Q1 2016: 4 Largest Socimis Almost Their Triple Profits

18 May 2016 – El País

The Socimis have become one of the most attractive investment vehicles in the financial market. With an annual return of around 5%, the four largest Socimis – Merlin Properties, Hispania, Lar and Axiare – earned €73.3 million in total during the first quarter of this year, which represents almost triple the €28.8 million that they achieved during the same period last year. These companies now own property-related assets amounting to more than €5,600 million.

The Socimis are key players in the Spanish real estate market. The four largest companies have starred in high-profile acquisition of buildings, shopping centres and hotel chains in recent months. During the first quarter alone, they have bought properties for €285 million and they are now preparing new acquisitions for the months ahead. These companies are revitalising a depressed sector thanks to, amongst other reasons, the tax advantages that they enjoy.

The returns that these firms are generating are overwhelming. The four largest Socimis – Merlin, Hispania, Lar, Axiare – generated income of €127 million during the first three months of the year and a profit of €73.3 million, according to information published by Spain’s National Securities Market Commission (CNMV). Most of their revenues come from the lease of shopping centres, hotels, offices and other properties that they acquire using funds raised from investors. (…).

Their rise has been meteoric. The largest Socimi, Merlin Properties, has a portfolio of 1,017 assets (buildings, offices, retail premises, leisure centres) worth more than €3,218 million. During the first quarter of the year, it earned €45.24 million, up by 131% compared to the same period in 2015 and it is rubbing shoulders with the country’s largest companies in the Ibex 35 after buying Testa from Sacyr last year for €1,794 million.

Hispania also stands out in the sector thanks to the prestige of its major investors. The magnate George Soros (16.7% of the capital) and the popular investment fund manager John Paulson (9.85%) feature amongst its shareholders. (…). The company is the owner of properties that it leases to hotel chains such as Barceló, Meliá, NH and Vincci, amongst others.

Another one of the largest Socimis is Lar España, which doubled its revenues during the first quarter of the year. This company is undergoing expansion, like all of the firms in the sector, which led it to purchase a retail complex in Barakaldo, the Palmas Altas Norte shopping centre (Sevilla) and to formalise the purchase of the remaining stake in the La Marina shopping centre in Ondara (Alicante) for €70.6 million.

Meanwhile, Axiare recorded a profit of €5.1 million, which represents a 1% increase with respect to the same period last year. Nevertheless, its revenues have grown by 38% due to the operation of new acquisitions signed last year. During the first three months of the year, Axiare spent €33 million acquiring two buildings: one property on Josefa Valcárcel (Madrid) and one shopping centre in Roquetas de Mar (Almería).

Original story: El País (by J. Sérvulo González)

Translation: Carmel Drake