Tag: Walter de Luna

Ibero CM Grants First Alternative Loan (€35M) To Local Property Developer

6 July 2018 – El Confidencial

Ibero Capital Management, the management firm launched by Walter de Luna and Luis Moreno, both former directors of Sareb and Acciona Inmobiliaria, has just closed the first major alternative financing operation in Spain, for an amount exceeding €35 million, which involves funding to purchase land, repay bank debt and build the project.

Of those €35 million, two thirds will be allocated to the land purchase and to repaying debt, whilst one third – approximately €10 million – will be used for the construction of the project.

The beneficiary is a local property developer in Málaga, which, thanks to this liquidity has been able to acquire three plots located in the Málagan town of Mijas, together with a golf course. It plans to build 145 homes on the land. The plots are not only finalist, the urban planning permissions to be able to start the building work are also very advanced, given that the marketing of the homes will begin immediately, according to explanations provided by Walter de Luna and Luis Moreno, speaking to El Confidencial.

The Ibero CM platform was created by the two directors to facilitate access to alternative financing for property developers and cooperative managers who want to buy land and are unable to obtain bank financing. They have €400 million available to finance developments all over Spain. The money comes from Oak Hill Advisors, one of the largest investment funds in the world, with more than USD 30 billion under management, which has invested more than €1 billion in Spain since 2005, primarily in real estate projects.

Ibero CM has closed this operation in record time, almost two months after announcing its own launch. It currently has several other projects in the pipeline amounting to approximately €100 million, which it hopes to close over the coming weeks and months.

This is the first firm of its kind to be launched in Spain, financing both the capital and debt of property development companies in every phase of the development of their products, including land purchases.

“The financing structure is very flexible since it includes several tranches that finance the acquisition of land, the repayment of bank debt, the payment of taxes and other expenses associated with the transaction and construction of projects (…)”, explain Walter de Luna and Luis Moreno.

“By staying (involved in projects) to the end and sharing in the profits, the financing costs decrease significantly”. And they add that “by sharing in the final profits of the project, the interest rates are not as high as if they were only financing land purchases. And there is not a fixed percentage, given that it depends on the total cost of the constructions that we finance. The greater the cost, the higher the percentage”, say the directors.

For now, Ibero Capital is focusing on finalist land and plots in a very advanced phase of urban planning, and they are centring on the major markets in Levante, Andalucía and Madrid, although they acknowledge that the Madrilenian market “is very expensive and, although we are only looking at the moment, obviously, if we decide to enter, the property developer margin would narrow”. Specifically, the manager is holding conversations with a cooperative manager to finance a project in Madrid. Similarly, they are open to both first and second home projects, whenever the projects are viable.

Unlike the investment funds that have acquired stakes in property developers in recent years, they do not get involved in the management of the companies that they finance. “We are not shareholders in the companies’ share capital, therefore we do not interfere in their decision-making or in their management. We carry out the same controls that any bank would when granting a property developer loan”, they conclude.

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

Oak Hill to Allocate €400M to Finance Residential Developments

3 April 2018 – Expansión

The American investment fund Oak Hill Advisors has arrived in the Spanish residential market hand in hand with the recently created management firm Íbero Capital Management. The fund is planning to allocate at least €400 million to finance the construction of homes in the country.

Walter de Luna, former CEO of Acciona Inmobiliaria and Executive Chairman of Íbero Capital Management, explains that, given the lack of modern, structured capital for the construction of residential developments and the high-level of unmet demand for new homes, the objective of the platform is to channel financing from Oak Hill Advisors and to offer customised solutions for the real estate project.

Oak Hill Advisors, with more than USD 30 billion under management, has invested more than €1 billion in Spain through corporate loans and investments in assets and companies. The alliance between Íbero Capital Management represents its debut in this segment.

The fund is currently negotiating to offer €50 million in financing for the development of around 500 homes in several developments in the Costa del Sol and Madrid. The heads of the platform explain that they will select new projects in other regions and open the door to extending their coverage to Portugal.

Sources at Íbero Capital Management explain that the requirement to access financing is that the property developers’ plans are “commercially viable” with a minimum of €5 million. Moreover, unlike what happens currently with bank financing, they will offer funding for the purchase of developable land or plots where little (urban planning) management required.

Another difference with respect to current bank financing lies in the fact that property developers do not need to have a certain volume of pre-sales to access the funds; moreover, payment of interest and commission will not be triggered until the homes are handed over.

The investment and divestment horizon for the €400 million financing initially planned has been established at six years. “The fund has the capacity and appetite for more”, adds Luis Moreno, Director General of Íbero Capital Management.

The financing solutions proposed by Íbero Capital Management are mainly aimed at small- and medium-sized property developers, although the firm is also open to reaching agreements with large listed companies for land co-investment agreements or specific projects.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Acciona Rules Out Socimi Creation & Replaces Walter de Luna As CEO

17 November 2016 – Expansión

Acciona has revised its real estate strategy after spending the last year working on its stock market debut and searching for a partner for its real estate division, which is worth more than €1,000 million.

The rethink has resulted in the departure of Acciona Inmobiliaria’s CEO, Walter de Luna (pictured above), the star recruit from Sareb, who joined the group owned by the Entrecanales family in 2014, with the aim of listing the company on the stock exchange, whereby taking advantage of the recovery in the market.

