2 November 2016 – Cinco Días
On Monday, Merlin Properties consummated the latest stage in the process to create Spain’s new real estate giant. Trading of the Socimi’s new shares began on the Ibex 35 after it completed the absorption of Metrovacesa’s real estate assets, giving rise to a company with a market capitalisation of around €4,810 million, according to Bloomberg.
The 146.7 million new shares in the Socimi – or listed real estate investment company –, following the exchange of Metrovacesa shares, began trading on the stock exchanges in Madrid, Barcelona, Valencia and Bilbaoon Monday.
To complete the exchange, Merlin had to hand over those 146.7 million shares with a nominal value of one euro to Metrovacesa’s shareholders. Those shares were launched with an issue premium of €10.40, in other words, with a total value of €1,526 million.
This operation was first announced back in June, when the Socimi chaired by Ismael Clemente (pictured above) reported that it was going to absorb the real estate business of Metrovacesa – owner of offices, shopping centres and other real estate assets that are rented out – which was controlled at the time by Santander (70%), BBVA (21%) and Popular (9%).
During trading on Monday, Merlin’s share price fell by 0.58% to €10.24.
By virtue of this agreement, another jointly owned company emerged, in the form of Testa Residencial, which will be converted into a Socimi and listed on the stock market in the future, and which owns the companies’ rental homes. In this case, the aforementioned financial entities will control around 65% of the new companies and the former shareholders of the Socimi will be minority shareholders, although one of Merlin’s directors, Miguel Oñate, will serve as the CEO.
As a result of this operation, the bank chaired by Ana Patricia Botín, now holds a 21.95% stake in Merlin and a 46.21% stake in Testa Residencial.
The exponential growth of Merlin
Similarly, the former real estate company, created in 1918 to develop the neighbourhood of Cuatro Caminos following the arrival of the Metropolitan Railway in Madrid, will continue to operate another company called Metrovacesa Promoción y Suelo, which will be responsible for the future construction of homes.
Merlin, created in 2014, attracted confidence from international investors from the get go. Upon constitution, it acquired the Árbol portfolio, containing more than 1,000 BBVA branches, which had previously been owned by several funds and family offices.
The strategy of the Socimi’s managers was to grow rapidly, benefitting from investor confidence and the recovery in the sector. In 2015, it seized the opportunity to buy Sacyr’s real estate subsidiary Testa for €1,800 million. As such, it added several iconic buildings in Barcelona and Madrid to its portfolio, including one of the four towers to the north of the Castellana. Following that decision, it received the blessing from its investors to carry out a €1,034 million capital increase and it immediately followed that with the clean up of its liabilities, with a syndicated loan from ten entities amounting to €1,700 million and the issue of bonds amounting to €850 million (in April).
With the integration of Metrovacesa complete, the new Merlin now controls assets worth €9,600 million, and whereby becomes one of the largest 10 Socimis in Europe and the second largest owner of shopping centres in Spain.
Original story: Cinco Días (by Alfonso Simón Ruiz)
Translation: Carmel Drake