Banca March Creates A Socimi To Maximise Returns From ABC Serrano

7 November 2017 – La Información

Serrano 61 Desarrollo Socimi – that is the name of the listed real estate investment company (Socimi) that Banca March has constituted to try to optimise the profitability of one of the most high-profile investments that the entity has undertaken this year, the acquisition of the ABC Serrano shopping centre, according to data in the Mercantile Register.

Banca March purchased the building on Calle Serrano, 61, in June for an undisclosed sum. It is one of the jewels in the crown of Madrid’s golden mile, which until then formed had part of a portfolio owned by CBRE Global Investors – the investment arm of the largest real estate consultancy firm in the world (CBRE Ellis). Banca March is the fifth owner the asset has had since 2013. In that year, Reyal Urbis, which has now filed for liquidation, transferred ownership of ABC Serrano and another commercial space to the investment company IBA Capital Partners, which shortly after included it in the asset portfolio of its Socimi Zambal. CBRE Global Investors acquired the building at the beginning of 2016.

Banca March has chosen the Socimi format, just like IBA Capital Partners, which is still responsible for managing the centre, did back in the day; its aim is to try and extract the maximum return possible from this real estate investment, in which it shares the risk and reward with a group of the bank’s clients who have participated in the operation as a result of a co-investment model through which the deal was formalised.

Co-investment is one of the unconventional investment formats that Banca March offers its clients. According to information provided by the entity on its website, it uses the format in “projects analysed by the March Group in which it decides to invest, and it offers its clients the opportunity to participate in the investments” (…).

MAB debut in 2018

This implies that Serrano 61 Desarrollo Socimi will not be an exclusive Banca March project, but rather will have financial backing from a group of the entity’s clients, which will also be shareholders of the company.

According to sources familiar with the operation, the company will start to operate as a Socimi from 1 January 2018 onwards and will make its debut on the Alternative Investment Market at some point next year. Its sole asset will be the ABC Serrano shopping centre.

Financial sources consulted by deny that the activation of this Socimi is the first step of a more decided commitment by Banca March to the real estate sector. “Grupo March has a very recognisable investment approach. It identifies assets of interest, analyses their profitability threshold and if it takes the decision to acquire them, it looks for the most appropriate vehicle to make them profitable. It does not invest in sectors, it invests in assets”, explained one market source.

The Socimi format will allow Banca March and the clients that accompany it with this investment to benefit from a Corporation Tax rate of 0%. Moreover, it will guarantee the distribution of 80% of the returns obtained from the management of the ABC Serrano to the shareholders, and it will provide a favourable fiscal framework that characterises this vehicle for the dividends obtained.

Original story: La Información (by Bruno Pérez)

Translation: Carmel Drake