Colonial, Merlin and Lar Rotating Assets Worth €2.5 Billion

20 August 2019

Spain’s largest socimis have all been taking advantage of the benign economic climate to implement a strategy of asset rotation, selling off non-strategic assets to raise funds for further investments. Colonial, Merlin and Lar España have completed more than 2.5 billion euros in divestments over the past two years.

Of the four, Colonial has been most active in this regard. The socimi has sold assets worth approximately €1.5 billion in the last two years, more than half stemming from its acquisition of Axiare. In October 2018, Colonial sold seven office buildings to Tristan Capital Partners and Real IS, as well as a development under construction in Madrid to Grupo Catalana Occidente, for 441 million euros. Of the seven properties sold, five originated with Axiare.

Colonial also recently sold a portfolio of 18 logistics assets, covering an area of 473,000 square meters, to Prologis for an estimated €425 million. What’s more, the socimi sold an office building in Paris for €450 million in mid-2017. The firm is investing the proceeds of some of its sales, allocating €468 million in twelve projects under development in Madrid, Barcelona and Paris, the three markets where the company operates.

Merlin, for its part, sold its 17% stake in Testa to Blackstone last September for €321 million. The firm also sold its portfolio of hotels to Foncière des Regions for €535 million. Lar has also sold €425 million of assets in the last 18 months. Of that, €120 million stemmed from the sale of a logistics portfolio to Blackstone, while another €190 million resulted from the sale of four office buildings in Madrid and Barcelona and some small retail assets.

Original Story: Expansión – Rebeca Arroyo

Adaptation/Translation: Richard D. K. Turner

Blackstone Combines Testa’s and Fidere’s HQs & Prepares to Sell a Mixed-Asset Portfolio

28 May 2019 – Valencia Plaza

Blackstone has combined the headquarters of its rental housing Socimis, Testa and Fidere, in Madrid. The companies, which manage 10,770 and 6,500 rental homes, respectively, will continue to operate as separate entities but will seek to obtain synergies through the management of their portfolios.

Testa and Fidere will both now operate out of offices on Paseo de la Castellana, 257, which are already occupied by Testa. Moreover, the two Socimis have convened their respective General Shareholders Meetings for the same day, Monday 24 June.

In the meantime, Blackstone is considering putting up for a sale a portfolio of several types of real estate assets that it considers mature and non-strategic. The portfolio of potential assets to divest is worth around €400 million and could include around 1,000 homes from Fidere, although none of them will be the flats that the firm acquired from the Municipal Housing Company of Madrid.

Blackstone is currently the largest owner of real estate assets in Spain, worth around €20 billion including logistics assets, offices and commercial properties, amongst others.

Original story: Valencia Plaza 

Translation/Summary: Carmel Drake

Blackstone Puts a Portfolio of FIdere’s Homes Worth €150M-€200M Up For Sale

25 April 2019 – Expansión

The US fund Blackstone has launched the sale of a portfolio of homes belonging to its Socimi Fidere worth between €150 million and €200 million.

According to sources, several interested parties are already analysing the portfolio, whose perimeter may vary depending on the offers received. This sale forms part of a wider initiative by Blackstone to rotate some of the assets in its portfolio. The US fund has already put some of the offices owned by another Socimi Corona up for sale.

Since 2012, Blackstone has invested almost €24 billion in real estate in Spain, where it is the owner of several investment vehicles and management companies, including the Socimis Testa, Albirana and Torbal, as well as Hispania.

Original story: Expansión (by R. A.)

Translation/Summary: Carmel Drake

Testa Suspends the Rental of its Homes Following Approval of New Rental Act

24 April 2019 – El Boletín

Blackstone, the fund that has invested the most in the Spanish real estate sector over the last five years, has reportedly suspended the rental of hundreds of homes managed by its Socimi Testa following the approval of the new Rental Act by Pedro Sánchez’s government on 1 March.

The new decree lengthens rental contracts, giving tenants the right to remain in properties for seven years in those cases in which the landlord is a company, and prohibits rent increases above CPI.

Testa has more than 11,000 properties under management and Blackstone has owned a majority stake in the Socimi since last year after acquiring shares from banks and other groups.

According to professionals from intermediary companies that work for Blackstone, a decision was taken to suspend Testa’s activity following the approval of the decree, in light of the uncertainty generated. Activity is expected to resume in May, following the general election.

Blackstone already warned a couple of months ago that the new Rental Act is discriminatory and would only serve to increase rental prices.

Original story: El Boletín

Translation/Summary: Carmel Drake

Blackstone to Raise €8bn for its European Real Estate Fund

25 March 2019 – Idealista

The US fund Blackstone wants to raise funds to continue growing in Europe. The fund manager expects to secure up to €8 billion for its next European real estate fund, which is going to be called Blackstone Real Estate Partners Europe VI.

The new vehicle’s investments will have tickets starting from €75 million and will include portfolios of properties and corporate operations as the target assets.

Spain is very much on Blackstone’s radar following its purchase of 51% of Popular’s real estate business from Santander for €5.1 million, in one of the largest operations signed last year.

Moreover, the fund has purchased the property of CatalunyaCaixa, the shares of Hispania (including its large hotel portfolio) and the shares of Testa, the rental home company.

Original story: Idealista 

Translation/Summary: Carmel Drake

Blackstone will be the Landlord of 25,000 Rental Homes by the End of 2019

31 January 2019 – Voz Pópuli

Blackstone, one of the largest investment companies in the world, expects to end the year with 25,000 rental homes under management in Spain.

Eduard Mendiluce (pictured above, left), the man from Blackstone who leads the US giant’s real estate emporium in Spain, has explained that the firm believes in the Spanish market, as it has done since 2014, and will end 2019 managing 10,000 more rental homes that it currently owns (15,000).

“We continue to believe in the fundamentals of the residential sector in Spain”, said Mendiluce at a conference about the real estate sector organised by Iese in Madrid. “Spain was one of the countries that suffered the most during the real estate crisis of 2008; prices are still 30% below their maximums”, he said.

The CEO of Aliseda and Anticipa explained that the US fund’s strategy in Spain in terms of real estate involves renting or buying and selling second-hand homes worth between €120,000 and €150,000. “When you have more than 200 homes under management in a given municipality, the business becomes profitable”, he explained.

Blackstone has invested almost €26 billion in the Spanish market over the last five years. In March 2014, it purchased 40,000 problem mortgages from Catalunya Caixa for €3.6 billion.

Since then, it has purchased: Banco Popular’s toxic property, together with Santander, for more than €5 billion; the Socimi Hispania for €2 billion; and 50.01% of the rental home Socimi Testa for €947 million. Last year, it bought Cirsa, a leading company in the gaming industry in Europe in a deal worth €2 billion.

In terms of the criticisms directed at the rental policies of Blackstone and other funds from certain sectors, Mendiluce has highlighted that in Spain, the funds own just 3% of the total rental housing stock, and that the rest is in the hands of individuals.

“I think that it is difficult to manipulate prices when you only account for a small percentage (of the market)”, he said. “I firmly believe that if there has been very concentrated price inflation in a handful of towns, then that has been due to a lack of supply”, and he pointed out that Spain has the lowest percentage of social housing in Europe.

Fashionable market

Juan José Brugera, President of the real estate company Colonial, was very optimistic about the real estate sector in Spain.

“We are in an expansive phase of the cycle, we are facing lower growth, but growth is growth, and it’s strong in Spain”, he said at the conference organised by Iese. “In the rental cycle, we are still in the growth phase, we have potential for rental growth that we believe ensures a strong performance over the next two or three years” he said.

“The Spanish market is fashionable at the moment, we predict expansive behaviour”, he said. “I have a positive vision, the stock market is behaving a bit strangely, but I think that is due to certain turbulences, both external and internal, that are generating uncertainty”.

Original story: Voz Pópuli (by Alberto Ortín)

Translation: Carmel Drake

Testa’s Former CEO Buys a Plot of Land in Madrid to Build 25 Homes

23 January 2019 – Eje Prime

Testa’s former CEO is continuing to shape his new real estate project. Nidom, the property developer led by Daniel Loureda, has purchased a plot of land at number 312 Calle Embajadores in Madrid, according to Expansión. The objective is to construct a 6-story building containing 25 homes, whereby resuming the plans set out by the previous owner.

Until now, the plot was in the hands of the company Caoba Directorship, and it has been sold for above the asking price, which was set at €7.5 million. The operation has been brokered by Knight Frank.

The plot has a surface area of 1,051 m2 and is located in the Legazpi neighbourhood of the capital, in a very sought-after area, where prices are on the rise due to the shortage of land and the location. In fact, it is one of the last buildable plots inside the M-30.

Nidom is thereby continuing to increase its portfolio, after launching several developments, including at number 76 Príncipe de Vergara, 7 Duque de Pastrana and 98 Calle Ferraz.

The property developer is led by Daniel Loureda, former CEO of Vallehermoso and Testa Inmuebles.

Original story: Eje Prime 

Translation: Carmel Drake

Blackstone Launches its 6th Socimi in Spain with 1,600+ Rental Homes

27 December 2018 – El Diario

Blackstone is increasing its position as the largest landlord in Spain. On Thursday, the vulture fund received approval to list its sixth Socimi, Euripo, on the stock market, which will make its debut with an initial value of €110 million. On its balance sheet, another 1,600 homes that will join the more than 20,000 properties that the fund already owns.

Euripo will make its debut on the Alternative Investment Market (MAB), the secondary market in Spain, where it will join other Socimis owned by the US fund, including Fidere, Albirana, Corona and Torbel. Blackstone also recently took control of 80% of Testa, the largest rental home company in Spain, ownership of which it shares with Banco Santander.

In this way, almost one in ten Socimis in Spain have Blackstone as a majority shareholder. As is usual in the operation of this fund, Euripo is owned by a company belonging to Blackstone that is based in Luxembourg.

In this case, Blackstone is listing a portfolio comprising more than 2,000 real estate assets including homes, garages and commercial premises proceeding from the divestment of two financial entities, BBVA and the now extinct Banco Popular. Of the total portfolio, it has direct ownership of 1,900 assets, whilst another 400 are in the hands of a related company, which will likely end up on Euripo’s balance sheet, according to comments included in the IPO document.

There are currently more than 60 Socimis listed in Spain on the MAB, the main stock market and the Ibex 35. Blackstone has been the most active investment fund, especially in the rental home segment, where it controls almost a quarter of the companies currently listed.

The set of assets that Blackstone is debuting on the stock market with this new Socimi is worth around €215 million, of which half are located in Madrid and Barcelona. The remainder are distributed across 35 Spanish provinces, according to the aforementioned IPO document.

Currently, less than 30% of the properties of this company are occupied. For this reason, the company expects to increase its revenues by improving the occupancy ratios and by increasing the rents charged for each occupied home by between 4% and 5%. Moreover, it says that 7% of its assets are illegally occupied.

Original story: El Diario (by Diego Larrouy)

Translation: Carmel Drake

2018: The Year that Blackstone was Crowned the King of the Spanish Real Estate Sector

17 December 2018 – Eje Prime

Blackstone wants it all and it wants it now. That is the sensation that the US investment fund, the new king of the Spanish real estate market, is transmitting throughout the real estate sector. Its portfolio is worth more than €20 billion after an accelerated period of purchases during 2018.

One of the objectives of the US fund manager has been, precisely, to expand its network in the Spanish real estate sector by entering markets such as the logistics segment. At the beginning of December, the company closed its latest operation in the country with the purchase of a logistics portfolio from Neinver for €300 million.

Nevertheless, the deal involving the giant Neinver is by no means the most significant operation that Blackstone has undertaken this year. Over the last twelve months, the group has taken control of Hispania, to grow in the hotel sector; it has acquired 80% of Testa, to manage thousands of rental homes, and in the logistics sector, it has accumulated 1 million m2 of space with the 55 assets from Neinver and the purchase of an industrial portfolio from Lar España.

Blackstone has disbursed almost €4 billion in the Spanish real estate sector this year, a figure that far exceeds the €127.5 million that it spent on its first investment in the domestic market in 2013. Moreover, that debut was not free from controversy, given that the group purchased 18 residential developments, containing 1,860 social housing units, which the Town Hall of Madrid sold the fund through the Municipal Housing and Land Company of Madrid (Emvsa).

Five years later, Blackstone is one of the largest owners of residential assets in Spain and the leader of the hotel sector. It leapt to first position in the hotel market ranking this year following its successful takeover of the Socimi Hispania. The company paid €1.99 billion for that vehicle, managed by Azora. With that operation, the fund added 46 assets and almost 13,150 rooms in Spain to a portfolio that it started to grow in 2017 with the purchase of HI Partners, the hotel arm of Banco Sabadell, for €630 million. In total, the manager owns 63 assets and almost 18,000 hotel rooms across Spain.

Hispania also provided Blackstone with residential assets worth €230 million, as well as 25 office buildings whose market value exceeds €600 million. Also in that segment, the company added the iconic Planeta office building in Barcelona to its portfolio during 2018, which it purchased from the Lara family in July for €210 million.

Spain, 20% of its global portfolio

Today, Spain accounts for 20% of Blackstone’s global investment. In total, the US firm owns property worth almost USD 120,000 million (€105,387 million) around the world. This real estate giant has become the largest unlisted real estate company in Spain (…).

The superiority of Blackstone’s portfolio in Spain with respect to those of the large domestic real estate firms is clear. The two largest players, Merlin and Colonial, are ranked within the top 15 Socimis in Europe and, yet, their portfolios are worth just half of that of the fund, at €11.785 billion and €11.19 billion, respectively.

Santander’s best friend

As well as mixing with other real estate players, Blackstone has made friends with some of the Spanish financial institutions. The banks, big losers in the previous real estate cycle, have worked hard over the last two years to place their property with the highest bidder, taking advantage of the new boom in the residential market.

In this way, in 2017, Banco Santander agreed with Blackstone the largest operation involving the sale of toxic assets from the real estate sector in the country. The fund manager purchased 51% of Popular’s property, a portfolio with €30,000 million in assets.

The relationship with the bank owned by the Botín family has been strengthened in 2018 with Project Quasar, the real estate firm created by the financial institution and the fund. The joint venture received a capital injection amounting to €300 million in May. Through this vehicle, the transfer of Popular’s assets is being carried out.

In order to place this property into circulation, as part of the operation in 2017, Blackstone also acquired the bank’s servicer, Aliseda, led by Eduard Mendiluce (…), who also manages the Socimi Albirana.

Albirana Properties is one of four residential Socimis that Blackstone currently has listed on the Alternative Investment Market (MAB). The others are Fidere Patrimonio, Corona Patrimonial and Torbel Investments.

Original story: Eje Prime (by Jabier Izquierdo)

Translation: Carmel Drake

Blackstone Obtains a c. €2bn Mega-Loan for Testa

19 December 2018 – Expansión

The Socimi Testa held an extraordinary General Shareholders’ Meeting on Tuesday, where it reduced the number of members of its Board of Directors from 11 to 5. The new governing body includes three people proceeding from the new majority shareholder, the investor group Blackstone.

Testa Residencial is going to sign a mega-loan amounting to €1.943 billion, which it had already agreed in principle after the US fund Blackstone takes control of the rental home Socimi with the purchase of 80.6% of its share capital within the next few days.

The loan, equivalent to the amount that the purchase of the firm has cost the fund (around €1.52 billion) along with the debt held by the Socimi, has been agreed with Bank of America Merrill Lynch, Société Générale and Santander itself, Blackstone’s partner in Testa with 18% of its share capital.

This bank financing was agreed during the first meeting of Testa’s new Board of Directors following the restructuring of the management body conducted hours before, at the General Shareholders’ Meeting, when entry was granted to Blackstone.

By virtue of this restructuring, Testa’s Board has been reduced to five members, from the previous number of eleven. The fund has appointed three representatives to the Board, one of which, Diego San José, will also be the President of the Socimi, a role held until now by Ignacio Moreno.

The other two chairs at the table will continue to be occupied by the current CEO, Wolfgang Beck, and the director Miguel Oñate. In this way, the Board seeks to ensure continuity in the management of the real estate firm and to continue benefitting from Oñate’s experience and knowledge.

New strategy

Despite this continuity in management, at the first meeting of Testa’s Board, with Blackstone in the driving seat, a resolution was taken to approve a new strategy for the company, which had been planning to invest €550 million in the purchase of new rental homes to add to its existing portfolio of 10,700 flats.

The new strategy involves “analysing the eventual purchase of new homes depending on the circumstances at play in each case”. Moreover, Blackstone has raised Testa’s current leverage limit, situated at 35% of its asset value, and has reduced the dividend payment to the “legal minimum”.

In terms of the super-loan, it is being guaranteed by the assets of the Socimi itself, worth €2.3 billion in May when it was considering making its debut on the main stock market, and which will be signed with a two-year term, with the possibility of three annual extensions.

Dividend

Before changing the dividend policy, the Board also agreed to distribute a payment to the shareholders leaving the Socimi as well as to the new shareholders.

Specifically, it is going to pay €7.612 per share to the shareholders that leave the company after selling their stakes to Blackstone, in other words, to BBVA, Acciona and Merlin and to Santander for the proportion of shares that it has also sold.

Moreover, Testa will pay €0.035 per share to those players that will be its shareholders once the sale and purchase agreement has been signed within the next few days, in other words, to Blackstone and Santander, as well as to a group of minority shareholders who own 0.5%.

With the acquisition of this Socimi, Blackstone is strengthening its position as the largest owner of rental homes in Spain, with around 24,000 homes through its various firms and Socimis. Moreover, it is consolidating its position as one of the largest real estate owners in the country, with an asset portfolio worth more than €20 billion.

Original story: Expansión

Translation: Carmel Drake