Stock experts have no explanation for the sudden rise in Colonial´s assets price observed in the last days. The news from January 2nd about the fresh capital injection by Juan Miguel Villar Mir (300 million Euros) has caused fall by 17.2%, then followed by another taper down by 15.9%. But in the last five sessions the titles climbed up by 58.15% and therefore set the price at €1.23 per asset, moving away from the price of €0.5 that Villar Mir is ready to pay. Yesterday the company on the Spanish Stock Market costed 279 million Euros while the best offer received from Villar Mir set its value at 112 million Euros.
What is the real price of Colonial? The last Net Asset Value (NAV) of the company made public in November last year shows €0.98 per share. Great European real estate companies quote with almost 20% discount on the declared NAVs. In case of Colonial, the hypothetical value could be punishable due to the company´s high indebtedness and its urgent necessity to capitalize itself as its syndicate credit exceeding 1.800 million Euros expires at the end of 2014. Since January 1st, its credit´s interest rate went up and now the company bears costs at 8% of it, namely 12 million Euros. If it extrapolated this year, the company would have to pay 144 million Euros.
Finally, the stock analysts remind that Colonial announced sale of its crown jewel, the French branch SFL that also suffers loss in value.
No matter what kind of logic drives the progressive adjustment of the assets in regard to the price offered by Villar Mir, the titles project a surprising upsurge keeping the market on tenterhooks. Analyst from M&G Valores, Nicolás López, says that “Villar Mir´s step in would rescue a real estate company that does not generate sufficient income to return the interest rate costs and by the deed would avoid causing its shareholders to lose money, but it does not justify the rises observed on the stock market. Buying now could be charged with significant risk (…)”.