Sareb Activates the Transfer of a Second Batch of Homes to its Socimi

11 June 2018 – La Información

“Investors are asking us for a larger portfolio, more geographical diversification and, above all, more liquidity”. The CEO of Témpore Properties – the Socimi launched by the bad bank to generate returns from its portfolio of residential rental assets -, Nicolás Díaz Saldaña, speaking at a recent conference organised by the Stock Exchange of Madrid, linked the success of the project with the acceleration of the milestones established in its strategic plan and reaching the objective of listing on the main stock market – which is planned for 2020 – as soon as possible.

The first step in that direction was taken just a few days ago by the team at Témpore Properties when it exercised “the right to submit the first offer” extended to it by the framework of the relationship signed with Sareb and which gives the Socimi priority when it comes to accessing rental assets that the bad bank wants to put on the market, according to sources at the Socimi speaking to La Información (…). On 24 May, the first window was opened for Témpore to expand its portfolio of assets by resorting to Sareb’s funds and the Socimi did not want to miss out on the opportunity.

Témpore made its stock market debut on 3 April 2018 with a portfolio containing 1,553 residential rental assets, worth €152.7 million in total. Its plans – according to its own IPO prospectus – include the intention to expand its portfolio to almost double the size this year with the addition of 1,000 new residential assets worth €160 million, which Díaz Saldaña’s team – which is very familiar with Sareb’s portfolio – has already cast its eyes over.

The Socimi has two opportunities to do this: now in May or later in November when the second window will open for incorporating assets from the bad bank into its portfolio (the agreement that gives priority over Sareb’s assets to Témpore expects such a window to open every six months over the next three years). The problem in both cases is how to finance the operation. The Socimi has a consolidated portfolio of assets but hardly any available capital. Sareb’s 98.51% stake reflects the value of the assets transferred for the creation of the Socimi and the minority stake is distributed between 24 small investors, who have contributed €2.12 million.

Sareb neither wants to nor could increase its stake in the share capital of the Socimi, which means that the acquisitions of the assets proceeding from the bad bank that Témpore executes will have to be undertaken at market prices and following their valuation by an independent expert: otherwise, the entity will either have to borrow or increase its share capital, or both, which according to the sources consulted is the most viable solution given that the Socimi has self-imposed a restriction on its debt capacity equivalent to 40% of its asset value, which leaves a margin of €80 million through that route.

Díaz Saldaña acknowledges that the lack of liquidity on the MAB is a barrier when it comes to attracting institutional investors, but he also recognises that he doesn’t have any choice but to do this if the Socimi wants to strengthen its portfolio to configure a project capable of debuting on the main stock market. For the time being, he says that he has a list of 40 investors interested in providing the €100 million that the company needs to finance this operation.

Geographical diversification

According to the sources consulted, Témpore’s team is already analysing the portfolio of assets offered by Sareb, although the real scope of the operation will depend on the Socimi’s capacity to incorporate new investors into its share capital.

Nevertheless, the objective of the operation is very clear: the geographical diversification of the Socimi’s portfolio of assets (…). Currently, 84% of the Socimi’s residential assets – calculated by market value – are concentrated in Madrid and Barcelona.

The priority is to open up the range of possibilities. The sources consulted specify that options are being evaluated in Valencia, Málaga, Sevilla, Alicante, Valladolid and Logroño (…).

Original story: La Información (by Bruno Pérez)

Translation: Carmel Drake

Will 2017 Be The Year Of Mergers Between The Socimis?

24 February 2017 – Expansión

The Socimi boom continues unabated. Ores – the listed real estate investment vehicle owned by Bankinter and Sonae Sierra – debuted on the Madrid stock market on Wednesday, and in doing so became the thirty-first company of its kind to have its shares traded on the MAB (Alternative Investment Market). Moreover, all indications are that this phenomenon is going to continue to grow.

An attractive tax regime and capital appetite for real estate assets has led to a flood of Socimis debuting on the stock market in recent years.

Heading up the list of Socimis, by size, are Merlin – the only real estate company whose shares are traded on the Ibex – Hispania, Lar España and Axiare. These four companies, which debuted on the Madrid stock exchange between March and June 2014 with €2,560 million to invest, now own a combined portfolio worth more than €10,500 million.

In addition to these Socimis, there are around thirty other companies that have joined the MAB in recent years. Following the tsunami that the real estate sector has experienced in just three years, the question now is: What will happen next?

Limitations

According to a report prepared by CBRE, “In 2016, the number of Socimis is expected to continue growing. Nevertheless, given that an increasing number of Socimis are competing in a somewhat limited market, it is likely that 2017 will be a year in which there is pressure for them to increase in terms of size and specialisation, with the aim of obtaining competitive advantages, driving merger and acquisition activity, and selling off non-strategic portfolios of assets between Socimis”.

In this sense, it is expected that existing investment vehicles owned by family offices and private banking will be converted into Socimis. The experts at CBRE point out that pooling assets into existing investment vehicles, in return for ownership stakes in them, generates value growth for investors. (…).

The analysts also point out that the Socimis are likely to move towards more specialisation in the future. In this sense, Hispania is planning to focus its activity on hotels, whilst it divests its residential business and rotates its offices. (…).

Merlin – the largest real estate company in Spain and one of the ten largest Socimis in Europe – decided to sell off its portfolio of hotel assets to Foncière des Regions for €535 million to focus on its significant office portfolio, which has just grown thanks to the Socimi’s acquisition of the iconic Torre Gloriés building, also known as Torre Agbar (pictured above), in Barcelona, for €142 million.

Meanwhile, Axiare is focusing above all on offices, whilst Lar España is centring its attention on shopping centres.

Investment

Operations such as Merlin’s purchase of Torre Agbar on 12 January and Axiare’s acquisition of the headquarters of Capgemini and PSA last month reflect the fact that, after the record investment figure recorded in 2016 – €14,000 million, a figure hitherto unseen in Spain – the real estate market is still very attractive.

“We expect 2017 to also be a very active year for the Spanish investment market (…)”, say sources at CBRE (….) thanks to the more attractive returns being offered by the real estate sector compared to other sectors, the outlook for economic growth across Europe and the continuous improvements in financing (…).

Original story: Expansión (by R.Arroyo and R.Ruiz)

Translation: Carmel Drake

Merlin Closes A €1,034M Capital Increase To Buy Testa

16 July 2015 – Expansión

Yesterday, the Socimi Merlin Properties announced a €1,033.7 million capital increase, representing 66% of its current share capital. The operation will allow it to finance the purchase of Testa, the subsidiary of Sacyr, which it has bought for €1,986 million.

The capital increase will have preferential subscription rights and will involve the issuance of 129,212 million shares, with a value of €8 and a premium of €7 per share. Last April, the Socimi chaired by Ismael Clemente closed its first capital increase amounting to €613.8 million, with the issuance of 64,605,999 new shares, to finance the purchase of real estate assets, offices and retail premises.

Merlín debuted on the Madrid stock exchange in June 2014 with a market capitalisation of €1,250 million, at €10 per share. Yesterday, it closed trading at €11.50 per share, up 1.86%, and its market capitalisation amounted to €2,228.9 million. Merlin’s main shareholders, which include UBS, Marketfield, EJF apital, BNP Paribas Asset Management and the fund Gruss Capital, are expected to participate in the capital increase.

The integration of Testa and Merlin will create a real estate giant with assets worth around €5,500 million, gross annual income of €290 million and a market capitalisation of close to €4,400 million.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake