SOCIMIs Retain Earnings And Potential

14 February 2016 – Cinco Días

These are good times for socimis which, according to experts, should reflect on the stock market the consolidation of the  real estate market recovery in Spain. The truth is that three of the main four real estate listed companies (Hispania, Axia Real Estate and Properties Merlin) keep stock market gains since going public in 2014. And despite the intense crashes equities have suffered in recent days, which are currently in tremendous volatility. Only Lar Spain accumulates losses since its IPO (initial public offering of shares).

A recent report by Bankinter is optimistic about the future of housing, considering that housing demand will continue to grow and prices will rise this year and next year in places where supply is limited, and is also committed to the commercial segment which shows in his view, a “clear bull phase,” and considers listed real estate companies as a good investment option.

Of course, the organization warns that “we must be extremely cautious” and advocates for selecting only those companies that meet several requirements, such as having a business model focused on equity activity in contrast of the promotion, quality assets located in core areas or high market capitalization, asset portfolio, trading volume and free-float.
Thus, Bankinter recommends looking at Merlin Properties, “it has the best perspectives for the industry due to the quality of its asset portfolio, visibility and earnings and dividend yield increase”

Merlin, the only Socimi listed on the Ibex 35, adds up a 13% appreciation since its release in late June 2014. The biggetst Spanish Socimi by market capitalization – around EUR 3,000 million, currently shows a price of around 9 € per share. And it still  has an important potential, higher than 34%, according to Bloomberg consensus. 77.8% of analysts advise buying stock, while 16.7% opt for keeping and only 5.6% for selling.

Shares of Axia Real Estate earn almost 19% since IPO in July 2014, to be around € 11.1  The upside potential is 23%, with a  consensus target price of € 13.79  And Hispania, which went public four months before, at a price of 10 €/share, advances over 10% since then and keeps a potential of 27%. For its part, Lar España It is the only in the club that can not withstand the storm. Its shares have fallen more than 9% in nearly two years. However, Bloomberg forecasts a 32% upward trend.

Apart from potential in the stock market, SOCIMIs have an attractive dividend yield, which in the case of Merlin is expected to be 1.7% this year. By law, SOCIMIs are required to distribute at least 80% of the net profit generated by their income, at least 50% of the profits from the transfer of property and 100% of their capital gains.

Original story: Cinco Días (by Miriam Calavia)

Translation: Aura Ree

AxiaRE Increases Capital By €396M To Fund New Purchases

6 April 2015 – Expansión

The listed real estate investment company (‘sociedad cotizada de inversión inmobiliaria’ or Socimi) Axia Real Estate has announced a capital increase of around €396 million. The operation, which will involve the issue of up to 36 million shares at a minimum price of €11 per share, will allow AxiaRE to continue purchasing real estate assets.

The Socimi also announced the purchase of two office buildings in Madrid: one in the Campo de las Naciones area and another on Calle Juan Ignacio Luca de Tena. In total, AxiaRe has invested €40.5 million in these two purchases.

The real estate company has also signed bilateral financing agreements for several properties, including the offices on Luca de Tena, for which it has signed a loan with CaixaBank for €10.85 million, with a term of 13 years. It has also obtained a €50 million loan from Santander, with a seven year term, to finance the purchase of some (other) offices in Madrid, two warehouses in Guadalajara and a retail space in Tarragona.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake

Blackstone Finalises Sale Of The Tucumán Building To Axia RE

26 March 2015 – El Confidencial

The Tucumán Building, located on the Glorieta de Mar de Cristal in Madrid measures 5,083 square metres. Until August 2013, when it was leased by Aegis Media, the asset was very “distressed”.

The talks are in their final phases. The fund Blackstone is finalising the sale of an office building measuring 5,000 square metres in Campo de las Naciones. The purchaser is the Socimi Axia Real Estate and the amount of the transaction is unknown. Blackstone is divesting the Tucumán Building, which it acquired from Sareb at the end of 2014 as part of the so-called Corona project, which also included the Delta Norte II and III office buildings, located to the north of Chamartín, and another office building in Montecarmelo, to the north of the capital. Three other properties also fell outside of that project, which were initially included in the portfolio of the “bad bank”, initially valued at €140 million.

It is not the first acquisition made by Axia Real Estate in Campo de las Naciones. In December 2013, five months after its stock market debut, the Socimi closed the purchase of a portfolio of buildings from Credit Suisse Asset Management for €180 million. The portfolio included the building at number 28 on Calle Ribera del Loira, in the business district of Campo de las Naciones in Madrid, as well as two other properties on Calle Vía de los Pobaldos, in the same area.

“The transaction will not be very relevant in terms of size, but it is very significant in several other respects. Firstly, the buyer is a Socimi, one of the most active investors in the market in the last year. This purchase would be clear signal that these companies are in ‘equity call’. That is, they are resorting to financing or may be considering capital increases to continue buying property”, explain financial sources.

Axia Real Estate raised €360 million through its IPO in July 2014. Since then, not only has it invested all of the funds it raised, it has also turned to financial institutions. In this way, for example, it financed the purchase of a portfolio of assets from Credit Suisse through a combination of own funds and bank financing.

Moreover, this future sale will involve the rotation of the first assets acquired from Sareb and “the fact that those who bought assets are selling them now, and obtaining a profit, sends a clear message to investors, that they can make money from assets purchased from the “bad bank””, explains one real estate source.

On the other hand, according to the experts consulted, this transaction is a clear symptom of the recovery in the Spanish real estate market, since investors have increased their scope beyond the prime area of Madrid. Campo de las Naciones is a fully consolidated business park where several transactions have been closed in recent months.

Besides Axia Real Estate, at the end of 2013, Lar España Real Estate closed the acquisition of the Egeo office building in Campo de las Naciones from the German company MEAG for €64.9 million.

The Tucumán Building, located on the Glorieta de Mar de Cristal has a surface area of 5,083 square meters. It was a very distressed asset until it was occupied by Aegis Media in August 2013. “The building was empty, with no tenants and located in an area that has nothing to do with the main business area of Madrid”, say real estate sources. “Now, however, the real estate situation has changed and the fact that the building has a tenant removes the risk of the property remaining vacant”.

Original story: El Confidencial (by Elena Sanz)

Translation: Carmel Drake

UBS Finalises Its Purchase Of The Zielo Shopping Centre

20 March 2015 – Expansión

The Swiss bank’s real estate fund is offering €73 million for the Madrilenian shopping centre, exceeding the expectations of its current owner, Hines, which has invested more than €100 million in its construction.

Another shopping centre is expected to change hands soon. After the French company Klépierre closed its purchase of the Plenilunio shopping centre in Madrid this week, another Madrilenian property will soon have a new owner.

The property in question is the Zielo shopping centre, located in the town of Pozuelo de Alarcón, in Madrid. The building was designed by the real estate company Hines, which took out a loan of €50 million to construct the property. Conceived at the height of the boom (it was opened in October 2009), Hines invested more than €100 million in its development.

The centre, designed by the architect Alberto Martín Caballero, has a surface area of 50,000 square metres, of which 15,537 m2 is dedicated to retail over three floors. It also has more than a thousand parking spaces, the majority of which are indoors.

Five years later, Hines put the “for sale” sign up on its Madrilenian shopping centre in January. The initial asking price was set at €65 million. The Houston-based real estate company decided to sell the property through a restricted (tender) process rather than open it up to all of the interested investors in the Spanish market. Thus, its advisors reached out to the large Spanish Socimis (Merlin Properties, Axia Real Estate and Lar España), as well as the more institutional investment funds such as Deka Inmobilien and the (fund) manager Tiaa Henderson. In the end, the real estate fund owned by the Swiss bank UBS made the best offer and is now negotiating the finer details of the transaction in an exclusive process with Hines.

According to sources close to the process, UBS is offering €73 million. A price that means that the yield on the transaction amounts to less than 5%, a very low figure compared with the figure of 10% that was achieved on the first deals involving the sale and purchase of shopping centres following the burst of the bubble, in 2013.

Zielo Shopping is not the only commercial property that is currently on the market in Spain. According to Deloitte Real Estate, around 80 shopping centres will come onto the market over the next 12 months. Some transactions, such as the purchase of Puerto Venecia in Zaragoza and Plenilunio in Madrid have already been closed. In total, €3,500 million could change hands in this market alone.

