The MAB Gets Ready To Receive A New Wave Of Socimis

5 October 2017 – Expansión

Socimis have become the shining stars of the stock market and the undisputed protagonists of the real estate sector. Over the last four years, in addition to the large five listed Socimis – Merlin, Colonial, Hispania, Axiare and Lar España – , 40 vehicles of this kind have been incorporated into the Alternative Investment Market (MAB) and experts predict that, far from slowing down, the flood of stock market debuts is going to continue for the next few months at least.

Specifically, they estimate that around a dozen new vehicles are set to debut on the Madrilenian stock market. “We calculate that the total number of Socimis listed on the market could reach 50 by the end of 2017. At Armabex, we have 14 processes open for new Socimis, which will be making their debuts between 2017 and the first quarter of 2018”, explains Antonio Fernández, President of Armabex.

“You could say that we are facing the second wave of Socimis, but their growth prospects, until they reach the €40 million or €50 million mark, are still very broad”, explains Sandra Daza, Director General of Gesvalt. For Daza, the tightening of the access requirements to the MAB for Socimis, especially in terms of the diffusion of shareholders, will avoid the appearance of a distinguished group of small Socimis, focused solely on the fiscal benefits and not oriented towards the professionalism of their asset management.

Moreover, analysts expect to see greater specialisation in the field of the Socimis and consolidation of the sector over the medium term. “Gradually, over a period of three to five years, we will see the start of a new model of Socimi: those that arise as a result of mergers and acquisitions. This movement will result in the consolidation of the structure and the creation of some more heavyweight Socimis”, explains Fernández.

For Daza, the specialisation of Socimis in alternative assets within the real estate sector will be a process that will push ahead gradually: “For a Socimi to be a good investment vehicle, it requires a minimum size and a development plan that alternative assets do not always allow due to the small size of the market”.

Experts rule out that a bubble is being generated. “If we analyse in detail the history of the various Socimis listed on the MAB, the majority are the result of the restructuring of pre-existing real estate companies. In other words, there were not any previous transactions, they merely represented the adaptation of existing property portfolios to a new financial-fiscal environment, the Socimis, in which their respective real estate strategies fit better”, says Fernández. For Daza, in comparison with other countries, the size of the Spanish market and our GDP indicate that we are in for “a bright future in terms of the growth in the volume of Socimis over the next three to five years”.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Socimis Come To The Hotel Sector’s Rescue

17 March 2015 – Expansión

Trend / Listed real estate investment companies (REITs or Socimis) are paving the way for (hotel) groups to separate the management and ownership of properties – the vehicles provide significant tax advantages and boost the professionalism of the industry.

Socimis – ‘socidedades cotizadas de inversion inmobiliaria’ or listed real estate investment companies – are playing an increasingly important role in the hotel sector due to the tax benefits they offer and also because they allow (hotel) chains to separate the ownership of their properties from the management of the facilities, in line with the Anglo-Saxon model.

These types of vehicle, which are used to purchase and refurbish assets for rental, must invest at least 80% of their funds in property and pay out at least 90% of their rental income (from said properties) in the form of dividends. They also have a special tax regime.

To publicise this alternative funding formula, the Mallorcan Hotel Business Federation (‘Federación Empresarial Hotelera de Mallorca’ or FEHM), Armabex Asesores Registrados and Garrigues have organised a seminar entitled “Socimis as an instrument for restructuring the real estate property of hotel groups”, which will be held today in Mallorca. At the event, the tax advantages of this investment vehicle will be analysed, together with their legal status and the process for incorporating Socimis into the Alternative Investment Market (Mercado Alternativo Bursátil or MAB), amongst other considerations.

The purpose is to raise awareness amongst (hotel) chains and professionals in the real estate sector of the importance of ensuring that the management of hotels and the ownership of the property are in different hands; this is the biggest challenge facing the industry. We will also analyse in more detail the value that Socimis have as a tool for reducing risk, being more competitive and efficient and also their tax advantages”, says Inmaculada Benito, Executive Vice-President of the FEHM.

Antonio Fernández, Chairman of Armabex Asesores Registrados, stresses that “the restructuring of real estate capital in the sector has been triggered by the lack of financing, the decrease in prices and the existence of an appropriate legal and fiscal framework”. On that last point, Fernández highlights that “investors may now own properties without having to manage them and hotel groups can continue with their management without having to be owners”.

José Manuel Cardona, partner at Garrigues, says that “Socimis are a tool that help to address many of the challenges facing the hotel sector in a single solution”. In his opinion, “they not only represent a funding formula; they also facilitate expansion and internationalisation, provide a solution to the problem of succession in family businesses and pave the way for integration between larger groups and small chains”. Furthermore, “they encourage greater transparency and control, the professionalization of management teams and carry the requirement to distribute minimum dividends, which results in more objective valuations of the assets and rents”.

First case

Barceló was the first company to adopt this formula, through its alliance with Hispania. Bay, the first hotel-sector Socimi, was created with 16 hotels and two shopping centres, worth €421 million. Experts believe that it will not be the only one and that there will soon be more hotel Socimis, that will own both holiday and urban hotel properties. “2014 was the year for shopping centres (in the real estate sector) and this year, hotels will be the leading players”, predicts Fernández.

Original story: Expansión (by Yvonna Blanco)

Translation: Carmel Drake