Inmobiliaria Colonial

News

04 May 2001

Colonial will complete four office projects in the next two years totalling 133,000m2, and is set to derive two thirds of its earnings from property investment

With a market capitalisation of €816m (Pts136bn), Inmobiliaria Colonial is Spain’s largest quoted real estate company. However, managing director Juan Jose Brugera has ruled out any further diversification, stressing that Colonial will continue to concentrate on its speciality: offices in Madrid and Barcelona, with housebuilding as a significant sideline.

Last year, Colonial’s commercial property investments provided 54% of the €105.8m earnings before interest, tax, depreciation and amortisation (EBITDA). Longer term, it aims to boost this to two-thirds.

The focus on offices is the result of an overhaul that started in 1994 when Colonial’s controlling shareholder, La Caixa, put in new management. The Catalan savings bank had acquired a majority stake in 1991, and delisted it in 1993. The new-look Colonial was refloated in October 1999, with La Caixa retaining a controlling stake which currently stands at around 49%. Offices now account for 89% of Colonial’s investment property, but the longer-term plan is to reduce this by having 25% selectively in other sectors.

Colonial’s office portfolio is now reckoned to be one of the best in Spain. Independently valued at €1.1bn, 36% of it is in Madrid and 61% in Barcelona, and the bulk is in the prime business districts. The properties are mainly new, or recently refurbished. Given the recent explosive growth in Spanish office rents, nearly half the portfolio is highly reversionary.

Last year the rental income from the commercial portfolio rose 38% to €6.5bn. Acquisitions and new developments accounted for €16.6m of the income. Last year, Colonial’s investment purchases included Citibank’s 38,545m2 headquarters building in La Moraleja Business Park in Madrid and two offices buildings in the Glòries complex on avenida Diagonal in Barcelona. Existing properties registered a 9% rise in revenue, thanks to index-linked rent rises and an improvement in the occupancy rate to 98.2%.

The company currently has four projects due to deliver a total 133,000m2 over the next two years. In Barcelona, the 10,000m2 Torre Cerdà will be completed this year, and there are 28,000m2 being built speculatively at Colonial’s San Cugat Nord office park. In Madrid, 62 Alfonso XII will provide 13,000m2 and earlier this year, Colonial bought a large site on the M30 ringroad, next to the Parque Norte business park. The plan is to develop a 30,000m2 office complex here, investing around €102m.

In addition, Colonial has recently acquired an option on the former Mahou brewery, near the center of Madrid on Paseo Imperial. Here it will develop a 42,000m2 business park if the local authority approves the change of use. The site also includes 58,000m2 for residential use. It has also paid €81m for Union Electrica Fenosa’s 17,850m2 HQ in Madrid. It will refurbish the building.

Colonial’s housing-building division increased EBITDA by 57% to €49.3m on sales of 1,200 units last year. It plans to keep activity at this level, selling between 1,200 and 1,500 units a year. There is a landbank of 5,500 units. Current developments and sites are mainly Madrid, Barcelona, other Catalan cities and Valencia.

The company is conservatively financed, with the 2000 year-end gearing set at 18%. The gearing target, however, stands at 45%.

Financial highlights
Colonial’s investment portfolio increased by 30%
Year ended 31 Dec (€m)	2000	1999
Investment portfolio	1,300	1,000
Net assets	907.2	592.2
Rental income	66.5	48.0
Housebuilding EBITDA	49.3	31.4
EBITDA	105.8	73.5
Pretax profits	73.9	58.6
Source: Inmobiliaria Colonial

Inmobiliaria Colonial
Avenida Diagonal 532
08006 Barcelona
Tel 34 93 404 79 00
Fax 34 93 404 78 26
www.inmocolonial.com

Colonial will complete four office projects in the next two years totalling 133,000m2, and is set to derive two thirds of its earnings from property investment With a market capitalisation of €816m (Pts136bn), Inmobiliaria Colonial is Spain’s largest quoted real estate company. However, managing director Juan Jose Brugera has ruled out any further diversification, stressing that Colonial will continue to concentrate on its speciality: offices in Madrid and Barcelona, with housebuilding as a significant sideline. Last year, Colonial’s commercial property investments provided 54% of the €105.8m earnings before interest, tax, depreciation and amortisation (EBITDA). Longer term, it aims to boost this to two-thirds. The focus on offices is the result of an overhaul that started in 1994 when Colonial’s controlling shareholder, La Caixa, put in new management. The Catalan savings bank had acquired a majority stake in 1991, and delisted it in 1993. The new-look Colonial was refloated in October 1999, with La Caixa retaining a controlling stake which currently stands at around 49%. Offices now account for 89% of Colonial’s investment property, but the longer-term plan is to reduce this by having 25% selectively in other sectors. Colonial’s office portfolio is now reckoned to be one of the best in Spain. Independently valued at €1.1bn, 36% of it is in Madrid and 61% in Barcelona, and the bulk is in the prime business districts. The properties are mainly new, or recently refurbished. Given the recent explosive growth in Spanish office rents, nearly half the portfolio is highly reversionary. Last year the rental income from the commercial portfolio rose 38% to €6.5bn. Acquisitions and new developments accounted for €16.6m of the income. Last year, Colonial’s investment purchases included Citibank’s 38,545m2 headquarters building in La Moraleja Business Park in Madrid and two offices buildings in the Glòries complex on avenida Diagonal in Barcelona. Existing properties registered a 9% rise in revenue, thanks to index-linked rent rises and an improvement in the occupancy rate to 98.2%. The company currently has four projects due to deliver a total 133,000m2 over the next two years. In Barcelona, the 10,000m2 Torre Cerdà will be completed this year, and there are 28,000m2 being built speculatively at Colonial’s San Cugat Nord office park. In Madrid, 62 Alfonso XII will provide 13,000m2 and earlier this year, Colonial bought a large site on the M30 ringroad, next to the Parque Norte business park. The plan is to develop a 30,000m2 office complex here, investing around €102m. In addition, Colonial has recently acquired an option on the former Mahou brewery, near the center of Madrid on Paseo Imperial. Here it will develop a 42,000m2 business park if the local authority approves the change of use. The site also includes 58,000m2 for residential use. It has also paid €81m for Union Electrica Fenosa’s 17,850m2 HQ in Madrid. It will refurbish the building. Colonial’s housing-building division increased EBITDA by 57% to €49.3m on sales of 1,200 units last year. It plans to keep activity at this level, selling between 1,200 and 1,500 units a year. There is a landbank of 5,500 units. Current developments and sites are mainly Madrid, Barcelona, other Catalan cities and Valencia. The company is conservatively financed, with the 2000 year-end gearing set at 18%. The gearing target, however, stands at 45%. Financial highlights Colonial’s investment portfolio increased by 30% Year ended 31 Dec (€m) 2000 1999 Investment portfolio 1,300 1,000 Net assets 907.2 592.2 Rental income 66.5 48.0 Housebuilding EBITDA 49.3 31.4 EBITDA 105.8 73.5 Pretax profits 73.9 58.6 Source: Inmobiliaria Colonial Inmobiliaria Colonial Avenida Diagonal 532 08006 Barcelona Tel 34 93 404 79 00 Fax 34 93 404 78 26 www.inmocolonial.com