Socimis Account For Almost One Third Of The MAB

14 March 2016 – El Economista

Almost one third of the 49 companies currently trading on the Alternative Investment Market (MAB) are Socimis. The real estate investment vehicles have a combined market capitalisation of €1,600 million and have led the debuts on this market, which have accompanied the recovery of the sector.

The first Socimi to make the move onto this growing business market was Entrecampos, which debuted in November 2013, a year in which Promorent also joined the exchange. In the middle of 2012, the Ministry of Development decided to improve the regulations governing Socimis – created in 2009 – whereby relaxing the requirements for their constitution, in relation to capital and the number of shareholders.

Despite that, in 2014, only two Socimis debuted on the MAB, namely Mercal and Obsido; the latter specialises in hotel assets.

The presence of Socimis was almost symbolic until in 2015, when there was also a change of direction in the real estate sector and this type of company – very common in other countries similar to our own – burst onto the MAB, which had been questioned after having witnessed some high profile failures (Gowex, Grupo Nostrum and Bodaclick, amongst others).

Last year, seven Socimis debuted on the MAB. They included Trajano Iberia, which is managed and promoted by a division of Deutsche Bank; Uro Property, whose portfolio mainly comprises bank branches leased to Santander; Corpfin Capital Prime Retail II; Autonomy; Fidere; Zambal; and Zaragoza Properties, which owns a stake in the Puerto Venecia Shopping Resort shopping centre in Zaragoza.

So far this year, four Socimis have debuted on the MAB, namely, Heref Habaneras, owner of the Habaneras shopping centre (in Torrevieja); Corpfin Capital Prime Retail III; Inversiones Doalca and Jaba I Inversiones Inmobiliarias. Indeed, the last two made their debuts on Friday.

Zambal is the Socimi with the largest market capitalisation on the MAB, almost €570 million, followed by Uro Property (€218 million) and Fidere (€192 million). Promorent and Obsido have the smallest market capitalisations in the Socimi segment on the MAB, with €4.3 million and €6.6 million, respectively.

The tax advantages of these vehicles for investors (they are exempt from Corporation Tax, although they must distribute almost 80% of the profit that is not reinvested in the form of dividends) are part of their appeal.

Nevertheless, even though the MAB is still growing and increasingly more companies are joining it, the heavy weight Socimis are listed on the main stock market (Hispania, Axiare, Lar España Real Estate) and Merlin Properties is even listed on the Ibex 35.

Original story: El Economista

Translation: Carmel Drake

Merlin Considers How To Exit Residential Sector In 2016

1 March 2016 – Expansión

On Monday, Merlin Properties presented its results for 2015, its first full year, which closed with a net profit of €49.1 million, slightly lower than the figure it recorded in the previous year (€49.7 million). It also announced a 277% improvement in revenues to €214.5 million, following the consolidation of Testa from the second half of the year onwards.

The acquisition of Testa from Sacyr for €1,794 million involved the incorporation of a residential portfolio, comprising more than 1,519 units spread across eleven buildings. These assets are peripheral for Merlin, which focuses on the office, shopping centre and logistics platform segments.

The President of the Socimi, Ismael Clemente, explained that the objective of the company is to divest that business during 2016 and he indicated that a joint venture is the most likely option.

Clemente revealed that Merlin is working with three investors and explained that this operation, which would result in the departure of 10 people from Merlin’s workforce, would involve designing a co-management structure, as well as exchange equations or contribution calculations.

The residential business accounts for 5% of Merlin’s balance sheet, with a value of around €288 million. “Our maximum priority is to achieve the excellent execution of the operation that we are going to carry out”, said the Director, who ruled out any negative effect on his divestment plans from the political uncertainty.

Regarding the unwinding of its positions in hotel assets, which do not form part of its core business either, Clemente said that the Socimi will act in line with “pragmatic” criteria and in accordance with the performance of the portfolio.

Bond issue

Merlin also announced yesterday that it had obtained an investment grade BBB credit rating from Standard & Poor’s, one notch below the rating for the Kingdom of Spain, which will enable the group to go to the bond market and improve its financial structure.

In this sense, the company is planning a corporate bond issue of between €800 million and €1,000 million, probably in two tranches. The issue, conducted through the parent company, will probably be listed in Luxembourg to reduce its average cost of debt from the current level of 2.4%.

Merlin also announced a distribution to shareholders of, at least, €140 million, which represents a 133% increase with respect to the previous year.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Lar España’s Dividend Soars After Profits Of €44M In 2015

1 March 2016 – Expansión

Lar España generated a net profit of €43.6 million in 2015, which represents a thirteen-fold increase in the figure from the previous year, thanks to growth in revenues from rental assets, which quadrupled to €35.7 million.

At its next shareholders’ meeting, the Socimi will propose the distribution of a €12 million dividend, which represents a payment of €0.201 per share, in other words, six times more than the dividend paid in the previous year. “In 2014, we were one of the few companies in the sector to distribute dividends, having operated for only nine months, and this year we are going to distribute more than a quarter of last year’s profits to our shareholders”, said the President of Lar España, José Luis del Valle (pictured above).

Original story: Expansión (by R.A.)

Translation: Carmel Drake

Axiare’s Profits Quadrupled To €85.3M In 2015

25 February 2016 – Expansión

The Socimi Axiare generated a net profit of €85.3 million in 2015, whereby quadrupling its result from 2014, the year in which it was constituted and first listed on the stock exchange. Axiare will propose the distribution of a dividend amounting to €0.04 per share at its general shareholders’ meeting and will set aside €3 million for the payment.

Original story: Expansión

Translation: Carmel Drake

Santander Uses Uro Property’s First Dividend To Pay Off Debts

6 July 2015 – El Confidencial

Just four months after Uro Property’s IPO on the stock market, the landlord of 1,136 Santander branches, has approved its first dividends and the entity chaired by Ana Botín has used the funds to pay off some of the Socimi’s debts. And that is because Santander is not only the Socimi’s tenant, it is also the main shareholder of the company, previously known as Samos, which it inherited after the company’s bankruptcy due to its inability to pay off debts amounting to more than €2,000 million.

The foreclosure by the banks was orchestrated, primarily, through the company Zitoli, which currently holds 85% of the share capital, whilst Santander owns the remaining 15% as a result of its financing of the mezzanine debt. The two partners have agreed to use the shareholder remuneration that Uro Property has just authorised, amounting to €154.3 million, to repay its debts and continue the clean up of the Socimi.

This decision has been orchestrated through the issue of demand notes, securities that will be capitalised, taking advantage of a capital increase to pay off loans, which will take place this summer, just after 30 July, when the dividend payment will be made. From that moment on, Ziloti and Santander will devote 57% of the remuneration due to them, almost €88 million, to continue with the plan to clean up the Socimi.

The Cantabrian entity has the leading role in this process, since through its indirect shareholding via Ziloti, as well as the direct stake it holds from the inherited mezzanine loan, it holds 24% of the share capital. The next largest shareholder is CaixaBank, with a 15% stake, BNP Paribas with a 8.81% stake and Société Générale, with a 3.14% stake. Moreover, several hedge funds and entities such as Barclays and Bayerische Landesbankhold hold stakes of less than 1%; whilst the former shareholders, Sun Capital, now known as Atisha Holding, and Pearl Group, now Phoenix Life, hold 21.7% and 14.38% stakes, respectively.

These vehicles created the current Uro Property together with Drago Capital, the fund led by Oriol Pujol, which is currently being investigated by the Tax Authorities and from whom the Socimi has made every effort to distance itself. That former link is the main threat that hangs over the entity and could severely jeopardise the efforts being made by it, under the guidelines set out by its creditors to clean up its balance sheet.

In fact, the Socimi is one of 64 individuals and legal entities that have been denounced by the Tax Ministry for “the alleged commission of a crime involving money laundering and fraud”.

Whilst the Courts continue with their investigations, the banks are also progressing quickly with their roadmap designed to financially restructure the Socimi and find an exit for those creditors that do not want to continue to hold shares in the company. One of the main steps taken to that end, besides the listing of Uro Property on the stock exchange, was the sale of 381 branches to Axa for €308 million, which was approved in April, and the issue of bonds amounting to €1,300 million.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Listed RE Companies Worth More Than €9,000M

12 June 2015 – Expansión

The real estate sector is in fashion on the stock market. Merlin’s recent agreement to purchase Testa is in itself testament to that. After years of decline, the expected growth of this sector has encouraged many investors, including large property magnates such as George Soros and Carlos Slim, to look for opportunities in RE shares, which were hit very hard during the crisis.

The fourteen real estate companies that are currently listed on the Spanish stock market – excluding those that have been suspended from trading – have all recorded gains in 2015, with increases exceeding 30% in the cases of Quabit, Inmobiliaria Sur, Realia and Montebalito. The positive sentiment in the sector has enabled the joint market capitalisation of the twelve listed Spanish real estate companies to reach €9,009 million, up 31% from the €6,821 million recorded at the beginning of the year. That is the highest figure recorded since 2009, but it falls far short of the €30,000 million that the 14 listed real estate companies in Spain were trading at when the crisis began in July 2007.

The recent resurgence in the Spanish real estate sector has been very closely related to the debut on the stock exchange of the Socimis – companies that are dedicated to the business of real estate rental and focus on paying dividends to their shareholders. In fact, the largest real estate company by market capitalisation on the Spanish stock exchange is a Socimi, Merlin, with a value of €2,248 million, which may increase when it finalises its purchase of Testa. The company, which began trading on 30 June 2014, has increased in value by more than 28% since its IPO, and some analysts have already placed it in the pool of possible securities to join the Ibex 35. The real estate sector has not been represented in the selective index since Colonial’s departure in April 2008.

Moreover, Colonial is now the second largest company in the sector, with a market capitalisation of €2,205 million. The company has benefitted in recent years from the entry of important investors (into its share capital), led by the Villar Mir Group. Its value has increased by more than 140% since 2014.

Original story: Expansión (by A. Monzón)

Translation: Carmel Drake

Sacyr Sells Its Subsidiary Testa To Merlin For €1,793M

9 June 2015 – Expansión

Strategy / The construction company cleans up its balance sheet with this transaction and improves its financial position, with a view to growing its international construction and concessions businesses.

Yesterday, Sacyr agreed the sale of its property subsidiary, Testa, to the Socimi Merlin Properties for €1,793 million. The group chaired by Manuel Manrique (pictured above right), which has been advised by the bank Lazard, has opted for Merlin’s proposal after rejecting the bids made by other investors such as the US fund Blackstone and the real estate company Colonial.

The agreement forms part of an “accordion operation”, in which Testa will simultaneously make a contribution to its shareholders of €1,196 million, through an ordinary dividend of €527 million and a reduction in share capital of €669 million. Through this transaction, Sacyr and Testa will normalise their balance sheets.

The sale comes just two days before Sacyr’s AGM, to be held on Thursday, where the Chairman of the group, Manuel Manrique, will reveal the foundations of the new industrial plan based on international construction and the development of concessions.

The largest Socimi

Merlin is the largest Socimi (listed real estate asset investment company) on the Spanish stock exchange, with a market capitalisation of €2,208 million and a portfolio of assets worth €2,594 million. The company debuted on the stock exchange on 30 June last year with €1,250 million of share capital from investors such as UBS, Marketfield and Gruss Capital.

Merlin, the real estate company controlled and chaired by Ismael Clemente (pictured above left), wanted to expand its assets with the purchase of a significant stake in a company in the RE sector and set its sights on Testa a while ago. Sacyr’s subsidiary closed yesterday with a market capitalisation of €2,906 million.

Sacyr holds a 99.93% stake in Testa; the remaining shares are listed on the stock exchange. The company has been looking for a partner for several months, to inject capital into its subsidiary. The search for an ally led Sacyr to consider an IPO of Testa’s shares aimed at institutional investors in order to strengthen its subsidiary’s balance sheet. The initial objective was to place 30% of the shares, but the construction company increased the option to 100%, once it had assessed the appetite of investors.

Merlin has more than enough financial muscle to handle this operation. In April, the company announced a capital increase amounting to €613.7 million. The real estate company, which earned €19.2 million during the first three months of 2015, has already invested the €1,250 million it secured from its debut on the stock exchange.

Testa owns real estate assets valued at €3,180 million, according to the most recent appraisal completed on 31 December 2014. Its properties include the Torre Sacyr, in the Cuatro Torres Business Area in Madrid, and Diagonal, 605 in Barcelona. It also owns two office buildings on Paseo de la Castellana, at numbers 193 and 83, where the construction group has its headquarters. Furthermore, it is the owner of several shopping centres in Malaga and on the Balearic Islands, and also owns residential blocks for rent. In 2014, Testa recorded turnover of €187.9 million.

(…)

Original story: Expansión (by R. Ruiz and C. Morán)

Translation: Carmel Drake

BBVA Has Renegotiated 66,166 Mortgages Since Start of Crisis

2 June 2015 – Expansión

BBVA has refinanced 66,166 mortgages and granted 11,680 “daciones en pago” (assignment of deeds in lieu of payment) since the start of the crisis, according to the report ‘BBVA’s Social Impact in Spain’, which was presented by the entity yesterday, having been prepared in collaboration with KPMG. The report seeks to quantify and detail the social impacts associated with the bank’s activity.

In Spain, 896,203 families live in homes financed by BBVA and during 2014, the entity granted new loans worth €1,379 million to 13,394 families for the acquisition of first homes. In addition, it financed 17,416 homes so that they could undertake energy efficiency improvements.

In terms of employment, BBVA has launched various initiatives such as “Yo Soy Empleo”, which has granted direct aid for the recruitment of almost 8,500 people; and “Project Momentum”, which has a 60% job placement rate.

The total number of jobs linked to the bank’s activity, including indirect or induced roles, amount to almost 100,293 people, i.e. 0.6% of the active Spanish working population.

Meanwhile, 951,284 individual shareholders received an average dividend of €870; 940,367 people have pension plans; and 875,448 employed people are covered by employment pension plans managed by BBVA.

Original story: Expansión

Translation: Carmel Drake

Lar España Distributes Dividend 10 Months After Launch

29 April 2015 – Cinco Días

The Socimi will rely on a possible extension or issue of promissory notes to raise funds.

It will also make purchases that will increase its asset volume to €800 million.

Yesterday, the Socimi Lar España held its first shareholders’ meeting, at the historical stock exchange building in Madrid, where a dividend of €0.033 was approved. The distribution will be made in cash within the next 30 days. Moreover, it ratified the company’s accounts to December 2014, which reported profits of €3.5 million.

During a session with journalists after the meeting, the managers of the Socimi, managed by Grupo Lar, welcomed the success. “It is noteworthy that after just ten months of operation, given that we launched the Socimi in March, and taking into account the initial costs, we have ben able to generate profits in the period to December and distribute dividends” said José Luis del Valle, Chairman of Lar España’s Board of Directors.

In addition, the shareholders’ meeting approved the authorisation (required) to issue debt securities (promissory notes) or increase capital by up to 50%, if necessary, which would result in new resources of around €200 million. “We are going to have to go to the market in the coming months”, admitted Valle.

Thus, Lar España joins other Socimis, such as Hispania and Merlin, which have already used the mechanism to increase their capital during their short lives. Lar España already launched a 7-year bond issue amounting to €140 million at the beginning of the year, which accrues interest at an annual rate of 2.90% and is listed on the Irish stock exchange.

Currently, the company has a margin of between €200 million and €300 million to invest in future agreements, according to its managers.

This type of listed real estate investment company has been operating in Spain since last year. They are listed vehicles, created for the acquisition and development of urban real estate assets for rental. They benefit from tax advantages and are obliged to distribute dividends.

The initial objective of this listed company was to secure real estate assets amounting to between €750 million and €800 million within its first 24 months of life, although the managers shortened those deadlines yesterday. “Our objective is to close the plan much earlier than expected”, said Miguel Pereda, CEO of the Grupo Lar.

Pereda explained that this listed vehicle has no intention of specialising (in a certain type of asset), but rather will seek to diversify in terms of its assets and geographical areas.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake