Capitalised at €264.4m (Pts44bn), Vallehermoso is Spain’s largest quoted property company, and the third-largest in the eurozone, behind the Dutch Rodamco and Italian UNIM. It began as a housebuilder in the early 1950s
Banco Central Hispano holds a 26% stake in Vallehermoso, while 40% is spread among foreign institutional investors. BCH’s recent merger with another Spanish bank, Banesto, has led to speculation that Urbis, a property company in which Banesto holds a 50.7% stake, might be merged into Vallehermoso. However, Banesto’s president Alfredo Saenz has said he is against this.
Vallehermoso has an investment portfolio of 735,000m2, built up mainly through development. A valuation by CB Richard Ellis at theend of December 1998 put a price tag of €1bn (Ptas166.5bn) on the investment properties. The surplus over the previous 1996 book value was €378.6m (Ptas63bn), implying a 26% rise in capital values. There is also €864m (Ptas143.7bn) in land, sites and developments.
Last year, the company registered strong growth in profits, reflecting the buoyancy of the Spanish market. Higher occupancy levels, up from 90.3% to 95% and lower interest rates helped pretax profits grow by 21%. There was also a contribution from the Phillips building, an office investment outside Madrid acquired for €36m (Ptas6bn) in late 1997 at a yield well in excess over its debt financing.
For the first time, recurring income from rents and services cover Vallehermoso’s administrative costs. There were also good surpluses achieved on sales of trading stock.
Vallehermoso has diversified the investment portfolio beyond its original focus on Madrid, divesting itself of older properties and investing outside the capital. In recent years it has focused on business parks, mainly on the outskirts of Madrid, and shopping centres. The latter include schemes in Majorca, Malaga and Zaragosa. At 30% each, by value, offices and housing are the two largest components of the investment portfolio. Shopping centres account for 14%, with other retail properties 12%. The remainder is car parks, except for 1% in industrial.
In the past, Vallehermoso’s rental income has been held back by the older, restrictive leases that existed in Spain. But with this regime being liberalised in 1995, that part of the portfolio let on modern leases is now up to 83%.
Projects due to start this year include a new 80,000m2 office complex in the north of Madrid, and an expansion of its business park in Atica, Madrid.
Vallehermoso is still a significant residential developer, producing middle-market homes. It maintains a sizeable landbank – capable of absorbing 2.1m m2 at the lastest count. In recent years, it has concentrated its purchases on large city-centre sites, buying Bayer’s former complex next to the TGV station in Barcelona and the GEC-Althom site south of Madrid. Income from house sales was 21% up in 1998, to €262.6m (Ptas43.7bn).
In the past five years, Vallehermoso has been diversifiying into property-related services. These include building maintenance, installing telecommunications, and shopping centre management. It also runs Spain’s largest real estate investment trust.
|
Year to 31 Dec |
1998 |
1997 |
||
|
€m |
Ptas bn |
€m |
Ptas bn |
|
|
Turnover |
344 |
57.3 |
263 |
43.8 |
|
Pre-tax profit |
60 |
10.0 |
52.9 |
8.8 |
|
Net assets |
1447 |
240.7 |
n/a |
n/a |
Vallehermoso
Paseo de Castellana 83-85
28046 Madrid
tel +34 91 556 10 65
fax +34 91 556 76 73
admin@vallehermoso.es
