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Spain’s Colonial seeks to sell assets

(MADRID) The Spanish stock market regulator suspended trade in beleaguered Spanish property firm Inmobiliaria Colonial yesterday, as papers reported it was seeking more asset sales to relieve its heavy debt load.

The suspension comes on the heels of a turbulent week for Spain’s second- largest real estate company after chairman Luis Portillo quit last Friday and its stock lost around 40 per cent of its value in two days’ trade.

Colonial has one of the highest debt ratios in the Spanish real estate sector, with a financial leverage of net debt against gross asset value at 77 per cent, compared with 45-50 per cent average in the European real estate sector, according to Banesto bank.

A squeeze on global market liquidity, a cooling property market in Spain and rising interest rates have conspired to make that debt much harder to service.

Net debt stood at 8.9 billion euros (S$18.8 billion) at the end of the third quarter, nearly triple its market capitalisation at end of trade on Friday of 3.1 billion euros.

Colonial hopes to sell around 24 per cent of French property firm Societe Fonciere Lyonnaise (SFL), 84.4 per cent owned by Colonial, Cinco Dias newspaper reported on Wednesday, citing sources close to the board of the company.

The property firm is also open to offers above market value for its 15 per cent stake in Spanish construction firm FCC, the paper said.

FCC shares were trading 0.88 per cent higher at 51.85 euros by 0900 GMT, a discount to the 78 euros per share paid for the stake just over a year ago.

A Colonial spokeswoman said she was not able to comment on the report.

The firm sold warehouse and logistics facilities for 201.6 million euros on Monday and a Barcelona tower block for 107 million euros on Tuesday as it seeks to lighten its debt burden.

Cinco Dias also said Colonial would seek further talks with Gecina, the French unit of Spanish real estate firm Metrovacesa, about a possible merger of the two companies.

Press reports say Colonial shareholders have put a deal on hold as they try to halt the slide in the share price.

Colonial closed trade at 1.88 euros, around a third of its year high of 6.08 euros.

 

Source: Reuters (Business Times 3 Jan 08)

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