Testa to Invest Another €500M Buying Up New Homes for Rent

20 April 2018 – Eje Prime

Testa is continuing to grow ahead of its stock market debut. The company is going to invest €500 million in its growth through the purchase of new homes to rent. These new assets will be added to the 10,700 homes that the Socimi already owns, a portfolio worth €2.3 billion that makes it the largest rental home company in the country.

This new investment forms part of the company’s preparations to make its stock market debut, according to Expansión. The leap onto the public market is going to be carried out through a double operation: a public offer for sale (OPV) and a public offer for subscription (OPS) of new shares, both aimed exclusively at institutional investors.

Testa is currently owned by: Santander and BBVA, which hold stakes of 37% and 26%, respectively; Acciona, which acquired 20% of its share capital in exchange for contributing a portfolio of homes; and Merlin, which holds the remaining 17%.

The Socimi is focusing its expansion on the purchase of entire blocks of apartments in the metropolitan areas of Spain’s main cities, including Barcelona, Palma de Mallorca, Pamplona, San Sebastián as well as Madrid, which already accounts for 65% of its current portfolio of homes.

Original story: Eje Prime 

Translation: Carmel Drake

Lone Star Will List Neinor On Stock Market In 2017

27 October 2016 – Cinco Días

The reactivation of the real estate sector in Spain has a future stock market star in the making: Neinor Homes, the former property development arm of Kutxabank, which the US private equity fund Lone Star acquired in May last year. The goal is to list the company on the stock market in 2017 and it has been assigned a preliminary valuation of around €2,000 million.

Neinor Homes belonged to Kutxabank until May 2015, although the sale agreement with Lone Star was signed in December 2014. The US private equity fund acquired the company that groups together properties from the former Basque savings banks, created in December 2012 as a bad bank, under the terms of the royal decree governing the clean up and sale of real estate assets in the financial sector.

The company was sold to the US private equity firm for €930 million, but Lone Star’s goal was not to liquidate the property developments and land that the entity’s property developer owned and pocket the corresponding gains. Instead, Juan Velayos (pictured above), CEO of Neinor Homes, announced as soon as he joined the company – previously he worked for Renta Corporación, but left in 2011 to join PwC – that the mission was to invest in land and construct developments.

Financial sources indicate that the company is already holding negotiations to engage investment banks to assist with its debut on the stock market, expected in 2017. Preliminary appraisal values, pending the publication of the company’s accounts for 2016 and the evolution of the real estate market, amount to around €2,000 million. That figure represents a valuation that is more than 100% higher than the price at which Lone Star purchased the company.

“From day one, the company was designed to list on the stock market. It is the natural step”, say sources at the company. “We are working with investment banks to evaluate the option of debuting on the stock market in 2017, but the final decision has not been taken yet. We will do it when we think that it is the optimal time in the market”, add the same sources.

It will be the first debut by a bread-and-butter property developer on the Spanish stock market in recent times, given that the only debuts in the sector since the crisis have involved Socimis (Lar, Hispania, Axiare and Merlin, which list on the main exchange); and 25 Socimis, which have debuted on the Alternative Investment Market (MAB). Neinor is a rarity, because it has moved away from the traditional real estate ownership model focused on rental income and the office market. At Neinor, revenues are driven by residential property developments.

The last traditional real estate company to debut on the stock market was Realia on 6 June 2007. The share price of that firm, hwich is controlled by Carlos Slim, has plummeted by 86% since that placement.

Velayos designed a €1,000 million investment plan for Neinor’s land. In 2015, the firm recorded sales of €340 million and EBITDA of €25 million. Nevertheless, the latest accounts filed with the commercial registry show a clear split between the two periods –the firm recorded losses of €70.9 million between January and June 2015 and losses of €11.2 million between July and December.

The company has signed an agreement with Kutxabank to administer and manage its assets for an initial period of seven years, extendable on an annual basis, which guarantees it recurrent annual income. The accounts filed with the commercial registry show that the firm recorded revenues of €14.4 million in H2 2015 by virtue of that contract. (…).

Original story: Cinco Días (by P.M. Simón, L. Salces and A. Simón)

Translation: Carmel Drake

Armabex: 35+ Socimis Will Debut On The Stock Market In 2017

14 October 2016 – Invertia

Over the last year, there has been a steady flow of Socimis debuting on the stock market, but in 2017, we could see a genuine explosion. According to the registered advisor Armabex, at least 35 Socimis will make their stock market debuts next year, including one company worth €2,000 million.

Overnight, the Socimis have become one of the new kings of the Spanish property sector. Although the corporate structure has existed for decades, the sector underwent a real revolution in 2012, when the Tax Authorities started to allow these companies to not pay corporation tax on their real estate revenues and asset sales and purchases, in exchange for publicly listing and distributing high dividends (the minimum pay-out threshold is 80%).

That led to a wave of IPOs, as companies constituted new Socimis to benefit from the tax advantages and overseas fortunes used the vehicles to enter the maligned Spanish real estate market. In less than five years, 29 Socimis have debuted on the Spanish stock market and Alternative Investment Market (the MAB). But, we could see an avalanche of debuts next year, according to Armabex, a MAB registered advisor and firm that specialises in this niche.

The Chairman of the consultancy firm, Antonio Fernández (pictured above), estimates that in 2017, we could see “no less than 35 IPOs” if market conditions allow. His firm is working on the placement of around fifteen Socimis next year, include one worth around €2,000 million. These types of companies tend to debut at a discount with respect to their book values, which means that the final listed share capital (for that company) may be lower, but even so, the company will be sufficiently large to be able to aspire to join the Ibex 35 and become the second largest company in this segment, surpassed only by Merlin Properties (€3,200 million). The total value of the other 14 companies will amount to around €3,500 million.

Although most of the Socimis that will be created next year will debut on the MAB, Fernández expects that at least three will list on the main stock exchange. The first may involve Acciona, which has been evaluating the placement of its real estate assets for some time now. Meanwhile, the expert confirmed that one listed company and one Spanish bank have already taken the decision to list their Socimis directly on the main Madrid stock exchange. (…).

Original story: Invertia (by Aitor Atozqui)

Translation: Carmel Drake

Hotel Miguel Ángel’s Socimi Will Debut On The MAB In 2017

5 October 2016 – Expansión

This iconic asset will form part of the Socimi created as a result of the alliance between the hotel group BlueBay and Le Royal Hotels & Resorts, which is due to debut on the Alternative Investment Market (MAB) during the first quarter of 2017.

In addition to Hotel Miguel Ángel, the Socimi will initially comprise other hotels located in Mallorca and a commercial development project on the Costa del Sol. In the absence of the opinion of an independent expert, first estimates indicate that the Socimi will be worth around €500 million.

The company has already engaged Armabex to prepare the informative document for joining the market. That firm will act as the global coordinator, alongside PwC, throughout the process.

The contribution of the hotel, which is owned by the Iraqi born British investor Nadhmi Auchi, who owns Le Royal Hotels & Resorts, has been carried out through a company restructuring process performed, primarily, using local companies and entities in Luxembourg.

New assets

“Although during the first phase, assets such as Hotel Miguel Ángel by BlueBay, some hotels in Mallorca and a commercial development on the Costa del Sol, including a hotel, will be included, the group will subsequently incorporate more properties, as a result of the asset restructuring process in commercial, fiscal and corporate terms, as well as due to the purchase of new assets”, explained the Chairman of BlueBay Hotels, Jamal Satli Iglesias in an interview. “The Socimi will be managed from Dubai, where I live, which will enable us to service different investors from the Middle East and London, for the other international investors”, said the Syrian-born Spanish businessman.

For the executive, the constitution of this Socimi forms part of a corporate strategy through which, in line with the actions of other international hotel chains, he wants to separate out the asset ownership and the operational sides of the business. “With this, we are looking for growth and consolidation”.

Amongst the benefits of this Socimi, Satli Iglesias highlights its significant diversification, both in terms of properties as well as lease contracts, which allows it to expect “very attractive returns, which will continue to increase over the next few years, driven by growth in the real estate sector and by the forecast growth in the tourism sector”.

Satli Iglesias said that this operation seeks to obtain “transparency and returns”. “During this first phase, we are more open to the entry of institutional investors and other hotel chains or hotel property owners who may want to join our project”.

BlueBay – the fifteenth largest hotel company in Spain – currently has 42 hotels in its portfolio, of which it owns 50%. “We are committed to a hotel management regime, backed by property ownership, and our future strategy is to increase the number of hotels that we manage under this structure”, he explained.

“Our strategic plan for 2017-2020, which we have just presented, involves increasing our current hotel supply by almost 50% to exceed 60 hotels by the end of the period. In terms of the number of beds, we expect the figure to double from its current level (23,000 beds) to more than 50,000 beds by 2020”, said the executive.

Satli Iglesias explained that in order to undertake these expansion plans, the group plans to allocate around 80% of the company’s profits to growth.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Popular’s New RE Company Will By Publicly Listed From Day 1

16 September 2016 – Expansión

The real estate company that Banco Popular wants to create from a significant portion of the foreclosed real estate assets that it has on its balance sheet, and whose shares will be distributed on a proportional basis amongst its shareholders, without any cost whatsoever to them, will be listed on the stock exchange from the day it is constituted, in such a way that its shares will have the necessary liquidity to enable their owners to do what they deem most appropriate with them.

At the moment, the heads of Banco Popular are focusing their activities on finalising the outstanding details of the design of the operation to create a real estate company, which still does not have a name, but which will incorporate real estate assets with a gross value of €6,000 million, chosen from the foreclosed assets that the bank owns, amounting to €11,140 million, and which form part of the entity’s balance sheet. And it also obtaining the necessary authorisations from the supervisors, the Bank of Spain and the National Securities and Markets Commission, as well as from the authorities at the Ministry of Economy, although the latter is not mandatory.

There is no specific timetable for completing the final phase of the process, but sources close to it indicate that it is hoped that it will become a reality during the first half of 2017, and that its launch will be announced sufficiently in advance to allow for a general shareholders’ meeting to be called, where the carve-out of the real estate company will have to be approved, along with the distribution of the shares amongst the bank’s shareholders, as if they were an extraordinary dividend.

The company will start trading on the stock market on the day of its constitution, when its shares will also be delivered to their new owners. It will have its own control and management bodies, which will operate completely independently of the bank. In this sense, a search will soon begin for a Chairman and CEO of the new company and the Board will be formed, almost in its entirety, by independent directors, with financing training and knowledge of the real estate sector.

It has not been ruled out the some of the bank’s main shareholders, who will also be main shareholders of the new company, may want to take a seat on the Board, given their shareholdings, but that is not something that is currently on the table.

The bank reported a foreclosed asset balance worth €11,140 million at the end of June, with a provisioning level that, at the end of this year, will amount to around 50% following the application of the results generated during the year and some of the recent capital increase amounting to €2,500 million, aimed at increasing the bank’s total provisioning level. This means that approximately half of these foreclosed assets (especially homes, offices and retail premises that have been completed and to a lesser extent those still in progress, and a small amount of land under development) will be included in the new company.

The company’s liabilities will be comprised of its capital, which the bank will disburse and transfer to the new shareholders; subordinated debt which Popular will purchase; and external financing for which, according to market sources, there is currently high potential demand, which will be determined on the basis of the return on the bonds issued and the relationship between capital, subordinated debt and the other financing. (…).

Original story: Expansión (by Salvador Arancibia)

Translation: Carmel Drake

Socimi Quonia Will Debut On The MAB On 18 July

13 July 2016 – Expansión

The Socimi Quonia will debut on the Alternative Investment Market (MAB) on Monday (18 July), to become the twentieth listed property investment company to join the market.

On the basis of the valuation report from the independent expert, Ernst & Young Servicios Corporativos, the company’s Board of Directors has set the reference value for each one of its shares at €1.65, which represents a market capitalisation for the company of €41.97 million.

The company will list using the price fixing system, according to a statement by Spain’s Stock Exchanges and Markets (BME).

The company owns a portfolio comprising rental properties used for residential and commercial purposes, located in Barcelona, Sevilla and Langreo (Asturias), with a total gross leasable area (GLA) of 12,197 sqm, excluding one ground-level car park containing 50 spaces and another underground car park containing 93 spaces.

VGM Advisory Partners is the registered advisor of the company and Santander Investment Bolsa is acting as the liquidity provider.

In the last two weeks, the Socimis Vitruvio Real Estate and Asturias Retail and Leisure, have also joined the MAB. The latter owns the Intu Asturias shopping centre, amongst other assets.

Original story: Expansión

Translation: Carmel Drake

AHE: Listed Mortgage Securities Tripled In Q1 2016

30 June 2016 – Expansión

In total, the volume of mortgage-backed securities admitted for listing during the first quarter of the year amounted to €22,514 million. According to the Spanish Mortgage Association (‘Asociación Hipotecaria Española’ or AHE), that figure represents a more than three-fold increase in the quantity recorded during the same period in 2015 (€6,300 million). Single mortgage-backed bonds maintained their weight over the total volume issued, accounting for around 53%. The issued volume of that instrument amounted to €7,143 million during the first quarter, up by 13.4% compared to a year earlier.

The issuance of securitisations backed by mortgages between January and March 2016 amounted to €15,371 million, up by 51.6%. The outstanding balance of mortgage securities at the end of March registered a decrease of 5.5% with respect to the same period last year.

Original story: Expansión

Translation: Carmel Drake

Asturias Retail & Leisure Socimi Will Debut On The MAB On Friday

29 June 2016 – Telecinco

The company Asturias Retail and Leisure Socimi will debut on the Alternative Investment Market (MAB) on Friday 1 July, after it received the green light from the MAB’s Coordination and Incorporations Committee, which has confirmed that it fulfils all of the necessary requirements for listing.

Using the valuation report prepared by the independent expert Ernst & Young Servicios Corporatives, the company’s Board of Directors has set a reference value of €19.15 for each one of its share, which values the company at €95.8 million.

The debut of the company, which will become the eighteenth Socimi to join the MAB, still requires prior approval from the MAB’s Board of Directors.

The company’s trading code will be YAST and its shares will be traded through the price fixing system. Renta 4 Corporate is the company’s registered advisor, whilst Renta 4 Sociedad de Valores is acting as its liquidity provider.

Asturias Retail and Leisure Socimi owns three properties in Oviedo, through two subsidiaries: the shopping centre known as Intu Asturias and seven retail premises, a hypermarket leased to Eroski and a service station.

Original story: Telecinco

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

At Least Five Socimis Prepare To Debut On The MAB

17 May 2016 – El Economista

The real estate sector is booming. Its appeal has barely declined despite the political uncertainty, in fact the creation of new Socimis seems unstoppable and over the next six months, at least five more Socimis are expected to debut on the Alternative Investment Market (MAB), where 15 other similar companies are already listed. The banks are also keen to get involved in the action.

The market capitalisation of the five soon-to-be-listed Socimis will exceed €1,500 million, according to Antonio Fernández, Chairman of Armabex, which is preparing to launch as the registered advisor of these companies.

The figure will continue to grow gradually, given that the political uncertainty has not curbed investors’ interest in these vehicles, which have a special tax framework that allows them to not pay tax on their profits, provided they distribute 80% of those profits as dividends. In this way, Fernández says that he has around 40 files on the table from Socimis wanting to debut on the stock market over the next few months. “They all have very different profiles and we are receiving proposals almost every day”, he explained.

Although the names cannot be revealed yet, the Director said that one of the five Socimis is focused on the hotel sector and its initial market capitalisation amounts to €220 million. Similarly, he says that a company focusing on homes for rent with assets worth €100 million, will also debut on the MAB soon.

The fact that that specialist Socimis are starting to flourish and establish themselves in Spain is a “very good sign”, according to the sector. With this type of vehicle, the market is managing to secure money from private investors, which due to their size are not able to commit to significant investments individually in the real estate sector.

Now they have several entry points and can select both the type of assets they like, as well as the yield that they want to obtain. Moreover, the specialist Socimis are also arriving hand in hand with wealthy Spanish families, which have been accumulating assets for years and can now take advantage of the new tax benefits. That is the case of the Socimi created by the property developer Tomás Olivo through his company General de Galerias Comerciales. With a portfolio of six shopping centres, whose star asset is La Cañada (Marbella), and hundreds of other assets (land, premises and homes), it is positioning itself as the third largest Socimi behind Merlin (Ibex 35) and Hispania (Stock Exchange).

According to experts, the value of its portfolio may exceed €1,000 million. (…).

And it is not only wealthy Spanish families who are making use of these vehicle; foreign capital is also backing them and one company, financed by capital from Latin America, will soon make its debut on the stock market. On the other hand, Domo is another company that is preparing to list on the stock market, as its Chairman, Feliciano Conde, announced last year, when he explained that the company would be tailored to medium-sized investors “so that they can participate in the returns generated from the purchase of land, and the subsequent rental and sale of the homes”. The market capitalisation of that company, the first property development Socimi, will amount to €50 million.

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake