Testa Residencial Debuts on the MAB with a Share Price Rise of 1.44%

26 July 2018 – La Información

The shares of Testa Residencial have made their conclusive debut on the Alternative Investment Market (MAB) with a rise of 1.44% to €14.10 per share. The Socimi made its stock market debut at a price of €13.86 per share, which meant that the company became the second largest on the MAB by trading value, exceeding even some of the entities listed on the Ibex such as Indra and DIA.

The Board of Directors had established a reference price for its shares of €6, which represented a market valuation for the company as a whole of €204 million. The company’s trading code is going to be “YCPS”, Renta 4 Corporate is the Registered Advisor and Renta 4 Banco is acting as the Liquidity Provider.

Testa Residencial is the leading private company in the residential rental market in Spain (excluding portfolios owned by financial institutions). It is owned by Santander (36.8%), BBVA (25.6%), Acciona (20%) and Merlin Properties (17%).

The Socimi operates in the residential segment in Spain and has a portfolio comprising more than 10,000 homes. Its assets are primarily located in Madrid, although it also has a presence in San Sebastián, Barcelona, Las Palmas de Gran Canaria, Palma de Mallorca and Valencia. Its properties were valued at €2.276 billion by Savills Aguirre Newman at the end of 2017 and the majority of them, 77.5% of the GAV, are located in premium locations.

In addition, over the last year, the combined value of its properties has increased by almost €73 million, according to the latest data.

Testa had initially planned to make its IPO on the main stock market in June this year. The rental home Socimi wanted to make its debut through a public share sale offer (OPV) and a public subscription offer (OPS) of new shares, the latter for €130 million, both aimed at institutional investors. In the end, in light of the political situation, the firm in which Merlin Properties holds a stake decided to delay its debut until now and change its course towards the Alternative Investment Market.

Original story: La Información 

Translation: Carmel Drake

Sabadell Sacrifices Profits to Clean Up its Balance Sheet & Resolve the TSB Crisis

27 July 2018 – Expansión

Banco Sabadell has decided to sacrifice all of the profit that it obtained in the last quarter to clean up its balance sheet and leave behind the impact of the sale of its real estate portfolios and the complex IT integration of TSB.

The entity chaired by Josep Oliu earned €120.6 million during the first half of the year, a figure that represents a decrease of 67.2% with respect to the same period last year (€317.7 million) as a result of having recognised impairments amounting to €806 million. Nevertheless, if we ignore those extraordinary effects, the bank’s recurring net profit grew by 24.4% to €456.8 million.

The entity decided to take a hit on the income statement for the second quarter with a provision amounting to €177 million resulting from the macro sale operation of a real estate portfolio worth €12.2 billion and which was formalised in July, in other words, in the third quarter. In parallel, it decided to recognise a provision amounting to €92.4 million to deal with future compensation payments to customers of its British subsidiary, TSB, who were affected by problems caused by the connection of a new IT platform developed by Sabadell.

With this measure, the bank wants to shelve the technological crisis that it suffered in the United Kingdom and also leave its balance sheet almost completely free of the toxic assets that it accumulated during the economic crisis. Specifically, during the first six months of 2018, Sabadell decreased its problem assets by €7.012 billion, and by €9.547 billion during the last twelve months. Now, the problem balance amounts to €7.911 billion, of which €6.669 billion are doubtful debts of all kind (not only real estate) and €1.242 billion are foreclosed properties. Thus, the ratio of net problem assets over total assets amounts to 1.7%. The default ratio following the portfolio sales amounts to 4.5%.

As at 30 June 2018, the bank’s fully loaded CET1 capital ratio amounted to 11%, although that will rise to 11.2% following the transfer of the majority of the toxic assets, closed in July.

The bank led by Jaime Guardiola has sold the bulk of its non-performing and foreclosed loans to Cerberus, with whom it is going to create a joint venture in which the fund will hold an 80% stake. The entity has also sold portfolios to Deutsche Bank and to Carval Investors. Solvia has not been included in any of those transactions and will continue to be fully owned by Sabadell.

Between January and June, Sabadell increased the volume of its live loan book by 3.7% thanks to a boost from SMEs and mortgages to individuals in Spain. Customer funds increased by 2.8% YoY driven by demand deposit accounts, which amounted to €105.4 billion. Off-balance sheet funds also grew, by 1.2%, during the quarter, primarily due to investment funds.

During the first half of the year, Sabadell’s interest margin remained stable, given that the entity earned practically the same amount as it did in the six months to June 2017 (€1.81 billion). The bank has been affected by exchange differences and a reduction in results from financial operations (-51%); by contrast, fee income grew by 6%. Thus, the gross margin fell by 8.8% to €2.631 billion.

The reaction of investors to these results has been negative. Sabadell’s share price fell by 2.99%, the third largest drop on the Ibex, to €1.37. So far this year, the bank’s share price has depreciated by more than 14%.

Original story: Expansión (by Sergi Saborit)

Translation: Carmel Drake

MAB Approves Testa’s Stock Market Debut with Market Capitalisation of €1.83bn

24 July 2018 – Eje Prime

Testa is getting ready to refinance its debt. The Socimi in which Santander, BBVA, Merlin and Acciona Inmobiliaria hold stakes has included the refinancing of its liability on its roadmap, given that 91% of the firm’s gross financial debt is due to expire in 2022, according to an information document prepared for its incorporation onto the Alternative Investment Market (MAB), which was published yesterday.

As at 31 March, Testa’s gross financial debt amounted to €475 million, whilst the net financial debt amounted to €415 million. In addition, in order to finance the purchase of the BuildingCenter, the company took out two more loans amounting to €230 million.

As the company explained, of the total gross financial debt, €431 million (91%) expires in 2022. The company plans to refinance its debt by resorting to different instruments.

Testa’s plans following its debut on the MAB involve continuing with its purchase process, which involves acquiring between 1,000 and 2,000 apartments each year. According to the document, the Socimi has a pipeline with a GAV of around €539 million, which represents around 2,959 apartments.

As at 31 December 2017, Testa’s portfolio comprised 9,244 homes, 295 retail premises, located in the same buildings as the homes, and an office building and parking lot in Plaza Castilla, with a combined market value of €2.276 billion. Nevertheless, that data does not include the BuildingCenter portfolio.

In March, Testa signed an agreement to acquire the residential portfolio of the real estate arm of CaixaBank, comprising 1,458 homes. To date, according to the MAB document, Testa has acquired 1,450 apartments from that portfolio for a price of €226 million.

By geographical area, the Community of Madrid accounts for approximately 65% of the gross value of the portfolio, followed by San Sebastián, with 7.2%; Barcelona, 4.1%; Las Palmas de Gran Canaria, 2.9%; Valencia, 2.5%; Toledo, 2.4%; Pamplona, 2%; Valladolid, 1.9%, and Oviedo, 1.5%.

The company, in which Santander holds a 36.8% stake; BBVA a 25.6% stake; Acciona a 20% stake and Merlin Properties a 17% stake, will make its debut on the stock market with a capitalisation of more than €1.83 billion. The company’s stock market debut has suffered several delays, but yesterday it received the green light from the MAB.

Original story: Eje Prime (by P. Riaño)

Translation: Carmel Drake

Veracruz Properties To Debut on the MAB with a Market Valuation of €76M

19 July 2018 – Eje Prime

A new Socimi is going to make the leap onto the Alternative Investment Market (MAB). Veracruz Properties is going to become the first real estate company from the Community of Valencia to ring the bell at the MAB. The company will make its stock market debut on 24 July with a market valuation of €76.7 million and a debut price of €32.60 per share.

The MAB’s Coordination and Incorporations Committee has given the green light for the Socimi to join the stock market. The real estate company specialises in the acquisition and management of shopping centres and nursing homes for the elderly.

