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Sareb’s Socimi Makes it MAB Debut with 1,383 Homes on the Outskirts of Spain’s Large Cities

3 April 2018 – Expansión

Sareb’s Socimi is making its debut today on the Alternative Investment Market (MAB) with a total valuation of €152.7 million. The company owns 1,383 homes, inherited from the rescued savings banks, located close to Spain’s large and medium-sized cities. Most can be found in very dynamic metropolitan areas such as Vallecas, with annual price rises of 10%-12%, and Hospitalet de Llobregat, as well as in places further afield, such as Manresa (Barcelona).

Témpore Properties, which has just two employees on its payroll, has delegated all of its management work to Azora, which will charge €1.5 million for its services in 2018 and €1.7 million in 2019, provided it fulfils all of the objectives set out in the business plan in terms of profitability and occupancy rates.

Azora, which is also the management firm for Hispania and Goldman Sachs, employs 140 people, half of whom work for Sareb directly or indirectly.

“Our greatest challenge is to increase the profitability of the rental portfolio from 3.7% to 5.5%”, explains Nicolás Díaz Saldaña, CEO of Témpore Properties and former Head of Rentals at Sareb.

As a first measure, the company is going to increase its rents, taking advantage of the renewal of its rental contracts. 33% of them expire in 2018, another 36% in 2019 and the remainder in 2020. “The prices that were applied by the savings banks are very out of date”, explains Díaz Saldaña. The average increase will amount to 15% and will rise to 20% in the outskirts of Madrid and Barcelona. The company assures that, despite those increases, 80% of its tenants are renewing their contracts.

Témpore is tightening up the requirements to access its homes in an effort to reduce its default rate, which currently stands at 4.8%. It demands the payment of a rental insurance from future tenants, which has a cost of €10 per month, as well as the one-month mandatory deposit. Moreover, the monthly rental cost may not account for more than 40% of the total income of the family unit.

In total, 24% of Témpore’s homes are located in Barcelona. “The Catalan political risk is not holding back rental prices. The rise in the metropolitan area of Barcelona stands at around 6%-10%”, says the CEO. 36% of the new package of homes that Sareb is going to transfer to the Socimi this year are located in Cataluña.

Témpore does not have any bank debt and has a credit line open with Sareb amounting to €2 billion, which it has not made use of yet.

The bad bank owns 98.5% of the Socimi and the intention is to allow investors (primarily institutional) to acquire shares, in such a way that will end up with a minority stake within three years. Témpore assures that there are many real estate funds, insurance companies and pension funds with liquidity willing to invest.

“Our business is one of scale. Témpore has to aspire to being as large as Testa Residencial, our best comparable”, says Díaz Saldaña.

Testa, in which Santander, BBVA, Acciona and Merlin all hold stakes, is planning to make its stock market debut at the end of May or beginning of June this year.

Original story: Expansión (by R. Lander)

Translation: Carmel Drake