29 November 2016 – Expansión
Ismael Clemente presented an ambitious proposal to his shareholders on 15 September 2016. The Socimi, which debuted on the stock market in July 2014, without any assets on its balance sheet, submitted the decision to absorb the traditional real estate company Metrovacesa, to the scrutiny of its investors, led by Santander and BBVA (…).
And having obtained the general support of the shareholders, Clemente is now working on managing the largest real estate company in Spain and one of the largest in Europe, with assets worth €9,400 million and annual gross revenues of €450 million. “The immediate focus is to successfully complete the post-merger program with Metrovacesa, which was registered on 26 October 2016 and whose shares have now been admitted for trading. Technically and legally, the operation has been completed, but now the business side begins, with the launch of three workstreams to manage the integration of the systems, human resources and operations”, said Clemente.
The Executive…defines Metrovacesa’s portfolio as “fantastic”. “And that’s not a coincidence, it is a historical company. It has been punished by relative inactivity in recent years, but it has a incredible intrinsic quality”.
Clemente highlights Metrovacesa’s shopping centre portfolio as the key to understanding the transaction. “For us, the over-riding purpose of the operation is, above all, the shopping centres, which clearly put us on the map. Before, we were in the middle of nowhere and now we have sufficient critical mass to allow us to negotiate better with our commercial operators. We have also grown in the office segment, and although that was not a primary objective, the purchase of Metrovacesa places us in a completely different class in terms of space (in m2), in spectacular locations, which really strengthens the position of leadership that we already held”.
Through the integration of Metrovacesa, Merlin has incorporated 14 shopping centres into its portfolio, worth more than €1,000 million, placing it second in the market behind only Unibail-Rodamco; as well as 37 office buildings covering 574,781 m2, worth €1,835 million.
In terms of challenges for next year, Clemente has earmarked making improvements to the occupancy rates of the offices it has inherited from Metrovacesa and acting “decisively” with respect to its shopping centres to secure occupants and sales.
In addition, Merlin will also look to either create a specialist Socimi or sell its portfolio of hotels as a whole. “We will analyse the book value and decide whether a direct divestment of the portfolio as a whole is possible. If not, we will probably decide to create a subsidiary, look for partners and constitute a company, with a majority, minority or equal stake shareholder structure”.
Following the integration with Metrovacesa, Merlin has 24 hotels with a gross value of €654 million. By number of rooms, the union between the two companies has given rise to a hotel leasing giant with almost 4,500 rooms, behind only Hispania.
In addition, he points to a surprise benefit from the operation with Metrovacesa: the strengthening of Testa Residencial, the subsidiary created with residential assets proceeding from the purchase of Testa: “A by-product has emerged, which has a life of its own. At first, we were exploring the market for potential buyers but, now, we are talking with our shareholder banks and other firms because we believe that this vehicle has the potential to be the star of the residential rental market in Spain”.
Original story: Expansión (by R.Arroyo and R. Ruiz)
Translation: Carmel Drake