El Corte Inglés advances its real estate plan, selling 660 million worth of assets in four years | Companies

El Corte Inglés is polishing its real estate assets. According to a presentation published to investors as part of the new bond issue, the company, with a total value of $15.5 billion, has managed to raise 660 million euros from asset sales over the past four years. This divestment plan allowed the company to reduce liabilities – to 2.059 million, or 1.9 times its gross operating income (EBITDA) – and…

El Corte Inglés is polishing its real estate assets. According to a presentation published to investors as part of the new bond issue, the company, with a total value of $15.5 billion, has managed to raise 660 million euros from asset sales over the past four years. This asset sale plan allowed the company to reduce liabilities – to 2.059 million, or 1.9 times its gross operating income (EBITDA) – and finally reach investment grade according to rating agencies.

The company cut the valuation of its real estate portfolio by about 500 million, to 15.5 billion. Of this portfolio, 93% is owned by the company, 87% is in shopping centers, 5% in offices and another 4% in logistics, with another 4% earmarked for other purposes. The company values ​​the non-profit property at approximately $1 billion.

The high cost of bricks is one of the arguments with which El Corte Inglés is trying to attract investors to a new bond issue. The presentation highlights that 75% of the portfolio’s value is concentrated in 25 assets, all located in city centers and locations. bonus in Spain and Portugal. The company emphasizes the high liquidity of these properties, and evidence of this is that it increases the number of assets sold over the past four years to 660 million, at a price of 10% above book value. “High liquidity of non-performing assets located in the best Iberia locations, which can be quickly monetized if necessary,” the presentation says.

In 2023 alone, the company sold 313 million properties, generating capital gains of 132.5 million. Although the company completed the process without selling the two largest buildings in dispute – the Torre Titania and the Puerta del Sol store, both in Madrid – it did make some relevant sales. Among them are the Portal de l’Angel store in Barcelona, ​​the former headquarters of the Royal Spanish Football Federation, the Serantes building in Asca or the former El Corte Inglés stores in Seville and Cordoba.

These sales played a key role in the company’s deleveraging process, reducing its liabilities to 2,000 million by the end of fiscal 2023. At the same time, it also launched the process of updating 25 of its businesses, including its centers. Bilbao, La Coruña, Malaga or Pozuelo (Madrid), various supermarkets and new Gourmet Club premises in various establishments. Currently, the reconstruction of the Preciados (Madrid) or Jerez (Cádiz) centers is underway. This, together with the acquisition of the Puerta del Sol 10 building, increased the investment for the year to 428 million and allowed all shopping centers to finish the 2023 financial year with positive EBITDA.

These efforts see the company re-enter the listed debt markets after canceling its 2022 issuances with a $2.6 billion refinancing. The company started Roadshow with investors to place 500 million bonds on the market with a maturity of seven years. The process of finding investors began this Friday with a breakfast organized in Madrid for funds of this type of debt, with the participation of the retail CEO José Maria Folache and Santiago Bau, the other CEO and CFO. . The company’s management will also travel to London next week. Bank of America, BNP Paribas, Credit Agricole, Deutsche Bank, JP Morgan and Société Générale are piloting the operation. The bonds will be listed on the Irish Stock Exchange.

The company says it will use funds raised from the market for general corporate affairs, which will increase cash flow to more than 500 million. This is also the company’s first issue after reaching investment grade from rating agencies. ratings, rated BBB-. With the offering, the company seeks to take advantage of this improved stock price by lowering the cost of liabilities, as well as reduce its exposure to bank debt and diversify its investor base.

Apart from the possibility of achieving some reduction in the cost of debt, this is the key to breaking free from the latest banking yokes. According to the annual report, the banks agreed to liquidate financial liabilities (covenantsjargon) to which they subject the group when it finally reaches that level of investment.

In addition to this new bond, the company has a syndicated loan of 1,500 million with a tranche of 919 and another tranche of 600, in addition to the RCF line of 44 million. He also has 186 million from the ICO loan he signed during the pandemic, 250 million from the European Investment Bank and 146 million in notes to MARF.

The company will be able to demonstrate its good results to investors. The company this week reported profits of $480 million, its best year since 2009, driven by gains in retail, travel and insurance. However, the figure was 50% lower than the previous year’s 870 million, figures impacted by the sale of its insured business to Mutua. For the year, the company generated revenue of 16.333 million euros, an increase of 5.4%. Most of this volume corresponds retailwith 12,845 million euros, representing an increase of 3.8% compared to the previous year.

Follow all the information Five days V Facebook, X And LinkedInor in our newsletter Five days program