Colonial replaces Portillo, sells asets amid stock market plunge

Luis Portillo has resigned as chairman of Spanish property giant Inmobilaria Colonial after the firm's shares went into freefall just days before market trading for 2007 closed. Colonial shares lost almost 40% in value in the two days to 28 December, prompting the company to issue a statement that Portillo had quit. Mariano Miguel Velasco, CEO of Colonial, will take over as chairman until a successor for Portillo is found, the company said.

Portillo, who is also the biggest shareholder in Colonial, is the latest casualty in the malaise which has hit the once high-riding Spanish property sector. Buoyed by booming consumption and construction levels over the past decade, economists now fear high private debt levels may be choking the property market, leading to stock market jitters and falling share prices. In July, shares in Astroc slumped 85%, costing the head of its founder Enrique Banuelos. A few months later, Valencia-based developer Llanera filed for credit protection.

In its statement, Colonial sought to calm investors, saying the fall in its share price was unjustified and that its property assets were worth EUR 12.1 bn. It said its debt amounted to 67% of total assets at the end of the third quarter, adding that this proportion would fall by the next reporting period. Colonial's debt has risen through large acquisitions of rival property companies Riofisa and Inmocaral as well as a 15% interest in builder FCC.

But as 2008 dawned Colonial was forced to shed assets to bolster its precarious financial position. La Caixa bank announced on 1 January that it was buying a tower block in Barcelona from Colonial for EUR 107 mln. This deal followed the announcement a day earlier that Spanish transport and communications infrastructure management group Abertis Logística had agreed to pay just over EUR 200 mln for several warehouse and logistics properties owned by Colonial in Madrid and Barcelona. The properties have a total surface area of 400,000 m².