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Listed RE Companies Worth More Than €9,000M

12 June 2015 – Expansión

The real estate sector is in fashion on the stock market. Merlin’s recent agreement to purchase Testa is in itself testament to that. After years of decline, the expected growth of this sector has encouraged many investors, including large property magnates such as George Soros and Carlos Slim, to look for opportunities in RE shares, which were hit very hard during the crisis.

The fourteen real estate companies that are currently listed on the Spanish stock market – excluding those that have been suspended from trading – have all recorded gains in 2015, with increases exceeding 30% in the cases of Quabit, Inmobiliaria Sur, Realia and Montebalito. The positive sentiment in the sector has enabled the joint market capitalisation of the twelve listed Spanish real estate companies to reach €9,009 million, up 31% from the €6,821 million recorded at the beginning of the year. That is the highest figure recorded since 2009, but it falls far short of the €30,000 million that the 14 listed real estate companies in Spain were trading at when the crisis began in July 2007.

The recent resurgence in the Spanish real estate sector has been very closely related to the debut on the stock exchange of the Socimis – companies that are dedicated to the business of real estate rental and focus on paying dividends to their shareholders. In fact, the largest real estate company by market capitalisation on the Spanish stock exchange is a Socimi, Merlin, with a value of €2,248 million, which may increase when it finalises its purchase of Testa. The company, which began trading on 30 June 2014, has increased in value by more than 28% since its IPO, and some analysts have already placed it in the pool of possible securities to join the Ibex 35. The real estate sector has not been represented in the selective index since Colonial’s departure in April 2008.

Moreover, Colonial is now the second largest company in the sector, with a market capitalisation of €2,205 million. The company has benefitted in recent years from the entry of important investors (into its share capital), led by the Villar Mir Group. Its value has increased by more than 140% since 2014.

Original story: Expansión (by A. Monzón)

Translation: Carmel Drake