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Spain’s RE Boom Drives New Avalanche Of IPOs

30 May 2017 – Expansión

Almost ten years after the burst of the real estate bubble, which destroyed the industry and brought many of the property giants to their knees, some of Spain’s new property developers and real estate investment vehicles, which have emerged since the crisis, are now looking to secure their place on the Spanish stock market.

Aedas, Vía Célere, HI Partners (the hotel management and investment arm of Sabadell), Rembrandt (a Socimi in which the Dutch pension fund APG and Renta Corporación hold stakes) and Testa Residencial (controlled by Santander, BBVA, Merlin and Popular) have fired the starting gun for their respective debuts on the stock market, which will happen gradually over the course of the remainder of this year and the next two years. Together, the companies have a combined valuation that could reach €6,400 million. In addition, Sareb plans to create a subsidiary of its own, with the aim of placing it on the market before the end of the year.

The real estate sector is enjoying a sweet moment, in the midst of a bullish cycle, supported by an improvement in the macroeconomic environment, forecasts for GDP and employment growth and an increase in consumer confidence. Both the residential sector and tertiary segment (offices, shopping centres, hotels and logistics) have become objects of desire for investors, who are looking for alternatives in the face of the low returns on bonds. (…).

First movers

The first company to try its luck on the stock market was Neinor. The real estate developer backed by Lone Star made its debut on the stock market on 29 March 2017, at a price of €16.46 and with a market capitalisation of €1,300 million. In just two months, that firm’s share price has risen by almost 9%. (…).

Over the next few months, Neinor will be followed by Aedas and Vía Célere. The first, controlled by the fund Castlelake and with assets worth €1,100 million, has engaged Goldman Sachs and Linklaters to prepare its stock market debut. Market sources indicate that its IPO could happen in October.

In the same way, Vía Célere, the property developer chaired by Juan Antonio Gómez-Pintado and controlled by Värde, will follow in the footsteps of its rivals and join the IPO wave in 2018. The company, which has assets worth €700 million, wants to grow in size before debuting on the stock market. It plans to list in the spring of 2018 with an asset portfolio worth between €1,000 million and €1,200 million.

Residential rental segment

In addition to the property developers controlled by funds, the Socimis will be some of the other players to undertake their IPOs over the coming months.

In this sense, one of the most awaited debuts is that of Testa Residencial, owned by the banks (Santander, BBVA and Popular) and Merlin. Testa Residencial, which was constituted as a Socimi in October 2016, following the merger of Merlin and Metrovacesa, currently has more than 8,000 homes in its portfolio, worth around €1,750 million.

The firm led by Miguel Oñate will start the administrative procedures (for its stock market debut) at the end of this year (…).

Renta Corporación also wants to benefit from the current strong investor appetite to launch a vehicle specialising in residential assets. The real estate group has created the Socimi Rembrandt, together with the Dutch fund APG, which will be the majority shareholder with a stake of 95%. The objective of the new Socimi is to accumulate assets worth €1,000 million, which will be concentrated in Madrid, Barcelona and other major Spanish cities.

Another entity that plans to resort to the stock market is Sareb. (…). The entity plans to create a Socimi that would complete its IPO before the end of the year. (…).

Other assets

And it is not only the residential sector that is in fashion. (…). Other assets, such as hotels are also piquing investor interest. In this context, Banco Sabadell is analysing the IPO of HI Partners, the hotel management and investment company that it created in 2015. (…) The bank has engaged Citi, JP Morgan and Credit Suisse to analyse the feasibility of listing its portfolio comprising 31 hotels and more than 3,500 rooms. (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake