17/12/2014 – Expansion
The year 2014 is set to come down to history as the pivotal point for the economy of Spain, heavily hit by the recession. After seven years of being a no-go, within twelve months, the country has transformed into the hottest market for large international funds and fortunes. Undoubtedly, the year belongs to Spanish REIT vehicles.
Known as Socimis, the vehicles were created to invest exclusively in rental assets, offering tax incentives and generous returns to their shareholders. Both arrival of funds and an amendment in the law regulating the trusts have contributed to favorable circumstances in which the Socimis could raise 2.56 million euros and spend 2.33 million of them year-to-date.
Hispania, a Different Kind of Reit
Hispania Activos Inmobiliarios debuted on the Spanish stock exchange market last March 14th. The trust, chaired by directors of manager Azora, raised 550 million at its Initial Public Offering (IPO), backed by such prominent investors as George Soros and John Paulson. Originally, it did not have a Socimi status, later on given to its affiliate Hispania Real. Due to not being tied up by requirements for Socimis, Hispania has purchased diverse types of assets. For instance, it bought out the real estate arm of ONCE, Oncisa (a 90% stake), including over 400 homes. Last month, the company announced alliance with Fortress, King Street and Goldman Sachs to submit a takeover bid for famous Realia.
Merlin, a Tycoon With Assets of BBVA
On the last day of June, Merlin Properties went public, gaining support from Marketfield, UBS and Moore Capital and raising 1.25 billion. Unlike other Reits, Merlin became listed with a purchase pre-agreement in hand, regarding 880 banking branches and five office buildings fully let to BBVA. As the Socimi has run out of almost all the IPO funds but not the acquisition ideas, it started to negotiate with banks on refinancing of a 825 million loan.
Lar, a Spanish Expert With Mighty Allies
It was the first Socimi to float on the Continuous Market. Managed by developer Lar, well-experienced in the Spanish real estate industry, it raised 400 million euros while going public, put from such key international players as Pimco, Franklin Templeton and Cohen & Steers.
Lar has spent only 230 million euros of its funds, primarily on retail assets.
Axia, €350 Million and Five Months to Meet Objectives
In turn, Axia Real Estate was the last Socimi to debut on the stock in 2014. After capturing 360 million euros in July, the company has already invested 100% of the equity and went to banks to close the most recent purchase, including four office buildings and a retail space.
Next to Go Public: Quabit & Urbas
This year’s four successful debuts convinced businessmen to the Spanish Socimis. Two more are set to float in 2015, Quabit and Urbas. Although already listed, the firms will change their structures to become the Reit vehicles.
GMP, a Real Estate Big Fish to Become Listed
Property manager GMP, specialized in management of office buildings in Madrid’s downtown, has been undergoing the transformation since October. Not long ago, the firm let the Singapore Sovereign Wealth Fund into its capital in exchange for a 200 million euro equity injection. However, the new Socimi will not become listed in short term (it disposes of 2 years for that) but what we know for sure is it will do the property shopping for an amount exceeding 250 million euros.
Original story: Expansión (by Rocío Ruiz)
Translation: AURA REE