New takeover bid in the real estate sector on the continuous market. Following the one announced in May by Safra for Árima, this Friday the real estate fund Hines and Grupo Lar have announced the presentation of a takeover bid (OPA) for the entire capital of Lar España, at a rate of 8.10 euros per share, as reported to the National Securities Market Commission (CNMV). The price offered, which will be paid entirely in cash, represents a maximum outlay of 609 million euros, since Grupo Lar already controls 10%. In total, the operation values Lar España at 677 million euros and if the debt is taken into account, the transaction values the company at 1,142 million.
The price of Lar España shares closed the trading session with a rise of 17.74%, up to 8.23 euros, slightly above the prices offered by Hines and Grupo Lar.
Lar España was one of the first socimis (listed real estate investment companies) to be created under this tax regime and debuted on the stock market 10 years ago. It was promoted by Grupo Lar and has been managed externally by this company of the Pereda family. The firm specialises in the ownership of retail assets. Specifically, it has nine shopping centres, including Lagoh in Seville and Gran Vía in Vigo, and three retail parks, such as Megapark in Barakaldo (Vizcaya), with a valuation of these properties of almost 1.4 billion.
To carry out the operation, both partners have created the company Helios. In this company, 62.5% belongs to the vehicle Hines European Real Estate Partners III, with capital raised by Hines among institutional investors and family officesThe remaining 37.5% of the bidder’s share capital is directly owned by Grupo Lar.
Hines and Grupo Lar also open the door to the real estate company being delisted from the stock market: “Lar España will continue to be listed on the Spanish continuous market, unless the thresholds that allow the exercise of the right to delist are reached.” squeeze-out [exclusión]”, a spokesperson said. This threshold is 90% according to the regulations.
Given that one of the bidders is already a shareholder of Lar España, the offer is directed at all of the shares of Lar España except for the shares held by both Grupo Lar and its director Miguel Pereda, who have irrevocably agreed not to accept the offer.
After the transaction was announced, Lar España sent a statement to the CNMV in which it indicated that “there is no agreement of any kind with Hines or Grupo Lar in relation to the offer.” It added that the board of directors “will meet shortly to examine the prior announcement published by the offeror.” It also reported that it had appointed JP Morgan and Lazard as independent financial advisors and Uría Menéndez as lawyers to analyse the takeover bid.
Currently, Lar España’s largest shareholder is the South African fund Vukile, which holds 25.523% of the capital, according to CNMV records. Grupo Lar controls 10%, the Adamsville company has 5.204% and Brandes another 5%. Blackrock and the Utah pension fund have around 3%. Therefore, the offer is effectively aimed at a total of 75,196,924 shares, representing 89.85% of its share capital.
Since Vukile joined the company in 2022, there has been speculation that this South African fund could launch a takeover bid for Lar España, since it controls the socimi Castellana Properties, a rival of the real estate company in the field of shopping centres. For now, with this takeover bid, Hines and Grupo Lar are closing that door.
According to potential buyers, the takeover bid price implies a 16% premium over the closing price of the share the day before the announcement, a 17% premium over the weighted average price of the last month and a 25% premium over the weighted average price adjusted for dividends of the last six months.
The takeover bid, however, involves a 20% discount on the actual valuation of the assets or net value (discounting the debt, known as NAV in the sector). Almost all REITs are currently trading below the net value of their properties.
Thanks to the announcement of the takeover bid and the recovery of the real estate segment of shopping centres in recent months, the value of Lar España shares is at its highest level, at values equivalent to its stock market debut 10 years ago. But Hines and Grupo Lar are convinced “that Lar España shares are now perceived as less attractive to investors” than when they debuted on the stock market, they explain in a joint statement. And they attribute this to several reasons: “Small/medium-sized company by capitalisation size within a broader listed real estate context, and this despite being the largest operator of parks and shopping centres in Spain.” They also believe that the value has limited liquidity, “with a volume of capital traded on the market in the last two years equivalent to only 24% of the total shares in circulation.”
One of the objectives of the two future shareholders, if the offer is successful, is to increase the company’s debt to a leverage of 60% with respect to the value of the assets. This desired level of debt is currently highly penalized by stock market investors, but as there are only two shareholders, they could allow themselves this capital structure to distribute more dividends or make more purchases. As of March 31, the leverage with respect to the value of the assets (LTV) is only 29.5%.
The offer is conditional on acceptance by at least 50% of the shares to which it is addressed. The operation must receive the approval of the market supervisory authorities (CNMV) and the competition authorities (CNMC).
In the first half of 2023, the REIT reported a net profit of €35.1 million, a decrease of almost 36%.
Other movements
Another socimi on the continuous market, Árima Real Estate, is about to change hands and be controlled by a single investor. J. Safra Sarasin, the Swiss capital manager and investment bank of the Brazilian Safra family, announced a takeover bid for Árima in May, which is expected to be finalised in the coming days. The offer, made through the socimi JSS Real Estate, for 100% would entail a disbursement of 223.7 million euros, leaving out 8% of treasury stock that Árima would have to absorb. Árima is a socimi created in 2018 by Luis Alfonso de Herrera Oria after his previous socimi called Axiare was taken over, in that case, by Inmobiliaria Colonial in 2017.
Also in the field of socimis, Colonial completed at the beginning of the month the capital increase fully subscribed by CriteriaCaixa, which has become the main shareholder with 17.3% of the shares.
Follow all the information of Five days in Facebook, X and Linkedinor in our newsletter Five Day Agenda
Newsletters
Sign up to receive exclusive economic information and the most relevant financial news for you
#Hines #real #estate #fund #Grupo #Lar #launch #takeover #bid #socimi #Lar #España #million