08 August 2017
Acciona will integrate its residential assets into Testa in exchange for 21% of the REIT’s capital
The combined company will thus be the first home rental REIT in Spain. The non-cash deal will be approved at the extraordinary shareholders’ meeting convened for next September 14.
The REIT Testa Residencial will increase its capital by €341.19 million to complete the merger of Acciona’s home rental portfolio, a deal agreed to last July, thereby creating the country’s first home rental.
The non-cash deal will be approved in the extraordinary meeting of shareholders that the company has called for next September 14.
Specifically, Acciona will exchange its portfolio of 1,058 rental homes for Testa shares equivalent to 21% of its capital. Acciona will then become the company’s third largest shareholder behind Santander (35.7%) and BBVA (26.9%). Other shareholders include Merlin Properties (12.7%) and, Banco Popular (3.1%).
Testa’s extraordinary shareholders meeting will also include the appointment of new directors to its board of directors, chaired by CEO José Manuel Entrecanales.
The operation will give rise to a new real estate ‘giant’, unprecedented in Spain, since it will create the first home rental company in Spain, coinciding with the growth of the country’s residential rental market.
Once this merger is concluded, Testa Residencial will have a portfolio of 9,041 homes in 118 buildings. More than half of them (51%) are in Madrid.
Testa’s new portfolio, valued at about 1.816 billion euros, will generate gross annual rental revenues in excess of 70 million euros per year.
The operation gives new impetus to the company’s growth strategy, less than a year after its adoption in October 2016.
Second growth operation
Testa Residencial is the result of last year’s merger of Merlin Properties with the equity arm of Metrovacesa, in a deal in which the companies agreed to segregate the housing portfolio into a specific company to be constituted as a REIT.
The current deal, where Acciona’s housing stock will be merged into Testa’s operations is the second major growth operation undertaken by the firm as part of its growth policy, which does not rule out going public.
The first one was concluded at the beginning of this year, when its three shareholder banks (Santander, Popular and BBVA) transferred a portfolio of 3,300 homes to the company, also through a non-cash capital increase.
However, the two transactions resulted in a dilution of Merlin’s initial 46.2% stake in Testa at the time of its incorporation, to the current 12.7%. The transfer of the homes from the banks had already reduced the holdings of the company run by Ismael Clemente to 34.2%, which is centred on office and commercial and logistic centres, and which did not consider the housing segment as strategic.
Original Story: Expansión – EP
Translation: Richard Turner