The presentation of the 2022 annual results was planned for February 2023, when the Spanish construction and infrastructure group OHLA entered the market. Its intention involved exiting its 50 percent stake in Centro Canalejas, near Puerta del Sol, a historically significant Madrid building.
This property has belonged to OHLA since 2012, when the original purchase was made. Juan Miguel Villar Mir acquired it from Banco Santander. The company carried out a major and intricate renovation to convert the site into a five star hotel, luxury residences, and a premier shopping center. In 2017, it was determined that the publicly traded company was primarily controlled by the Mexican Amodio brothers. OHLA then sold 50 percent of the asset to the Mohari Investment group led by Mark Scheinberg, a prominent investor known for founding PokerStars.
The news that OHLA planned to divest its stake caused a stir in the market. Last week and five days prior, reports indicated that the company authorized a sales process through Banco Santander to approach potential buyers. OHLA valued its stake at between 400 and 500 million, potentially raising the asset price to 800 or 1,000 million.
Despite Mohari holding a right of first refusal, more recent information suggests that it will not execute this option. Relations between the partners are strained, and both sides have begun arbitration at the Paris Chamber over disagreements on the governance of the asset.
An inflated price
The market was surprised by the price assumptions around OHLAs participation in the asset. A real estate executive commented that buyers can propose whatever they want, but actual payment depends on investor interest. When OHLA sold 50 percent to Mohari in 2017 for 225 million, the implied value of the stake was 400 to 500 million. Experts interviewed by this publication say the current valuation does not align with the asset’s performance or appraisal data.
Audits conducted by Deloitte, according to 90 percent of the 2022 accounts accessed via Insight View, the economic segment of Prensa Ibérica, place strong value on the hotel operations and the owned facilities, at around 543 million euros, well below the sellers expectations. OHLA’s own assessment of its stake sits around 180 million, lower than the investee company’s reported value. An expected correction from higher interest rates through 2023 could put further downward pressure on real estate valuations.
Canalejas’ unique status is a key factor in its valuation, but the shopping gallery portion struggles with tenant occupancy even as the Four Seasons hotel performs well. If a buyer is found at the asking price, most experts agree the deal would lack solid financial justification.
Sales lead and creditors
Banco Santander was chosen to search for potential buyers for 50 percent of Canalejas. Usually owners rely on real estate consultancies and brokers, but OHLA handed Santander this responsibility because of the bank’s long standing relationship with the company.
According to the 2022 accounts for Centro Canalejas Madrid, SLU holds about 192.5 million euros of debt to credit institutions, including facilities arranged with Banco Santander, Banco Popular, and CaixaBank in December 2014. The total credit facility reached 268.46 million euros. Although the loan term was nine and a half years, it has been renewed multiple times and extended beyond its original maturity.
Centro Canalejas does not disclose what percentage of debt is attributable to Santander, but Santander has clearly been the largest lender alongside Banco Popular and CaixaBank. This places Santander as the leading creditor for Canalejas, OHLA, and Mohari. In this sale process the goal is to maximize the sale price to recover the principal and the interest.
Bonds as selling pressure
Another driver behind OHLA’s decision to sell Canalejas is debt refinancing. The company faces two bond maturities in 2025 and 2026. The bonds, issued for construction and infrastructure, carried high coupons and had been refinanced in 2021 with additional capitalization. The outstanding debt exceeds 400 million euros with a high single digit coupon rate as reported that year.
The heavy interest burden pushes OHLA to reduce liabilities quickly through asset disposals. The Canalejas sale remains central, and there is talk of selling the service subsidiary Ingesan. Various outlets have reported that OHLA plans toSELL Ingesan to Serveo for between 60 and 90 million euros. Serveo is controlled by Portobello Capital, which previously invested in Ferrovial Services and later expanded it. Serveo notably acquired Sacyr’s subsidiary in the same year for around 87 million. When contacted for comment, Banco Santander and OHLA declined to provide statements about the process.
In this context the sales process remains active as banks and investors weigh a potential purchase, while the parties negotiate how the asset could be positioned within OHLA and its group structure. The dialogue continues as the market watches closely for developments.