After 18 months working on a possible IPO and being advised by Morgan Stanley, Acciona has decided to cancel its stock market plans, due to an increase in the uncertainties and volatility surrounding such markets. That same uncertainty also put pay to its plans to list its renewable assets on an overseas stock market, through a yield (high dividend) vehicle in the USA.

The company has now redefined its strategy, which, in principle, sets aside the real estate activity and focuses on development. This change means that its rental portfolio (1,382 homes, 36 premises, two hotels, several office buildings and 155,000 m2 of land) will be moved into the main portfolio, as assets available for sale.

Acciona has just executed one divestment, with the sale to the Socimi Merlin of its 50% stake in the Arturo Soria Plaza shopping centre, for €44 million. Sources in the sector indicate that the construction company chaired by José Manuel Entrecanales is holding conversations with Merlin to sell other assets to the Socimi, such as Urbanizadora el Coto, which other investors have also expressed interest in.

The revenues obtained from the sale of Acciona’s rental assets will be used to invest in new developments. Acciona currently has a stock of around 300 homes, of which around one hundred are located in Mexico and Poland.

In 2015, Acciona carved out its pure property development business from its real estate business. Its rental homes, buildings and land were transferred into a new company called Acciona Real Estate, whose most recent valuation, according to the company, amounted to €630 million. In total, the division is worth €1,200 million.

The real estate company was born with a debt of €199 million. An important part of the subsidiary is Urbanizadora del Coto (rental homes and premises in Madrid), which Acciona purchased from the Cavero family in 2006.

According to the accounts for 2015, the real estate division saw its turnover fall by 45% to €51 million and its EBITDA decrease by €3 million to €6 million, compared with the previous year. Acciona’s share price closed down 1.2% yesterday at €63.80 per share.

Original story: Expansión (by C. Morán and R. Arroyo)

Translation: Carmel Drake

KKR Considers Buying One Third Of Acciona’s RE Subsidiary

18 March 2015 – El Confidencial

The group owned by the Entrecanales family is looking for a partner to allow it to ‘ride the wave’ of the real estate recovery and has invited the US fund to be its travel companion.

KKR. The acronym of Kohlberg Kravis Roberts has become Acciona’s most important partner in recent times. Last June, the private equity giant purchased a third of the international renewable energy business owned by the Entrecanales family’s group for €417 million, and in a stroke, that allowed the Spanish group to clean up its accounts, fulfil its divestment plan six months early and rethink other sales that it had on the table, such as Bestinver and Acciona Inmobiliaria.

The sale of the latter became more attractive after the company was strengthened through the hiring of Walter de Luna, who was until then the number two at Sareb, as the CEO, and Luis Moreno, who was his right hand man at the bad bank; they joined the company with the clear challenge of designing a plan for growth. Nevertheless, that plan requires resources and, once again, Acciona’s American friend seems to be willing to help out.

According to knowledgeable sources, KKR is considering buying share capital in Acciona Inmobiliaria; and if the negotiations between the two parties go well, they will culminate in a third large transaction between the fund and the Spanish group, because, as well as having acquired the international renewable energy business from the construction company, KKR has also created a joint venture with the Spanish group, containing wind assets, the famous ‘yieldco’, which it expects to list on the Nasdaq soon.

In recent official presentations, Acciona itself has formally acknowledged the badly-kept secret that it is looking for a partner to inject the money it needs to reinvigorate its real estate subsidiary and thus be in a position to benefit from the recovery that is emerging in the sector, now that it has managed to sort out the direction of the parent company.

The book value of Acciona Inmobiliaria amounts to c. €1,500 million and market sources indicate that the goal of the Entrecanales family would be for the new partner to take ownership of around one third of its share capital. Nevertheless, other alternatives have also been put on the table (in the discussions with KKR), such as tackling projects together, since the Spanish group has (lots of) projects (in the pipeline) and the American fund has cash.

KKR’s commitment to Spain

Spain has become a priority market for KKR in Europe, where its Operations Director, the Spaniard Jesús Olmos, has been the main driver behind the firm’s growth in our country in recent years. He has led the investment of more than 2,400 million dollars in companies such as Saba, Telepizza, Uralita, Grupo Alfonso Gallardo, Port Aventura, T-Solar and, of course, Acciona. These transactions have been strengthened by the fund’s decision to open an office in Madrid and recruit Alejo Vidal-Quadras, who was the CEO of 3i España until last December.

Now, one of KKR’s next goals in our country is to position itself as a player of reference in the real estate sector, as well as to open its sphere of operation to investments in credit and to continue its growth in infrastructure.

Meanwhile, after seven years of crisis and various failed sale attempts, Acciona Inmobiliaria managed to recover in 2014 to record positive results; it closed last December with an EBITDA – earnings before interest, tax, depreciation and amortisation – of €3 million, compared with losses of €2 million a year earlier.

The group owned by the Entrecanales family values its subsidiary at €1,529 million, of which it considers around 70% (€1,199 million) to be gross gains by the group. By geographical region, 87% of the subsidiaries’ assets are located in Spain and only 13% are overseas; whereas if we analyse the subsidiary in terms of turnover, 45% relates to property (primarily residential), 37% corresponds to land in Spain, 8% is land overseas and development activity accounts for the remaining 10%.

Original story: El Confidencial (by R. Ugalde)

Translation: Carmel Drake