International Funds Take Control Of Spain’s Real Estate Companies

6 November 2017 – Expansión

Together they own stakes worth €4.3bn / International funds and managers have become the largest shareholders of the listed companies in the sector. Seven of the top ten have foreign majority shareholders.

Seven of the ten large listed real estate companies are held in foreign hands. That is the new reality of the Spanish real estate market, which is enjoying a new period of growth ten years after the last boom.

Whilst during the previous upwards peak in the sector, the owners of the property companies were domestic businessmen, now it is the turn of the international funds to hold majority stakes in these companies in the sector. That is the case of the new leaders in the property developer sector: Aedas and Neinor Homes. These two companies made their stock market debuts this year, in October and March, respectively. In both cases, the property developers making their IPOs were owned by two large international funds: Lone Star in the case of Neinor; and Castlelake in the case of Aedas (…).

In the case of Aedas, which debuted on the stock market on 20 October with a valuation of €1.518 billion, two international firms became reference shareholders: T. Rowe Price, with a stake of almost 3.8%, and Fidelity Management and Research (FMR), with a 3.6% stake. It is not their first investment in a Spanish real estate company in either case. T. Rowe was one of the funds that participated in the IPO of the Socimi Axiare, in July 2015, acquiring a 9.7% stake; meanwhile, FMR is the third largest shareholder in another Socimi, Hispania, and in the property developer Neinor Homes. In the case of the latter, another international investor is the second largest shareholder, Wellington Management, which already owns 8.5% of the capital, worth around €120 million.

In the case of the traditional real estate companies, the status of the international funds varies. Realia (…) is currently controlled by Inversora de Carso, a firm owned by the Mexican businessman Carlos Slim. In addition to the Mexican magnate’s stake (70.77%), Polygon Global own 10.5% and JP Morgan own 6.026% (…).

By contrast, two of the classic real estate companies on the stock market still have Spanish businessmen as their main shareholders: Quabit, whose largest shareholder is its President, Félix Abánades, with a 21% stake (…); and Renta Corporación, in which Dinomen, a company controlled by its President Luis Hernández, holds a 29.97% stake. In the latter real estate company, Baldomero Falcones also holds a stake, of more than 5%, making him the fourth largest shareholder.

Quabit’s second-largest shareholder is a Spanish company: Sareb. The public company holds a 7.66% stake in that firm (….). By contrast, the second largest shareholder in Renta is Morgan Stanley, with an 8.1% stake.

In total, foreign investors hold shares worth more than €4.343 billion in the five main Socimis and four largest property developers.

Spanish shareholders

(…), the number of domestic investors who control these types of companies is much lower, but they have a very prominent weight.

Such is the case of the banks Santander and BBVA, the largest shareholders in the largest real estate company on the Spanish stock market: the Socimi Merlin Properties. (…). Currently, Santander holds a 22.26% stake in that company, worth €1.162 billion, more than half of all Spanish investment in the ten largest listed real estate companies (around €1.8 billion). BBVA’s stake is worth around €336 million.

Alongside the two large Spanish banks, two real estate groups stand out as prominent investors in the listed companies in the sector. Such is the case of Colonial, which holds a stake worth €200 million in Axaire (…). Meanwhile, Colonial is controlled by three overseas investors, after Villar Mir reduced its stake.

Moreover, the real estate group Lar, controlled by the Pereda family, is the third largest shareholder of the Socimi Lar España, with a stake of more than 5.6% (…).

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

WeWork, The Co-Working Giant, Arrives In Spain

13 September 2017 – El Español

The co-working space giant WeWork, which is worth around $22,000 million, has finally arrived in Spain. And it already controls two offices in Barcelona and Madrid. The latter is going to open first, with a hosting service for small companies and independent professionals.

The offices in Madrid are located on Paseo de la Castellana, 43. This 9-storey newly-renovated office building, with a surface area of 6,000 m2, is owned by Colonial and used to house the headquarters of the consultancy firm PwC and also of Abengoa (which moved out in July 2016 to cut costs).

WeWork is not yet offering on its website the space that it has available in Barcelona. According to Ejeprime, it signed an agreement with the Catalan group Castellví in July to occupy a building in the 22@ district, where many of the main technological companies are concentrated.

The strategy that WeWork has adopted for its arrival in Spain is similar to the one that it has implemented in other markets: it does not own any real estate properties outright but rather reaches long-term agreements to lease them. Nevertheless, in May, it signed an alliance with an investment firm with the aim of acquiring real estate assets.

Who is WeWork?

WeWork is a project born in 2010 that offices flexible work spaces for workers. In Madrid, its launch prices start at €250 per month (in the case of individual desks for workers) and range up to €14,500 for private offices with up to 50 desks.

The company, which has a presence in another 17 countries, has raised more than $4,400 million, with investors ranging from fund managers, such as Fidelity and T Rowe Price, to banks such as Goldman Sachs and JP Morgan.

The most recent capital injection was received in August. In total, $4,400 million was contributed by the Japanese technological and telecommunications giant Softbank.

There has been debate over the valuation of the company in recent months. The $20,000 million figure represents 20 times its forecast revenues for 2017. That is much higher than those of its competitors such as Regus. The reason? It is not only a business that is growing quickly (by more than 80% if the forecasts for 2017 are fulfilled, according to CBInsight, with $1,000 million of revenues), but also because of its projection as a expert in how companies work with access to a vast quantity of data, as the magazine Wired pointed out in a recent report.

How does WeWork work?

The company has already created a Spanish company: WeWork Community Workspace SL. It was constituted at the end of June and its administrators include Mike Nolan, the company’s Head of Global Business Planning and Abraham Safdie, Vice-President of the International Business.

Its tax structure is very similar to that of other companies in the sector, such as Uber and Yahoo: the parent company that controls the subsidiary, WeWork Companies International BV, has its centre of operations in the Netherlands, a country with a very favourable tax regime and used by multinationals to reduce their tax bill.

Original story: El Español (by J.M.G)

Translation: Carmel Drake

Axiare Raises €93M Through Accelerated Capital Increase

10 March 2017 – Expansión

Axiare has completed a capital increase amounting to €93 million, through the accelerated placement of 7.18 million new shares, which represent almost 10% of its share capital.

The operation was performed at an issue price of €13 per share, which represents a discount of 2.6% on the market price at the end of trading on Tuesday. Axiare’s share price fell by 1.27% on Wednesday to €13.18 per share.

The company has said that it will use the funds raised to continue investing. Axiare has identified investment opportunities amounting to more than €1,100 million, of which deals amounting to €400 million are in “advanced stages of execution”.

“The placement has been performed amongst a solid base of qualifying investors and international institutions, including current shareholders as well as new investors. This has allowed Axiare to diversify its shareholder base, improve its free float and increase the liquidity of its shares.

Currently, Axiare’s largest shareholder is Colonial, with a 15% stake, followed by T.Rowe Price (9.7%) and Citigroup (9.2%). Following this operation, those shareholders may see a dilution in their stakes.

Original story: Expansión (by R.Arroyo)

Translation: Carmel Drake

Spain Offers Pockets of Opportunities

22/07/2014 – Investment Week

During the “golden age” in the Spanish real estate market, this sector accounted for around 18% of the country´s GDP, while investment in property was topping €30 billion in 2007. Then the recession loomed.

However, the year 2014 started to show some clear traces of recovery. For instance, five Socimis (REITs) have gone public since January with several more waiting to become listed.

The vehicle Merlin Properties has raised the largest IPO amount so far (€1.25 billion). Originally, the firm tried to raise €1.5 billion on its flotation.

Many big-name investors decided to bet on the Spanish REITs, such as George Soros and John Paulson, as well as a number of international funds.

Stuart Mitchell, the founder of SW Mitchell, sees builder Sacyr Vallehermoso as the real opportunity calling its earlier books valuations “underestimating”. He assures he gained 100%-150% through the investment, expecting 50-100% more in the future as the company comes back to normal. The investor also purchased stakes in Santander and Banco Popular.

There are some that think the REO sales by banks pressured by strict European capital reserve requirements are the real deals. T. Rowe Price´s portfolio manager Dean Tenerelli says that the Spanish appeal lays in “record low rentals and an abundance of cheap properties”. In fact, home values in Madrid continue to go down with depreciation of 1.9% registered in Q1 2014.

Terenelli points out that the recovery is still crawling and for this reason investors shall stay on alert. “In this economic circumstances, identifying reliable companies is essential to obtain high return when the market gets over the crisis hit.”

 

Original article: Investment Week (by Dan Jones)

Summary: AURA REE

T. Rowe Price Takes a 3.19% Stake in Colonial

7/07/2014 – Expansion

The U.S. fund manager has informed the CMNV (the National Stock Exchange Commission) about a purchase of 3.19% share in Colonial.  T. Rowe Price Associates is said to have participated in the recent capital enlargement.

 

Original article: Expansión

Translation: AURA REE