Merlin Will Issue €500M In Bonds Before Year End

The new Merlin Properties will issue €500 million in bonds before the end of the year, according to a statement made on Thursday by Ismael Clemente, the Chairman of the Socimi, following the general shareholders’ meeting, at which the integration of Metrovacesa was approved. The aim of this operation is to convert a bridge loan from the former real estate company, which expires in 2018, into longer-term bonds, and therefore reduce the cost of its liabilities.

Two companies will emerge from the integration approved by the shareholders: the Socimi Merlin, with €9,000 million in assets, which will focus on the real estate business; and another new company, called Testa Residencial, which will focus on the rental homes. The new Merlin will have Santander as its main shareholder, with a 21.93% stake. BBVA will hold 6% and Popular around 3%. Clemente said that it is unlikely that the banks will exit their shareholdings within two years, unless they so wish, and that there are clauses that put caps on the sale of share packages at different points in time.

Moreover, the chief executive of Merlin said that the banks may be in for a surprise because the Socimi is capable of generating high returns. “We are a dividend distributing machine”, he said.

New housing company

Regarding the smaller company, Testa Residencial, the rental home business, Clemente confirmed that work is being undertaken to convert it into a Socimi within the next two years, although it may be sold sooner if a suitable buyer can be found.

He also revealed that the banks will include their own residential assets in this joint venture over the next two years. In the case of Santander, it will transfer more than 4,000 homes and BBVA, another 1,500 homes, figures that are expected to double the size of the company.

Testa Residential currently owns 4,700 homes and has a gross asset value of €980 million.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Original Story:

Translation/Summary: Carmel Drake