Tag: strategic plan

El Corte Inglés & Merlin Negotiate an Alliance to Create a Real Estate Giant

11 October 2018 – El Confidencial

El Corte Inglés wants to fulfil the commitments it has made to the financial ratings agencies as soon as possible. At its recent, first-ever bond issue, it promised that it will reduce its €4 billion debt by half over the next 18 months. To this end, Jesús Nuño de la Rosa, President of the distribution group, has decided to expedite the sale of some of its real estate assets, the jewel in the crown of the holding company. According to financial sources, the company is negotiating an operation with Merlin Properties, the largest listed company in the real estate sector in Spain.

The same sources have confirmed the conversations between Jesús Nuño de la Rosa and Ismael Clemente, the CEO of Merlin Properties, the real estate Socimi in which Banco Santander holds a stake and which has assets under management worth €7.7 billion as at 30 June 2018. The negotiations are very open and cover all of the property types that comprise El Corte Ingles’s portfolio, appraised by Tinsa at €17.1 billion for the most recent annual report. Sources close to Merlin declined to comment on this information, whilst official sources at El Corte Inglés indicated that “the firm has not reached a global agreement with any operator”.

According to other sources, the most recent meetings have focused primarily on the purchase and management of the logistics assets owned by the department store company, which were already offered to several agents in the sector almost two years upon the advice of Morgan Stanley. Those conversations did not prosper due to the diversity of the portfolio, which comprises shopping centres, shops and logistics docks, some of which were worth very little at the time and so distorted the value of the portfolio.

But now, having made a commitment to Standard & Poor’s, Moodys and Fitch to reduce the group’s debt, De la Rosa has set himself the priority of divesting all of the assets needed to reduce the liability by around €2 billion. Through that, it will manage to reduce the ratio of debt to operating profit or EBITDA to 2x, compared to the current figure of 4x, which would give it an investment grade rating.

That would represent a very considerable change, which would allow the entity to obtain financing in the markets at cheaper interest rates – now it has paid 3% – given that its bonds could be purchased by all types of investors and not only by those looking to speculate such as now, given that fund managers that only acquire fixed income or equities with a minimum solvency and without risk of default are prohibited from subscribing to below investment grade securities.

Merlin Properties is the entity that is holding the most advanced negotiations with El Corte Inglés, which wants to close an agreement before the end of 2018 or, before 28 February 2019, at the latest, the date that marks the end of its financial year. The current proposal involves the acquisition of some of El Corte Inglés’s real estate assets and the signing of a contract as the manager of the portfolio. The distribution group’s portfolio comprises 94 properties, most of which are in Spain, of which 87% are shopping centres.

Of the total portfolio whose valuation amounts to €17.1 billion, almost €15 billion correspond to points of sale. But the physiognomy of those centres is very heterogeneous, as shown by the fact that whilst four of them are worth €2 billion, most of the assets could be sold for between €100 million and €200 million. But almost one third of the total are what El Corte Inglés itself calls unproductive. In other words, sites where they lose money. The group has tried to convert them into outlets for large brands, but the truth is very few of them have the characteristics to be able to be transformed into places of the calibre of Las Rozas Village and Factory.

In terms of the points of sale considered unproductive, the following stand out: Leganés (Arroyosur), Jaén, Oviedo, Elche, Guadalajara, Talavera, Albacete and Eibar. In addition to these shopping centres (which make losses), the company has another seven sites breaking even, such as those in Cádiz, Castellón, Córdoba and Arroyomolinos. The value of these shopping malls, as they are known in the sector, is more doubtful, given that a sale and leaseback contract could not be signed since the revenues do not cover the debt. Moreover, given their physical structures, most of them do not have windows, their transformation into offices, the main market of Merlin Properties, or hospitals would be more difficult.

Of the €7.7 billion in assets that Merlin manages, €5.5 billion correspond to offices, €934 million to shopping centres and €403 million to commercial premises on high streets.

Original story: El Confidencial (by Agustín Marco)

Translation: Carmel Drake

Sareb is Selling 33 Homes Per Day but still has 55,000 Properties on its Books

12 September 2018 – Expansión

Sareb managed to sell 5,926 properties during the first half of 2018, up by 7% YoY, for a total sum of €552.7 million. In other words, 33 units per day. Of the total, 86% of the properties were homes and garages, 9% were plots of land and 5% were commercial premises.

For the last four years, the bad bank has been helping delinquent property developers to market the properties that they placed as collateral for their loans to allow them to use those funds to settle their debts. Through that channel, it has sold another 4,692 units.

If this pace continues during the second half of 2018, the entity will exceed the sales figure registered in 2017 when 18,925 units were sold and a new record was set.

The bad bank was created with 107,000 properties and during its first five years of life, it has managed to divest 68,300 units. Nevertheless, we must bear in mind that Sareb has executed the guarantee for some of the 90,000 loans that it also took on when it started out and so that has led to an increase in the number of properties on its balance sheet.

Currently, the bad bank still has 55,000 homes and 34,000 garages and storerooms left to liquidate. Sareb is the largest owner of residential homes in Spain and the largest landowner in several autonomous regions, such as Castilla-La Mancha.

During the first half of this year, Sareb recorded revenues of €2.8 million in a special land sale campaign and another €13 million from the sale of other plots. It put 500 units on the market in each case. The managers are looking for a partner to build developments on the land.

Contracts under review

The senior management team at the bad bank is considering tearing up the expensive and exclusive contracts that the entity has with four specialists (Haya, Solvia, Altamira and Servihabitat), which cost it more than €200 million per year, equivalent to 35% of its operating costs.

Sareb lost €565 million last year and since its creation, has generated cumulative losses of €1.315 billion. In reality, the operating result is now positive. Nevertheless, the financial charges are so high – it had to take out a swap to cover itself in the event of an interest rate rise – that they completely determine its income statement.

The senior management team updated Sareb’s business plan in February, which forced the shareholders to recognise new write-downs. The review resulted in the recognition of a loss equivalent to 73% of the initial investment, which amounted to €4.8 billion.

Recently, the entity’s President, Jaime Echegoyen (pictured above) went further and warned that he thinks the shareholders will “struggle” to recover their investments.

Sareb has ten years left to liquidate all of its real estate stock. In reality, it is committed to returning the €37 billion in bonds secured by the State that it used to pay for the assets of the rescued savings banks.

The largest shareholder, the FROB, with 45.9% of the share capital, lost €950 million last year due primarily to the impairment of Sareb’s accounts due to its poor performance. The banks have also been forced to make significant adjustments. Sabadell, which has published its data, confirmed that its investment has generated an accounting loss of €321 million in five years.

The Minister for the Economy, Nadia Calviño, said yesterday, during her speech at a breakfast meeting organised by the New Economy Forum, that “for the time being, the Government is supporting Sareb’s strategic plan”. Nevertheless, she reminded listeners that the Administration is an important partner that participates actively in decision-making, “but it is not the only one”. 54% of the entity’s share capital is private.

Original story: Expansión (by Raquel Lander)

Translation: Carmel Drake

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

Lanca Invests €2.5M in the Construction of a Logistics Warehouse for Iparvending Group

14 June 2018 – Eje Prime

The real estate company Lanca is strengthening its logistics business. The company has just completed the construction of a logistics warehouse at number 35 Calle Eduardo Torroja, on the Butarque Industrial Estate in Leganés.

The Basque real estate group has been working for the Iparvending Group once again, investing €2.5 million in the construction of a turnkey industrial warehouse for the leading automatic food distribution group. The operation has been brokered by Inverpremium.

Work on the asset was completed in April. The Basque real estate group is continuing with its strategic expansion plan to 2020, looking for new real estate investment opportunities involving premises, offices, industrial warehouse and plots of land.

Original story: Eje Prime

Translation: Carmel Drake

Renta Corporación Considers Paying Dividend of 30% to Shareholders in 2018

26 April 2018 – Eje Prime

Renta Corporación is returning to the boom times. According to Luis Hernández de Cabanyes, President of Renta Corporación, the real estate group is evaluating the possibility of distributing a 30% dividend to its shareholders. If that decision is approved in the end, the group’s shareholders would receive almost €5 million, given that the group’s objective for this year is to achieve a net result of €16 million.

That would be the first time in ten years that Renta Corporación has distributed any of its profits. “We have the intention of distributing a dividend, however, it will all depend on the financing needs of the company”, added the President of the group. Although the dividend for 2018 is still under consideration, the company has hinted that it will almost be a commitment to its shareholders starting from next year.

This reward for Renta’s shareholders comes after the company managed to pull itself out of the economic crisis. “We find ourselves facing a favourable market for the next four years and our objective is to return to our pre-crisis levels, when the group’s net profit amounted to between €30 million and €50 million, by 2022”, says Hernández.

“A stable business model, a renewed brand (the group is going to unveil a redesign of its entire corporate image next week), solvency, a portfolio of buildings under construction, a database and external collaborators are the ingredients to achieve the results that we have set ourselves”, concluded the President of the group.

According to the group, its strategic plan for the next three years involves maintaining a portfolio mix similar to the one it has had until this year “with the aim of diversifying its exposure to the risk presented by the different segments of the real estate market”.

“Renta will continue to concentrate its portfolio in the residential sector, one of the markets that is experiencing the highest growth and where positive trends are forecast, both in terms of prices and the volume of operations” – say sources at the group – “The operations forecast in the strategic plan will continue to concentrate on the cities of Madrid and Barcelona, since they are the most dynamic of all the markets”.

In 2018, Renta expects to close numerous operations involving the acquisition of new assets and the sale of properties, whilst in 2019, the number of transactions carried out by the group will rise to 31. In 2020, Renta plans to sign 34 operations. The operating margin is expected to amount to €26.5 million in 2018; €33.9 million in 2019; and €35.6 million in 2020.

Although Renta is focusing on Spain, specifically Madrid and Barcelona, the company does not rule out returning to some of its old haunts such as Paris (…).

Original story: Eje Prime (by Custodio Pareja)

Translation: Carmel Drake

Quabit Acquires a Plot for 125 New Homes in Madrid for €7.4M

6 April 2018 – Eje Prime

There is no stopping the property developers in 2018. Quabit, the company chaired by Félix Abánades, is pushing ahead with its strategic plan and has added a plot of buildable land in El Cañaveral (Madrid) to its portfolio. This purchase involved an investment of €7.4 million for the group, which plans to record turnover of €29.4 million once it has completed the development, according to a statement.

The new plot has a buildable surface area of almost 13,500 m2 for the construction of 125 homes and will join the four other developments that Quabit is building in El Cañaveral. This is the second land operation that the company has closed this year, following the portfolio of buildable residential land that it acquired during the first quarter in Guadalajara and Corredor del Henares.

With all of these operations, Quabit is strengthening its land bank, which now contains 1,043,306 m2 of buildable land for the development of 8,700 homes. During the first quarter of this year, the group started building 473 homes across 6 developments, in addition to the 302 homes that it was already working on.

During the second quarter, construction will begin on another 350 homes and the plan is to have around 1,700 homes under construction by the end of the year. The company maintains its objective of handing over 7,900 homes between now and 2022, due to its capacity to obtain building permits (it has taken an average time of four months for the permits obtained so far this year) and due to its compliance with its investment targets, building work starts and new commercial launches.

All in all, Quabit will end the year with a commercial portfolio of around 3,000 homes. This year, it will also begin to hand over its first developments, although it will not be until 2019 that it exceeds the threshold of 900 finished homes to reach its cruising speed of 3,000 completions per year in 2022.

Original story: Eje Prime

Translation: Carmel Drake

Bankia Puts €400M Toxic Asset Portfolio Up For Sale

2 April 2018 – Eje Prime

Bankia is accelerating the sale of its toxic assets. This year is set to be a key year for the banks, in general, in terms of property divestments, and Bankia is one of the firms that is working hardest to get rid of the real estate load left over on its balance sheet. The financial institution has placed on the market its largest portfolio of toxic assets in two years, worth €400 million.

Project Beetle, which is what the Spanish bank has called this macro-operation, primarily comprises non-performing loans backed by real estate collateral. When the sale closes, the company will strengthen its property divestment plan in 2018. It already disposed of one portfolio of toxic assets worth €290 million during the first quarter of the year, according to El Independiente.

The company chaired by José Ignacio Goirigolzarri has not sold such a large portfolio since December 2015. Then, it placed a portfolio worth €645 million. Last year, Bankia raised €300 million in three operations relating to assets with debt.

With the way paved for sales thanks to the investor appetite that is accompanying the upwards cycle in the real estate sector, the Spanish bank is going to continue with its divestments in 2018 without forgetting the property development market. Not in vain, Goirigolzarri has already announced that his bank will grant €400 million per year in property developer loans between now and 2020, boosted by an objective that the entity has set itself, and which appears in its strategic plan, of reaching a market share of between 7% and 8% over the next two years.

Original story: Eje Prime

Translation: Carmel Drake

Emesa’s Storage Space Company Boxinfiniti Debuts in Madrid with 5,100m2

22 March 2018 – Eje Prime

Emesa, the investment group owned by Emilio Cuatrecasas, is continuing to grow the businesses in which it operates. Boxinfiniti, which specialises in the rental of storage space and in which Emesa holds a stake, has made its debut in Madrid with the absorption of 5,100 m2 spread over three locations.

Two of the premises are located in the centre of Madrid (in the Cuatro Caminos-Nuevos Ministerios and Pacífico areas, close to Atocha station) and the third is located in Alcorcón. Together, the sites span a total surface area of 5,100 m2.

In Barcelona, with the upcoming opening of four new centres in the process of being implemented, the total surface area under management will increase by 3,650 m2. The new establishments there are located in the neighbourhoods of Eixample, Gràcia and Sants, in Barcelona and in Santa Coloma de Gramenet.

With these openings, Boxinfiniti, led by Luis Casanovas, is expanding its network to include thirteen storage centres in Barcelona and Madrid. “The company is constantly on the lookout for premises in the best locations of Barcelona and Madrid within the framework of its strategic plan”, according to sources at the group.

Original story: Eje Prime

Translation: Carmel Drake

Project Makalu: Sabadell Puts €2.5bn Portfolio Up For Sale

21 March 2018 – Vozpópuli

Banco Sabadell is stepping on the accelerator to complete its balance sheet clean up as soon as possible. After months of negotiations with the Deposit Guarantee Fund (FGD), the Catalan entity has decided to place on the market its first large portfolio proceeding from CAM’s Asset Protection Scheme (EPA). In this way, it has distributed information to investors about Project Makalu, comprising €2.5 billion in assets from the former Alicante-based savings bank, according to financial sources consulted by Vozpópuli.

This operation comprises foreclosed assets and unpaid loans from companies and individuals covered by the EPA. It follows another portfolio that has been on the market for a few days, Project Galerna, comprising €900 million in non-performing loans.

KPMG is advising Sabadell on both operations, which together comprise assets and loans worth €3.4 billion.

The group chaired by Josep Oliu has been negotiating with the FGD for months to try to kick-start these operations. The aim is that they will be followed by two more portfolios taking the total value of the assets for sale to €12 billion and whereby reset the entity’s real estate calculator. The issue is not simple because the sale of these loans may generate a hole for the Fund that would impact the State deficit.

Strategic plan

The Catalan entity announced at the recent launch of its strategic plan in London that it maintains the objective of reducing its exposure to problem assets at a rate of €2 billion per year. With the sale of Project Makalu alone it would more than exceed that goal.

The bank held €15.2 billion in problem assets at the end of 2017, but the forecasts indicate that that figure will fall below €9 billion by 2020: €4 billion in doubtful loans and €5 billion in foreclosed assets. And that is without taking into account the divestments that are now being worked on with the FGD.

Project Makalu is the fourth largest portfolio of problem assets ever to be put up for sale by a Spanish bank, behind only Popular’s Project Quasar, amounting to €30 billion, purchased by Blackstone; BBVA’s Project Marina, amounting to €13 billion, acquired by Cerberus; and Project Hercules, amounting to €6.4 billion in mortgages from Catalunya Banc, which was bought by Blackstone.

Meanwhile, Project Galerna is similar to Project Gregal, which Sabadell sold less than a year ago to three funds: Grove, D. E. Shaw and Lindorff. That portfolio comprised loans linked to consumers, without real estate guarantees, which had already been fully written off, and so all of the proceeds from the sale were recorded directly as gains.

Precedents

Besides Gregal, Sabadell closed two other major operations last year: Normandy, comprising €950 million in property developer loans, which was acquired by Oaktree, and which also proceeded from CAM’s EPA; and Voyager, comprising €800 million, which was purchased by the largest pension fund in Canada.

The latest operation launched by Sabadell joins others recently placed on the market by Sareb, BBVA, Cajamar and Kutxabank.

Original story: Vozpópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Adveo Puts 4 Warehouses Up For Sale for €40M

18 March 2018 – Eje Prime

Adveo is continuing with its divestments. The Spanish wholesale group, which specialises in office equipment and services, has put four warehouses up for sale, three of which are located in Spain, through which it hopes to raise €40 million.

The domestic assets are located in Madrid, País Vasco and La Rioja, whilst the fourth asset is located in Belgium. The proceeds from the divestment will be used to continue reducing the debt, according to sources at the company, whose liabilities amount to €190 million. The objective of the company is to reduce that figure by €10 million in 2018, according to Expansión.

In January, Adveo completed another sale in France. On that occasion, the group sold a warehouse to the company IDI Gazeley for €8 million, which, by virtue of the contract, is going to lease the logistics centre to the French subsidiary of the Spanish company.

All of these operations form part of the Strategic Plan for 2017-2029 designed by the group, which seeks to transform the company into “a service platform with logistics solutions adapted to the new reality of the business”, according to the company.

Original story: Eje Prime

Translation: Carmel Drake