Clemente: “Merlin May Participate In A Future Wave Of Socimi Mergers”

26 April 2017 – Cinco Días

He is one of the stars of the new real estate sector. In 2014, Ismael Clemente (…) created the Socimi Merlin Properties out of nothing. In less than three years, it had debuted on the Ibex 35 to become the largest player in the sector by market capitalisation. The company’s CEO convinced international funds to back the recovery in Spain and later on, he adopted an aggressive acquisitions policy.

First, Merlin acquired Testa from Sacyr, and then it absorbed the tertiary assets (shopping centres and offices) of Metrovacesa, which made way for Santander and BBVA to enter that company as major shareholders. Merlin Properties now has properties amounting to almost €10,000 million in its portfolio. Here, Cinco Días interviews the CEO.

Q: Merlin has grown very quickly. What are your plans now?

A: During 2017, we are focusing on managing our assets and on consolidating the company after several years of rapid growth. Over the next few years, we will invest in creating value from our properties, above all, rather than in buying more assets on the market. Right now, it is hard to justify any asset purchases to our shareholders because of the prices.

Q: In other words, you are going to withdraw from the market because of the high prices?

A: It seems like we have been very active in the market, given our recent acquisition of Torre Agbar in Barcelona, but really, since the middle of 2016, we have had a quiet period. Nevertheless, we knew that we wanted to increase our exposure in Barcelona and Lisbon and that is what we have done.

Q: What do you think about the future of the Socimis?

I think that we have a rather interesting period to look forward to because the Socimis have undergone a settling down period, and are now focusing on different specialisation strategies. There will be less purchasing activity and we will see more M&A activity between entities. (…).

Q: Might Merlin participate in any mergers?

A: Maybe, but it will take a while for the merger period to really get going. If we find something that we think may have value for our shareholders, then we may participate in the future wave of mergers between the Socimis.

Q: Why would Merlin be interested in that?

A: We would be interested if we could strengthen one of our areas of activity, if it was good for us from a cash flow point of view or if such an operation would contribute an asset that complemented the quality of our portfolio particularly well.

Q: Will we see mergers amongst the large players?

A: There are two very large players, us and Colonial, which is not actually a Socimi, even though it may as well be. Any of the large players could be interested in any of the small entities on the stock market, and even, eventually, on the MAB.

Q: Can we expect to see mergers in 2017?

A: It is still too early. I think that we will see some activity from 2018 onwards. What we are not going to see is mergers between real estate companies and residential developers. I don’t think that there will be any interaction between those two sectors. The starting point features five large players, including Colonial as a Socimi equivalent, and 30 entities on the MAB, where the largest players are GMP and Iba Capital. (…).

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake