million initial capital and planned increases up to 250 million, plans to apply for incorporation to the Alternative Investment Market (MAB, in its Spanish acronym) during the first half to provide liquidity for investment. Armabex acts as global coordinator of the transaction and registered advisor for its incorporation to the stock market.

Original story: Expansion

Translation: Aura Ree

Metrovacesa Sets Up A ‘Land Bad Bank’ To Carve Out Its Residential Business

8 July 2015 – El Confidencial

Make someday today (‘Algún día es hoy’). The slogan of Metrovacesa’s new marketing campaign is a declaration of intent regarding the direction that the real estate company has decided to take now that Rodrigo Echenique has taken over as the new Chairman of the company.

In this context, and having closed the refinancing of the company, the Director has set the objective of restoring the company to its past splendour and consolidating its position as one of Spain’s largest real estate companies, capable of competing head to head with Colonial and with the large socimis, such as Merlin and Hispania, which are now establishing themselves amongst the main landowners in the country.

The first step of this ambitious strategy entails a move that the experts in the sector have been pondering for some time…and which the company is already working on: the creation of a bad bank for its land assets. Sources at Metrovacesa say that although the option is already on the table, a final decision has not yet been taken.

The real estate company’s plans involve making a similar move to the one implemented by Colonial five years ago, when it separated its land and development assets and placed them into a newly created company, called Asentia. It was the beginning of an ambitious clean-up plan that was completed last year, when the subsidiary was sold to several funds.

In the case of Metrovacesa, the idea is to separate the residential and land businesses, according to sources close to proceedings, to focus on growing its property business, especially the buildings located in prime areas, which represent 75% of its turnover. The thorniest point of this strategy are the provisions that will likely have to be made to carry out the carve-out, which will be offset when this business is sold, since that will allow it to deconsolidate all of the associated debt. (…)

In its results for 2014, Metrovacesa already included several provisions for losses on certain assets and valued its entire portfolio at €4,800 million. The portfolio comprises: 8 shopping centres and 2 more that are being constructed (one is scheduled to be opened this year and the other has been placed under review); 8 hotels in operation, as well as the hotel that Barceló will manage in the Torre de Madrid; and 34 office buildings, the jewel in the group’s crown, which have a combined gross leasable area of 520,000 m2, in Madrid and Barcelona.

In terms of housing, the real estate company owns 35 developments across ten provinces (…), whilst in terms of land, it is currently marketing plots to individuals in another half a dozen municipalities (…).

But the bulk of the group’s land business comprises developments that are underway in Alicante, where it plans to construct 300 homes in an urban development covering 48,000 m2; Sevilla, with Project Palmas Altas Sur, a plot measuring 679,223 m2 where 2,870 homes will be built; Tarifa, where it wants to build la Ciudad del Surf, with 600 hotel beds, 7,500 m2 of retail space and up to 250 homes; Hospitalet del Llobregat, close to Barcelona, comprising almost 160,000 m2 of buildable space for tertiary use; and Madrid, where the company is trying to obtain permits to build a residential development on the site of the former Clesa factory.

Following the capital increase approved last spring to capitalise the group’s bank debt, the shareholders of Metrovacesa currently include Santander, which holds a 58.67% stake, BBVA (19.42%), Banco Sabadell (13.85%), Popular (7.99%) and other small investors (0.071%).

Once the residential business has been carved out, the entities will have to agree on the best way to maximise the value of their shareholdings, from a range of possibilities that have been put on the table. These include: creating a hotel Socimi, finding a partner to buy some of the capital and listing on the stock market.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake