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Goldman Enters The Bidding For Testa’s 1,500 Homes

5 November 2015 – Expansión

Testa’s residential portfolio is attracting interest from the large international funds. In October, the Socimi Merlin Properties commissioned Deloitte and CBRE to handle the sale of Testa’s residential portfolio, after acquiring the real estate company from Sacyr in June for €1,793 million.

Merlin, whose takeover of 100% of Testa was approved on 28 October, has taken the decision to divest the residential and hotel portfolios of the new company, which it has converted into a Socimi. The first process involves the sale of 1,519 homes spread across eleven buildings in Madrid, Toledo and Guipúzcoa. CBRE and Deloitte have invited interested parties to submit their bids within the next few days. The porfolio, which includes both unsubsidised and social housing properties, as well as around 30 commercial premises, has already attracted interest from international funds such as the German fund Patrizia and the US fund Blackstone, as well as from the real estate company Hispania. According to sources in the sector, Goldman Sachs has also now joined the list of candidates.

Goldman Sachs owns a sizeable residential portfolio at the global level. And it has already made a couple of purchases in Spain. The largest was in 2013, when it acquired 3,000 homes managed by the Community of Madrid’s Housing Institute (Ivima) for €201 million. At the beginning of this year, Goldman also acquired a batch of 18 buildings from the property developer La Llave de Oro, in Barcelona. It paid €90 million for this portfolio, which included 13 unsubsidised housing buildings, three more social housing buildings and two retirement homes.

The sales process, in which Merlin also offers buyers the option of purchasing 640 parking spaces, will allow the Socimi to generate income of around €300 million, money that it will use to reduce Testa’s debt ahead of its integration with Merlin.

Refinancing

In parallel, the real estate company is working to restructure the debt it has associated with Testa, which amounts to around €1,600 million. The objective is to “adapt the current repayment structure to match the cash generated by the company”, says Merlin in the takeover brochure presented to the CNMV.

Merlin plans to take ownership of 100% of Testa – it currently holds a 77% stake – before July 2016. Once the two companies have merged, the new Socimi will hold assets worth €5,800 million and will generate revenues of more than €300 million per year.

Merlin’s share price dropped by 2.9% in trading yesterday to €11.38.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake