1 April 2016 – Cinco Días
When the Socimis began to emerge timidly in 2014, few thought that they would become the key and crucial factor behind the change in the real estate cycle in Spain. The four largest companies alone, excluding the dozen other companies listed on the Alternative Investment Market, have managed to double the value of the properties that they own in the last year, to take the total to €9,235 million.
The key behind this change has been two-fold. Firstly, the acquisition that the Socimi Merlin Properties closed last year, of Testa from Sacyr, which doubled its size. Secondly, the large number of international funds that have relied on these Spanish managers to enter the domestic real estate market, where opportunities are now arising after the tough years of the property crisis.
Socimis are a type of company that is exempt from paying corporation tax in exchange for having the obligation to distribute dividends each year. Their structure is similar to the more established Anglo-Saxon REITs, which control properties that are leased out (offices, shopping centres, hotels..). The most obvious risk is that they drive up the prices of these kinds of assets, because they set short-term timeframes for investing the money they raise from investors.
The largest of these companies in Spain is Merlin Properties, chaired by Ismael Clemente, an experienced former director of Deutsche Bank. This Socimi has managed to sneak into the crème de la crème of the business world by listing on the Ibex 35 since the beginning of the year. Almost all of the funds that control its capital are international, with very diluted individual shareholdings. The largest block belongs to BlackRock, which owns a 5% stake.
(…). Merlin’s portfolio amounts to €6,052 million, and comprises offices (36%), retail premises (31%), shopping centres (11%), hotels (6.6%) and residential assets for lease (4.8%). (…). In December, the entity announced that it expects to issue bonds with a BBB rating. The company currently has a market capitalisation of approximately €3,370 million.
Thanks to its partnership with Barceló, Hispania has become another one of the major players in the sector. (…). In total, Hispania now owns properties amounting to more than €1,425 million, comprising hotels (59%), offices (29%) and residential properties (12%). (…).
The multi-millionaire George Soros owns 16% of the company, meanwhile John Paulson owns a 9.9% stake. (…).
One of Lar España’s most recent operations has been the announcement that it will invest €145 million in the construction of Sevilla’s largest shopping centre. The Socimi, managed by Grupo Lar, has gradually specialised in these types of assets, which now account for almost 70% of its business volume.
The company is currently listed with a market capitalisation of €340 million. Its other assets include a small residential portfolio (7%), as well as logistics assets (8%) and office buildings (17%).
The company is led by Luis López de Herrera-Oria, a veteran in the real estate sector (…). Its shareholders include several funds – also international – such as Citigroup, Deutsche Bank, Gruss, JP Morgan Chase, Perry Partners and Pelham Capital.
It has doubled its portfolio of assets in the last year to €859 million, thanks to the appreciation in the value of its assets and new acquisitions. 72% of its portfolio relates to offices and 15% comprises logistics assets.
Original story: Cinco Días (by Alfonso Simón Ruiz)
Translation: Carmel Drake