Emesa Segregates its Activity & Creates a Dedicated Real Estate Company

14 May 2018 – Eje Prime

Emesa is showing that it’s serious about its real estate business. The investor group owned by Emilio Cuatrecasas is immersed in a company reorganisation, which will lead him to segregate his business into two: one division will be destined to corporate investment and the other to real estate investment. The group has recently created the first company to this end, Emesa Real Estate, which will have Emesa Corporación Empresarial as its sole shareholder and Ferrán Forrellad as the administrator.

According to the Official Bulletin of the Mercantile Registry, the constitution of Emesa Real Estate is the first step being taken by the group to initiate its corporate restructuring. Although the company already operated its real estate business through the holding company Emesa Corporación Empresarial, from now on, it will channel all of its operations in the real estate sector through one specific company.

Meanwhile, the other arm of Emesa’s business, Emesa Capital, will be managed by Vanessa Llopar, who has served as the CEO of that division since March. Through that subsidiary, Emesa is investing in companies in various sectors, from healthcare companies, such as Devicare, to companies specialising in urban storage, such as Boxinfiniti.

Thus, Emesa’s new plans in the Spanish real estate sector will be conducted directly by this new division. The group is going to invest more than €100 million in Barcelona and its surrounding area, as revealed by Eje Prime, in order to launch new residential projects, office buildings and hotels.

Even so, the company’s involvement in the real estate sector dates back years. Emesa first leapt into the property development world with a building in the heart of Barcelona’s 22@ district, which is now the headquarters of the law firm Cuatrecasas in the Catalan capital.

The group, which has increased its workforce by threefold over the last three years, from seven employees to twenty-one, is now in the preliminary phase of constructing a new office building in the same area, at number 184 Calle Pallars. Designed by the architecture studio BAAS, Emesa is going to invest €25 million in that new asset, which will have an above ground surface area of 9,200 m2 and 5,000 m2 of space below ground level.

Moreover, in recent months, Emesa has starred in several high-profile operations in the Barcelona real estate market, such as the purchase of the Diagonal 444 building, the former headquarters of Cuatrecasas; and of the Diagonal 632 building, which is the headquarters of the Quirónsalud’s Ophthalmological Institute in Barcelona.

And from one side of Avenida Diagonal to the other. As Eje Prime revealed, Emesa acquired 37,000 m2 in Finestrellas, an up and coming area, which will include offices, residential properties and a commercial area. The project in which Emesa is participating involves an office development spanning 90,000 m2, in which it has invested €80 million and which is expected to be fully operational by 2023 (the construction work will begin in 2020).

Emesa also plans to make headway in the residential sector over the next few years. The company is going to build a development containing 40 homes for rent in Badalona after investing €12 million in this project.

Currently, the portfolio of Emesa Corporación spans more than 180,000 m2 and is worth more than €750 million. Emesa Corporación Empresarial generated revenues of €8.07 million last year.

Original story: Eje Prime (by C. Pareja)

Translation: Carmel Drake

Popular Stakes Its Future On The Segregation Of Its RE Arm

4 November 2016 – Expansión

Banco Popular is in the eye of the storm. The bank’s senior officials are facing the future by effectively placing a firewall between the entity’s normal banking activity and its real estate risk, however, the markets do not seem to be able to trust that they will succeed in finding their way out of the tunnel the entity entered when the real estate bubble was about to burst.

Following two major capital increases, amounting to €2,500 million each, and a third, smaller, capital injection of €450 million, as a result of which a Mexican investment group, led by the Del Valle family, became a shareholder of the group, the value of the bank (based on its share price) currently amounts to less than €4,000 million, making it the domestic financial entity that has seen its market capitalisation decreased by the most this year.

Popular has two lives: one afforded by its traditional business, which focuses on rendering financial services to individuals, self-employed people and SMEs, and where its efficiency and profitability ratios are high; and the other one, linked to the real estate sector, where the cumulative losses due to the impairment of its assets represent a real threat to the rest of its activity. (…).

Although the bank has received several offers to join a larger and more powerful financial group, the Board of Directors and the main shareholders who serve on the Board have categorically rejected them all, preferring instead to continue to lead the entity along its own path. “We do not want Popular’s intrinsic value to benefit others”, the entity has said time and time again, in order to justify its negativity towards a corporate operation in which it would fail to take over the reins. (…).

The two capital increases (the first one was carried out in December 2012 and the second one at the start of the summer) were accompanied by the appointment of Francisco Gómez (a man who has worked at the bank for his entire life) as the CEO (in the case of the first) and by his replacement by Pedro Larena, previously from Deutsche Bank and Banesto (in the case of the second). The aim was the same in both cases: to try to convince the market each time that the change in management was going to effectively deal with the recurrent problems, in other words, to eliminate the real estate risk.

Popular has tried to resolve its problems in the traditional way…by selling off its damaged assets at significant discounts, offset by growing provisions…but this has not proved sufficient, not least because the entry of damaged assets onto the balance sheet has been higher than the volume it has managed to sell through individual sales. (…).

Now, Popular is pursuing a strategy to segregate a substantial part of the real estate risk that it holds on its balance sheet (€6,000 million in book value), by placing it into a company that it will also endow with sufficient capital (around 20% of its liabilities). This capital will distributed free of charge amongst Popular’s existing shareholders in a way that will completely dissociate the entity from the transfer/sale. (…).

However, even once Popular has managed to eliminate a significant part of its real estate risk, the bank’s problems will not be over. That is reflected in the ERE that it is currently negotiating with the trade unions (which should be finalised by Sunday 6 November at the latest), which proposes the closure of 300 branches and a reduction in personnel of around 1,600 people through early retirement and voluntary redundancy packages. (…).

Original story: Expansión (by Salvador Arancibia)

Translation: Carmel Drake

Acciona Delays IPO Of RE Subsidiary Due To Political Uncertainty

11 May 2016 – El Confidencial

Acciona has decided to delay the decision regarding the possible IPO of its real estate subsidiary on the basis that the current “political uncertainty does not favour” the operation, according to the Chairman of the company, José Manuel Entrecanales (pictured above).

“We will wait for a reasonable period of time or we will proceed with the most viable alternative”, he said with respect to the different options that the company is analysing for its new company Acciona Real Estate, the subsidiary into which it has segregated all of its real estate assets, worth around €630 million and primarily comprising homes for rent in Madrid.

The group was weighing up the partial sale of this new company, either by opening it up to a new partner or by listing it on the stock exchange, but “the current political uncertainty does not seem to favour the latter option”, said Entrecanales in a speech to Acciona’s General Shareholders’ Meeting. Nevertheless, the group will push ahead with its goal of reducing the debt linked to these assets.

The group completed the constitution of this real estate subsidiary at the beginning of the year. It was created with assets worth €60 million and debt amounting to €190 million.

63% of the assets comprise 1,382 homes for rent, most of which (73%) are located in Madrid, as well as several retail premises associated with those homes.

Another 22% of Acciona Real Estate’s portfolio comprises tertiary assets, such as four office buildings that it owns in Madrid and Barcelona, two hotels in Marbella and Barcelona, respectively, a 50% stake in the Arturo Soria Plaza shopping centre in Madrid and 54 retail outlets. The portfolio is completed with a batch of 16 plots of land, which are ready to develop, covering a surface area of around 155,000 sqm.

Original story: El Confidencial

Translation: Carmel Drake