Goodbye Banks, Welcome Socimis

21/11/2014 – Cinco Dias

The new cycle for the real estate sector has begun, marked by progressive return to the business of banks and appearance of new players: Socimis (REITs) and funds. Spanish entities no more attend property exhibitions – in the last five years their stands were among most popular – and they shed their holdings in the industry. The time has come for Socimis.

In less than a decade, the banks barged in the market and left through the exit door. In the years 2006-2007, the entities financed multi-million projects in the Spanish property sector, such as buyout of Riofisa by Colonial, absorption of Fadesa by Martinsa, of Urbis by Reyal and of Parquesol by SanJose. All the operations amounted to more than €10 billion. And there were many other transactions, urbanizations to be raised all over the country and the fight for Metrovacesa between Joaquin Rivero and the Sanahuja family.

The businessmen fast realized that the purchases were lethal for their enterprises. The real estate bubble burst wiped out the rest of their resources for the would-be mega-projects. Creditors grabbed stakes in the firms.

Financial entities created sales platforms for their repossessions, managed the real estate companies and got the decisive votes in listed firms. They still dispose of all these, but since 2013 they have started to lose the monopoly in the sector.

First signs of change were the purchases of banking servicers by U.S. funds. In the second half of 2013, Santander, Popular, Banesto, CaixaBank and Bankia sold Altamira, Aliseda, Aktua, Servihabitat and Bankia Habitat to funds Apollo, Kennedy Wilson, Centerbridge, TPG and Cerberus respectively,

During 2014, Socimis played the main role in acquiring real estate assets in Spain. Spanish REITs enjoy tax incentives and give out 80% of their rental profits in form of dividends. Since going public in the first half of the ongoing year, Merlin Properties, Lar Real Estate, Hispania and Axiare have raised jointly €2.5 billion. Merlin Properties tops the ranking with €1.25 billion spent on properties and Hispania shopped for €347 million.

Another sign of the turn in the cycle is the – recently hottest – sale of Realia by Bankia and FCC. Also, Colonial managed to restructure its debt showing €9 billion at the beginning of the recession. Furthermore, Metrovacesa is still being owned by banks eagerly swapping its liabilities. All the same, turn in the trend is evident.


Original article: Cinco Días (by Alberto Ortín Ramón)

Translation: AURA REE