Aedas, Testa and Vía Célere, After the ‘Neinor Effect’: The Stock Market Opens its Arms to Real Estate in 2018

27 October 2017

U.S. funds are seeing gold in Spain’s residential real estate market and are planning on taking their presence in the country to the next level. Castlelake, Värde and Lone Star are the leading this new moment in Spanish real estate.

What will the new real estate cycle bring that that everyone is looking to invest in it? Not only is Spain a target market for large international funds, but it is also a playground for these groups to grow their businesses and create a new corporate reality within the sector. Castlelake’s Aedas, Värde’s Vía Célere and Aelca and even Spain’s own Testa and Sareb are seeking to take advantage of the Neinor effect by preparing their IPOs for the coming months. If 2017 was the year in which the residential real estate market in Spain quickly recovered, 2018 is expected to be the year when developers give an emphatic ‘yes’ to the market.

The Värde fund has had the clearest intentions regarding the future of its business in Spain. The company will list two of the developers that it controls in the country: Vía Célere and Aelca. The U.S. fund plans to list 60% of the first company on the stock market.

Värde hired Credit Suisse and Jefferies-Arcano to manage contacts with investors for the Vía Célere IPO, while CaixaBank will act as the placement bank. Last February, Värde paid ninety million euros for control of the Madrid-based developer Vía Célere, with the aim of merging it with its real estate company DosPuntos.

Värde had initially planned for Vía Célere’s IPO to take place at the beginning of 2018, but the move could take place before the end of 2017, after considering the excellent performance the real estate sector is experiencing on the stock exchange.

The stock exchange is one of funds’ alternatives to finance their growth plans in Spain

The U.S. fund has similar plans for Aelca, which has a portfolio of assets valued at 650 million euros and which could also start trading in the coming months. The fund has invited the main investment banks and advisory firms to present their proposals to list the developer on the stock market. Aelca was founded in 2012 by Javier Gómez and José Juan Martín and Värde acquired 75% of the company’s capital in 2016. The remaining 25% is in the hands of the two founding partners, who lead the developer’s management.

Castlelake and Aedas

Another principal actor in Spain’s new real estate cycle is the developer Aedas Homes, owned by the U.S. fund Castlelake, which is also considering a jump to the stock market soon. The firm has already publicly declared its plans to list its shares on the Madrid, Barcelona, Bilbao and Valencia stock exchanges and its inclusion into the Stock Exchange Interconnection System (Continuous Market).

Its objective is the same as that of Värde’s Vía Célere: placing up to 60% of the company’s capital through an initial offer that expects to raise funds amounting to 100 million euros. Aedas Homes will invest these funds in future growth opportunities and to partially finance the planned expansion of the group and, principally, to pay for buildable land under the housing development plan, up to 2023. The share offer will be composed of the issuance of new shares and an offer of existing shares by the sole shareholder, Hipoteca 43 Lux.

Developers and socimis take their business in the country to the next level, moving to the continuous market

Neinor Homes paved the way for the new wave of developers that are betting on stock market listings, hoping to gain the financial strength to ensure their growth plans for their businesses in Spain. Lone Star’s company was the star of the most significant IPO of a real estate developer in the country. The company made its leap to the market last March with an initial capitalisation of around 1.3 billion euros.

The value of the group’s shares has been increasing in the stock market in recent months. At the close of yesterday’s session, the company’s shares were valued at 17.97 euros each, with a total market capitalisation of 1.419 billion euros, an increase of 9.15% since its debut in the continuous market in the first quarter of this year.

Testa to Sareb: also heading to the stock market

Thus, the Basque company has facilitated the path for other real estate developers who are looking to make the leap to the stock market. An example is Testa Residencial, which is also preparing for a listing next year.

The apartment rental socimi, owned by Santander, BBVA and Acciona, is expected to debut on the stock market sometime between April and May of next year. The company will be listed on the stock exchange after becoming the first company focused on rentals in the country after its merger with Acciona’s home rental business.

Through this operation, the group presided by José Manuel Entrecanales will take a 21% stake in Testa’s capital, which makes it the second largest shareholder of the socimi, behind Santander (38.8%), in exchange for supplying the combined company with one thousand additional properties, according to Europa Press.

The transaction is part of the growth strategy that Testa delineated after its incorporation in October 2016, a result of a merger between Merlin and Metrovacesa. This approach has as its ultimate goal the firm’s IPO, as established by its status as a socimi. Under the socimi’s legal structure, the firm has September 30, 2018, as a deadline for a stock market listing.

Sareb prepares to launch its socimi Témpore Properties and its immediate jump to the stock market

Sareb has also been caught up in the rush to a listing, this time with its socimi Témpore Properties. While it is still in the process of incorporation, the bad bank says it will take the company public before the end of this year. To this end, it has chosen Azora, which was behind the creation of Hispania, one of the largest socimis in Spain, to manage the firm.

Témpore Properties will have its pick of more than 1,500 of Sareb’s best rental properties, with a volume of assets valued at over 200 million euros, with the aim of attracting the highest number of investors.

Sareb continues to plan to list Témpore Properties on the stock exchange through the Alternative Stock Market (MAB), which saw the debut of a large number of socimis last year. But it intends to make the leap to the continuous market, where companies with higher visibility are listed, in the future.

Original Story: Eje Prime – C. Pareja

Translation: Richard Turner

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