Blackstone’s Socimi Will Spend €25M On Corporate Operations

3 July 2017 – Eje Prime

Fidere, the social housing Socimi owned by the US fund Blackstone, is growing rapidly through acquisitions. Over the course of this year, the company will spend €25 million on the acquisition of Spanish companies dedicated to rental housing. In this way, Fidere will add new assets to its portfolio, according to explanations provided by market sources to EjePrime.

Fidere’s purpose is to acquire and manage residential rental assets in Spain. Since its incorporation onto the Alternative Investment Market (MAB) on 29 June 2015, the group has acquired 3,365 new residential units (as well as storerooms and garages) for rental in the Community of Madrid. As at 31 January 2017, the average occupancy rate of these residential units amounted to 92.9%.

With this declaration of intentions, Blackstone is going to continue adding assets in the Spanish market with the aim of leading the residential rental market in the country. With a portfolio of 12,000 homes under ownership in Spain, the fund has constituted several companies to implement its strategy after having invested €7,000 million in the country.

The fund, which owns the majority of its properties in Cataluña (followed by its portfolios in the Community of Madrid, the Community of Valencia and Andalucía) has decided to back the rental market in Spain in the face of changes in residential demand in the country, above all, amongst young people.

To carry out its plans, Blackstone has added three new Socimis to its portfolio of Socimis, which until now comprised Fidere alone. It now owns Albirana Properties, which has been trading on the MAB since March, Pegarena and Tourmalet (which have not debuted on the stock market yet) and the servicer Anticipa Real Estate (…).

Albirana Properties, for example, manages 5,000 homes, whilst Pegarena and Tourmalet, companies that have been constituted already, will start incorporating some of Blackstone’s portfolio in Spain. The fragmentation will allow these asset packages to be sold more easily in the future. Created in New York in 1985, Blackstone manages assets around the world worth €335,950 million.

Blackstone and its commitment to property

The fund, which is one of the largest private investment vehicles in the world, set a new milestone at the beginning of the month by managing to raise €7,800 million to launch its fifth fund specialising in real estate. The new instrument, classified as opportunistic by the firm itself, will operate under the name Blackstone Real Estate Partners Europe V (BREP Europe V).

The strategy that Blackstone adopts with these types of funds is to locate and acquire high-quality, well-located assets at significant discounts, to manage them appropriately and then sell them, after achieving the proposed objectives.

The Blackstone group, which founded its real estate arm in 1991, administrates around €91,000 million in capital from various investors through its real estate subsidiary. Its real estate portfolio includes offices, retail premises, hotels, industrial assets and residential properties in the US, Europe, Asia and Latin America.

Original story: Eje Prime (by C. Pareja)

Translation: Carmel Drake

Rental Housing Is Booming Following The Crisis

26 October 2016 – El Economista

The rental market, which had never really caught on before in Spain, is now enjoying a genuine boom following the economic crisis. The employment instability experienced in recent years and the inability of people to buy a home in the face of mortgage restrictions have raised the prominence of the rental market in Spain, which now accounts for 15.6% (of the total housing stock), a ratio not seen since 1987, according to the latest data from the Bank of Spain and reported by Idealista. By contrast, the percentage of owned homes has decreased to 77.3%, a figure not seen since 1988.

With this data on the table, it is logical to think that the decrease in owned homes this year will exceed the figure recorded in 2015. Specifically, last year, there was a decrease (in the number of rental properties) of almost 9% from the peaks registered in 2002, when owned homes accounted for 84.72% of the total housing stock.

The increase in demand for rental properties has had a significant impact on prices. After seven years of continuous decreases, which peaked at 25% in some cases, the first increase – of 3% on average – was recorded in 2015. The impact on rental prices was felt most acutely in the country’s ten largest cities, led by Barcelona, where prices rose by 17% on average.

Although the supply has also increased since then, average rental prices have continued to rise and according to pisos.com, they increased by 5.09% during the third quarter of 2016. In this way, the average rental price amounted to €661 in September 2016 for a typical home with an average surface area of 112 m2. In comparative terms, this figure represents a 0.3% increase compared to August. Nevertheless, the YoY increase amounted to 9.26%.

These average increases are symbolic if we focus on specific areas in Madrid and Barcelona, where potential rental clients look for properties in central, prime areas, that are well connected (in terms of transport links). Thus, in the Catalan neighbourhoods of Sant Martí, Gràcia and Sants-Montjuïc, prices are rising by between 12% and 16% p.a..

The real estate market itself is not oblivious to this trend and for this reason, a wave of Socimis are getting reach to focus on the rental housing sector.

For the time being, Fidere and Optimum III are the only Socimis that are actually up and running. Imminent debuts are expected from Alquiler Seguro, with its Socimi Quid Pro Quo, which will have 625 units in its first phase, and Domo Activos Socimi, the cooperative manager, with its portfolio of 1,400 units. The Valencian group Inveriplus, the US fund Blackstone – with Albinara Properties, Pegarena and Tourmalet – and Testa Residencial, with 4,700 homes, are also expected to enter the market.

Original story: El Economista (by Alba Brualla and Cristina Alonso)

Translation: Carmel Drake

Santander & BBVA Will Transfer c.7,500 Homes To Testa

28 June 2016 – El Confidencial

Spain’s largest landlord is called Testa Residencial. This is the company that has been chosen by Merlin and Metrovacesa to take over all of the homes that they have for rent – 4,700 properties in total – and to create a new jointly owned company in which the former will hold a 34% stake and the later, the remaining 66% stake.

But those numbers are just the first step of a calculated road map designed by the banks that own Metrovacesa – Santander, BBVA and Popular – which want to take advantage of this new arrangement to get rid of thousands of homes from their own balance sheets.

Although still in the analysis phase, according to sources in the know, the entity chaired by Ana Botín (pictured above) wants to transfer between 4,000 and 6,000 homes, whilst BBVA hopes to transfer around 2,500 of the homes that form part of its real estate portfolio, closed eight years ago.

During the harsh years of the real estate crisis, the two entities struggled to cope with this load, along with the rest of the sector, following the debacle that began back in 2007. But now, they have found a way of reducing the burden.

In fact, if the plans go ahead as expected and they receive all of the necessary blessings, the two entities may begin transferring assets this year, a move that would turn Testa Residencial into the largest rental home company in the country, ahead of Fidere, within a matter of months.

Depending on the final number of homes that end up being transferred to Merlin Properties’s subsidiary, the future Socimi will own between 11,000 and 13,000 homes for rent, which means that it will compete head to head with Azora, which owns 11,892 homes and far exceed the 6,000 homes owned by Fidere and the 775 held by Hispania, the Socimi managed by Azora, which has already announced its decision to put the brakes on its residential business.

Five years to debut on the stock market

Now that this giant has been created, the real challenge for all of its shareholders will be its debut on the stock market, the natural destination and reason why they have created this joint Socimi, which has been given a maximum period of five years to complete its IPO.

First, they must define the definitive portfolio of homes, value them, get rid of those assets that do not fit within the plans of the new Socimi through small operations, and above all, find the ideal window of opportunity on the market for the debut.

The key to the success or failure of this business will depend on the price at which Merlin and the banks manage to sell their shares when the time comes to list the subsidiary on the stock market. (…).

The new Testa Residencial that will emerge from this agreement has been given a period of two years to become a Socimi. Its shares are held by Merlin (34.24%) and the banks (65.76%), as follows: Santander 21.95%; BBVA 6.41% and Popular 2.86%.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

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

Socimi Fever Shakes Up The Stock Market

28 September 2015 – El Economista

After a flurry of activity during 2015, Spain now has 14 listed Socimis, of which 10 trade on the MAB. And this figure is expected to continue to grow over the coming months.

Last week, two Socimis went public on the Alternative Investment Market (‘Mercado Alternativo Bursátil’ or MAB). The first, Autonomy Spain, debuted with an increase of 1.52%, to €16.75.

Autonomy is the parent company of a group that currently comprises two sub-Socimis. The group’s real estate portfolio contains six office buildings – five located in the Community of Madrid and one in Cataluña.

A day later, it was the turn of the Socimi Corpfin Capital Prime Retail II, which became the tenth real estate investment company to go public on the MAB.

The company, which has already invested €75 million in retail premises in “prime” areas of Madrid, San Sebastián, Burgos and Vitoria, expects to invest a further €35 million before November 2016, whereby taking its total investment to €110 million.

This is the first Socimi that the private equity firm Corpfin Capital has listed publicly. The firm also has plans to list another Socimi, Corpfin Capital III, through which it holds joint investments in 8 real estate assets.

The week before, Zaragoza Properties, which owns a stake in the Puerto Venecia Shopping Resort shopping centre in Zaragoza, debuted on the MAB.

Also this year, the Socimi Obsido entered the market for small companies. Its growth plans involve the purchase of hotels in Spain’s principal tourist destinations.

In addition, Trajano Iberia debuted on the stock market (in July). It is managed and promoted by a division of Deutsche Bank, and focuses on “semi prime” offices in Madrid and Barcelona; “prime” offices in secondary cities, shopping centres, and logistics assets.

Also in July, Mercal went public with a portfolio of assets in strategic locations in Spain. Four months before that Uro Property Holding, which owns one third of Santander’s bank branches, began trading on the MAB with a valuation of €259.7 million.

The Socimis Entrecampos, Fidere and Promorent also trade on the MAB, but the largest Socimis, namely Merlin Properties, Hispania, Lar España Real Estate and Axiare, all trade on the main stock exchange. Between them, they had purchased assets amounting to more than €3,100 million as at the middle of August, strengthened by the funds raised through their respective capital increases.

Even Acciona is evaluating the possibility of creating a Socimi for its real estate assets, and this Monday, the General Shareholders’ Meeting of Testa is expected to approve the conversion of the company into a Socimi after it was acquired by Merlin.

Original story: El Economista

Translation: Carmel Drake

New Hotel Socimi ‘Obsido’ To Debut On MAB In Sept

5 August 2015 – Idealista

Obsido Socimi, whose portfolio of retail assets is concentrated in Málaga, is set to become the next Socimi to list on the stock market in Spain; and it will do so in September, with a market value of €21.39 million….and a share price of €19.40.

Following the recent debuts of the Socimis owned by Blackstone and Deutsche Bank, Obsido will become the seventh Socimi to list on the Alternative Investment Market (‘Mercado Alternativo Bursátil’ or MAB). (…).

According to the company’s prospectus, Obsido Socimi is backed by Spanish and Norwegian capital. Håkan Tollefsen controls a 33.165% stake in the company (365,683 shares), as does Joaquín Hinojosa, whilst the Obsido Group, the parent company, holds a 0.26% stake (2,850 shares) and the other minority shareholders own the remaining shares (33.41%).

The company, which has the support of Armabex as the registered advisor and Banco Sabadell as the liquidity provider, has focused its real estate portfolio on Málaga, specifically two hotels in Marbella, according to Antonio Fernández, President of Armabex.

“All of the properties in the company’s real estate portfolio are located in the province of Málaga. As a result, the company’s business depends to a large extent on the overall economic conditions in the province and on demand for hotels in that area in particular”.

The seventh Socimi to list on MAB

Obsido is the seventh Socimi to debut on this exchange, which is also home to small companies looking to obtain financing to accelerate their expansion and SICAVs (the investment vehicles used by high net worth individuals).

The most recent Socimi to list on MAB was Trajano Iberia, owned by Deutsche Bank, which debuted on 30 July,… In addition, Entrecampos, Mercal Inmuebles, Promorent, Uro Property and Fidere (Blackstone’s Socimi) complete the line-up of Socimis listed on this alternative investment platform.

One thing is certain, Obsido will not be the last Socimi to debut on this market. In fact, analysts expect that the MAB will receive a new wave of Socimis after the summer.

Original story: Idealista

Translation: Carmel Drake

Blackstone Finalises MAB Listing Of Its VPOs In Spain

3 June 2015 – Expansión

Almost 3,000 VPOs / The US fund is completing the final steps for the IPO of its Spanish subsidiary Fidere Patriomonio on MAB. It will do so through a small private placement, advised by Renta 4 and Clifford Chance.

The social housing that Blackstone owns in Spain will be listed on the stock exchange within the next few weeks. The US fund is working on the debut of its subsidiary, the Socimi Fidere Patrimonio, on the Alternative Stock Exchange (Mercado Alternativo Bursátil or MAB); the subsidiary  purchased almost 3,000 social housing properties (VPO) during the crisis.

The US investor has engaged Renta 4 as its advisor and Clifford Chance as its legal advisor for its market debut. The operation, which is still pending approval by several authorities, will replicate the model used by Uro Property, the Socimi that owns a third of Santander’s branch network in Spain.

Thus, Fidere Patrimonio will float by listing – through a private placement – the minimum amount of capital required by law, i.e. around €2 million. The Socimi will list on the MAB with the goal of not losing the tax relief afforded to this kind of company, including exemptions for the payment of Corporation Tax.

Progress

As part of the listing process, Fidere has: appointed Iberclear as the accounting entity; created a website for investors; and amended its bylaws.

According to Blackstone, the MAB listing will be completed before the summer. Fidere’s market debut comes at a time when the local and regional election results are threatening to change the rules of the game with respect to the public sale of social housing.

In fact, Blackstone purchased the majority of its 3,000 VPO homes from the Municipal Company for Land and Housing (Empresa Municipal de Vivienda y Suelo or EMVS). The US fund paid €125.5 million for 18 residential developments in July 2013, which included 1,860 homes in total. The developments are located in the Madrilenian neighbourhoods of Carabanchel, Centro, Villa de Vallecas and Villaverde.

Subsequently, the fund complemented Fidere’s portfolio with other transactions. In November 2013, it purchased another 420 VPO homes from FCC for just over €30 million.

Two months later, the US fund won the auction to buy 600 VPO homes from Sareb, for which it paid almost €50 million. Most of the homes came from Catalunya Banc and Bankia, and were located in Madrid, Barcelona and Guadalajara.

In August 2014, Blackstone closed its final major purchase of VPO homes. The fund acquired 26 of Bankia’s real estate development companies, which included 3,000 homes in different stages of development: completed, under construction and in the initial phase. Initially, only one of the 26 companies has been included in Fidere.

Fidere’s board is led by two of Blackstone’s executives, Francois Bossy Jean – Chairman – and Diego San José – Director of the RE business at the fund – , together with an executive from the consultancy firm Magic Real Estate, Miguel Oñate.

Plans for growth

Beyond the listing on MAB, Blackstone is planning to continue to acquire rental housing so that Fidere can become one of the key players in this market in Spain. Once it is listed on the stock exchange, new investors will be able to enter through capital increases and the sale of shares.

With its stock market debut, Fidere will become the eighth Socimi to list on the stock market since the regulations changed at the end of 2013.

Original story: Expansión (by J. Zuloagar and R. Ruiz)

Translation: Carmel Drake