SOCIMIs Retain Earnings And Potential

14 February 2016 – Cinco Días

These are good times for socimis which, according to experts, should reflect on the stock market the consolidation of the  real estate market recovery in Spain. The truth is that three of the main four real estate listed companies (Hispania, Axia Real Estate and Properties Merlin) keep stock market gains since going public in 2014. And despite the intense crashes equities have suffered in recent days, which are currently in tremendous volatility. Only Lar Spain accumulates losses since its IPO (initial public offering of shares).

A recent report by Bankinter is optimistic about the future of housing, considering that housing demand will continue to grow and prices will rise this year and next year in places where supply is limited, and is also committed to the commercial segment which shows in his view, a “clear bull phase,” and considers listed real estate companies as a good investment option.

Of course, the organization warns that “we must be extremely cautious” and advocates for selecting only those companies that meet several requirements, such as having a business model focused on equity activity in contrast of the promotion, quality assets located in core areas or high market capitalization, asset portfolio, trading volume and free-float.
Thus, Bankinter recommends looking at Merlin Properties, “it has the best perspectives for the industry due to the quality of its asset portfolio, visibility and earnings and dividend yield increase”

Merlin, the only Socimi listed on the Ibex 35, adds up a 13% appreciation since its release in late June 2014. The biggetst Spanish Socimi by market capitalization – around EUR 3,000 million, currently shows a price of around 9 € per share. And it still  has an important potential, higher than 34%, according to Bloomberg consensus. 77.8% of analysts advise buying stock, while 16.7% opt for keeping and only 5.6% for selling.

Shares of Axia Real Estate earn almost 19% since IPO in July 2014, to be around € 11.1  The upside potential is 23%, with a  consensus target price of € 13.79  And Hispania, which went public four months before, at a price of 10 €/share, advances over 10% since then and keeps a potential of 27%. For its part, Lar España It is the only in the club that can not withstand the storm. Its shares have fallen more than 9% in nearly two years. However, Bloomberg forecasts a 32% upward trend.

Apart from potential in the stock market, SOCIMIs have an attractive dividend yield, which in the case of Merlin is expected to be 1.7% this year. By law, SOCIMIs are required to distribute at least 80% of the net profit generated by their income, at least 50% of the profits from the transfer of property and 100% of their capital gains.

Original story: Cinco Días (by Miriam Calavia)

Translation: Aura Ree

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