International Funds Take Control Of Spain’s Real Estate Companies

6 November 2017 – Expansión

Together they own stakes worth €4.3bn / International funds and managers have become the largest shareholders of the listed companies in the sector. Seven of the top ten have foreign majority shareholders.

Seven of the ten large listed real estate companies are held in foreign hands. That is the new reality of the Spanish real estate market, which is enjoying a new period of growth ten years after the last boom.

Whilst during the previous upwards peak in the sector, the owners of the property companies were domestic businessmen, now it is the turn of the international funds to hold majority stakes in these companies in the sector. That is the case of the new leaders in the property developer sector: Aedas and Neinor Homes. These two companies made their stock market debuts this year, in October and March, respectively. In both cases, the property developers making their IPOs were owned by two large international funds: Lone Star in the case of Neinor; and Castlelake in the case of Aedas (…).

In the case of Aedas, which debuted on the stock market on 20 October with a valuation of €1.518 billion, two international firms became reference shareholders: T. Rowe Price, with a stake of almost 3.8%, and Fidelity Management and Research (FMR), with a 3.6% stake. It is not their first investment in a Spanish real estate company in either case. T. Rowe was one of the funds that participated in the IPO of the Socimi Axiare, in July 2015, acquiring a 9.7% stake; meanwhile, FMR is the third largest shareholder in another Socimi, Hispania, and in the property developer Neinor Homes. In the case of the latter, another international investor is the second largest shareholder, Wellington Management, which already owns 8.5% of the capital, worth around €120 million.

In the case of the traditional real estate companies, the status of the international funds varies. Realia (…) is currently controlled by Inversora de Carso, a firm owned by the Mexican businessman Carlos Slim. In addition to the Mexican magnate’s stake (70.77%), Polygon Global own 10.5% and JP Morgan own 6.026% (…).

By contrast, two of the classic real estate companies on the stock market still have Spanish businessmen as their main shareholders: Quabit, whose largest shareholder is its President, Félix Abánades, with a 21% stake (…); and Renta Corporación, in which Dinomen, a company controlled by its President Luis Hernández, holds a 29.97% stake. In the latter real estate company, Baldomero Falcones also holds a stake, of more than 5%, making him the fourth largest shareholder.

Quabit’s second-largest shareholder is a Spanish company: Sareb. The public company holds a 7.66% stake in that firm (….). By contrast, the second largest shareholder in Renta is Morgan Stanley, with an 8.1% stake.

In total, foreign investors hold shares worth more than €4.343 billion in the five main Socimis and four largest property developers.

Spanish shareholders

(…), the number of domestic investors who control these types of companies is much lower, but they have a very prominent weight.

Such is the case of the banks Santander and BBVA, the largest shareholders in the largest real estate company on the Spanish stock market: the Socimi Merlin Properties. (…). Currently, Santander holds a 22.26% stake in that company, worth €1.162 billion, more than half of all Spanish investment in the ten largest listed real estate companies (around €1.8 billion). BBVA’s stake is worth around €336 million.

Alongside the two large Spanish banks, two real estate groups stand out as prominent investors in the listed companies in the sector. Such is the case of Colonial, which holds a stake worth €200 million in Axaire (…). Meanwhile, Colonial is controlled by three overseas investors, after Villar Mir reduced its stake.

Moreover, the real estate group Lar, controlled by the Pereda family, is the third largest shareholder of the Socimi Lar España, with a stake of more than 5.6% (…).

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Listed RE Companies’ Values Soared By 30% In 2015

29 March 2016 – El Confidencial

(…). Colonial, Merlin, Hispania, Realia, Axiare and Lar, the six largest listed RE companies (in Spain), have been the drivers of the recovery that maligned the property sector until recently and, they are also, the major beneficiaries of the recent change of pace.

During the last year, these companies have been the value of their assets soar by between 25% and 30%, depending on whether one looks at their gross asset value (GAV) or net asset value (EPRA NAV). Although this spectacular rate of growth has been driven in large part by the commitments made by these companies to the recovery of the sector, in the form of lots of purchases, the data also reflects an improvement in the underlying valuations of many of their assets.

That positive trend has been felt most acutely in the segments in which these companies mainly operate, in other words, in the office, hotel and shopping centre segments, as well as the logistics business. By contrast, the residential and land segments have barely entered the portfolios of these companies.

As the table in the original article shows (see link below), the GAV or market value of the real estate investments made by these six companies increased by 25.7% last year, an improvement that in the case of Colonial was also seen in its stake in the French firm SFL, in the case of Merlin, in the purchase of Testa, and in the case of Hispania, in a leap driven by the consolidation of its hotel Socimi Bay, whilst in the case of Axiare and Lar (the latter publishes fair values), the figures simply reflect the high investment rate recorded last year.

But if we take the EPRA NAV as the reference indicator, which reflects the net value of the assets, in other words, which discounts the debt and excludes certain concepts that are not expected to materialise with certainty, we see that the improvement in valuations is even greater, reaching almost 30% on average (in the case of Realia, the NNAV value has been taken as that was the figure published).

Neverthless, this increase in asset values has not been reflected in the same proportion in the share prices of the companies. Although all of them recorded increases last year, and important milestones were reached, such as Merlin’s incorporation into the Ibex 35, the improvement in share prices fell a long way below the variations in the value of their assets.

Stock market

The company that performed best on the stock exchange last year was Realia, whose share price shot up by 49%, thanks to the takeover war between Carlos Slim and Hispania to take control of the company. Despite losing the battle, the Socimi led by Concha Osácar and Fernando Gumuzio was, alongside Axiare, the next best performer on the stock market, closing 2015 with an increase of 20%; whilst the company led by Luis López de Herrera Oria recorded an increase of 21.9%. Meanwhile, Colonial’s share price rose by 16.3%; Merlin Properties was up by 15.1% and Lar España’s rose by 3%.

Nevertheless, most of those gains have evaporated already this year, as the real estate companies have also suffered from the poor start to the year that has been seen on stock markets around the world. Almost all of them have recorded share price decreases during the first quarter, the only exceptions being the company led by Pere Viñolas, which has risen by 4.6%; and Realia, whose share price is being driven by a second takeover bid from Slim, and by the demands from Polygon to increase his offer of €0.80 per share. (…) According to the company’s own annual report, its NNAV per share amounts to €1.20.

Original story: El Confidencial (by R. Ugalde)

Translation: Carmel Drake