Veracruz entered the nursing home sector just a few months ago when it purchased two homes for the elderly in Valencia from the French fund Omega, which has remained as the tenant of both assets.

Veracruz was created in 2014 by investors from Latin America and, currently, is led by Salvador Fonduer, a businessman linked to the Dominican company Agilant. In addition to the Plaza Mayor de Gandía and Xátiva shopping centres, the company owns two other assets in Spain, Parla Natura, in Madrid, and El Arcángel, in Córdoba.

The Valencian Socimi closed the first quarter of the year with a profit of €495,268, up by 1.03% compared to its results during the same period in 2017, according to València Plaza. Nevertheless, quarterly revenues from asset rentals decreased by almost 8% to €1.71 million.

Original story: Eje Prime

Translation: Carmel Drake

Spain’s Competition Authority Approves Minor’s Takeover of NH

21 July 2018 – Expansión

Minor’s takeover of the NH Hotel Group is moving forward. The Spanish National Securities and Markets Commission (CNMV) admitted the offer from the Thai company Minor on Thursday and then, yesterday (Friday), Minor obtained approval from the Spanish and Portuguese competition authorities (CNMC). In this way, the offer is conditioned “exclusively” on its approval by Minor’s General Shareholders Meeting, which has been convened for 9 August. The Thai company currently controls 29.8% of NH’s share capital and, in September, plans to complete the purchase of an additional 8.4% stake from the Chinese firm HNA, which will increase its percentage stake to more than 38%.

The company, which is offering to pay €6.40 per share (€6.30 following the payment of the dividend approved by the General Shareholders’ Meeting) has indicated that its objective involves controlling between 51% and 55% of the Spanish group and for the remaining shares to continue to be listed. If that limit is exceeded, the company will consider making way for the entry of a financial partner in the share capital. Minor has also said that its objective involves increasing NH’s dividend by 50% next year to €0.15 per share.

The Thai group recorded revenues of €1.4 billion in 2017, has a market capitalisation of €3.9 billion and employs 66,000 people. With this operation, Minor will strengthen its hotel presence in America and Europe. Minor has 161 hotels and 20,384 rooms, primarily in Asia and Africa, whilst NH has 382 establishments and 59,350 rooms. Currently, the only markets in which the two chains have a presence are Brazil, Portugal and the United Kingdom.

At the General Shareholders’ Meeting held in June, the Chairman of NH’s Board, Alfredo Fernández Agras, described the offer as insufficient. Moreover, the President of Hesperia and CEO of NH, José Antonio Castro, expressed his criticism of the operation and his dissatisfaction with the Thai group’s entry onto the Board of Directors, where it now has three representatives.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Excem Debuts on the MAB with a Market Value of €16.8M

9 July 2018 – Expansión

The Socimi dedicated to the rental of rooms for young people is going to make its stock market debut at a price of €1.40 per share. The Socimi is going to debut with a portfolio of 28 homes, which contain 181 rooms for rent, all located in the centre of Madrid.

The real estate firm Excem, which was constituted in 2015, has the aim of investing in urban properties located in central areas of Madrid, Barcelona and other main cities in Spain. It targets properties that are suitable for renovation and redecoration and subsequently leases out rooms to students and young professionals.

Currently, the Socimi is looking to extend its activity in the capital to other cities with “high demand and limited supply of these types of assets for rent”, including Barcelona, Sevilla, Valencia, Málaga, Bilbao and Santiago de Compostela, according to information provided in the explanatory prospectus that accompanies its debut on the MAB.

Around 40% of the company is controlled by Excem, a group owned by the Hatchwell family. In fact, the Socimi is chaired by David Hatchwell, who started his professional career in Goldman Sachs and HSBC before joining the group.

With the aim of undertaking its investment and growth strategy, Excem’s Socimi has conducted a number of capital increases since 2016 and has mortgaged all 28 of the homes that it holds in its portfolio.

At the moment, it has an indebtedness level equivalent to 38.5% of the value of its assets, well below the leverage limit of 70% that the company has imposed on itself.

“HOMIII.COM”.

The Socimi markets the rental of its homes through its own online platform (www.homiii.com) and by subleasing through other specialist companies. Since September last year, it has had an agreement with Uniplaces, a company from the United Kingdom specialising in reserving accommodation for students in a number of European cities. According to the prospectus, at the end of March, the firm had 175 lease contracts for its rooms (96.7% of its portfolio) with different tenants.

By virtue of the contracts, the tenants pay a monthly rent and make a contribution towards shared utilities (water, electricity, gas, internet and central heating) after handing over a deposit equivalent to one month’s worth of both concepts by way of guarantee.

Excem has the aim of achieving a gross return on each asset of between 4% and 6%, a percentage calculated as gross income from rental over the investment made. The Socimi has been created with the option of setting itself an expiry date, given that it does not rule out selling its properties once the minimum period of three years established for Socimis has come to an end, or dissolving the company after the seventh year, “depending on what the shareholders agree on the basis of the performance of the company, as well as the current and future properties in the portfolio”.

Original story: Expansión 

Translation: Carmel Drake

Blackstone’s Socimi Torbel Debuts on the MAB at €11.45/Share

5 July 2018 – Voz Pópuli

Torbel Investments, the new Socimi owned by the US fund Blackstone, is going to make its debut on the Alternative Investment Market (MAB) this Thursday at a price of €11.45 per share, giving the company a market value of €92.2 million.

Torbel, the second Socimi that is going to be managed by Anticipa Real Estate, owns a portfolio of 2,495 assets – 2,165 of the properties are flats and family homes, and the remainder are commercial premises, parking spaces and storerooms -, which have a combined market value of €218 million.

These assets are distributed throughout Spain, with the Community of Valencia accounting for the largest share – it is home to 36.5% of the total between the provinces of Valencia and Alicante -, followed by Cataluña, with 17.8% of the total, and Madrid with 15.9%. The remaining 30% are located in Andalucía and Castilla-La Mancha.

All of these assets, whose overall occupancy rate amounts to around 58% (tenants are being sought for the remaining 42%), proceed from the Empire portfolio that Blackstone purchased from Banco Sabadell between 2016 and 2017; they are managed by the US fund’s subsidiary Anticipa.

Anticipa Real Estate was constituted in 2014 after passing into the hands of Blackstone and has been an evolving entity ever since. It has gone from being a servicer that managed assets for third parties to being a management platform of real estate assets and mortgage loans, all with the aim of becoming the leading residential rental manager in Spain.

Torbel is the fourth residential Socimi that Blackstone has debuted on the stock market in Spain following Fidere Patrimonio, Corona Patrimonial and Albirana Properties.

Original story: Voz Pópuli 

Translation: Carmel Drake

Única Real Estate to Invest €10M per Year Buying Commercial Premises

28 June 2018 – Eje Prime

A new roadmap for Única Real Estate following its debut on the stock market. The Socimi specialising in commercial premises has set itself the objective of investing at least €10 million each year in the purchase of new establishments in the Community of Madrid and other large Spanish cities.

Yesterday, the company made its debut on the Alternative Investment Market (MAB) at a price of €25.25 per share, according to Expansión. In addition to its debut on the stock market, the company is also planning to undertake new capital increases.

“Over the last three years we have been investing an average of around €10 million per year in assets and we would like to maintain that rhythm or accelerate it”, explained Andrés Femia, CEO at the Socimi.

Única Real Estate owns 29 commercial premises in the Community of Madrid, worth €32.5 million, which generate annual rental income of more than €1.9 million. Currently, the Socimi’s share capital is owned by 53 shareholders, including the company’s executives.

Original story: Eje Prime

Translation: Carmel Drake

Blackstone Formalises Revised Takeover Bid for Hispania

27 June 2018 – Eje Prime

The deal involving Blackstone’s purchase of Hispania has entered the home stretch. This lunchtime, the US fund has asked Spain’s National Securities and Exchange Commission (CNMV) to authorise a modification to the offer presented in its takeover bid for the Socimi, to €18.25 per share, a figure that both parties agreed to last week, according to a statement issued by the stock market regulator in a relevant fact.

The increase in the bid by Blackstone came hand in hand with a commitment from Hispania to accept the new offer, which values the Socimi at more than €1.992 billion. In April, the fund made its first offer of €17.45 per share, following its purchase of 16.5% of the company.

The initial bid fell below the expectations of the real estate company, which specialises in the hotel sector, but it now recommends the acceptance of the operation’s new conditions, which it describes as “attractive”.

All of the directors of the Socimi have reached an agreement to accept this new offer for 100% of its shares, equivalent to 48,108 shares, which account for 0.044% of Hispania’s share capital.

Azora (with 1.1 million shares and 1.070% of the capital) has “irrevocably” committed to accepting the new offer from Blackstone, as has Canepa (as the management company of Row Fund, which controls Tarmelane) on behalf of Tarmelane.

Original story: Eje Prime

Translation: Carmel Drake

Several Funds Acquire/Increase their Stakes in Hispania in the Midst of Blackstone’s Takeover Bid

11 June 2018 – Expansión

Blackstone’s takeover bid for Hispania has placed the Socimi firmly on the radar of investment funds. Since April when Blackstone announced its intention to launch a public share acquisition offer (OPA) for the Spanish Socimi, there have been continuous changes in the shareholding structure.

In terms of the funds who have been active, Fidelity has continued to back the company and has strengthened its stake to 9.64%. Prior to the takeover bid, the company’s stake remained at just over 7%.

Fidelity is the second largest shareholder of Hispania, behind Blackstone, which, after purchasing the stake owned by the Hungarian-born magnate George Soros, leads Hispania’s shareholder ranking, with a 16.56% stake.

Another one of the Socimi’s shareholders that has strengthened its weight since the takeover is Axa Investment Group, which now controls 4.14% compared to 3% before the takeover bid, and Bank of Montreal and BlackRock, which currently hold stakes of around 4.1% each, compared with 3.01% and 3.3%, respectively, that they used to control.

These shareholders constitute the hardcore nucleus of the company’s owners, together with the Mexican firm Canepa, which holds almost 6% through Tamerlane, and the Brazilian family office BW Gestao de Investimentos (BWG) with 3.7%.

New shareholders

In addition to the reference shareholders who have taken positions, Blackstone’s interest in Hispania has led to new interest from other shareholders.

The Norwegian fund, through its manager Norges Bank, has appeared to acquire 1.09% of the Socimi; Man Group, one of the largest hedge funds in the world, has bought 1.27%; and Kite Lake Capital Management has purchased 1.56%.

Blackstone’s takeover bid for 100% of Hispania at a price of €17.54 per share means that it is valuing the Socimi at €1,905 million. Hispania used to have a market capitalisation of €1,903 million and its shares closed trading on Friday at a price of €17.68 per share, slightly above the takeover price.

After Blackstone launched its takeover, Hispania’s Board of Directors engaged Goldman Sachs, UBS and JPMorgan as financial advisors and Freshfields and Uría Menéndez, as legal advisors, to analyse the terms of the offer and look for alternatives.

Expressions of interest

In a conversation with analysts in May, during the presentation of the group’s results, Cristina García-Peri, Director-General of Hispania, classified Blackstone as a “plausible” buyer, but she emphasised that other investors have been “very interested” in the Socimi and its hotel portfolio.

The American investment fund’s offer, whose brochure is pending approval by Spain’s National Securities and Markets Commission (CNMV) is conditional upon obtaining at least 50% plus one of the shares in Hispania. Moreover, the takeover is subject to a clause that prevents the sale of assets for an aggregated transaction value of more than 5% of the NAV (net asset value) (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake