Merlin Properties to Begin Trading This Month on Portugal’s PSI-20

3 January 2020 The Spanish socimi Merlin Properties will debut on the Portuguese Stock Exchange this month. The firm had initially planned to begin trading before the end of last year.

Due to its size, Merlin Properties, which has traded on the IBEX 35 since 2015, will likely debut on Portugal’s PSI-20, which is run by Euronext.

La socimi española Merlin Properties debutará en la Bolsa de Valores de Portugal este mes. Debido a su tamaño, la firma, que cotiza en el IBEX 35 desde 2015, probablemente debutará en el PSI-20 de Portugal, dirigido por Euronext.

Original Story: Expansión

Translation/Summary: Richard D. Turner

Spain’s Top 5 Socimis Have A Combined Market Cap’n Of €12,160M

2 August 2017 – El Confidencial

The Socimis are still proving fashionable. Spain’s listed real estate investment companies are continuing to capture the attention of large investors. And they are not disappointing them. The companies’ results for the first half of this year show that their average profits have risen by 50% YoY.

Colonial (Ibex 35), Axiare, Lar and Hispania are four of the five Socimis listed on the main stock market (another 30 are listed on the Alternative Investment Market (MAB)) that have published their accounts for the first half of 2017. Meanwhile, Merlin, the largest Socimi in Spain, which is also listed on the main stock market, will wait until after the summer to publish its half year accounts (on 22 September).

Since their debut on the stock market, these Socimis have not stopped growing. (…). Hispania has appreciated in value by 66%, followed by Axiare (64%), Merlin (43%) and Lar (6%). “The case of Colonial is not comparable with the others because it already existed as a company. Moreover, it is worth noting that Merlin comes off worse than Hispania in terms of pure value appreciation, but it has distributed the most dividends”, explain sources at Bankinter.

On Monday, Colonial reported that it increased its net profit by 90% compared to the same period last year. Moreover, it is the first Socimi to publish results having been transformed under the new tax regime. The entity chaired by Juan José Bruguera has seen its real estate asset portfolio increase in value by 7%. The portfolio contains office buildings located in the centre of Madrid, Barcelona and Paris (…). The company’s share price rose by 1.4% off the back of the good results, to reach €7.8 per share (…).

Meanwhile, Axiare Patrimonio increased its profits by 36% to €114 million. The asset portfolio of that firm has appreciated to €1,709 million, according to the valuation certificate issued by CBRE Valuation Advisory (…). Currently, Axiare Patrimonio is working to refurbish four of its office buildings in Madrid and Barcelona (with a combined surface area of 49,202 m2) and two logistics projects (for 76,816 m2 in total). (…).

Meanwhile, Lar España has increased its net profits by 50%. (…). The company chaired by José Luis del Valle generated profits amounting to €65 million. (…). Between January and June 2017, Lar acquired the Parque Abadía retail complex in Toledo and 22 retail premises in different locations across Spain.

In the case of Hispania, the Socimi in which the US magnate George Soros holds a stake, the entity reported net profits of €185 million, which represents an increase of 35% with respect to the same period in 2016. (…). The company chaired by Rafael Mirando explained that its half-year results continued to benefit from the positive effect of tourism so far this year.

In terms of the Socimis in the Ibex, analysts at Bankinter are still backing Merlin Properties as their main investment plan, with a “buy” recommendation and a target price of €12.6 per share, representing a potential appreciation of 9.6%. (…).

For Colonial, the analysts maintain their “neutral” recommendation with a target price of €8.1 per share, representing a potential appreciation of 4.8%. (…).

New requirements to debut on the MAB

In July, six new Socimis debuted on the MAB. The reason is that new requirements entered into force on 1 August affecting all companies wanting to debut from this month onwards and in particular, the Socimis (…).

Meanwhile, all eyes are fixed on the Socimi that is being promoted by Sareb (…). It is expected to make its stock market debut before the end of the year, once it has completed all of the procedures required by the MAB.

Sareb has announced that it has already taken the first steps to constitute the new company. It has also engaged several advisors to accompany it through the process, such as Renta 4 (…) and Clifford Chance (…). Although the so-called ‘bad bank’ has not provided details about the assets that will form part of its Socimi, it is understood that a quarter of the 4,600 homes and 820 tertiary assets that it currently rents out could be transferred to this new vehicle, which would represent almost 1,500 properties in total.

Original story: El Confidencial (by Carmen Alba)

Translation: Carmel Drake

MAB Approves Stock Market Debut Of Socimi AM Locales Property

20 July 2017 – Expansión

The Socimi sector is in full swing. The Alternative Investment Market (MAB)’s Coordination and Incorporations Committee has sent a favourable evaluation report to the MAB’s Board of Directors regarding the Socimi AM Locales Property’s compliance with the joining requirements after it had evaluated all of the documentation submitted.

The company’s debut will require prior approval by the MAB’s Board of Directors. The company’s trading code will be YAML and its shares will be traded through the price fixing system.

Armabex is the company’s registered advisor and BNP Paribas is the liquidity provider. The company’s Board of Directors has set a reference value of €19.48 for each one of its shares, which represents a total company valuation of €97.9 million.

The Socimi begin is activity in 1990 and since then has made various acquisitions of real estate properties in Spain. Its portfolio currently contains 40 assets, mainly retail premises. The properties are managed by Inversiones GB Balboa, which is controlled indirectly in its entirety by the company.

On Tuesday, the MAB’s Coordination and Incorporations Committee sent a favourable report regarding the Socimi Numulae Gestión de Servicios to the MAB’s Board of Directors.

Renta 4 Banco predicts that between 10 and 15 additional Socimis will make their debuts on the MAB between July and December, which means that the entity expects there to be between 45 and 50 companies of this kind trading on the stock market by the end of the year (…).

One of the companies that is expected to make its debut is Sareb’s Socimi, Témpore Properties, which has engaged Renta 4 Banco as its global advisor for its stock market debut, which is scheduled to happen before the end of the year.

Currently, only two listed real estate investment companies (Socimis), Merlin and Colonial, trade on the Ibex 35, the most prestigious index in Spain.

Original story: Expansión

Translation: Carmel Drake

MAB Approves Stock Market Debut Of Socimi Numulae

19 July 2017 – TeleCinco

The Alternative Investment Market (MAB)’s Coordination and Incorporations Committee has sent a favourable evaluation report to the MAB’s Board of Directors regarding the Socimi Numulae’s compliance with the joining requirements after it had evaluated all of the documentation submitted.

The company’s debut will require prior approval by the MAB’s Board of Directors. The company’s trading code will be YNUM and its shares will be traded through the price fixing system.

Renta 4 Corporate is the registered advisor and Renta 4 Banco is the liquidity provider.

The company’s Board of Directors has set a reference value of €1.90 for each one of its shares, which represents a total company valuation of €10.4 million. Numulae is a real estate investment company, which aims to provide its investors with returns from rental income and capital appreciation based on the selective acquisition and active management of real estate properties in Spain.

Between 10 and 15 new Socimis will debut in H2

Renta 4 Banco predicts that between 10 and 15 additional Socimis will make their debuts on the MAB between July and December, which means that the entity expects there to be between 45 and 50 companies of this kind trading on the stock market by the end of the year (…).

One of the companies that is expected to make its debut is Sareb’s Socimi, Témpore Properties, which has engaged Renta 4 Banco as its global advisor for its stock market debut, which is scheduled to happen before the end of the year. Currently, only two listed real estate investment companies (Socimis), Merlin and Colonial, trade on the Ibex 35, the most prestigious index in Spain.

Original story: TeleCinco

Translation: Carmel Drake

Grupo Villar Mir Sells Final 1.51% Stake In Colonial

10 July 2017 – El Mundo

Grupo Villar Mir has definitively exited the share capital of the real estate company Colonial by selling the 1.51% stake that it still owned in the Socimi. The shareholding that has been sold is worth around €40 million on the basis of current market prices.

The corporation owned by Juan Miguel Villar Mir has thereby brought to an end its phase as a shareholder of the real estate company, which began in January 2014 – at its height, the Group was the largest shareholder, with a 24% stake. Villar Mir first invested in the real estate company Colonial when that firm was in the middle of its restructuring and clean up process, and it has exited it days after the firm returned to the Ibex 35 and became a Socimi.

Specifically, the corporation has sold the 5.42 million shares that it still owned directly in the real estate firm, through Espacio Activos Financieros, a package equivalent to a 1.51% stake of its share capital, according to the registers of Spain’s National Securities and Exchange Commission (CNMV).

Grupo Villar Mir also owned another 3.21% of Colonial indirectly, through various financial instruments. Those shares have been “loaned to hedge a financial operation”, according to the supervisor’s register.

