Tag: Wanda

Baraka Seeks Financing For Edificio España Purchase

3 March 2017 – Expansión

The Baraka group still has a month left before it has to close the operation to purchase the Madrilenian building Edificio España from the Chinese group Wanda, but the initial idea of financing the acquisition through a syndicated loan secured by the property itself, is not going to be possible.

The group is going to have to find another way, whereby it either contributes the funds to complete the purchase directly, or it finds a partner to participate with it in the operation.

By way of background, Baraka, the group owned by Trinitario Casanova, signed an agreement to purchase Edificio España for €272 million, in July 2016. To date, it has only disbursed a small amount of that sum, around €20 million, with the remaining balance due before the deadline at the end of this month (…).

The group has already held negotiations with Banco Sabadell and Bankia, as well as with other possible interested parties, regarding the granting of a syndicated loan amounting to almost €300 million. The idea was that it would serve to finance part of the purchase of the building and part of the renovation project, which is going to house a hotel, luxury homes for rent and a retail space, which will include a luxury restaurant and maybe even a casino.

This alternative, in which the group Matutes was initially going to participate, became impossible when Baraka reached a definitive agreement with the hotel group RIU. The deal significantly modified that real estate project, given that RIU agreed to contribute €100 million to carry out the renovation, in exchange for the expansion of the surface area designated to the hotel (to occupy 22 of the floors in the building), at the expense of space initially allocated for rental homes. The plans now involve building a 4-star macro-hotel in the centre of Madrid with 650 rooms, which will be run by the RIU Plaza brand.

However, the contract signed between Baraka and Riu strictly prohibits the mortgaging of Edificio España to finance the purchase operation, and so that ruled out the possibility of the syndicated loan. The banks interested in granting financing for the purchase of the building have asked Baraka to provide other, different, properties by way of guarantee. The group, which operates in the construction, real estate and supermarket businesses, owns several buildings but even combined they do not represent sufficient collateral, say sources in the sector.

Financing

One of the pitfalls for financing the operation is the high LTV demanded by the group led by Trinitario Casanova. Baraka has approached the entities to finance between 75% and 80% of the property’s value, however, the entities are prepared to lend only around 65%, say these sources.

Another option is that Baraka, which has sufficient funds, disburses the amount necessary to complete the purchase operation and then the banks finance the renovation project. In total, Baraka must invest around €400 million, from which it will have to deduct the €100 million that RIU will contribute (….) or reach an agreement with a third investor willing to participate in some or all of the project.

In addition, RIU reserves the right to veto any financing operation if it considers that it could endanger the project. (…).

Original story: Expansión (by S. Arancibia and R. Ruiz)

Translation: Carmel Drake

Baraka Teams Up With Riu To Promote Edificio España Hotel

13 January 2017 – Cinco Días

The Baraka group has taken a giant step forward in its acquisition of Edificio España from the Chinese holding company Wanda. The company, through which the Murcian businessman Trinitario Casanova is handling the operation, has announced the launch of a joint venture with the hotel chain Riu.

Through this joint company, Rui will hold a stake in the property amounting to between 25% and 30%. Sources close to the agreement indicate that the hotel chain will participate as an investor through the joint venture for the acquisition and renovation of the building, which is actually still owned by the Chinese group Wanda.

The Mallorcan hotel chain, founded by the Riu family, in which the tour operator giant Tui owns a 49% stake, will also manage the future five-star hotel in Edificio España, which will operate under its Riu Plaza brand under a long-term lease contract. It will be the first property to operate under the brand in Spain, which was created in 2010 and which specialises in urban destinations, such as New York and Miami in the USA, Guadalajara in Mexico and Berlin in Germany.

The future establishment, which may open its doors at the end of 2018, will have almost 700 rooms, spread over 22 floors and will have a surface area of just under 70,000 m2. It will join six other properties operated under the same brand across Europe and America. (…).

Riu operates more than 100 hotels across 18 counties and each year receives more than 4 million clients, which means that the future hotel in Edificio España will have a very international profile.

Meanwhile, Baraka also made a second payment for the historical building yesterday, amounting to €14 million….the final operation must be signed before 31 March 2017, at which point the Murcian businessman will have to pay the remaining balance to make up the figure of €272 million agreed with the Chinese group.

Casanova reached an agreement with Dalian Wanda to purchase the property in July. The Chinese investor Wang Jianlin had purchased the building from Santander in 2014 for €265 million, but his plans to demolish the building and reconstruct it were never approved by the Town Hall ruled by Manuela Carmena.

Casanova had been looking for a partner to deal with the renovation of the property, which will have an additional cost of around €200 million. The businessman was looking for an operator for the hotel with which he could sign a fixed lease contract, which caused the major international chains to withdraw their interest. And that, despite the fact that Baraka managed to negotiate a 30 year contract with the US group Hard Rock. (…).

Original story: Cinco Días (by A.S. and L.S.)

Translation: Carmel Drake

Tax Authorities Seize Assets From Marina D’Or’s Owner

4 January 2017 – Expansión

The Tax Agency (Aeat), one of the largest creditors of the real estate group created around the holiday resort Marina D’Or, has decided to take action. The Ministry of Finance has approved the precautionary seizure of assets from several companies owned by the founder and owner of the Castellón complex, Jesús Ger (pictured above), amounting to €49 million.

The measure is based on the fact that the Tax Agency considers that the Castellón group performed an “asset emptying” operation of its largest company in 2010, to stop the possible collection of debt that it held by carving out its activity into several companies.

The debt originally corresponded to the company Comercializadora Mediterránea de Viviendas (Comervi), the property developer and construction company that suspended its payments in 2014 and which appears on the tax authority’s list of largest debtors. Months before the insolvency, it changed what had been its historical name, Marina D’Or-Loger, under which it had promoted and constructed the popular holiday resort.

In 2010, Ger restructured the group’s parent company and divided its activity into four companies to prevent the real estate crisis from dragging down its hotels and the tourist business at the complex next to the beach in Oropesa del Mar (Castellón).

Controversial carve-out

That operation is what has caused the Central Taxpayers Office to claim the amount owed by Comervia (€57.48 million) from two other companies owned by Ger: Gestión Cartera Castellón – which was the owner of the shares in Marina D’Or-Loger until the segregation and which assumed ownership of the hotels and other businesses – and Golf Playas Castellón – owner of the macro-urban Marina D’Or Golf project, which Wanda expressed an interest in -.

In June 2016, the Administration approved an agreement whereby Gestión Cartera and Golf Playas assumed “joint and several liability” for the debt, taking responsibility for €47.9 million and €1 million, respectively.

A few months earlier, in March, the Ministry of Finance had already notified both entities that it had seized their shares in the companies “in a provisional and precautionary way” and “100% of the full ownership and usufruct of the real estate assets, homes, apartments, parking spaces and land” registered in Castellón, Benidorm and Oropesa.

Failed appeals

The two companies and the businessman himself then filed special appeals with the Superior Court of Justice (TSJ) of Madrid. In the three appeals, the plaintiffs contended that their fundamental rights had been violated as they were not guaranteed any right of defence or access to a hearing. The three cases were dismissed by the court.

According to the list of events included in the rulings, Aeat considers that as a result of the carve-outs and company operations of the former Marina D’Or-Loger, €327 million of net assets were removed from the company. That meant that it was left with negative equity of €140 million at the end of 2010, which was one of the factors that led to its subsequent bankruptcy. Moreover, the most recent appraisal reports from the Ministry of Finance value the properties that Comervi used to guarantee its tax debts to delay and split the payment at just €19.47 million, which is “well below the total tax debt of almost €58 million”. The properties were initially assigned a value of €96 million.

Sources at Marina D’Or indicated yesterday that they had achieved an agreement with the Tax Authorities “whereby their precautionary seizures will be rendered ineffective” and that they have not been carried out “and so they would not have any affect on the activity” of its companies.

Original story: Expansión (by A.C.A)

Translation: Carmel Drake

Baraka Wants To Double Edificio España’s Value In 3 Years

19 December 2016 – El País

The Murcian group Baraka, led by the businessman Trinitario Casanova, has completed its purchase of Edificio España from the Chinese group Wanda. The historical property, located in Plaza de España in Madrid, will be sold for €272 million, which is €7 million more than the Asian firm paid Banco Santander for the property back in 2014. Nevertheless, following the renovation work, the building is expected to be worth €532 million, according to a report by JLL filed with the Hong Kong stock exchange.

The owner of Baraka, Trinitario Casanova, will hand over a cheque amounting to €272 million, within the next three months (before 31 March) for the building, which the Chinese group Wanda is selling for almost the same price at which it purchased it from Banco Santander (€265 million). (…).

The President of the Chinese group, Wang Jianlin, who is the richest man in China, decided to sell the building to Baraka because the Murcian holding company promised that it would make a fast and secure payment to ensure the quick sale of the building, according to several sources.

Under the terms of the operation, Baraka has now paid Wanda €6 million by way of deposit and has made the commitment to pay another €14 million by way of guarantee when the public deed is signed before the notary. It will then pay the remaining €252 million.

Meanwhile, the consultancy firm Jones Lang Lasalle (JLL), which led the negotiations between the two companies, submitted a technical report to Wanda, which the Chinese Group has sent to the Hong Kong stock exchange. The report explains that, following the renovation work, the building will be worth €532.5 million. If this is the case, Baraka will earn almost twice as much as it spent to acquire the building in just three years, which will represent a profit of almost 100% of the capital employed for the purchase.

The Murcian businessman Casanova, who has been investigated for an alleged fraud of €6 million against the Tax Authorities and who was sentenced to one year in prison in 2008 for altering the value of shares in Banco Popular, is keen to renovate both the outside and inside of the building. Its architects have been working on the plans for months and the construction work will begin at the beginning of January, said Casanova in October.

The façades of Edificio España will remain in tact, as required by the Town Hall of Madrid, whilst the changes to the interior will serve to accommodate a large luxury hotel from 2019 onwards (probably operated by the Hard Rock Café chain). This hotel will have 600 rooms and a lease contract of 30 years. Those are Baraka’s intentions at least.

The first three floors and the basement (a space measuring up to 15,000 m2, of the building’s total surface area of 71,000 m2) will be let to retail groups.

Few changes

“The building will remain practically the same as it used to be. It will be cleaner, more beautiful and restored, but aesthetically it will be the same”, said the businessman in his most recent official appearance before the press. (…).

Original story: El País (by Luca Constantini)

Translation: Carmel Drake

Baraka Makes A Second Payment To Wanda For Edificio España

3 November 2016 – Expansión

The Baraka Group, owned by the businessman Trinitario Casanova, has made another payment to the Chinese group Wanda for Edificio España. With this payment, which will be added to the amount that the Murcian group handed over in July, another step is taken in the negotiations. The transaction is expected to close at the end of 2016 or during the first few months of next year.

Wanda, which acquired Edificio España from Banco Santander for €265 million in July 2014, decided to abandon the project following disagreements with the Town Hall of Madrid regarding the conservation of the exterior façade. It signed an agreement in principle with the Baraka Group in July 2016 to sell the property for €272 million.

In July, Baraka paid a deposit of €1 million and so Wanda promised to not negotiate the sale of the property with any other candidate at least until the middle of October. Casanova’s offer for Edificio España specifies that the acquisition will be made using the group’s own funds, although Baraka is now looking for financing in order to undertake the subsequent renovation of the property.

In parallel, the Baraka Group’s holding company is making progress in its conversations with the Hard Rock hotel group, which has expressed interest in operating the hotel that will occupy most of the building. Specifically, the Baraka Group’s plans involve opening a retail space on the first few floors of the building, and using the rest of the property to house a luxury hotel with 600 rooms, which will open its doors between the end of 2018 and the middle of 2019.

The property has a surface area of 71,000 m2, of which 15,000 m2 will be used for the retail space between the first basement floor and the third floor, and the rest will converted into the five star hotel.

Casanova has promised to conserve the main façade and the rest of the building’s external structure and whereby comply with the demands imposed by Madrid’s Urban Development team.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Edificio España Hotel: Baraka Negotiates With Starwood, Hyatt & Meliá

20 September 2016 – Expansión

Edificio España will not contain any homes, but it will house a luxury hotel and shopping centre. The Murcian group Baraka, owned by the businessman Trinitario Casanova, is pushing ahead with its new project in Madrid.

In July, Baraka reached an agreement with the Chinese group Wanda to buy Edificio España. The company, controlled by the magnate Wang Jianlin, will sell the Madrilenian skyscraper for a similar price to which it bought it – around €270 million, compared with the €265 million that it paid – two years after acquiring it from Banco Santander, after it ran into problems with the Town Hall of Madrid regarding the renovation of the building.

The new owner, which plans to complete the purchase of the property on 15 October, has decided to eliminate the 300 homes that were included in the original plans and construct a 22-storey hotel, as well as a shopping area, which will occupy the first three floors of the 117m tall building, which has a surface area of 76,000 sqm, according to El Mundo.

In fact, Baraka is already negotiating with several international hotel chains, including Hyatt, Starwood and Meliá, for the rental contract of the future hotel space. The new operator will replace Wanda Hotels & Resorts, the chain that Jianlin was going to open in the middle of 2019, his first property in Spain in the iconic Madrilenian building.

The Town Hall

Whilst Baraka negotiates with the hotel operators to lease more than 67,000 sqm of space, it has also made contact with the Town Hall of Madrid, filing an urban planning consultation regarding the construction work that it may undertake at the property.

The new owner must maintain the façade of the building in tact, something that went against Wanda’s plans, which sought to dismantle the façade of Edificio España “brick by brick” and subsequently reconstruct it using more modern materials.

The inability to develop his plans led Wanda to instruct the property consultancy JLL to sell the building. In the end, the Chinese group opted for the bid submitted by Baraka, and the operation will be completed next month.

Other funds were interested in acquiring this property, which used to belong to Metrovacesa before Santander, including the US fund Hines, the housing manager Domo, the real estate fund of Axa and the Philippine group Emperador, the owner of another skyscraper in Madrid, Torrespacio, located in the Cuatro Torres complex.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Marina d’Or – A Future Without Apartments?

22 August 2016 – Expansión

The voice of a child saying “Marina d’Or, how cool” has become one of the unmistakable signs of summer. Jesús Ger, the founder and owner of the popular Marina d’Or complex in Oropesa del Mar (Castellón) is still using the same advert year after year, however his business nowadays is very different from the real estate giant whose name used to be synonymous with holiday apartments for most Spaniards.

Today, Marina d’Or is trying to shake off any association with real estate to convey an image of a pure tourism company. Ger launched this strategy during the years of the financial crisis, when he undertook a major restructuring of his companies with one clear purpose: to build a firewall to prevent the real estate fire from spreading to his holiday city.

The holding company is now divided into four main companies. On the one hand, Hoteles Marina d’Or, the company that operates the five hotels, eight amusement parks and some of the catering establishments and other services at the complex in Oropesa. This company is also responsible for the resort’s marketing campaigns and runs the rental of holiday homes, although many of those are now owned by the banks that financed them.

The excellent evolution of the tourist industry has given Hoteles Marina d’Or a break, such that it is now enjoying high occupancy rates this summer. Sources at the group explain that turnover in July exceeded the amount recorded during the same month last year. Nevertheless, the figures and returns from this business, with revenues of €38 million and profit of €600,000 last year, are well below the €450 million invoiced by the holding in its heyday.

Legal obstacles

The asset that was going to be the great jewel in the group’s crown for the next two decades, Marina d’Or Golf, the urban macro-plan measuring 18 million m2, a few kilometres away from the coast in Oropesa, was transferred to another company, Promociones PAI Gold. This project, which has been on hold for years, has been revived in the media from time to time when potential investors express interest in the facilities.

This last happened at the end of 2015, when a Chinese newspaper reported that Wanda was planning to invest €1,200 million. (…). Sources at the Castellón-based group say that the search for partners continues, but it is a very slow and discrete process. (…).

Original story: Expansión (by A.C.A.)

Translation: Carmel Drake

Baraka Group Agrees To Buy Edificio España For c. €265M

20 July 2016 – Expansión

The Baraka group, controlled by the businessman Trinitario Casanova, has reached an agreement with the Chinese group Dalian Wanda to acquire Edificio España in Madrid, according to reports by the El Mundo newspaper.

The holding company is finalising the details of the operation, which is expected to be completed after the summer. Casanova’s offer, which is understood to amount to around €265 million, reportedly exceeded the bids made by the other interested parties, including the Chinese firm Fosun, Hemisferio and Platinum Estates.

According to reports, Baraka is undertaking a significant expansion program. It recently acquired a plot of land measuring more than 10 million sqm in Valdebebas (Madrid) for around €75 million.

The “for sale” sign went up over the iconic Edificio España building in January, when Wanda engaged the real estate consultancy JLL, which has not confirmed the operation, to find a buyer.

The Chinese group, controlled by Wang Jianlin, the richest man in China, opened the door to the possible sale of the building after discrepancies arose with the Town Hall of Madrid regarding the renovation of the building. Wanda’s plans, which included the construction of a luxury hotel, a shopping centre and homes, clashed with the demands of the Town Hall, which insisted on the conservation of the front and side façades of the building, as established by the law governing the protection of historical buildings. In any case, Wanda has maintained contact with Madrid’s Town Planning team, in parallel with the sales process, and last met with them on 14 June.

The Chinese group paid Banco Santander €265 million in June 2014 for the building. Now, it is on the verge of selling it for a similar amount.

Wanda’s future divestment of Edificio España comes shortly after the Asian holding company announced its purchase of the UCI Odeon group – which owns the largest cinema chain in Spain.

After several years trying to sell the British Odeon cinema chain to AMC Theatres, Wanda’s subsidiary in the USA, the private equity firm Terra Firma announced the deal on 12 July. The price of that transaction amounts to GBP 921 million (around €1,100 million), of which GBP 407 million relates to the debt held by UCI Odeon, which the buyer will take on.

One of UCI Odeon’s main assets, to be taken over by Dalian Wanda, is the chain Cinesa, which is the largest film company in Spain with 535 screens across the country. In total, the chain owns 2,236 screens in 242 cinemas in Spain, the UK, Italy, Austria, Portugal and Germany. (…).

Original story: Expansión

Translation: Carmel Drake

Wanda Accelerates Timetable For Edificio España Sale

29 June 2016 – Expansión

Wanda wants to get its homework done before it goes on holiday and so has decided to accelerate the sales process for Edificio España. Following a recent visit to Spain by representatives of the Chinese group, Wanda has called on the interested parties to submit binding offers for the iconic Madrilenian property. Candidates have until tomorrow to present their final proposals.

The business conglomerate led by Wang Jianlin, which acquired Edificio España from Banco Santander in June 2014 for €265 million, engaged the real estate consultancy firm JLL to manage the sale of the property a year and a half after its acquisition. The possible buyers include the Chinese group Fosun, the Philippine group Emperador, the Hong-Kong based firm Platinum Estates and the Spanish RE manager Domo. Sources at JLL declined to make any comments about the process.

During their stay in Spain, the representatives of the Chinese group met with some of the candidates and revealed certain information about the property, located in Madrid’s Plaza de España, as well as about the company Renville Invest, which is the immediate owner of the building.

In addition, although the positions adopted by the Town Hall and Wanda, regarding the approach to the renovation of the property, seem irreconcilable, the Chinese group is still in contact with Manuela Carmena’s urban planning team, according to sources at the Town Hall. Specifically, the councillor responsible for the Sustainable Urban Development department, José Manuel Calvo, met with Wanda’s representatives on 14 June to discuss the project for remodelling Edificio España.

The main obstacle in the negotiations between the municipal team and the Wanda group lies in the Town Hall’s demand to preserve the façade of the property, as required by law, a position opposed by Wanda, which had been hoping to demolish the building and reconstruct it.

Original story: Expansión (by R. Arroyo)

Translation: Carmel Drake

Marina d’Or Has Sold Off Assets Worth €330M

14 June 2016 – Expansión

The real estate empire constructed by Marina d’Or in Oropesa de Mar (Castellón) is changing hands, but for the time being, its new owners have little to do with the Chinese group Wanda, despite the rumours that were rife just a few months ago.

The company into which the owner of Marina d’Or, Jesús Ger, has grouped together his real estate business, Comercializadora Mediterránea de Viviendas (Comervi), disposed of properties and land (in 2014), worth €330 million at the time. In most cases, banks were involved in these transfers, given that Comervi filed for bankruptcy in 2014.

The most notable operation to date affects the subsidiary Platja Amplaries, a company created in 2011 with Banco Popular to hold properties and land financed by that entity. In December 2014, two companies headquartered in Luxembourg, created just a few months earlier, Ecol Investment and Trans Investment, took control of the firm, owned until then by Comervi (75%) and the bank, through Aliseda (25%).

The two companies acquired a 49.73% stake each and Comervi retained just 0.54%, following a capital increase that did not involve the contribution of any new funds, but rather the transformation of a €27.7 million loan, granted by the former shareholders, into capital.

Apartments and debt

Platja Amplaries is the owner of assets including apartments in Marina d’Or worth €91 million – which the group rents out or has put up for sale – and land that Marina d’Or acquired in different areas of the province of Castellón worth €163 million. Its debt amounts to €266 million, and is all borrowed from Popular.

None of the vendors has revealed the identity of the owners of the Luxembourg-based companies. Comervi’s financial statements for 2014 reflect the transfer, which allowed the company to increase its net equity by €147 million, according to the audit report, which was not prepared until April 2016.

This was not the only transfer that took place. The financial statements also reflect the sale of properties worth almost €80 million to a bank in exchange for debt. Thanks to these operations, Comervi reduced its total liabilities from €528 million in 2013 to around €240 million by the end of 2014, of which €194 million corresponded to bankrupt liabilities. The creditors include Public Administrations, owed €68.5 million, and Sareb, which has called for the rescission of certain corporate transactions, according to the financial statements.

Original story: Expansión (by A.C.A)

Translation: Carmel Drake