Valencia-based Astroc’s wide remit — which includes land trading, development, financial advice and property promotion — as well as access to cash and debt, has helped it to attain strong share price growth
When Spanish newspaper El Mundo published its rich list last month, Astroc’s meteoric rise was confirmed. Among the top 10 entrants — six of whom are in the real estate business — was Astroc’s president Enrique Bañuelos. He made his debut at number seven with a fortune of €3.2bn.
Since listing on the Madrid stock exchange general index (IGBM) in May last year, the company’s share price has increased fivefold. The share was trading at around €40 as EuroProperty went to press, giving the company a market capitalisation of €4.9bn.
And third-quarter profits last year came in at €87m, a 327% increase from the same quarter in 2005. Turnover had increased 84% to €193.9m.
Last year will be remembered in Spain for its many takeovers, among them Inmocaral’s purchase of Colonial, Martinsa buying Fadesa, Reyal acquiring Urbis and San Jose taking over Parquesol.
Astroc didn’t miss out. In October last year, it bought Landscape, Banco de Sabadell’s real estate arm, for €900m, with an additional €89.7m in interest. But it did not stop there. The next day it bought a 60% stake in Rayet Promoción, the real estate arm of Grupo Rayet, for €450m.
“Astroc is fulfilling the objectives of the company’s strategic plan, based on three pillars,” said the company’s chief executive, Jon Palomero. “Firstly, listing. Secondly, growth. And thirdly, geographic expansion through the acquisition of companies such as Landscape and Rayet, Astroc is now present in Madrid, Cataluña, Valencia and the Zona Norte.”
It wasn’t the first time Astroc had dealt in acquisitions; at the end of 2005 it bought two other local real estate companies, Rentalia Valencia and Nova Oropesa del Mar, which proved to be very profitable.
Based in Valencia, Astroc was founded in 1995 and is involved in all aspects of the real estate business, from land acquisition to property sales. During its nearly 12 years of existence it has acquired 17.4m m² of land and built 50,000 houses. In the past three years Astroc has sold 602,530m m² worth of stock with a value of €443m.
The management and trading of land accounts for 55% of Astroc’s recent business, while third quarter profits show construction and development generating €85.4m. The company also offers financial advisory services, including wealth management. Its property promotion division last year accounted for 15% of the value of Astroc’s real estate assets and 13% of its gross margin.
“Astroc’s business model is based on specialisation, high rotation of assets and a low degree of leverage,” says Palomero. “In this sense, Astroc has a strong rhythm of growth and dynamism, which allows it to rotate assets every 18 months.”
Enrique Bañuelos, who owned around 70% of the company when it listed, has recently begun offloading some of Astroc’s shares. He sold 600,000 shares for €19.8m on 29 November last year and a further 605,000 shares for €20m on 1 December, a total of 1% of the company’s capital. Bañuelos now controls around 61% of the company. Other shareholders include fellow property company Nozar, with 10% of shares, and Carmen Godia, vice-president of Abertis, who controls 5%. Grupo Rayet, subject of the recent takeover, holds the option to buy 5% as well, while bank Caixa Galicia is also a shareholder. Armancio Ortega, owner of retail company Zara and comfortably top of El Mundo’s rich list, bought a 5% stake in Astroc just before Christmas.
The next step for Astroc is to digest the companies it has taken over and maintain its growth in 2007. It has sold off around 40% of the property portfolio it acquired from the Landscape deal to GE Real Estate in a deal worth €650m. It is also selling two hotels in Barcelona to Rayet for €97m.
One Spanish property expert explains that Astroc’s success has been down to three things — cash to spend, access to a lot of debt, and guts.
www.astroc.com
