The Assets Of The SOCIMIs Shoot Up By More Than 80% This Year

2 September 2015 – Expansión

The assets of the SOCIMIs shoot up by more than 80% this year

If 2014 was the year of creation of large listed real estate investment trusts (SOCIMIs/REITs), 2015 is the year of their consolidation.

Merlin Properties, Hispania, Axiare and Lar España have continued to increase their property portfolios and, 12 months after their flotation, already accumulated assets valued at 8.005 billion euros, having earned 181 million in the first semester.

These four large SOCIMIs debuted in Madrid between March and July 2014 without any property on their balance sheets. Therefore, they quickly began to invest 2.560 billion obtained from international investors for their stock market debuts. The investment rage helped them to greatly exceed the initial amount, and so they began financing their acquisitions.

In total, by December 31, 2014, Merlin, Hispania, Lar España and Axiare had assets worth 3.541,9 billion euros.

By size, the most important is the portfolio of Merlin Properties. The Socimi, created by the management team of the Magic Real Estate company, by the end of last year had invested €2,291,000.

Among the most notable purchases are the acquisition of Tree Inversiones (company with 880 branches and five buildings leased to BBVA) in June, for 739,5 million, and the Marineda City shopping center in La Coruña for 260 million. At the year end, Merlin formalized its first purchase of offices in Madrid, five buildings for 130 million.

Testa Purchase

Despite all these operations, it was 2015 when the company has carried out the most important operation in the sector: the purchase of Testa. In June Merlin agreed the acquisition of the real estate company with Sacyr, then its owner.

For the company, with assets valued at 3.202 billion as of June 30, Merlin will pay the construction group 1.790 billion, through a phased purchase operation. At present, the Socimi is already the majority shareholder in Testa, with 77.01% stake, which means control over a portfolio worth 5.616 billion euros.

To tackle this purchase, Merlin conducted a capital increase of 1,034 billion, which together with the revaluation of its own securities, placed its current market capitalization at about 3.322 billion, compared to 1.250 billion with which it debuted in March 2014.

Until June, the assets of Merlin had a gross asset value (GAV) of 2861.3 billion, including then owned 25% of Testa, two office buildings, two ships and the grounds acquired in 2015. In the first half, company earned 119,6 million, via investment of 65.4 million coming from rentals.

Next Socimi that raised the purchase of another real estate to get hold of a large portfolio of assets was Hispania. Although having a subsidiary Socimi, it is listed through the company which channels most of its investments. In November 2014 Hispania made a takeover bid to Realia, which was subsequently superseded by a counter-offer from Carlos Slim.

While the bidding for Realia was being resolved, Hispania has continued to work on expanding of its portfolio. Not being the parent Socimi, the company is not subject to the limitation of investing 80% in rental assets, for which reason it has the most diverse portfolio compared to its competitors, with hotels and homes, among others.

In 2015, Hispania has expanded its portfolio from 422 million to 710 million. Among its most  prominent operations are several hotel investments closed this summer: the Gran Hotel Atlantis Bahia Real and Suite Hotel Atlantis Fuerteventura Resort, for a total of 105 million. It recently bought two offices worth 54,5 million.

It has also created a hotel Socimi, named Bay, with the Barceló chain, through which it will initially buy 11 hotels and a shopping center, with an option to acquire another six properties. Overall it will invest 340 million in the new Socimi, of which it will have 80.5% of the capital. In the first half, Hispania made a profit of 10,7 million euros.

Investments

Lar España has been the most active Socimi in the last two months. The highlights of this period are the purchase of the Megapark business park in Bilbao, for 170 million, and of the shopping center El Rosal in Ponferrada (León). Currently, its portfolio is valued at 873 million euros, compared to 593 million of the valuation made at the end of the first semester. Until June, Lar España earned 19,300,000 and a gross operating profit (EBITDA) of 8.3 million.

As for Axiare, which went public in July 2014 with no assets and 360 million of capital, this year it also accelerated its investments and, in just two months, closed purchases worth 229 million, equivalent to 58% of the proceeds from the capital increase launched in June with the goal of doubling the size of the company. In the first half, Axiare had a profit of 31.3 million.

Original story: Expansión

Translation: Lee La

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