Quabit Generated Profits of €1.1M in H1 2018

27 July 2018 – El Economista

Quabit Inmobiliaria recorded a net profit of €1.1 million during the first half of the year, compared with losses of €3.5 million during the same period in 2017, according to information submitted by the company on Friday to Spain’s National Securities and Exchange Commission (CNMV).

The firm’s net turnover amounted to €9.1 million during H1, which more than tripled the €2.8 million recorded a year earlier; and the operating result entered positive territory, amounting to €3.6 million.

The real estate firm closed land operations amounting to €24 million, spanning a buildable surface area 85,130 m2, during the first six months of the year.

In total, since kicking off its growth plan in 2017, Quabit has invested €193 million in plots to build almost 4,850 homes, which means that it has already fulfilled 75% of its target to promote 7,900 homes by 2022.

As at 30 June 2018, the firm’s residential portfolio comprises 3,237 homes, which will generate an estimated turnover of €672 million that will be reflected in the income statement as they are handed over in 2018 and 2019. In June, handover began of 116 homes on the Quabit Aguas Vivas urbanisation in Guadalajara, and the firm will finish the year with a total of 215 homes delivered.

The group highlighted that it will see the sale of almost 1,000 homes in 2019 before it reaches its “cruising speed” of 3,000 deliveries per year in 2022.

Original story: El Economista 

Translation: Carmel Drake

The Profits Of Spain’s Top 5 Socimis Rise By 68%

16 November 2017 – Expansión

Spain’s principal Socimis are continuing to register record-breaking numbers and improve their balance sheets thanks to the on-going real estate boom and the appreciation of their assets. In this way, during the first nine months of the year, Merlin, Colonial, Hispania, Axiare and Lar España saw their combined net profits soar by 68% and the value of their property portfolios rise by 35%.

In total, the largest five Socimis that trade on the Spanish stock market earned €1,306 million during the nine months to September 2017. Their revenues during the same period amounted to €797 million, up by 30% compared to the first nine months of 2016. The reason why these companies earn more (profits) than they turnover (revenue) stems from the significant capital gains that they record from the appreciation of their real estate portfolios. In this way, for example, Merlin Properties and Hispania recorded €332.6 million and €204.82 million, respectively, for this concept, during the first 9 months of 2017.

These five real estate companies, which, with the exception of Colonial, debuted on the stock market just three years ago, currently own combined assets worth €24,295 million. Of that volume, two of the companies stand out due to their size: Merlin, which although it did not update its portfolio in the third quarter, is still the largest entity with an asset volume of €10,556 million; and Colonial, which owns properties worth €8,253 million.

Consolidation

The success of the Socimis, together with the good times that the real estate sector is enjoying, has led these companies to enter a new phase. In this way, after years of intense competition, the companies are starting to rotate their assets, by selling the properties that are not strategic as well as those that have reached a certain degree of maturity in their portfolios.

Such is the case of Merlin, which at the start of the year sold its hotel portfolio to Foncière de Murs Lar, for €535 million, and has deconsolidated its residential branch through Testa. Lar España has done something similar, given that in September it sold an office building to Colonial for €32.5 million, to focus on its current strategy of commercial assets.

Meanwhile, Hispania, which will focus its activity on hotels until its extinction, planned for 2020, is continuing with the unitary sale of homes and is also preparing the sale of its office portfolio, although it has had to postpone that operation until the first quarter of next year in light of the Catalan crisis.

These real estate companies are also backing investments that involve the revaluation of the assets they have acquired. Such is the case of, for example, Merlin, which after absorbing the real estate portfolio from Metrovacesa, is updating its portfolio, with an investment of €95 million to renovate six shopping centres. The Socimi in which Santander and BBVA hold stakes is also investing another €46 million in the construction of a new office tower (Torre Chamartín) in Madrid and in the renovation of Torre Glòries. Meanwhile, Lar España has managed to increase the value of its portfolio by more than €230 million with respect to the purchase price of its properties.

Moreover, the market is preparing for consolidation between the Socimis. The first move in this sense came last Monday with the launch of a takeover by Colonial for Axiare. The former announced the purchase of an additional 13.3% stake in Axiare on Monday and a takeover bid for the remaining 71%.

Stock market

Merlin, Hispania, Axiare and Lar raised almost €2,560 million in their respective debuts on the stock market and they have a combined market capitalisation of €9,060 million.

Including Colonial, whose General Shareholders’ Meeting approved the adoption of the special tax regime for Socimis in June, with retroactive effect to January, the stock market value of the large Socmis amounts to €12,038 million. In addition, Colonial’s bid for Axiare has raised its stock market value by €154 million in three days.

Original story: Expansión

Translation: Carmel Drake

Quabit Agrees €15M Financing Line With Alpin Equities To Buy Land

11 October 2017 – Expansión

The list real estate company Quabit has announced a new line of financing to partially fund its growth plan. On this occasion, the company controlled by the construction group Rayet has signed an agreement with Alpin Equities, which is leading a group of funds that are finaning the loan, amounting to €15 million.

The conditions of the loan, which has a 3-year term, include the possible conversion of all or some of the outstanding loan balance into shares in Quabit if “certain circumstances” arise.

The operation with Alpin Equities is the third alliance of its kind that Quabit has closed in recent months. Until now, the residential property developer had reached two financial agreements with the fund Avenue Capital, for a combined total of €100 million.

The objective of these three lines of credit is to allow the real estate company, which emerged a decade ago from the merger between Astroc, Landscape and Rayet Inmobiliaria, to close new land purchases, some of which are in very advanced phases of negotiation, say sources at the company, such as the construction of 14 new developments, which will result in turnover for the company of almost €180 million.

Following these agreements, Quabit’s residential portfolio will amount to almost 1 million m2 of land for the construction of 4,700 homes, whereby exceeding its own objective for the period between now and 2021 (4,090 homes).

The company has announced that it will convene an extraordinary shareholders meeting soon to approve a non-monetary capital increase, with which to materialise the transfer of several plots of land from Rayet, as well as the operations closed with Avenue.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Spain’s Top 4 Socimis’ Profits Rose Five-Fold In 2016

3 March 2017 – Expansión

Spain’s largest listed real estate investment companies (Socimis) – Merlin, Hispania, Lar España and Axiare – which all debuted on the Spanish stock market between March and July 2014 with €2,560 million to invest, closed their second full fiscal year with significant increases in their income statements.

The four companies recorded a combined profit of €1,131.2 million in 2016, almost five times as much as in 2015 (€244.7 million). Of that amount, almost half was generated by a single company: Merlin Properties, which saw its profits soar by more than 1,000%, following the integration of the real estate company Metrovacesa onto its balance sheet.

The other Socimis also managed to substantially increase their earnings, thanks in large part to the increase in their asset portfolios. Specifically, these four Socimis owned assets worth €14,445 million at the end of 2016, up by €5,256 million compared to the same date a year earlier. Again, the impact of Metrovacesa on Merlin’s portfolio was the main reason behind the increase in its assets, although the other three Socimis also saw their respective portfolios grow.

Nevertheless, unlike in the previous year, the Socimis opted to make much more selective purchases in 2016, each specialising in a different RE segments (offices, shopping centres, hotels, etc) – this represented a change in strategy compared to 2015 when the main aim of all of them was to grow in size and, therefore, buy assets to generate revenues.

In this sense, the combined turnover of these companies amounted to around €608 million in 2016, compared with €233.03 million the previous year.

The increase in their portfolios has also had an impact on the stock market, above all, given the capital increases that were completed last year, with the aim of financing new investments. In this case, the companies that debuted on the stock market between March and July 2014, with a combined market capitalisation of €2,560 million, now have a global capitalisation of more than €7,900 million.

Divestments

From this Spring onwards, the period (three years) that the Socimi rules require these companies to hold onto their assets for, in order to benefit from the exemption to pay tax on the profits obtained in a transaction, comes to an end.

In the case of Merlin, for example, it already completed several divestments in 2016. For example, the Socimi led by Ismael Clemente deconsolidated the residential portfolio that it had inherited from Testa and merged it with Metrovacesa’s equivalent portfolio; today it holds a 16.1% stake in that divested company.

Similarly, on 30 December 2016, Merlin sold its portfolio of hotel assets to Foncière des Murs for €535 million.

A special case in Hispania, the firm in which George Soros holds a stake. It was created on the basis of a model inspired by traditional private equity and venture capital funds, for a period of six years, and so intends to sell all of its assets before March 2020.

In the case of Lar, its non-strategic assets include the luxury housing development on c/Lagasca 99, which the Socimi hopes to have sold and handed over to the new owners by the first quarter of 2018.

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

Translation: Carmel Drake

Hispania Will Accelerate Its Hotel Investments In 2017

25 January 2017 – Expansión

New strategic plan / The Socimi managed by Azora is planning to sign operations amounting to almost €200 million over the next few months and is also considering selling off its residential portfolio and rotating its offices.

Hispania is clear about its commitment to the hotel sector and is going to put its foot down on the accelerator in 2017, with operations worth almost €200 million due to be completed soon and more, worth over €1,400 million, currently being analysed. The real estate firm, managed by Azora and in which George Soros holds a stake, will present its new strategy to its shareholders at the end of February. The strategy includes: increasing the rate of growth in hotels, divesting from the residential segment and rotating its office assets. (…).

Hispania currently owns 37 hotel assets, containing more than 10,500 rooms, worth more than €1,000 million, making it the second largest hotel owner in Spain, behind only Meliá, and one of the main investors specialising in hotels in Europe, alongside Fonciére and Pandox.

The Socimi’s portfolio also contains 750 homes in Madrid and Barcelona, worth €215 million, and 25 office buildings, with a combined leasable surface area of 153,000 m2, worth almost €450 million. The firm’s plans include selling off its residential assets in a block sale to maximise gains and rotating its office portfolio.

In the residential segment, the company acquired the Torre Isla del Cielo in Barcelona, containing 213 homes for more than €60 million in May 2014; and it also owns 286 homes in Sanchinarro (Madrid). 75 of the homes in the Sanchinarro complex have been renovated Hispania bought them, whilst 64 of the homes in Isla del Cifra have been refurbished. This repositioning strategy has allowed the company to lease the renovated homes for 31% more in the case of Sanchinarro and 74% more in the case of Isla del Cielo. Hispania also owns homes in San Sebastián de los Reyes and Majadahonda, as well as a complex on Avenidad de Hispanidad, in the north west of Madrid.

In terms of offices, Hispania’s portfolio includes the Torre 30 building, leased to Ilunsion, and the Aurelio Menéndez building, leased to Uría Menéndez.

In parallel, the company is working with ratings agencies with a view to securing an investment grade rating, according to market sources. Hispania’s average cost of debt currently stands at 2.7% and depending on the results of the strategic review, the company may analyse a bond issue with the objective of diversifying its financial structure.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Project Eloise: Sareb Sells NPL Portfolio To Goldman Sachs

23 December 2016 – Debtwire

Sareb has selected Goldman Sachs as the winner for non-performing loan portfolio Project Eloise, in what is the largest transaction so far for the Spanish bad bank, said a person familiar with the situation.

The final gross book value of the portfolio is EUR 600m, the person said. Launched in the fall/autumn, initially the portfolio had a gross book value of over EUR 1bn, as first reported by this newswire. The size changed during the binding process.

Blackstone was the other bidder selected for the binding phase of the process.

The bad loans of the portfolio are backed by residential assets located across Spain. Sareb has been advised by Evercore.

The deal is still pending subject to signing of the contract, but the goal remains to close by year end, the person familiar with the deal said.

The transaction marks a turning point for Sareb, which had focused on sales of small portfolio until now; in 2015, it closed transactions for approximately EUR 520m.

When it was established, Sareb received EUR 50.8bn in assets to dispose off within 15 years. By December 2015, the portfolio had been reduced to EUR 42.9bn, according to its latest report.

Original story: Debtwire

Edited by: Carmel Drake

Merlin Considers How To Exit Residential Sector In 2016

1 March 2016 – Expansión

On Monday, Merlin Properties presented its results for 2015, its first full year, which closed with a net profit of €49.1 million, slightly lower than the figure it recorded in the previous year (€49.7 million). It also announced a 277% improvement in revenues to €214.5 million, following the consolidation of Testa from the second half of the year onwards.

The acquisition of Testa from Sacyr for €1,794 million involved the incorporation of a residential portfolio, comprising more than 1,519 units spread across eleven buildings. These assets are peripheral for Merlin, which focuses on the office, shopping centre and logistics platform segments.

The President of the Socimi, Ismael Clemente, explained that the objective of the company is to divest that business during 2016 and he indicated that a joint venture is the most likely option.

Clemente revealed that Merlin is working with three investors and explained that this operation, which would result in the departure of 10 people from Merlin’s workforce, would involve designing a co-management structure, as well as exchange equations or contribution calculations.

The residential business accounts for 5% of Merlin’s balance sheet, with a value of around €288 million. “Our maximum priority is to achieve the excellent execution of the operation that we are going to carry out”, said the Director, who ruled out any negative effect on his divestment plans from the political uncertainty.

Regarding the unwinding of its positions in hotel assets, which do not form part of its core business either, Clemente said that the Socimi will act in line with “pragmatic” criteria and in accordance with the performance of the portfolio.

Bond issue

Merlin also announced yesterday that it had obtained an investment grade BBB credit rating from Standard & Poor’s, one notch below the rating for the Kingdom of Spain, which will enable the group to go to the bond market and improve its financial structure.

In this sense, the company is planning a corporate bond issue of between €800 million and €1,000 million, probably in two tranches. The issue, conducted through the parent company, will probably be listed in Luxembourg to reduce its average cost of debt from the current level of 2.4%.

Merlin also announced a distribution to shareholders of, at least, €140 million, which represents a 133% increase with respect to the previous year.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Goldman Enters The Bidding For Testa’s 1,500 Homes

5 November 2015 – Expansión

Testa’s residential portfolio is attracting interest from the large international funds. In October, the Socimi Merlin Properties commissioned Deloitte and CBRE to handle the sale of Testa’s residential portfolio, after acquiring the real estate company from Sacyr in June for €1,793 million.

Merlin, whose takeover of 100% of Testa was approved on 28 October, has taken the decision to divest the residential and hotel portfolios of the new company, which it has converted into a Socimi. The first process involves the sale of 1,519 homes spread across eleven buildings in Madrid, Toledo and Guipúzcoa. CBRE and Deloitte have invited interested parties to submit their bids within the next few days. The porfolio, which includes both unsubsidised and social housing properties, as well as around 30 commercial premises, has already attracted interest from international funds such as the German fund Patrizia and the US fund Blackstone, as well as from the real estate company Hispania. According to sources in the sector, Goldman Sachs has also now joined the list of candidates.

Goldman Sachs owns a sizeable residential portfolio at the global level. And it has already made a couple of purchases in Spain. The largest was in 2013, when it acquired 3,000 homes managed by the Community of Madrid’s Housing Institute (Ivima) for €201 million. At the beginning of this year, Goldman also acquired a batch of 18 buildings from the property developer La Llave de Oro, in Barcelona. It paid €90 million for this portfolio, which included 13 unsubsidised housing buildings, three more social housing buildings and two retirement homes.

The sales process, in which Merlin also offers buyers the option of purchasing 640 parking spaces, will allow the Socimi to generate income of around €300 million, money that it will use to reduce Testa’s debt ahead of its integration with Merlin.

Refinancing

In parallel, the real estate company is working to restructure the debt it has associated with Testa, which amounts to around €1,600 million. The objective is to “adapt the current repayment structure to match the cash generated by the company”, says Merlin in the takeover brochure presented to the CNMV.

Merlin plans to take ownership of 100% of Testa – it currently holds a 77% stake – before July 2016. Once the two companies have merged, the new Socimi will hold assets worth €5,800 million and will generate revenues of more than €300 million per year.

Merlin’s share price dropped by 2.9% in trading yesterday to €11.38.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Testa Becomes A Socimi & Puts Its Residential Portfolio Up For Sale

29 September 2015 – Expansión

The real estate company Testa is making progress with its integration with the Socimi Merlin Properties. Yesterday, the company held an extraordinary shareholders’ meeting to approve a change in the corporate structure of the real estate company into a listed real estate investment company (Socimi).

The decision comes after an agreement was made between Sacyr and Merlin in June to sell Testa for €1,793 million. Currently, the Socimi led by Ismael Clemente (pictured above) controls 77% of Testa’s capital and is expected to own 100% of the shares before the end of June 2016.

The Socimi-conversion will apply (retrospectively) from 1 January 2015, which means that Testa may benefit this year from the tax advantages afforded to this kind of company, although they have yet to be quantified.

At the meeting yesterday, the shareholders approved the appointment of Ismael Clemente as a Director of Testa; he currently also serves as the Chairman and CEO of Merlin Properties. In addition, Miguel Ollero, a Director of Merlin, was also appointed as an independent Director of Testa, following the resignation of Juan María Aguirre Gonzalo.

Following the entry of these two new Directors, Testa’s governing body comprises seven members, including the Chairman, Fernando Rodríguez Avial and the CEO, Fernando Lacadena.

Once the purchase of the whole company has been completed, the two companies will merge into a single Socimi. The new Merlin Properties will have assets worth around €5,000 million.

Having taken control of Testa, the Directors of Merlin have decided to divest the real estate company’s residential portfolio, which contains around 1,500 homes. They have engaged two consultancy firms to coordinate this process, which is expected to begin within two weeks.

Potential purchasers of the portfolio include other Socimis and investment funds.

In addition to the sale of this package of properties, which generates annual rental income of €10.5 million, Merlin has also announced that it will sell the portfolio of hotels currently owned by Testa, before the end of the year.

Merlin’s shares closed trading on the stock exchange yesterday at €10.72 per share, up 0.33%, taking its market capitalisation to €3,461.3 million, whilst the market capitalisation of Testa is €2,055.5 million.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake