Socimis Dethrone the Traditional Realtors

10/07/2014 – Expansion

Socimis, Spanish REITs, have become the principal target of large international investors eyeing the stock exchange investment opportunities. Still one year ago, property-linked companies were skipped due to their high risk, only the introduction of this investment vehicle convinced the investors from all around the world to turn back to the property sector.

But why the REITs? Experts point at various factors which could have provoked the boom. Firstly, Socimis are managed by specialists and the sector´s most experienced administration teams, which does not escape the notice of the foreign funds. Furthermore, the listed vehicles are obliged to distribute dividends annually: 80% proceeding from the rent, 50% of asset sales gains and 100% coming from the other Socimis or REITs.

Another virtue of this kind of vehicles is the obligation to trade on the stock market. No matter if on the Continuous Market or the Alternative one (MAB), Socimis are constantly observed and they must provide reports on their activity quite often.

Are all Socimis the same? Year-to-date, six of them sell the shares on the stock. When it comes to those listed on MAB, Entrecampos Cuatro and Promorent are rather family patrimony firms, controlled by the Segura Rodríguezes with a €107.7 million capitalization and the Pavón Olids  with €5.5 million, respectively.

The third REIT trading on the Mab is Mercal. The company run by Basilio Rueda, Esteban Costa and Enrique García became listed on July 1st at the price of 29 euros a share. The total value of the vehicle reaches €25.4 million, mostly thanks to a rented hospital building in Malaga.

When it comes to the Continuous Market and thereby bigger volume Socimis, the first to float was Lar España. The firm raised €400 at its IPO, mostly assigned by such great investors as Pimco and Franklin Templeton. Its “blind pool” soon after enlarged with two shopping malls. Another non-residential property purchase is in process.

Also, Axia Real Estate became listed yesterday without any assets in possession. The trust raised €360 million at its flotation, intended for creation of a portfolio consisting of offices in Madrid and Barcelona, principally. With the asking price at 10 euros, the first day Axia´s values went down to 9.80 euros a share.

Until now, Merlin Properties managed to raise a record amount at its IPO. In contrast with the other two listings, Merlin had 880 banking branches and 5 office buidlings fully let to BBVA already promised.

This year, also Hispania Activos Inmobiliarios debuted on the stock exchange market. The company (which in fact is not a Socimi) held by giants like George Soros and John Paulson, has invested  €220.7 million out of the €550 million IPO. Yesterday, the firm spent €15 million on an office building in Madrid.


Original article: Expansión (by Rocío Ruiz)

Translation: AURA REE