Spain's Hispania launches €151m offer for peer Realia

Recently launched Spanish REIT Hispania has launched a €151 mln takeover offer for indebted Spanish developer Realia after reaching an agreement with the company's creditors.

Hispania is offering €150.6 mln, or €0.49 per share, for Madrid-based Realia, representing a 28%discount to the trading price of Realia shares before the announcement and a discount of roughly 50% to the average price of €1.1 a share held in November. Realia's shares reached a peak in May this year, hitting €1.5 a share.

As part of the deal, Realia will raise about €800 mln of new capital to repay part of a syndicated loan signed in 2009 and maturing in 2016, which is now held by creditors including Goldman Sachs Group, Fortress (through the Aneto unit) and King Street (Puffin Real Estate).

The bid is conditional upon acceptance by at least 55% of Realia's shareholders and includes debts of over €1.08 bn, Hispania said in statement to the market regulator, CNMV.

Under the terms of the offer, existing Realia shareholders would be invited to participate in the capital increase, and any shortfall in the offer would be covered by creditors to convert their remaining loans into Realia stock, according to the statement.

Hispania has also reached an agreement with creditors to buy 50% of the loan for €313 mln pending a successful takeover bid. In total, it will invest between €393 and €470 mln to take a 50 to 58% stake in Realia, which will remain listed.

Hispania went public on the Spanish stock exchange in March 2014, raising €550 mln (of which nearly €400 mln have already been invested). It is externally managed by Azora and counts international investors such as John Paulson and Moore Capital as well as Dutch pension fund APG among its shareholders.

Realia owns a 420,000 m2 commercial portfolio, consisting largely of office buildings including Torres Kio in Madrid and Torre Realia BCN in Barcelona. The Bankia Group owns 25% of Realia and Barcelona-based construction company Fomento de Construcciones & Contratas holds about 37%.

The two shareholders announced in late 2013 that they had hired Goldman Sachs to sell their stake in Realia. Earlier this year, Spanish listed property firm Colonial confirmed plans to mount a €650 mln bid for Realia.

Colonial, which is controlled by businessman Juan Miguel Villar Mir and the Qatar Investment Authority sovereign wealth fund, said the offer was conditional on the sale by Realia of non-strategic assets as well as the refinancing of its debt.