19 April 2017 – Expansión
The Socimi Vitruvio Real Estate has completed the incorporation of a new property into its portfolio. The listed company, which is currently immersed in an integration process with CPI (the investment vehicle created by the manager of Banca March), has acquired a 4,000 m2 building at number 14 on c/Ermita del Santo, in the heart of the Madrid Río area of the capital.
The operation, signed on Friday 7 April, sees the incorporation of a unique asset into its existing real estate portfolio, which comprises residential and office buildings in the most historic areas of Madrid. For this property, which has a surface area of around 4,000 m2, spread over 38 homes and four commercial premises, Vitruvio will disburse €7.6 million, to which it will have to add a significant injection of funds to refurbish the asset. Currently, the property, which is leased in its entirety, generates annual rental income of €330,000, an amount that Vitruvio expects to increase following its upgrade or, in a worse-case scenario, it will sell the homes unit by unit.
The operation, advised by Baltex Brokers and Arcania, has a peculiar feature in that the vendor, or in this case, the vendors, have decided that almost half of the agreed price (around €3 million, to be specific) will be covered by shares in the Socimi (the rest will be financed through a loan with Banco Santander). In this way, Oliva de Borbón y Rueda, the last marquis of Villamantilla de Perales and her daughter Cristina de Figueroa de Borbón, daughter of Alfonso de Figueroa y Melgar IV, Duke of Tovar, will go from being the owners of this building, constructed in 1948 and owned by the family since then, to owning shares in the listed real estate company.
These types of operations are not new in the market or for this Socimi. Whilst the large listed real estate investment companies have become a haven for large international funds wanting to invest in Spanish real estate, the smaller real estate companies have developed a market for themselves as an efficient tool for wealthy families. In the majority of cases, families with wealth opt to build up their own vehicles, however, in some cases, they choose to transfer their family wealth to a firm managed by third parties, something that has already happened in the case of Vitruvio with families (primarily Spanish business people and private banking investors) who invested in the March’s management company.
At the end of 2016, the managers of the Socimi Vitruvio and Consulnor Patrimonio Inmobiliario (CPI) signed a merger agreement whereby CPI, a real estate investment vehicle created by Consulnor (the manager in which Banca March holds a 48% stake) would transfer its assets to the Socimi in exchange for shares in its capital. As a result of this operation, Vitruvio will become the largest Socimi on the MAB, by number of shareholders, with more than €100 million in properties.
After closing the CPI and Madrid Rio operations, Vitruvio plans to undertake new investments amounting to more than €30 million this year, taking the global figure to around €75 million. “In parallel to the fusion by absorption with CPI, which should be definitively approved between the end of May and the beginning of June, we are engaged in negotiations to acquire more assets”, said Joaquín López-Chicheri, CEO at Vitruvio.
Original story: Expansión (by Rocío Ruiz)
Translation: Carmel Drake