Freshly Listed Real Estate Firms Invest €1.55 Bn Within Five Months

26/08/2014 – El Economista, Expansion

They were born with view to giving an impulse to the property market in Spain and this is what they are doing. The four Socimis (Reit firms) listed earlier this year have invested €1.56 billion within the five months which have passed since their stock debuts.

Axia, Hispania, Lar and Merlin, as well as Promorent, Mercal and Entrecampos Cuatro listed on the Alternative Stock Market, offer many tax incentives, such as exemption to the Corporate Tax. This makes them very attractive to foreign investors who want to take advantage from the promise of rapid recovery of the Spanish market with prices and returns hitting the bottom.

The summer months were marked by many large transactions which involved the investment vehicles.

Lar España Real Estate Socimi was the first to go public on March 5th, rasing €400 million in funds at its initial public offering (IPO). Only 18 days later, the firm announced a purchase of two shopping malls in Irun and Palencia for the total of €39.4 million.

Aiming at Shopping Parks

The next acquisition carried out by Lar España took place at the end of July, when the company informed about six operations that together with the first amounted to €212.8 million. In total, the Socimi owns five shopping centers, two office buildings and two industrial warehouses.

On March 13th, another Reit arrived at the stock exchange market. Hispania Activos Inmobiliarios gained trust of such big-name investors as George Soros and John Paulson. It raised a €500 million IPO, out of which quote it has so far spent €230 million on eight office buildings, three hotels and several residential assets.

The Investment Leader

Although with merely three transactions, Merlin Properties wins with the amount disembursed in real estate purchases sealed during its lifespan. On floating on June 30th, the Socimi earned €1.25 billion in committed funds and until now it has invested 83.68% of the amount.

Specifically, Merlin spent €1.05 billion in total on a shopping mall and an office unit, as well as on buying Bosque and Tree Inversiones which included five buildings let to BBVA and 880 banking branches.

Finally, Axia Real Estate became listed on July 9th. The Socimi managed to raise €360 million at its IPO and it chose to focus on the logistics sector. It purchased five logistics warehouses and an office building for the total of €69.3 million.

Legal Amendments

The Socimi scheme has been approved in 2009 and modified in December 2012. But only this year the tax incentives could be fully enjoyed. Spanish Reits have to give out 80% of the gains proceeding from rents and 50% of those originating from asset sales, as well as 100% of earnings from other Socimis.

Although the vehicles boost investment and bring better dinamics to the real estate market in Spain, they have to compete with other companies which are potentially noteworthy in other markets, says Patricio Palomar, Research Director at CBRE.


Original article: El Economista (by Alba Brualla), Expansión (by Rocío Ruiz)

Translation: AURA REE