Tag: Wang Jianlin

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

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

The New RE Kings: Professional & Discreet

7 November 2016 – El País

The property sector still suffers from its soiled reputation as the cause of the bubble that led to the ruin of so many real estate companies, savings banks and families, ultimately bringing down the Spanish economy. But in a very discrete way, the sector is recovering its strength and real estate companies are becoming involved in major corporate operations once again, from purchases to mergers to stock exchange IPOs. The large corporations have also turned their business models on their heads. Whilst previously they undertook all kinds of activity (from property development to rental), we are now seeing specialist companies, many of whom are controlled by overseas investment funds.

The kings of property have also lost the glamour that those self-made businessman, such as Enrique Bañuelos (Astroc), Luis Portillo (Colonial) and Fernando Martín (Martinsa) enjoyed as their fortunes shined on the Forbes rich list (…). Nowadays, the new real estate companies do not have a visible face but rather are professional undertakings, and in many cases the managers are anonymous. The Socimis have taken up their place alongside the private equity funds and the large international investors such as the US businessman George Soros; Wang Jianlin, the richest man in China; and the Mexican magnate Carlos Slim.

Real estate stalwarts, such as Martinsa-Fadesa, Metrovacesa and Astroc, whose names used to feature on property developments, were left for dust, devoured by the black whole of gigantic debt. Their place has been occupied by the Socimis Merlin, Hispania, Lar and Axiare, whose names are barely known by the majority of the general public; by property developers such as Vía Célere and Neinor Homes, some of which have been created by overseas capital either investing directly in their capital or through partnerships for specific projects; and even by the former real estate arms of the banks, most of which are now owned by international funds.

One of the few exceptions to the empires from the last decade that has managed to survive is Colonial, which has cleaned up and transformed into a company that specialises in rental properties, and which is back with new investment plans. Last month, the company chaired by Juan José Brugera acquired 15.1% of the Socimi Axiare for €135 million. “Most of the companies that are left are a selection of the most professional enterprises”, said the Professor of Applied Economics at the Pompeu Fabra University, José García Montalvo. (…).

“The new managers of the real estate companies are more professional”, argues García Montalvo. In addition, the companies are more specialised and some even focus only on specific segments. One example is Lar España, a Socimi that specialises in shopping centre management (although it does also own a few office buildings), which has launched a €240 million investment plan for next year, supported by the major funds that comprise its shareholders, such as Franklin Templeton, Blackrock and Pimco.

Another example is Hispania, in which the US multimillionaires and fund managers George Soros and John Paulson hold stakes. It has also grown rapidly since it debuted on the stock market in 2014 and now manages assets amounting to almost €1,500 million. Its strategy is clear: to grow in size. Although it failed in its purchase of Realia, the company led by Concha Osácar and Fernando Gumuzio has absorbed the hotel Socimi Bay and all of the experts in the sector have tipped it to play an important role in upcoming operations. (…).

Original story: El País (by Ramón Muñoz and Lluís Pellicer)

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

Wanda Confirms Sale Of Edificio España To Baraka For €272M

26 July 2016 – Cinco Días

The Wanda Group has confirmed that it has reached an agreement with the Murcian group Baraka (the investor group owned by Trinitario Casanova) to sell Edificio España for €272 million, but it has made it clear that the deal has not been formalised yet, according to a statement presented to the Hong Kong stock exchange.

The price represents €7 million more than the €265 million that Wanda spent when it acquired the property in 2014.

In its statement, Wanda echoed the information circulating in the press that the Group owned by Wang Jianlin has reached an agreement with Baraka to sell Edificio España and it detailed the terms of the sales agreement reached with the Spanish group.

The company owned by Wang Jianlin stated that on 12 July, Wanda European Real Estate Investment and Baraka Global Invest signed a “memorandum of understanding” relating to the negotiation and possible sale “of all of the issued shares, amounting to €272 million.

Under the framework of this memorandum, continued Wanda, Baraka has paid €1 million as a deposit to the Chinese group, which grants the buyer exclusive rights to proceed with the sale until 15 October 2016. Next, it added that the sale is still “under discussion and consultation and is subject to a final agreement between the parties”.

