The Latest Spanish Property News from Kyero.com
December 29th, 2006
Grupo Ferrovial SA, Spain’s second- largest builder, agreed to sell its real-estate division to Promociones Habitat SA for 1.6 billion euros after its August takeover of airport operator BAA Plc inflated debt.
The sale of Ferrovial Inmobiliaria SA will result in a gain of 770 million euros, Madrid-based Ferrovial said. It later plans to buy 20 percent of Habitat for 125 million euros.
Ferrovial racked up about 32 billion euros in debt following its $19 billion purchase of London Heathrow airport operator BAA in August. It’s selling the property unit as Spanish house-price growth that’s been running at an average 15 percent a year since 1999 begins to cool with higher borrowing costs.
“With this transaction, Ferrovial significantly renews its investment capacity and changes its net debt position,” the Spanish construction company said in a statement late yesterday.
Shares of Ferrovial climbed as much as 1.70 euros, or 2.3 percent, to 74.90 euros, and traded at 74.10 euros as of 9:40 a.m. in Madrid. The stock has climbed 27 percent this year, giving the company a market value of 10.4 billion euros.
Spanish builders have invested in other industries to help prepare for a possible slowdown in domestic housing and construction spending. Ferrovial has expanded in airport-baggage handling and U.S. toll roads, as well as buying BAA. Competitors Actividades de Construccion & Servicios SA and Acciona SA are betting on energy.
Under the terms of the deal, Ferrovial Inmobiliaria will first pay a dividend of 160 million euros to its parent and Habitat will then pay 1.44 billion euros to acquire the business. The financing of the acquisition is led by Barcelona-based savings bank La Caixa.
The transaction doesn’t include Ferrovial’s property holdings in Poland, where the Spanish company said it will continue to expand. Ferrovial said in November it had received more than three approaches for its property division.
Habitat, founded in Barcelona in 1953, sells about 3,000 homes a year and combined with its latest purchase has annual sales of about 993 million euros. Outside Spain, Habitat is expanding in Portugal, China and Latin America, including Chile and Mexico.
Spanish house-price growth slowed to 9.7 percent in the 12 months through September, the first time in 5 1/2 years that the pace of gains has dropped below 10 percent, the country’s housing ministry said on Oct. 19.
The European Central Bank has increased borrowing costs six times since December 2005, lifting the benchmark interest rate to 3.5 percent from a six-decade low of 2 percent.
