Tag: risk-return

Soros Commits To Back Hispania’s Future Capital Increase

6 May 2016 – Cinco Días

The Socimi Hispania is considering carrying out another capital increase, of up to €250 million, and the multimillionaire George Soros (pictured above), the company’s largest shareholder with a 16.7% stake, has expressed his intention to participate.

According to a statement made yesterday to the CNMV, on the occasion of Hispania’s general shareholders’ meeting, the company, which debuted on the stock exchange in March 2014, is in advanced negotiations regarding investment operations amounting to €200 million.

Hispania is looking for new resources to make acquisitions, “now that it has committed almost all of its investment capacity”. The Socimi already raised €337 million in a previous capital increase in Spring 2015, which Soros Fund Management participated in.

“Our main investor has expressed interest in supporting the operation”, said sources at the Socimi in a document to the CNMV. In this way, the fund managed by Soros would contribute around €42 million to avoid the dilution of its stake.

For 2016 as a whole, Hispania, which is managed by Azora, expects to generate significant growth in its results across its different investment lines (hotels, offices and residential). The company already part-owns the Socimi Bay, in partnership with Barceló, which specialises in the hotel sector.

“The window of opportunity is mainly opening in the holiday hotel sector in Spain, which is still offering a very attractive risk-return profile”, said the Socimi, led by Concha Osácar and Fernando Gumuzio, in the document.

Original story: Cinco Días (by A.S.)

Translation: Carmel Drake

Hispania Set To Invest €1,500M In Hotels & Offices

26 April 2016 – El Español

(…). “Currently, Hispania, (the company in which George Soros (pictured above) and John Paulson hold stakes of 16.7% and 9.85%, respectively, and which will soon be converted into a Socimi) is evaluating investments worth approximately €1,500 million”, said Isabel Troya, the company’s Head of Investor Relations.

It has one objective in its line of sight: hotels. The Director says that 75% of the investments that it is evaluating will be in that segment. The second focus will be offices, but investment volumes there will be much lower.

In 2015, its first full year, Hispania invested €841 million in properties, above all, in hotels (€633 million) and earned €66.6 million. During that time, its assets appreciated by 15.6%. Basically, the company buys assets, does them up and then looks for a tenant to increase the return from the properties. Hispania’s management is in the hands of Azora, a firm founded in 2003, which specialises in the real estate sector.

More hotels and office but not more homes

The problem being faced by the large firms now is that there are not as many interesting offices in the market as there were a few years ago. Thoroughfares such as Madrid’s Paseo de la Castellana no longer have as many “for sale” signs up. That is because wealthy individuals, such as Amancio Ortega, the main shareholder of Inditex, are opting to buy those premium assets and whereby raise prices. For that reason, the Socimis in general and, in this case, Hispania, are looking for offices that are close to the centre, but not in it. And in those cases, the returns vary depending on location, access and the number of tenants that already occupy them.

Meanwhile, Hispania has no plans to expand its residential portfolio. “We are not planning to make any more investments in the residential segment”, said Troya firmly. They are focusing, therefore, on hotel assets because they regard them to be more profitable than conventional properties. For those assets, “the risk-return ratio is higher than elsewhere”, she said.

Hispania made its first major step into the hotel sector alongside Barceló. Together, they constituted a Socimi in which Hispania ended up taking a majority stake. “We want to double our existing portfolio in the hotel sector, to complement it with investments in markets where we have less exposure, such as the Balearic Islands and Marbella, for example; and also in markets where we have no presence yet, such as specific places along the Levante Coast”, says Troya. In all cases, she said, they will focus on European tourists.

The goal of becoming a Socimi

At the general shareholders’ meeting in May, the company will have to approve its full conversion into a Socimi. Why? Because it can. Until now, it has used a parent company to invest in assets that were too “risky” for this still small structure. “Since the beginning, Hispania has always wanted to become a Socimi”, says Troya. “However, we also wanted to have the flexibility to invest in non-qualifying assets”. Socimis may only invest 20% of their funds in assets regarded as “non-qualifying”. (…).

Original story: El Español (by Cristina G. Bolinches)

Translation: Carmel Drake