Metrovacesa to invest EUR 4 bn by 2010

Spanish property giant Metrovacesa plans to invest up to EUR 4 bn in commercial property across Europe by 2010 in a move aimed at reducing its exposure to the shrinking residential market in the country. The company, which on Monday announced the launch of a new strategic plan for the years 2008 to 2010, said that it will look for investments mostly in France, Germany and the UK, with a minor exposure to Belgium and the Netherlands.

With the new Phoenix plan, the Madrid-based group aims to consolidate its position 'as one of the top three European property companies in terms of return and efficiency'. Metrovacesa said it plans to boost its presence in Europe, with the share of European assets set to increase from 31% at present to 45% by 2010.

In future, property activities will increase from 75% at present to about 90% of Metrovacesa's Gross Asset Value, while the construction business will be cut to just 10%. The move is aimed at increasing Metrovacesa's rental revenues and will allow the company, which recently split from its French unit Gecina, to increase the dividend paid to shareholders. The company's turnover dropped by 30% in 2007 as a result of the split from Gecina.

Metrovacesa is 80%-owned by the Sanahuja family, which agreed a year ago on a separation plan with former chairman Joaquin Rivero. Financial institutions Citigroup, ING and Credit Suisse own about 15% of the company. Under Spanish law, the Sanahujas will be forced to launch a takeover bid for the company, but the company's directors pointed out that the Sanahujas intend to reduce their stake to just more than 50% after the launch of the takeover bid.

The company will also issue convertible bonds of EUR 700 mln as part of its strategy to reduce its Loan-to-Value ratio to below 50%.