For this reason, it warned that “investors should pay attention to the possible sale, which may or may not go ahead”.

Abandoned plans

The Chinese group put Edificio España up for sale after giving up on its plans for the property, citing technical difficulties. Wanda had wanted to remodel the building to construct a hotel, shopping centre and luxury homes.

The main obstacle was that the Town Hall required the Wanda Group to maintain the façades of the original building.

Original story: Cinco Días

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

Chinese Investors Await Edificio España Verdict

3 June 2016 – Expansión

The negotiations between the Town Hall of Madrid and the Wanda investment group, the owner of the property, over the future of Edificio España, has had the sector on tenterhooks, and not only the main players involved, but also the Chinese investment community in general, which is waiting for the outcome before deciding whether Spain is an appropriate destination for their capital.

The Chairman of Wanda, Wang Jianlin, said recently in an interview with Chinese state television CCTV that he is waiting for “written” permission from the Town Hall of Madrid to demolish Edificio España, whilst, in parallel, he analyses offers to resell the building. In the interview, Wang Jianlin complained about the change in the conditions surrounding the building’s renovation following the arrival of the new mayoress.

Recently, the Chinese ambassador to Spain, Lyu Fan, acknowledged that some Chinese companies are determining their future plans on the negotiations being held by the Chinese giant in Madrid.

Investments in 2015

Interest from Chinese capital in Spain has grown considerably in recent years. The Director of the Economics Department at Casa Asia, Amadeo Jensana, explained that in 2015, total investment (by Chinese players) amounted to €850 million, compared with an average of around €100 million five years earlier. (…).

The Head of Development and Expansion of the company Christie & Co in Asia, Joanne Jia, said that Spain has always been a very active market, but she acknowledged that what is happening with Wanda will undoubtedly have an effect. According to Jia, investors are waiting to see what will happen with Edificio España before they take their investment decisions. “If it is resolved favourably, it will be promising. If not, it could cause some investors to stop looking for opportunities”…given that a blockage in negotiations would mean less confidence in the legal system, in addition to the cultural barriers. (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Wanda Plans To Sell Edificio España Before August

26 May 2016 – Cinco Días

The Chinese group Dalian Wanda is pushing ahead with the sale of Edificio España, and at the same time it is continuing its negotiations with the Town Hall of Madrid to refurbish the building. The process to complete the transaction is progressing quickly. In fact, the company owned by the magnate Wang Jianlin expects to close the deal before the summer holidays, according to sources close to the talks.

Over the next two weeks, the Chinese group will receive the first non-binding offers from parties interested in buying the building, where Wanda plans to open a hotel and luxury homes, as well as a shopping arcade. These bids will be analysed and a due diligence process will begin. Wanda expects to have closed the sale before August.

For this process, the Chinese investor has engaged the real estate consultancy JLL to act as intermediary, which is pushing ahead with the transaction. Both Wanda and JLL are conducting the transaction with the utmost confidentiality. (…).

The sources consulted understand that Wanda has lost interest in this Madrid mega-project, as it has been unable to carry out its refurbishment plans, which included demolishing the property to reconstruct it from scratch in a similar form to the original. In the face of the rejection from the Town Hall, the Group has decided to forego the complicated refurbishment.

Nevertheless, Wanda is continuing its negotiations with the municipal technicians to find a solution for tackling its future renovation and whereby obtain the necessary construction permits. Market sources insist that it would be positive for the Chinese Group to have these permits, because they will add value to the property for the potential buyers, as would resolve the problems with the Town Hall of Madrid regarding the renovation.

Companies reported to be evaluating the purchase come from Asia, Europe and USA. In some cases, these companies and funds are looking to form alliances with Spanish partners or with firms that have knowledge of the local market, so as to entrust the refurbishment work to them. The figure being talked about in the sector for the sale amounts to just under €300 million.

