3 May 2018 – Expansión
The boom in the residential market, the changing habits in society, the difficulties involved in accessing housing and the increase in mobility have all led to a rebound in the residential rental market in Spain. According to the latest data from Eurostat, more than 22% of Spanish households live in rented properties, although that figure is still well behind the average for the European Union (34%).
In addition, the State Housing Plan, which seeks to encourage rental amongst the younger generation, and the greater professionalisation of the sector, is going to serve to further boost the rental market in Spain.
The change in trend, as well as the increase in residential rental yields, has compelled investors to analyse this business as an alternative to other real estate assets such as offices, shopping centres and hotels.
To lead this market, certain players have redoubled their commitment to rental housing, such as the case of Testa Residencial – the Socimi in which Santander, BBVA, Acciona and Merlin hold stakes – which owns almost 9,300 residential rental properties, with a gross value of €2.275 billion and annual rental income of €72.2 million.
Stock market debuts
That Socimi is preparing its leap onto the market, which will be carried out through an offer of its existing shares (OPV) and an issue of new shares (OPS) aimed exclusively at qualified investors.
One of the first players to back this business was Blackstone, which purchased 18 residential developments, containing 1,860 homes in total, in the Madrilenian neighbourhoods of Carabanchel, Centro, Villa de Vallecas and Villaverde from the Municipal Housing and Land Company of Madrid (EMVS) in July 2013. In 2015, the fund debuted its Socimi Fidere on the MAB (Alternative Investment Market) with 2,688 social housing properties, including those acquired from the EMVS two years earlier. Currently, Fidere owns around 6,400 homes for rent.
The fund also debuted Albirana on the MAB in March 2017 with a portfolio of 5,000 rental homes proceeding from Catalunya Banc loans. Another star of the real estate sector that has detected an opportunity in the rental sector to offload its assets is the Company for the Management of Assets proceeding from the Restructuring of the Banking System (Sareb) with Témpore Properties. That Socimi debuted on the MAB in April with a portfolio of 1,553 residential units, which have a gross value of €175 million.
Another player is Vivenio Residencial, the investment vehicle created by the Dutch pension fund APG together with Renta Corporación. Vivenio has invested around €200 million in the purchase of properties and now owns more than 1,000 rental homes. The Socimi plans to debut on the stock market in 2019.
According to data from Armabex, in 2017, five new Socimis debuted on the stock market with residential assets in their portfolio. In total, at the end of last year, 16 Socimis held rental homes in their portfolios, including, in addition to Fidere and Albirana, Vitruvio, VBare, Colón Vivienda and Domo.
In addition to the listed Socimis, other players in the sector include the real estate managers. One of the largest by volume of assets under management is Anticipa Real Estate, owned by Blackstone. Anticipa currently manages 12,000 homes proceeding from banks acquired by the fund during the crisis. Anticipa manages Albirana’s homes, amongst others.
Another star in the rental home manager sector in Spain is Azzam Vivienda – a subsidiary of Azora – which has more than 11,000 homes under management distributed across 140 buildings.
Azora, which will make its debut on the Madrid stock market on 11 May, plans to raise up to €500 million from its stock market debut to co-invest with its partners in various assets, including in the residential sector.
The company founded by Concha Osácar and Fernando Gumuzio in 2003, was managing €1.5 billion in residential assets at the end of last year, which represented 33.4% of its total portfolio. It plans to increase its footprint in the sector to have between €1.3 billion and €1.6 billion under management by 2022 in homes, accommodation for the elderly and assets relating to healthcare.
Despite the increasing prominence of the rental sector, the business is still very fragmented and one of the challenges for the sector is to gain scale in order to compete. Juan Manuel Acosta, CEO of Greystar in Spain, said in an interview with Expansión in February that the US real estate investment firm is looking for opportunities to become one of the largest operators in the residential rental market in Spain.
Original story: Expansión (by Rebeca Arroyo)
Translation: Carmel Drake