12 May 2016 – Expansión
Mercal, the Socimi listed on the Alternative Investment Market (MAB) since July 2014, is analysing new business opportunities to diversify its portfolio and is looking at hotel assets in particular. “We are focusing on urban hotels”, explained the CEO of Mercal, Basilio Rueda, who specified that his firm is looking to acquire assets worth up to €20 million (maximum), whose day-to-day operation will be left in the hands of professional managers.
The company’s real estate assets are currently distributed as follows: commercial premises (60%), a hospital in Málaga (30%) and offices (10%). “We want to grow but in an orderly and realistic fashion, ever mindful of our commitment to generate returns and fulfil our dividend promises”, said Rueda. Mercal’s General Shareholders’ Meeting recently approved a capital increase for a maximum of €3 million.
The group debuted on the MAB with a share price of €29 and since then, its stock value has increased by almost 18%.
The CEO of Mercal explained that the company has ruled out certain operations so as not to “distort” its profitability. “Some of the operations being undertaken in the market are generating returns of 3%. Personally, I have my doubts as to whether the Socimis can keep investing for such returns without their dividends being affected”, he explained. In this sense, Mercal’s CEO highlighted that the company’s gross profitability currently exceeds 7%.
In any case, Rueda was categorical when it came to ruling out a bubble involving the Socimis and he said that he thinks that there is still scope for the development of these real estate investment vehicles. “The spread between the expected dividends from a Socimi and the return on a 10-year bond is enormous. This makes the Socimis very attractive and means that the capital that is not willing to bear the risk of variable-rate securities is being channelled into the real estate sector instead”, he said.
Rueda acknowledged that the political uncertainty is affecting investment. “Investors are willing to invest in Spain, but many are waiting to see what will happen over the next few months”, he said. Nevertheless, he considers that the current economic trend indicates that Spain will continue to grow. “The real estate sector is 100% aligned with the economic situation in the country”, he added.
Original story: Expansión (by R.Arroyo)
Translation: Carmel Drake