Wanda paid Santander €265 million in 2014 for the skyscraper, constructed in the 1950s, which is currently unoccupied. It planned to undertake an ambitious renovation, which included reconstructing the building from scratch, but it met with refusal from the Local Heritage Committee, in which the Town Hall (Ahora Madrid) and regional Government (PP) participate, due to the protection afforded to the façades. However, differences of opinion started to emerge last year. The Asian conglomerate decided to put the building up for sale in February. In recent weeks, however, it has resumed talks with the Town Hall.

Nevertheless, there was a new twist in the tale on Monday. The President of the Asian conglomerate broke his silence to confirm that he is still waiting for official confirmation from the Town Hall that his company will be allowed to demolish the property and rebuild it from scratch. “The Town Hall is holding talks with us again saying that we can demolish it. We are waiting for a written document to confirm this, rather than their verbal promise”, said the Chinese magnate to CCTV, the state television channel in his country.

In this way, he contradicted the team led by Manuela Carmena, which has stressed to date that it will not allow the demolition. Sources close to the project say that they do not know why the Chinese officials in Spain agreed to not demolish the building after months rejecting the municipal proposal and they consider that they have gone to the limit to obtain the upper hand in the negotiations.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Hines & Emperador Bid For Edificio España

2 March 2016 – El Confidencial

Two of the largest real estate investors in the world want to buy Edificio España. The US giant Hines and the Philippine group Emperador, which has just acquired Torre Espacio, have already taken up their positions in the sales process launched by the Wanda Group for the skyscraper, according to several sources close to the operation.

The Chinese group has engaged the consultancy firm JLL to find a new owner for the property, which it has decided to sell after failing to reach an agreement with the Town Hall of Madrid regarding the handling of the renovation.

Not even the meeting held yesterday between Manuela Carmena and Laurent Fischler, Wanda’s Global Head of Real Estate, managed to put a stop to JLL’s sales mandate, although the consultancy firm declined to make any comment. This meeting was held at the request of the mayoress, anxious about the earthquake unleashed by the Asian group’s decision to leave Madrid. But the only thing she managed to agree with Wang Jianlin’s envoy was the firm’s willingness to remain in the capital, provided the town hall gives something in return.

Nevertheless, there are only a handful of investors with the capacity to undertake the purchase, which could range between €250 million and €300 million (Wanda paid €265 million two years ago), a quantity to which another €100 million should be added for the subsequent construction work to renovate the property.

And that figure is mounting, because the final cost of the renovation will depend heavily on the agreement that the Town Hall of Madrid approves, and the survival of Norman Foster’s project, who has threatened to take Wanda to court if it breaks the agreement signed to develop the architecture project.

The reality is that Wanda inherited this contract from Banco Santander and in theory, the buyer would also be subrogated to it, according to real estate sources. But that honour has discouraged some of the large international funds from bidding for Edificio España, as they prefer to avoid large firms because they make the construction work more expensive.

Giants in the market

By contrast, the profile of Hines and Emperador fit well, given that their investments typically focus on iconic buildings, located on the main thoroughfares of large capital cities and, in many cases, linked to unique architectural projects. Ingredients which, if the negotiations with the town hall are unblocked, are present in abundance in the case of Edificio España.

The US firm Hines is an expert in this kind of development and is currently involved in a growth plan in Spain, which has led to the signing of two operations – for the Desigual store next to Portal del Ángel in Barcelona and number 44, on Madrid’s Gran Vía – in less than two months, for a combined total of €78 million.

And its future plans are even more ambitious, as shown by the fact that it is actively seeking out large transactions in both Madrid and Barcelona. With $87,000 million (€80,000 million) in assets under management, Hines is the fourth largest real estate investment management company in the world.

Meanwhile, Grupo Emperador is one of many companies that comprise the business empire of the Philippine-born Andrew Tan, one of the richest people in the world according to Forbes. (…).

Despite all of these possessions, Tan was virtually unknown in our country until last November when he acquired Torre Espacio with a bid for €558 million, an amount that he largely financed in cash and with a syndicated loan for €280 million from ING Wholesale Banking.

This operation is just the tip of the iceberg of the group’s plans. Emperador has also set itself the objective of multiplying its investments in Spain, both in the real estate sector, as well as in those markets linked to the world of spirits, where it has worked in conjunction with González-Byass for many years.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake