28 June 2016 – El Confidencial
Spain’s largest landlord is called Testa Residencial. This is the company that has been chosen by Merlin and Metrovacesa to take over all of the homes that they have for rent – 4,700 properties in total – and to create a new jointly owned company in which the former will hold a 34% stake and the later, the remaining 66% stake.
But those numbers are just the first step of a calculated road map designed by the banks that own Metrovacesa – Santander, BBVA and Popular – which want to take advantage of this new arrangement to get rid of thousands of homes from their own balance sheets.
Although still in the analysis phase, according to sources in the know, the entity chaired by Ana Botín (pictured above) wants to transfer between 4,000 and 6,000 homes, whilst BBVA hopes to transfer around 2,500 of the homes that form part of its real estate portfolio, closed eight years ago.
During the harsh years of the real estate crisis, the two entities struggled to cope with this load, along with the rest of the sector, following the debacle that began back in 2007. But now, they have found a way of reducing the burden.
In fact, if the plans go ahead as expected and they receive all of the necessary blessings, the two entities may begin transferring assets this year, a move that would turn Testa Residencial into the largest rental home company in the country, ahead of Fidere, within a matter of months.
Depending on the final number of homes that end up being transferred to Merlin Properties’s subsidiary, the future Socimi will own between 11,000 and 13,000 homes for rent, which means that it will compete head to head with Azora, which owns 11,892 homes and far exceed the 6,000 homes owned by Fidere and the 775 held by Hispania, the Socimi managed by Azora, which has already announced its decision to put the brakes on its residential business.
Five years to debut on the stock market
Now that this giant has been created, the real challenge for all of its shareholders will be its debut on the stock market, the natural destination and reason why they have created this joint Socimi, which has been given a maximum period of five years to complete its IPO.
First, they must define the definitive portfolio of homes, value them, get rid of those assets that do not fit within the plans of the new Socimi through small operations, and above all, find the ideal window of opportunity on the market for the debut.
The key to the success or failure of this business will depend on the price at which Merlin and the banks manage to sell their shares when the time comes to list the subsidiary on the stock market. (…).
The new Testa Residencial that will emerge from this agreement has been given a period of two years to become a Socimi. Its shares are held by Merlin (34.24%) and the banks (65.76%), as follows: Santander 21.95%; BBVA 6.41% and Popular 2.86%.
Original story: El Confidencial (by Ruth Ugalde)
Translation: Carmel Drake