In this way, the corporation concludes just over three years as a shareholder of Colonial, after leaving the Board of Directors in December 2016, when it decreased its stake in the company to just 3.3%.

Subsequently, in January 2017, it decreased its percentage to 1.5%, which is the stake that it is now selling.

Finaccess, current largest shareholder

Currently, the Mexican group Finaccess is the largest shareholder of Colonial; following its recent share purchase, it now owns 13.76% of the share capital. The Qatar sovereign fund is the second largest shareholder of the company chaired by Juan José Brugera, with a stake of 11.7%. The next largest shareholders are the Colombian firm Santo Domingo (6.1%) and the Puig family, which recently acquired a 5.10% stake.

On 19 June 2017, Colonial returned to the Madrid Stock Exchange’s Ibex 35, nine years after leaving the exclusive group. The firm owns a portfolio of office buildings for rent in the centre of Madrid, Barcelona and Paris, with a combined surface area of 866,000 m2 and a value of around €8,000 million.

With its return to the Ibex, Colonial completed the restructuring and clean-up process that it began in 2015. After that, it undertook a growth strategy through which it has now made investments amounting to €1,760 million through various operations, ranging from the purchase of assets to increasing its stake in its French subsidiary Société Foncière Lyonnaise (SFL), and acquiring capital in another Socimi, Axiare.

Original story: El Mundo

Translation: Carmel Drake

Santander Is Ready To Divest €7,500M Of Popular’s Problem RE

21 June 2017 – Cinco Días

Banco Santander acquired Popular last week, including its €30,000 million real estate exposure (comprising properties and problem loans), which the entity dragged into the new model of European resolution. That slab ended up taking out Popular’s new President, Emilio Saracho, after he proved himself incapable of finding a credible solution for unblocking the property on the entity’s balance sheet, despite taking over the reins in February.

By contrast, the President of Banco Santander, Ana Botín, needed just a few hours to appear publicly with a strong message to calm the market. “We are going to divest half of the real estate assets in 18 months”, she said. A challenge into which her entity will invest €7,200 million to clean up the bank that it purchased for €1. But that is just the first step.

The signal that Santander is going to give the market is one of an agile response to digest the real estate assets. Whilst it has already taken a decision to increase the coverage of those assets, which guarantees that it will be able to sell them with large discounts without having to record large losses, the bank is now in a position to sell both the secured debt portfolio and the real estate assets in an accelerated manner. In total, it has identified €7,500 million in assets that it could divest in a matter of months if it so decides.

Doubtful debt

Of the €12,100 million in doubtful loans inherited from Popular, the company presided over by Botín has a battery of up to €5,000 million that it has already identified that it could package up and sell as quickly as it wants, according to financial sources familiar with the portfolio.

These sources indicate that Santander will likely slice up the €5,000 million into several portfolios and put them up for sale. Although this is a significant amount, the financial sector considers that if the bank puts the packages on the market at a good price, it will receive quite a favourable response from the typical opportunistic funds that participate in these types of processes.

Strategy with subsidiaries

Moreover, it has been revealed that the entity presided over by Botín will likely use its real estate subsidiaries to digest the assets. That is the first scenario being considered by the team from Santander that is intervening in Popular. In fact, it has already come up with some provisional figures regarding how much could be transferred to the different companies: between €2,100 million and €2,500 million.

A large part of that amount, around €1,200 million, corresponds to land that can be transferred to Metrovacesa, according to the same sources. Santander owns a 70% stake in that company, in addition to the c.9% stake held by Popular. (…).

Santander is also currently evaluating the contribution of between €500 million and €800 million in high-quality tertiary assets (primarily offices) to the Socimi Merlin Properties, which is listed on the Ibex 35. That process – which could be approved before the end of the year – would be completed only after analysing the assets and evaluating whether they fit with the company’s current portfolio, which contains properties worth more than €10,000 million. (…).

Finally, the entity may also transfer rental homes worth between €400 million and €500 million to the Socimi Testa, which it plans to debut on the stock market in 2018 and which is currently negotiating the incorporation of Acciona’s buildings into its portfolio (…).

Sources at the bank warn that it is still too early to quantify the assets that it wants to put up for sale first, given that any sale would have to be preceded by a new valuation process. (…).

The team that is going to lead this process on Banco Santander’s side is being led by José Antonio García Cantera, the man that Botín has put at the head of Popular for this transition period until the full integration has been completed, and by Francisco Javier García-Carranza, the entity’s new CEO. (…).

Original story: Cinco Días

Translation: Carmel Drake

Without Secessionist Threat, Merlin Would Invest Twice As Much In Barcelona

16 June 2017 – Expansión

The President of Merlin Properties, Ismael Clemente (pictured above), confirmed yesterday that his Socimi would invest “twice as much in Cataluña in the absence of the political instability there”. “Our investments in Barcelona account for 16% of the total at the moment, but we could invest up to 30%”, he said. However “the types of political movements based on superiority do not create any kind of sympathy amongst investors”, he added, and so “we are not able to invest as much as we would like to in Cataluña”.

Regarding the reactions that international investors – including some of Merlin’s shareholders – have had to the political problems in Cataluña, Clemente said that “there is no kind of sympathy for the topic” and that “if the (Spanish) Government were to give a more definite reaction, both the international investor community and the Ibex 35 would applaud it”.

Clemente, who participated yesterday in the Annual Meeting of the Esade Alumni Real Estate Club, in Barcelona, said that the Catalan sovereign process may also affect the city’s candidacy to host the European Medicines Agency. “The project has a lot of potential, the coordination between the administrations is exemplary and the proposal is spectacular, but Barcelona has a gigantic problem, the political issue”, he added.

Context

Ismael Clemente shared the discussion table with Colonial’s CEO, Pere Viñolas. They addressed issues such as the change in the cycle of some international real estate markets. “The deceleration in London and New York may have a limited impact here, but Spain will continue to grow and at a faster rate than other European economies”, said Clemente. Viñolas added that the only approach is “to focus on industrial added value because it is the only margin that we can work with”.

Original story: Expansión (Marisa Anglés)

Translation: Carmel Drake

Clemente: “Merlin May Participate In A Future Wave Of Socimi Mergers”

26 April 2017 – Cinco Días

He is one of the stars of the new real estate sector. In 2014, Ismael Clemente (…) created the Socimi Merlin Properties out of nothing. In less than three years, it had debuted on the Ibex 35 to become the largest player in the sector by market capitalisation. The company’s CEO convinced international funds to back the recovery in Spain and later on, he adopted an aggressive acquisitions policy.

First, Merlin acquired Testa from Sacyr, and then it absorbed the tertiary assets (shopping centres and offices) of Metrovacesa, which made way for Santander and BBVA to enter that company as major shareholders. Merlin Properties now has properties amounting to almost €10,000 million in its portfolio. Here, Cinco Días interviews the CEO.

Q: Merlin has grown very quickly. What are your plans now?

A: During 2017, we are focusing on managing our assets and on consolidating the company after several years of rapid growth. Over the next few years, we will invest in creating value from our properties, above all, rather than in buying more assets on the market. Right now, it is hard to justify any asset purchases to our shareholders because of the prices.

Q: In other words, you are going to withdraw from the market because of the high prices?

A: It seems like we have been very active in the market, given our recent acquisition of Torre Agbar in Barcelona, but really, since the middle of 2016, we have had a quiet period. Nevertheless, we knew that we wanted to increase our exposure in Barcelona and Lisbon and that is what we have done.

Q: What do you think about the future of the Socimis?

I think that we have a rather interesting period to look forward to because the Socimis have undergone a settling down period, and are now focusing on different specialisation strategies. There will be less purchasing activity and we will see more M&A activity between entities. (…).

Q: Might Merlin participate in any mergers?

A: Maybe, but it will take a while for the merger period to really get going. If we find something that we think may have value for our shareholders, then we may participate in the future wave of mergers between the Socimis.

Q: Why would Merlin be interested in that?

A: We would be interested if we could strengthen one of our areas of activity, if it was good for us from a cash flow point of view or if such an operation would contribute an asset that complemented the quality of our portfolio particularly well.

Q: Will we see mergers amongst the large players?

A: There are two very large players, us and Colonial, which is not actually a Socimi, even though it may as well be. Any of the large players could be interested in any of the small entities on the stock market, and even, eventually, on the MAB.

Q: Can we expect to see mergers in 2017?

A: It is still too early. I think that we will see some activity from 2018 onwards. What we are not going to see is mergers between real estate companies and residential developers. I don’t think that there will be any interaction between those two sectors. The starting point features five large players, including Colonial as a Socimi equivalent, and 30 entities on the MAB, where the largest players are GMP and Iba Capital. (…).

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

MAB’s 31 Socimis Must Prove Their S/H Liquidity By Friday

8 March 2017 – Invertia

The deadline that the Alternative Investment Market set for Socimis to demonstrate greater liquidity in terms of their share capital, is looming. By Friday, at least €2 million of the respective share capital of those entities must be held by minority shareholders in each case. Any Socimi that fails to comply with this requirement will be expelled from the alternative stock market.

Last year, the Alternative Investment Market (MAB) produced a circular, which, amongst other things, sought to increase the liquidity of the shares of its Listed Real Estate Investment Companies (Socimis). The Socimis represent a very important segment in this small MAB market, but the negotiation of their shares stands out for all the wrong reasons – due to its absence. Having said that, it should be noted that the large Socimis, which are listed on the continuous stock market – including the one company that trades on the exclusive Ibex, namely Merlin – do have more than acceptable movements in their shares.

In this way, a significant difference is being established between the 31 Socimis whose shares are traded on the MAB and the four whose stocks are listed on the continuous market. In addition to Merlin, the group of Socimis whose shares are actively traded comprises: Axiare, Lar and Hispania.

Friday represents the deadline for all of the Socimis to comply with the minimum capital distribution requirements, whose aim is to generate more liquidity (…).

Article 3.2 of the MAB’s circular states that: “In the case of Socimis, for the shares of such a company to be traded on the MAB, a minimum number of those shares must be owned by shareholders that hold less than 5% of the company’s share capital, and that minimum number must comply with either one of the following magnitudes:

– An estimated market value of €2 million.

– 25% of the shares issued by the company.

The calculation above will include shares placed at the disposal of the liquidity provider to perform this function. The effective diffusion of those shares should happen within a maximum period of one year following their incorporation onto the MAB”.

The MAB established a period of one year for the Socimis to adapt to this shareholder composition requirement. In other words, Socimis that were operational on 9 March 2016 and before, must comply now (by Friday) and those that have joined since that date will have one year to comply following their incorporation onto the market.

The Socimi Paradox

Socimis first emerged in 2013, boosted by a very favourable tax treatment of 0% in terms of Corporation Tax. The reason, according to the experts, was to revive the real estate market that attracted so many overseas investors to Spain in search of bargains that the real estate crisis had left behind.

In this way, the Government was trying to strengthen the real estate investments of large families with a very advantageous tax vehicle. (…).

Nevertheless, most of the Socimis are owned by wealthy families and companies owned by very few people, which are achieving remarkable savings in terms of Corporation Tax. This means that in many cases, it does not make sense to sell shares in these Socimis given that their founding owners do not want to offload those shares. Nevertheless, the entities are required to be publicly listed with the aim of ensuring that company information is generally available. The act of listing forces these companies to be more transparent in terms of information.

However, Friday’s deadline for the MAB’s circular could force some of the Socimis out on the street and therefore, losing their tax benefits. (…).

Original story: Invertia

Translation: Carmel Drake

Merlin’s Profits Soar By 1,000% After Metrovacesa Merger

2 March 2017 – Expansión

In 2016, the listed real estate investment company (Socimi) Merlin Properties managed to turn itself into one of the largest real estate companies in Europe. It also made the leap onto the selective Ibex 35, which had not featured a single company from the property sector since 2008.

And, it achieved these milestones thanks to the completion of the largest corporate transaction between real estate companies since the burst of the real estate bubble – the integration of the historical firm Metrovacesa, and that had a significant impact on its income statement for the year.

In this way, in 2016, Merlin saw its net profit soar by 1,087% to €582.6 million, thanks in large part to the contribution of Metrovacesa’s assets, which increased the value of its portfolio to €9,824 million.

In the case of revenues, the Socimi generated 362.8 million, the majority of which (€351 million) came from rental income. Last year, the contribution of rental income rose by 64% compared to 2015.

The firm’s operating profit or EBITDA amounted to €303.6 million, whilst its net debt, at the end of the year, stood at €4,471 million.

Dividend

The company, which has just appointed Francisco Javier García-Carranza Benjumea, the Deputy General Manager at Banco de Santander, as its new President, to replace Rodrigo Echenique, has announced the distribution of an extra dividend, amounting to 20 cents, which will take the remuneration per shareholder in 2016 to €0.40 per share.

Likewise, the Socimi, which owns a 16.1% stake in Testa Residencial, has said that it will increase the distribution of profits amongst its shareholders by 10% in 2017 (as a Socimi, it is obliged to distribute 80% of its profits) to 44 cents, which will involve the distribution of more than €207 million.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake