Banks Ponder Creation of Socimis to Enjoy Benefits & Stop Asset Underselling

26/03/2014 – El Confidencial

The Socimi boom is at the verge of reaching its peak as large banks have already analyzed all possible fiscal benefits they might draw from such vehicles and, additionally, compete with Sareb. Whole sector is gearing up and considering release of their own REIT company. Some of the plans reached a pretty advanced stage.

To illustrate, BBVA, Sabadell, Banca March, Deutsche Bank and BNP have gone far away with their projects that could be assigned to one of four groups.

 The first one consists of banks wishing to shed real estate owned assets awarded to them over the last years. The second group gathers banks that want to convert the few remaining investment funds into Socimis. The next one embraces banks targeting at a cooperative creation of a REIT, when a bank provides financial support and the private banking client brings about assets. The last one involves participation of private equity firms that have acquired a real estate platform. This group aims at identifying troublesome assets, repositioning them and once improved, converting them into Socimis.

Out of all these alternatives, the first seems the most tempting as it would allow the banks to free up fees, raise profit, enjoy the fiscal benefits of a Socimi and have a share in future gains. In contrast to direct asset sales carried out by now, the strategy prevents asset underselling. (…).

For banks the essential matter is the possibility to deconsolidate the real-estate-owned assets by placing them within a Socimi as it would help them avoid the rental income tax in terms of accountancy. Moreover, the debt related to these assets may become a security part of the Socimi, in exchange giving a stake for the bank. From this point on, banks have got pockets of opportunities, including creating several vehicles by one banking entity. (…).

Sabadell and BBVA weight the move in earnest as they are the only banks that still possess property funds that could be easily converted into Socimis. (…).

BNP´s case is totally different. Its Socimi would be composed of offices, shopping centers, logistic platforms and hotels belonging to private banking´s clients and supported financially by the institution. (…).

According to sources from the market, JP Morgan, UBS or Credit Suisse could promote a Socimi as well.

In turn, Deutsche Bank and Banca March are currently releasing Tree Inversiones Inmobiliarias that manages 1.000 BBVA´s offices. (…).

What is more, slight revival of Spanish economy encouraged familly offices to return to the market. For all this time they have been skimming through the offers and managed to buy quality assets at bargain prices.

If it comes to venture capital funds, they will aim mainly at hotels, offices and shopping malls that lost their value due to their age. The funds will utilize their freshly purchased real estate platforms to reposition the property with view to future transforming them into a Socimi.




Original article: El Confidencial (Ruth Ugalde)

Translation: AURA REE