26 April 2016 – El Español
(…). “Currently, Hispania, (the company in which George Soros (pictured above) and John Paulson hold stakes of 16.7% and 9.85%, respectively, and which will soon be converted into a Socimi) is evaluating investments worth approximately €1,500 million”, said Isabel Troya, the company’s Head of Investor Relations.
It has one objective in its line of sight: hotels. The Director says that 75% of the investments that it is evaluating will be in that segment. The second focus will be offices, but investment volumes there will be much lower.
In 2015, its first full year, Hispania invested €841 million in properties, above all, in hotels (€633 million) and earned €66.6 million. During that time, its assets appreciated by 15.6%. Basically, the company buys assets, does them up and then looks for a tenant to increase the return from the properties. Hispania’s management is in the hands of Azora, a firm founded in 2003, which specialises in the real estate sector.
More hotels and office but not more homes
The problem being faced by the large firms now is that there are not as many interesting offices in the market as there were a few years ago. Thoroughfares such as Madrid’s Paseo de la Castellana no longer have as many “for sale” signs up. That is because wealthy individuals, such as Amancio Ortega, the main shareholder of Inditex, are opting to buy those premium assets and whereby raise prices. For that reason, the Socimis in general and, in this case, Hispania, are looking for offices that are close to the centre, but not in it. And in those cases, the returns vary depending on location, access and the number of tenants that already occupy them.
Meanwhile, Hispania has no plans to expand its residential portfolio. “We are not planning to make any more investments in the residential segment”, said Troya firmly. They are focusing, therefore, on hotel assets because they regard them to be more profitable than conventional properties. For those assets, “the risk-return ratio is higher than elsewhere”, she said.
Hispania made its first major step into the hotel sector alongside Barceló. Together, they constituted a Socimi in which Hispania ended up taking a majority stake. “We want to double our existing portfolio in the hotel sector, to complement it with investments in markets where we have less exposure, such as the Balearic Islands and Marbella, for example; and also in markets where we have no presence yet, such as specific places along the Levante Coast”, says Troya. In all cases, she said, they will focus on European tourists.
The goal of becoming a Socimi
At the general shareholders’ meeting in May, the company will have to approve its full conversion into a Socimi. Why? Because it can. Until now, it has used a parent company to invest in assets that were too “risky” for this still small structure. “Since the beginning, Hispania has always wanted to become a Socimi”, says Troya. “However, we also wanted to have the flexibility to invest in non-qualifying assets”. Socimis may only invest 20% of their funds in assets regarded as “non-qualifying”. (…).
Original story: El Español (by Cristina G. Bolinches)
Translation: Carmel Drake