Fresh Traces of Revival on the Spanish RE Market

21/03/2014 – Wall Street Journal

Together with the arrival of two genuinely Spanish so-called Socimis (real estate investment trust counterparts in Spain) on the stock market, investors turned their eyes back to the crisis-wretched country. The Socimis allow them to invest in property exclusively as it is widely known that yield in Spain is high and interest rates low.

 This month two Socimis became listed: Lar España Real Estate and Hispania Activos Inmobiliarios that raised €500 and €400 million at flotation, respectively. (…). The creation of Spanish counterparts of REITs was possible due to an amendment in law introduced by the Government. As an effect, this type of companies are exempt of corporate taxes. (…) 15 new Socimis have been registered in the Tax Office.

The only drawback in a Socimi´s management is that usually an external companies do that. Conflict of interest and higher costs emerge as a result. Also, investors who buy assets of a REIT do not know what kind of properties the trust will acquire. Now banks are selling property out so the choice is diverse.

In 2013, €5.2 billion were invested in the Spanish property. Foreign investment contributed €3.7 billion, 70% of the total, while the U.S. funds only decided to spend €1.6 billion.

However, there is still a long way for Spanish economy to recover.



Original article: Wall Street Journal (Alessia Pirolo)

Resume: AURA REE