Possible buyers include the British real estate company Intu Properties, which is finalising a call option on a real estate project in Málaga, as part of its €2,500 million investment program, and the fund manager CBRE Global Investors, which plans to invest €600 million in shopping centres and retail outlets in the Spanish market.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Blackstone Drives Boom In The Purchase Of Logistics Assets

26 January 2015 – Expansión

Investors spent €620 million on logistics assets in 2014, compared with €100 million in 2013 / The total spend on warehouses amounted to more than €500 million for the first time since 2008.

From €100 million to €600 million in twelve months. That was the trajectory of the investment market in industrial and logistics assets in Spain in 2014.

Interest from large international funds and the launch of Socimis drove the volume of investment in the logistics sector through the roof in 2014, in a similar way to shopping centres. From minimal levels in recent years, the figures have increased sixfold.

According to data published by the property consultant JLL, €620 million was invested in logistical and industrial assets in Spain last year. In 2013, this figure was €100 million. “Investment in these types of assets has exceeded €500 million for the first time since 2008”, comments JLL.

The turnaround has been characterised not only by an increase in the number of transactions, but also in their size. Blackstone closed one transaction amounting to more than €60 million, and another for €132.8 million. “Blackstone closed 35% of all the transactions in the market, followed by the Socimis, which accounted for 36% of total volumes”, highlights the report. In just two years, the US investment fund has acquired a portfolio of logistics assets in Spain covering 600,000 square metres.

The listed property companies Axia Real Estate, Merlin Properties, and Lar España purchased logistics properties worth more than €200 million.

Another example of the boom in the sector is that the asset purchases have not been restricted to the major markets, says the consultancy in its report. “Madrid, Guadalajara and Barcelona continue to be the preferred locations for investors, but cities such as Sevilla, Valencia, Zaragoza and others are also in the mix”. The experts at JLL believe that, over the next few years, the funds with a more opportunistic nature will make way for those that have a more conservative profile.

In the case of recruitment, the numbers did increase with respect to the previous year, but not as significantly as the investment data. Nevertheless, demand for large warehouses, especially those that occupy more than 25,000 square metres, has skyrocketed, as companies such as Amazon and the textile groups realise their need to increase their storage capability in the face of increases in online sales.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake

Hines Puts Zielo Shopping Centre Up For Sale

19 January 2015 – Expansión

The real estate company Hines has decided to sell one of its landmark shopping centres in Spain, namely the Zielo Shopping centre, located in the Madrid suburb of Pozuelo.

Zielo Shopping opened in October 2009. It occupies a total surface area of 50,000 square metres, of which 15,537 m2 are used for commercial purposes; and it has more than one thousand car parking spaces. In February 2011, Hines requested a €50 million loan from Eurohypo to finance the construction of the centre. Before its inauguration, the real estate company said that its investment in the facilities would exceed €100 million.

Now, Hines has put the property on the market for a price of around €65 million. To this end, the Houston-based real estate company has decided to organise a restricted sales process, in which it has invited three of the largest Socimis to participate, namely: Merlin, Axia Real Estate and Lar España, as well as the funds Tiaa Henderson and Deka Inmobilien. If no agreement can be reached with these five candidates, Hines will open up the process to new investors, according to real estate sources.

Original story: Expansión

Translation: Carmel Drake

Spain’s Real Estate Sector Closed 2014 With A Record High

02/01/2015 – Expansión

The arrival of international funds and the implementation of large REITs have increased investments, with respect to previous years, up to 9 billion euros. Both the total figures and number of operations have skyrocketed. Well-located large shopping centers and office buildings have been the most desirable assets in 2014.

After more than five years of decline in business, the Spanish real estate sector predicted that recovery would arrive in the year 2014. However, the more optimistic reality has exceeded all expectations.

In anticipation of the year-end figures, this is already the second best year in the last decade, surpassed only by 2007, in the boom of the Spanish economy. “The market this year has been proportionally more active than in 2007. A higher number of assets have been purchased, and the prices, when compared with 2007 figures, are much higher,” explained representatives from the research department of JLL Spain.

So far this year, more than 6.18 billion euros have been invested in real estate for tertiary use (i.e. non-residential), according to Deloitte Real Estate.

This figure soars to 9 billion, according to the consultancy group, Aguirre Newman, if we take into account multiple debt portfolios whose securities were real estate assets, and the sale of land and housing.

These figures are double those recorded in 2013, 2012 and 2011, and are explained by a combination of several factors. “2014 was a year in which all the elements were present to favor real estate investment: the improvement of the overall economic situation, the emergence of new players with liquidity and the pressure to invest (the REITs), the return of funding and the need to sell certain closed funds,” says Javier Garcia-Mateo, director of Deloitte Real Estate.
New investors

The new players in the real estate sector, the REITs, are among the most influential reasons for investment growth. Only four major listed real estate companies, Merlin Properties, Hispania Real, Lar España and Axia Real Estate, have invested over 2.4 billion euros. Among their investments was the purchase of Marineda City, a shopping center located in La Coruña (Galicia), by Merlin Properties for 260 million euros, the largest purchase of a shopping center until December 24, 2014.

A few days ago, the British real estate company, Intu Properties, beat this record by paying 451 million euros for Puerto Venecia in Zaragoza. With these last transactions, investment in shopping centers in 2014 amounted to 3 billion euros, the same amount invested across the real estate sector in 2013.

Shopping centers are not the only commercial properties to be the star of large operations. Street storefronts have also been key players in investments. Thus, companies such as Mango bought property in Madrid and Bilbao to create large retail stores; while international funds, such as Axa Real Estate and Deka, bid for being the landlords of the main brands along the Gran Via in Madrid.

As for office buildings, investment has soared over 200% from January to September to 2.4 billion euros, according to CBRE. These figures are due to the purchase of portfolios such as the four buildings located in Barcelona and Madrid held by Blackstone, in addition to the other four buildings that the same fund bought from SAREB a few days ago.

Also noteworthy is the purchase of two properties in Barcelona — Torre Agbar and Paseo de Gracia 111 — which will be transformed into luxury hotels, and the numerous buildings sold by public administrations such as the Generalitat.

“A year of great investment activity has closed and the market should expect the same level of activity for the next year, albeit with some changes in the profile of investors,” says Jaime Pascual, Executive Managing Director of Aguirre Newman.

Original article: Expansión (by Rocío Ruiz)
Translation: Aura REE

Real Estate Sector To Close A Record Year In Spain

30/12/2014 – Expansión

BOOM INVESTOR / The arrival of international funds and launch of large investment REITs have increased investment over previous years to 9 billion euros. Both number of operations and total figures have soared. Large shopping malls and prime-location office buildings have been the most sought-after assets in 2014.

After more than five years of business decline, it was forecast that recovery would come to the Spanish real estate sector in 2014. However, the most optimistic scenario has played out in reality and exceeded all expectations.

Awaiting the year-end figures, this is already the second best year over the past decade, surpassed only by 2007, amidst the boom of the Spanish economy. “The market this year has been considerably more active than back in 2007. A larger number of assets and in higher volumes have been purchased, when compared to the 2007 prices,” explained experts from the Research division of JLL España.

So far this year, more than 6.18 billion euros have been invested in real estate for tertiary use (i.e. non-residential), according to Deloitte Real Estate.

This figure goes even further up to 9 billion, according to the Aguirre Newman consultancy, taking into account various debt portfolios secured with real estate assets as well as sale of land and housing.

These figures are double those recorded in 2013, 2012 and 2011 and attributable to a combination of several factors. “2014 was a year in which we had all the factors to foster investment: overall improvement of the economic situation, the rise of new players with liquidity and willingness to invest (the REITs), the return of funding and the need to sell certain close-ended funds,” says Javier Garcia-Mateo, director of Deloitte Real Estate.

New investors

Among the factors which most influenced the increase in investment are the new players in the sector: the REITs. Only four major listed real estate companies – Merlin Properties, Real Hispania, Lar Spain and Axia Real Estate, have invested over 2.4 billion euros. Among those investments made by December 24 was the purchase of the largest shopping mall in 2014: the Marineda City in La Coruña, by Merlin Properties for 260 million euros.

Just three days ago, the British realtor Intu Properties beat this record by paying €451 million for Puerto Venecia in Zaragoza. With these transactions, investment in shopping malls in 2014 amounted to €3 billion, the same amount invested in the entire real estate sector back in 2013.

The malls are not the only type of commercial property that has defined large-scale transactions. Street locations have also been blue-chip investment. Thus, companies such as Mango bought properties in Madrid and Bilbao to open large stores, while international funds, such as Axa Real Estate and Deka seek to be the landlords of the major brands on Gran Via in Madrid.

In the case of office space, investment has soared from January to September over 200%, up to 2.4 billion, according to CBRE. These figures are due to the purchase of portfolios, as for example, in addition to its four buildings in Barcelona and Madrid, Blackstone has acquired other four from SAREB a few days ago.

In terms of offices, it’s worth noting the purchase of two properties in Barcelona — Torre Agbar and Paseo de Gracia 111 — that will be turned into luxury hotels, as well as the numerous buildings sold by public administrations like that of the Generalitat.

“We are at the close of a fiscal year of a great deal of investing activities and we should expect the same level of activity for the next year on the market, though with certain changes in the investors’ profile,” states Jaime Pascual, CEO of Aguirre Newman.

Original article: Expansión (by Rocío Ruiz)

Translation: Aura REE

The Socimi Axiare Invests €180 Mn in Five Buildings

11/12/2014 – Expansion

Socimi Axia Real Estate (Axiare), one of the Spanish REITs listed earlier this year, has just spent the remaining amount of the 360 million euros in funds raised at its flotation on July 5th. The trust bought four office buildings and a retail space for a joint amount of 180 million euros from Credit Suisse Asset Management Immobilien Kapitalangegesllschaft. ‘Credit Suisse had to sell the assets because the fund was set to be dissolved in 2015. First, the talks went on two or three assets, but finally the entire porftolio was transferred’, said Oriol Barrachina, CEO at Cushman & Wakefield España which served as a consultant at the operation.

The acquired properties totalling at more than 40.000 square meters of rentable space are found in Madrid (3) and in Barcelona (2). Among them, interesting are two office buildings inside the Cristalia business park in Madrid, leased to such big-name firms like corporate service provider Sodexo and logistics firm Chep Iberica. In Catalonia, apart from an office unit located at 197 Diagonal street inside the 22@ District in Barcelona, Axiare has bought a retail space of 12.413 square meters let to Bauhaus.

Portfolio

Following the purchase of the 5 units, the Socimi chaired by Luis Lopez de Herrera Oria has added new properties to its twelve-unit office portfolio with buildings situated in Madrid, Alcobendas and Barcelona, as well as several logistics warehouses in Seville and Guadalajara. In total, the REIT has spent 415 million euros on assets and additional 10 million on document processing and advisory services. As at its IPO Axiare raised only 360 million euros, it asked for support from banks at the deal. ‘We have consolidated our asset portfolio and we are analyzing various real estate investment opportunities for the following months’, said Lopez de Herrera Oria Tuesday.

Original story: Expansión (by R. Ruiz)

Translation: AURA REE

Axiare Acquires an Office Unit in Madrid For €31 Mn

14/11/2014 – Expansion

Newly listed Spanish REIT (or a Socimi as they are known in this country) Axia Real Estate (now Axiare) has bought an office building situated at 7 Manuel de Falla in Madrid for €31 million.

As soon as the rehabilitation works are completed (probably in March 2016), the property will become a part of the buyer’s portfolio.

The deal was formalized through a down payment of €12 million, fully disembursed from Axiare’s own funds.

The building has a total built area of 6.500 square meters and apart a parking lot with 40 spaces, all designed by the Arquitectura Allende Arquitectos architect’s office. Gleeds Ibérica will advise Axiare on supervision of the refurbishment works.

In opinion of the general director of the Socimi, Luis Lopez Herrera-Oria, the deal was an exceptional opportunity in terms of purchasing offices in downtown Madrid. Acquisition of this building and of another one located at 15 Fernando el Santo street proves the firm bet the company placed on the city center.

During the four months which passed since its listingAxiare has invested a more than €236 million amount, representing 65.5% of its IPO funds.

 

Original article: Expansión

Translation: AURA REE