Merlin Increases Its Capital By €614M To Fund New Purchases

16 April 2015 – Expansión

Yesterday, the listed real estate investment company (‘sociedad cotizada de inversión inmobiliaria’ or Socimi) Merlin Properties announced a capital increase amounting to €613.7 million. According to the Socimi, the aim of the operation is to (raise finance) to continue with its purchase of real estate assets.

The increase will be conducted through the issue of 64.6 million new shares with a nominal value of one euro and a premium of €8.50, said the company. The current shareholders, which include large funds and fund managers such as Marketfield and UBS, will have pre-emptive purchase rights. Two rights will be required to subscribe each new share. It is hoped that CNMV will publish the prospectus today following its approval.

The increase in the share capital of Merlin Properties comes less than a year after its IPO on 30 June 2014.

The company, which first floated on the stock exchange with capital of €1,250 milllion and a pre-agreement to purchase almost 900 branches and a number of banking offices from BBVA, has already invested all of its own funds and has also made use of bank financing to fund additional purchases. One of the most desirable assets in its portfolio is the Marineda shopping centre in La Coruña, which it acquired for €260 million.

Rising share price

At the General Shareholders’ Meeting, which was held just a few weeks ago, Ismael Clemente, the Chairman of the Socimi, said that the company was working on investment transactions with a value of up to €2,000 million, including office buildings, asset portfolios and shares in companies.

The Socimi closed 2014 with rental income of €56.6 million, a gross operating profit of €38 million and a net profit of €49.7 million. Yesterday, the real estate company’s shares closed at €13.10, up 0.77%.

Merlin’s recent purchases include the acquisition of an office building on Calle Alcalá in Madrid and a logistics warehouse in Coslada (Madrid), for which it paid almost €58 million in total.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake

UBS Finalises Its Purchase Of The Zielo Shopping Centre

20 March 2015 – Expansión

The Swiss bank’s real estate fund is offering €73 million for the Madrilenian shopping centre, exceeding the expectations of its current owner, Hines, which has invested more than €100 million in its construction.

Another shopping centre is expected to change hands soon. After the French company Klépierre closed its purchase of the Plenilunio shopping centre in Madrid this week, another Madrilenian property will soon have a new owner.

The property in question is the Zielo shopping centre, located in the town of Pozuelo de Alarcón, in Madrid. The building was designed by the real estate company Hines, which took out a loan of €50 million to construct the property. Conceived at the height of the boom (it was opened in October 2009), Hines invested more than €100 million in its development.

The centre, designed by the architect Alberto Martín Caballero, has a surface area of 50,000 square metres, of which 15,537 m2 is dedicated to retail over three floors. It also has more than a thousand parking spaces, the majority of which are indoors.

Five years later, Hines put the “for sale” sign up on its Madrilenian shopping centre in January. The initial asking price was set at €65 million. The Houston-based real estate company decided to sell the property through a restricted (tender) process rather than open it up to all of the interested investors in the Spanish market. Thus, its advisors reached out to the large Spanish Socimis (Merlin Properties, Axia Real Estate and Lar España), as well as the more institutional investment funds such as Deka Inmobilien and the (fund) manager Tiaa Henderson. In the end, the real estate fund owned by the Swiss bank UBS made the best offer and is now negotiating the finer details of the transaction in an exclusive process with Hines.

According to sources close to the process, UBS is offering €73 million. A price that means that the yield on the transaction amounts to less than 5%, a very low figure compared with the figure of 10% that was achieved on the first deals involving the sale and purchase of shopping centres following the burst of the bubble, in 2013.

Zielo Shopping is not the only commercial property that is currently on the market in Spain. According to Deloitte Real Estate, around 80 shopping centres will come onto the market over the next 12 months. Some transactions, such as the purchase of Puerto Venecia in Zaragoza and Plenilunio in Madrid have already been closed. In total, €3,500 million could change hands in this market alone.

Possible buyers include the British real estate company Intu Properties, which is finalising a call option on a real estate project in Málaga, as part of its €2,500 million investment program, and the fund manager CBRE Global Investors, which plans to invest €600 million in shopping centres and retail outlets in the Spanish market.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

CBRE Enters The Real Estate Wealth Management Segment

18 March 2015 – Expansión

CBRE, the multi-national consultant and real estate services company, has launched a Wealth Management division in Spain, which will specialise in the management of large property estates. To this end, the US company has hired Etienne Brocas, who will advise domestic and international investors in the acquisition of properties in the country, where assets are particularly “attractive in terms of price and yields compared with those in other European countries”.

The entry of CBRE into the Wealth Management segment is one of the goals mentioned by the company in its Strategic Plan for 2014–2016. The objective of that plan is to double the company’s turnover “through organic and inorganic growth, and to expand into new and innovative business streams”.

Experience

Etienne Brocas has more than 25 years of experience in the real estate market and 16 in private banking. He was the CEO of Santander Private Banking’s real estate arm and CEO of the same sector for Western Europe at UBS Wealth Management.

Original story: Expansión (by J.B.)

Translation: Carmel Drake

UBS Strengthens Its Stake In NH Following Intesa’s Exit

2 February 2015 – Expansión

New movement in the share capital of the NH Hotel Group: the identity is now being revealed of the entities that purchased the 26.77 million shares – representing 7.6% of the hotel chain’s capital – that Intesa San Paolo sold just over a week ago. UBS is the first company to acknowledge that it took advantage of the Italian bank’s exit to strengthen its holding in NH; it acquired around 1% of the total capital – 3.48 million shares – on 23 January, according to CNMV records.

Together with the shares that it already held in its portfolio, the Swiss bank now owns 11,630,402 shares, representing 3.3% of NH’s capital. Intesa sold its shareholding for €113.8 million, at a price of €4.25 per share, which brings the total amount of UBS’s transaction to €14.81 million.

New shareholder profile

Following the acquisition, the Swiss entity becomes the fifth largest shareholder in NH, whose main shareholder is the Chinese conglomerate HNA, with a 29.5% stake. It is followed by the Inversor Hesperia Group (9.09%), Banco Santander (which become a shareholder in December after taking over 8.56% held by Hesperia, to which it acts as the main lending entity) and the fund THS (3.89%).

Almost all of NH’s share capital has changed hands in less than two years, following the exit of its traditional shareholders, such as Bankia, Amancio Ortega – the owner of the retail empire Inditex – and Intesa. NH’s share price was €4.39 at close of trading on Friday, down 0.23%. Its price has rise by 10.44% this year.

Original story: Expansión (by Y. Blanco)

Translation: Carmel Drake

Merlin Properties Buys Another Building In Barcelona for €37m

13 January 2015 – Expansión

Merlin Properties, a leading Spanish listed real estate company, is investing in Barcelona once more. In August last year, it acquired a building in the World Trade Center (WTC) Almeda Park (Baix Llobregat) from the Swiss bank UBS, and five months later, it is completing a very similar transaction. The Socimi has bought a new office building in the same business complex, which was also owned by UBS, for €37 million. The Swiss bank has been advised by Cushman & Wakefield.

Merlin Properties has acquired building number 8 in the WTC’s Almeda Park complex, which includes 14,543 square metres of office space and is leased to various groups, including Panasonic, Technip and Colt Telecom.

Last August, Merlin Properties bought building number 6 in the same complex, for €47 million, which is leased to Axa (the sole tenant). Cushman & Wakefield also advised on that transaction.

The CEO of the consultancy firm Cushman & Wakefield in Spain, Oriol Barrachina, indicates that “real estate investors are interested in this business complex because its facilities are very attractive to the companies that occupy it”.

Catalan sovereignty

Last December, the CEO of Merlin Properties, Ismael Clemente, warned that Catalan sovereignty was beginning to affect real estate investments in that market, “We have seen a shift in investor sentiment in Cataluña”, he said. However, he also assured that Merlin Properties would continue to increase its portfolio in the Catalan market.

Original article: Expansión (by Marisa Anglés)

Translation: Aura REE

Formulas To Capitalize On Construction Sector Recovery In Spain

29/12/2014 – Cinco Dias

The housing market has completely transformed since the burst of the housing bubble; it has gone from what had long been an investment sector to avoid to one that is now giving way to new business models with interesting opportunities for private owners as well.

“2015 is going to be, as it has been since 2014, a good time to buy properties to rent,” says Julio Gil, president of the Real Estate Studies Foundation (EIF), who argues that with an average annual return of 4.5%, residential leasing has become “a much more controllable investment for a small-scale investor” and more advantageous than deposits, given the drop in interest rates to historic lows, or equities, and the ups and downs in strong market volatility.

From his point of view, moreover, this approach allows the individual to benefit from the progressive rise of the rental market — the crisis has reduced the traditional preference for homeownership among Spaniards — exploiting the gap left by large buyers.

Experts envisage new business models with investment opportunities in the housing market

Some international investment funds that have been entering the Spanish market over the last year and a half have also chosen to purchase residential property to lease, e.g. Blackstone that acquired 1,860 homes to rent in the Municipal Housing and Land Company of Madrid, or Azora and Goldman Sachs, who bought 2,935 homes from the Housing Institute of the Community of Madrid (Ivima). However, most have opted to implement this strategy in the tertiary sector.

“The prospects for rent growth are somewhat feeble, while still observing an upward trend in prime-location office rents” highlights a recent report from the real estate consulting firm Knight Frank, pointing to Madrid as one of the rising markets with returns ranging from 5.5% to 8% depending on the type of asset.

This market, however, is not off-limits for the small investor. Despite the stagnant results being seen throughout the first quarter, a handful of investment companies in the real estate market, the so-called REITs, have begun trading during this year. These investment vehicles, which spend 80% of their resources on investing in rental property, are exempt from taxes and their shareholders are only taxed on the dividends they earn.

“Their main targets are prime-location offices and shopping centers, although renting houses and hotels is also on their business plans,” states the latest UBS outlook report, noting that at its base scenario, “The annual return for investors will be in a range between 7% and 10% over a three to four years timeframe, a competitive return even compared to the broad Spanish equity market.”

In terms of prices, Swiss bank experts point out that the price of housing in Spain has fallen between 30% and 40% from its previous highs, a decline despite which “the price of houses in Spain is not cheap”.

In light of this development, they expect further reductions of between 1% to 3% in the coming year and price stagnation in subsequent years. Given this situation, on the whole, UBS notes that it sees no investment opportunity in the Spanish residential sector except the rental market.

Thus investment in housing in the wait of a strong appreciation in the medium term is what all consulted experts dismiss at any rate. With that in mind, real estate transactions are still associated with obtaining a mortgage loan for individuals without large financial resources.

Obtaining a mortgage is a path paved with requirements due to a persistent credit crunch but it is beginning to pick up on the bank windows with deals nearing Euribor plus 1.5% variable interest, and a close entanglement with the bank. The conditions are often particularly advantageous on still strong housing properties, appropriated by banks and SAREB and appearing on their balance sheets. A possible opportunity for those who decide to take advantage of the construction sector recovery in the new year.

Original article: Cinco Dias (by Juande Portillo)

Translation: Aura REE

UBS Increases Stakes in Hispania, Merlin REITs

9/12/2014 – Expansion

UBS Group has raised its share in Socimi (REIT) Merlin Properties (MRL) to 12.3 per cent, and the stake in Hispania (HIS) to 3.2 per cent. These hikes are worth 157 and 18.6 million euros respectively.

Precisely, UBS remains the majority shareholder of Merlin, holding 15.8 million of the Trust‘s shares. The Socimi went public on June 30th, coming down to history as the biggest initial public offering in Spain since July 2011 and the third-largest in Europe in the past 12 months.

Also, fund Marketfield Asset Management, Emanuel Friedman or Credit Suisse Group have their 10.6%, 5.2% and 4.8% shares in the REIT respectively.

Likewise, the entity increased its stake on Hispania Activos Inmobiliarios to 3.2 per cent, equivalent to 1.7 million shares.

This Socimi was listed on the stock exchange market on March 14th, gaining attention of such big-name investors as John Paulson (18.3%) and George Soros (16.7%). Furthermore, Pac Recovery Fund owns a 9.1% share, Tamerlane 5.9% and Credit Suisse 4.9%.

Currently, Hispania’s stock sells 1.05 per cent higher at 10.6 euros, and Merlin’s shares trade 0.25% up at 9.9 euros each.

 

Original story: Expansión 

Translation: AURA REE

UBS Grabs a 5.22% Shareholding in Axia Real Estate

13/10/2014 – Expansion

UBS has increased to 5.22% its stake in Axia Real Estate, a share estimated to be currently worth of €18 million. The percentage corresponds to 1.88 million shares of the Socimi (a Reit firm in Spain).

Axia, a Socimi developed by Luis Lopez de Herrera Oria, has been picked by such big-name investors as Perry Partners International (a 29.162% stake), T. Rowe Price Associates (10%) and THS (11.109%).

Also, several banks bought a share in Axia Real Estate, namely Barclays Bank (4.214%), Citigroup (9.1%), Deutsche Bank (3.9%) and JP Morgan (5.8%).

At the end of September, Axia acquired a real estate asset portfolio, backed by Spanish properties located within the Community of Madrid, for €99.5 million. The purchase included office buildings, logistics hubs, a retail park and parking spaces.

By closing the transaction, Axia has spent around €170 million in two months, representing 47% of all the equity raised at its July flotation.

 

Original article: Expansión

Translation: AURA REE

UBS: Rock-Bottom Prices to Stagnate For Next 14 Years

18/09/2014 – El Confidencial

Swiss bank UBS, together with its army of economists and alike, as well as political and social scientists, has come to a conclusion that Spanish citizens should take the news about property market recovery with a solid pinch of salt.

In their recently released report titled Spain: Real Estate Market. Little at sight with sluggish and uneven recovery (transl. Aura), the authors portend persisting stagnation of bottom-low housing prices which may overrun by 14 years, a similar situation observed in Germany between 1995 and 2009.

UBS claims the slump in home values marking 45% since the 2007 peaks is going to stabilize on the 2002 levels in nominal and on the 1998 levels in real terms. The entity gives five arguments proving its predictions are pertinent. Firstly, weak upturn in employment without any increase in wages. Secondly, very slow housing stock absorption. Thirdly, demographic fall. Furthermore, rise in interest rates and finally, an upsurge in cheap properties fueled by millions of square feet seeking a purchaser.

The Swiss entity forecasts that even if the real estate market hits the bottom this or the next year, the factors that traditionally pick the demand up are not occuring and they probably will not.

From the point of view of demography, when foreigners return to their mother countries and the young go into exile, the population ages rapidly and if a sharp decline in birth rate added, the number of people falls at a speed of 200.000 inhabitants per year. Such a phenomena is especially harmful for the working-age part of the popuation (and at the same time the home-buying part) which loses 300.000 employees each year. Unsurprisingly, this jeopardizes the potential economic growth of a country. UBS predicts the growth will not cross 1.5% in Spain.

In fact, natural demand (households, holidays and sales to foreign investors) has plummeted due to the demographic effect. From 500.000 properties sold each year from 2003 throughout 2006, now the number of transactions averages at 170.000 units changing hands anually.

While considering the stock volume, at the end of 2013 there have been 650.000 properties pending sales. By 2016, diminishing at a speed close to zero, the stock will duplicate the natural demand. And yes, UBS included the vivid interest of overseas investors in the Spanish real estate.

Housing in Spain Remains Expensive

To make matters worse, the Swiss bank convinces that in spite of the pricing drop-off, Spanish housing is not cheap. In the best case, accessibility levels out, influenced by high unemployment rate, low salaries, high taxes and major differentials in mortgages. Putting it in other words, if the number of young people does not grow and many of them have no job or earn one thousand euros monthly, who is going to buy houses in this country?

The few lucky who can attempt to purchase a dwelling must face considerable differential rates on mortgages.

However, UBS positively assesses the rental market as gran part of the sectors investment (including shopping done by Socimis – Reits) targets this particular segment.

 

Original article: El Confidencial (by Ruth Ugalde)

Translation: AURA REE

Goldman Sachs & UBS Buy 9% of Hispania

26/03/2014 – Cinco Dias

Goldman Sachs and UBS acquired 9% of Hispania Activos Inmobiliarios´s stake. Multimillionaire George Soros has already bought a holding in the investment trust promoted by Azora for €50 million.

According to the information provided by the CNMV (the National Stock Exchange Commission), the two banks acquired 5 million new securities for €10 each (today the company concluded the session at €10.60).

If we consider the fact that on becoming listed Hispania originally issued 50 million securities, the additional 5 million shares raises the final offer to 55 million and this means that Goldman Sachs and UBS are now controlling 9% of the stake.

As Hispania´s underwriters, the banks had the right to execute the “greenshoe” option, an option that allows them to buy up to 10% of a company´s stake in order to smooth out price fluctuations.

The option will have been in force by 13th April but the allocating banks decided to execute it now as in the upcoming days, new share negotiations are to take place.

Hispania became listed on 14th March at price of €10.5 per share. (…)

 

 

Original article: Cinco Días

Translation: AURA REE