CNMV Approves Millenium Hotel’s Stock Market Debut

26 March 2019 – El Confidencial

A new hotel giant is getting ready to make its stock market debut. Millenium Hotels, the platform that Javier Illán has been growing for the last two years, has just received approval from Spain’s CNMV to make the leap onto the stock market before the summer. The company will begin a road show with investors in April, with the aim of making its debut between the end of June and the beginning of July.

Millenium Hotels will start by trading on the MAB, before moving onto the main stock market once it is sufficiently large enough. The firm owns eight assets, including the 4-star Hotel Vía Castellana in Madrid, and has already received funding amounting to €100 million from mutual, insurance companies and family offices. Moreover, it is negotiating the purchase of four more properties.

Original story: El Confidencial (by R. Ugalde)

Translation/Summary: Carmel Drake

Vukile to Inject €600M into its Socimi Castellana Properties

5 March 2019 – Eje Prime

Vukile is going to inject €600 million into its Spanish Socimi, Castellana Properties, to enlarge its portfolio. The aim of the South African fund is to debut the Socimi, which specialises in shopping centres, on the main stock market during 2019.

The company currently owns 19 commercial assets in Spain worth €898 million and has a leverage ratio of 48%, but before making the leap onto the main stock market, the company wants to increase its asset portfolio to €1,500 million and reduce its leverage ratio to below 45%.

The plan is to carry out a €600 million capital increase, to finance the additional asset purchases, which will be subscribed by its main shareholder, Vukile.

Original story: Eje Prime

Translation: Carmel Drake

MAB’s Director Encourages Socimis to Generate Trust to Attract Investment

30 October 2018 – Finanzas

The Director General of the Alternative Investment Market (MAB), Jesús González Nieto (pictured below), has today encouraged the Socimis to “generate trust” through the transparency of their corporate governance arrangements to attract new investors and “to depend on the market for growth”.

González Nieto closed a conference about Socimis at the headquarters of the CEOE by underlining that generating trust is a task for everyone so that the real estate investment formula, which has been on the Spanish stock market for five years, can become increasingly well known.

In his opinion, the French and British markets have many more small investors in the real estate sector thanks to the structures that they have, which are similar to Socimis, and so he expects growth in the Spanish market if the entities can manage to provide good information about that possibility of stock market investment.

At the moment, 61 Socimis are trading on the MAB, whilst another five trade on the main stock market.

The Director General of Renta 4 Banco, Jesús Sánchez-Quiñones, has inaugurated a process for the concentration of Socimis over the coming years and has said that “they are avoiding stock market crashes”, due to their strong expectations and lower liquidity.

Representatives from eleven Socimis participated in the conference, ten on behalf of Socimis that are trading on the MAB and one that will make its debut soon: Park Rose Iberoamericana, which will start trading on 15 December.

The President of Park Rose, Luis Alberto Akel, explained that his firm has Chilean capital and is diversifying its real estate investments in Chile, the USA and Spain.

The CEO of Témpore, Nicolás Díaz Saldaña, warned that “there is a lot of international interest in the Spanish residential sector”, and, after reminding the audience that his Socimi arose as an “additional mechanism for the divestment of assets by Sareb”, he said that when that operation concludes, they will go “and look for new investors”.

Díaz Saldaña has indicated that he would like for Témpore to be listed on the main stock market and the Director General of GMP Property, José Luis García de la Calle, also noted that his firm has considered that option, but that the growing “demands” of the MAB are already broad enough, without having to implement audit and remuneration committees.

Meanwhile, the CEO of Castellana Properties, Alfonso Brunet said, “We are getting ready to comply with the requirements of the main stock market”.

The CEO of Vitruvio, Joaquín López-Chicheri, highlighted that “the Socimis allow us to diversify risk” and to be present in the four segments (residential, commercial, offices and logistics), whilst other participants in the conference indicated that they prefer to focus on a niche market.

In this way, José Nistal, from the Socimi Almagro, explained its specialisation in the purchase and rental of flats for the elderly, where the tenants have an average age of 84.3 years.

The latest Socimi to join the MAB, Azaria, in September, focuses exclusively on the long-term, stable, rental of offices and its only asset, for the time being, is the headquarters of El Páis, which is leased until 2033, explained its manager, Teodoro Díez.

Sergi Mirapeix, from Tander, explained that his firm only invests in commercial premises in the most central areas of cities (currently, it is present in four: Barcelona, Santander, Bilbao and San Sebastián) and Jorge González, the representative of the Socimi Asturias, has indicated that its sole objective is to focus on large retail parks.

Josep Turró, from Barcino, said that his firm is going to seek to diversify as much as possible, by “adaptating to demand”, and Fabrizio Agrimi, from Vbare Iberian, said that his Socimi is committed to “added value, without property developer risk”.

Original story: Finanzas 

Translation: Carmel Drake

British Fund Pelham Acquires 10% of Árima

25 October 2018 – Eje Prime

Árima has opened the door to British capital. The UK fund Pelham Capital has declared a stake of 9.98% in the new Socimi from Luis López de Herrera-Oria (pictured below), according to a statement filed by the company with Spain’s National Securities and Market Commission (CNMV).

The new real estate vehicle of the former founder and CEO of Axiare (which was taken over by Colonial) has convinced the London-based firm to enter its share capital by acquiring 999,028 shares, worth €9.5 million, on the basis of the real estate firm’s current share price.

After completing its debut on the main stock market, with a dip of 10%, Árima’s share price recorded a slight upturn on the second day of trading, with an increase of 5.56%.

It is expected that, over the coming days, other funds and institutional investors will be revealed that have participated in the €100 million capital increase that Árima launched to complete its stock market debut. Initially, the Socimi had intended to raise up to €300 million, but it lowered its expectations in light of the unstable situation in the markets.

Original story: Eje Prime

Translation: Carmel Drake

Spain’s Large Socimis are not Perturbed by Podemos’s Proposed Tax Legislation

14 October 2018 – La Información

The Socimis, one of the great tax regimes currently booming in our country, suffered a serious blow on Thursday after an agreement was published between PSOE and Podemos to push ahead with the State’s General Budgets. As a result, the Socimis are going to have to pay tax (at a rate of 15%) on any profits that they do not distribute as dividends, in other words, the funds that remain in the companies to increase their capitalisation. But, which companies are going to be most affected? Only the smallest ones.

In recent months, the large real estate companies on the Ibex and the Continuous Stock Market have been distributing significant dividends, in some cases even exceeding their accounting profits by two or three times. Therefore, the new measure will not affect them, given that only undistributed profits will be taxed. By contrast, the small entities that are listed on the Alternative Investment Market – where they have their own segment – barely exceeded the obligatory dividend distribution of 80% of the profits for that type of company in most cases.

If we take Merlin – a giant in the tertiary sector –by way of example. Last year, it obtained a profit of €114.5 million (after discounting the appreciation of its assets) and it dedicated 205% of its profits to dividends. Even high figures were recorded by Colonial, which distributed 267% of its profits to its shareholders, and Lar España, which is listed on the main stock market, and which distributed 236% of its results after taxes to the owners of its shares.

By contrast, the small companies on the MAB complied with the law in a comprehensive way but without distributing such significant figures. Such was the case of AP67, a Socimi whose assets are primarily residential, commercial and office-based, which distributed just over €240,000 of its total profits of €300,000.

Why do the small companies only distribute the legal minimum? Most of the companies listed on this market are owned by a small number of shareholders, normally those who have been with the entity since the beginning and, therefore, they have no commitment to the owners of those shares. In fact, the movement in shares is so small in the majority of cases that the volume is almost nil.

By distributing 80% of their profits as dividends, they pay tax of up to 25% on those earnings, whilst the remaining 20% is posted to reserves and, previously, there was no requirement to pay any tax on that. With this proposal, the money that is not distributed to the shareholders (in other words, that 20%) would be subject to a tax rate of 15%.

For tax experts, these measures may scare off foreign investors, especially funds, which regard Spain as a good opportunity for investing after the framework for Socimis was brought into line with those governing REITs in countries such as France and Germany. Moreover, “other countries have an advantage over Spain going back many years and they offer more beneficial tax frameworks”, something that the new tax will only serve to dent in the Spanish system.

In light of the possible approval of the draft presented on Thursday by Unidos Podemos and PSOE, the Socimis “will distribute all of their profits as dividends to avoid the double taxation of the same money”, said a high-profile tax advisor consulted by La Información.

Original story: La Información (by Lucía Gómez)

Translation: Carmel Drake

López de Herrera-Oria Forgets Axiare & Launches a Socimi to Invest €300M

5 October 2018 – Eje Prime

Following Colonial’s takeover of Axiare, Luis López de Herrera-Oria (pictured below) is reinventing himself with Arima. The former CEO of Axiare has constituted a new Socimi that plans to raise €300 million to invest in the real estate market.

The new company will centre its efforts on the office market in Madrid, the star segment for the now extinct Axiare, which will account for 80% of its investments. Barcelona and logistics assets will also be of interest to the Socimi.

The return of López de Herrera-Oria to the real estate sector, as revealed by Eje Prime in June, is expected imminently and his new vehicle is expected to debut on the main stock market without first starting out on the Alternative Investment Market (MAB). In fact, Arima’s stock market debut could even happen before the end of October, according to Expansión.

Alongside the executive, a serial entrepreneur in the real estate business, one of his right-hand men at Axiare, Chony Martín Vicente-Mazariegos, who used to be the Socimi’s Finance Director, will be immersed in the project. Similarly, some of López de Herrera-Oria’s other trusted directors will form part of Arima’s new project, including Guillermo Fernández-Cuesta, Fernando Arenas and Stuart McDonald. Arima means soul in Basque.

Since February, when Colonial completed its successful takeover of Axiare and merged the Socimi into its group,  López de Herrera-Oria has kept a low profile. The director pocketed €26.4 million from the sale of the package of shares that he owned in the manager.

Original story: Eje Prime

Translation: Carmel Drake

Residential Assets Displace Offices as the Leading Investment Choice for New Socimis

23 August 2018 – El Confidencial

The configuration of the investment map of the Socimis on the Alternative Investment Market (MAB) has changed drastically following the recent incorporation of the company owned by Santander, BBVA, Acciona and Merlin Properties. With a portfolio comprising 10,700 homes, Testa has placed the residential segment in first position on the investment ranking of new listed companies, relegating the office sector to third place.

In this way, of the 14 new joiners to the MAB so far this year, 30.8% have housing as the main or significant target of their investments, compared with 12.8% of the 20 new companies that made their MAB debuts in 2017. With this boost, offices, which had led the ranking until now, have been relegated to third place with 15%.

The weight of retail premises is also striking since they have increased from 6% to 23%, according to data from Armabex. Beyond specialisation, registered advisors also highlight the leading role of international investors, which account for 43% of the new listed companies.

“The rate of new joiners is expected to continue and this year, we are going to comfortably exceed the total figures recorded last year (44 companies), to more than 70”, said the President of Armabex, Antonio Fernández. Currently, there are 59 Socimis trading on the MAB, which account for 60% of the one hundred or so companies that participate in the Alternative Investment Market.

In terms of the upcoming debuts, the Socimi from Bankinter specialising in the hotel sector, Atom Hoteles, is planning its launch. Other examples include Haya Real Estate, Vía Célere and Azora, whose plans to debut on the stock market have been delayed due to the instability in the international financial markets, the political uncertainty in Spain and the evolution of the businesses themselves. The most recent to debut, at the beginning of August, was Mistral Patrimonio, whose activity focuses on rental homes.

“These companies have evolved towards greater specialisation. They started leading tertiary assets to move towards housing and, now, they are opening up to other segments such as hotels, residences, healthcare complexes, gas stations, etc.”, says Fernando Vives, Technical Director at Alia Tasaciones.

An annual valuation

To ensure transparency, the regulations require that these investment vehicles are listed on a regulated European market, be it the main stock market, the Euronext or the Alternative Investment Market, in a maximum period of two years following their constitution.

Nevertheless, the stock market listing is not the only method of transparency. The MAB has just introduced a new requirement that obliges companies to issue more reports. They will be obliged to undertake an annual valuation of their assets, beyond the initial assessment. (…). “The measure obliges Socimis to provide more information and to incur expenses, but it is very positive at the macroeconomic level and for investors”, says Antonio Fernández (…).

“The Socimis have brought confidence back to the real estate sector after the real estate bubble burst. They are here to stay, taking advantage of the upwards cycle and they will continue to activate the real estate market, above all for tertiary use until at least the end of the cycle (…)”, says Vives.

Original story: El Confidencial (by E. H.)

Translation: Carmel Drake

Testa’s Shareholders Approves its Debut on the MAB

16 July 2018 – Expansión

The General Shareholders’ Meeting of Testa Residencial has approved its debut on the Alternative Investment Market (MAB), which will likely happen before the end of this month (July) through the listing system, according to reports from sources at the company speaking to Europa Press.

The rental home Socimi in which Santander and BBVA hold stakes, had initially planned to make its debut on the main stock market in June, but delayed that move until the end of September due to the political and stock market uncertainty. It has now decided to make its debut on the MAB at the end of this month to comply with Socimi regulations. In this way, in order to not lose its status as a Socimi, which establishes a period of two years from constitution to debut on the stock market, Testa Residencial will list on the MAB before the end of this month, although it does not rule out making the leap onto the main stock market in a second phase.

Through the listing system, the company can request access to trading without the need to launch a public sale offer (OPV). This formula gives its shareholders the opportunity of having their shares trade on an organised market without having to place the shares with new investors. Also, there will be no reference price, but rather the price will be determined based on the purchase and sales orders received during the adjustment period.

Testa Residencial became the second company after Azora to decide to delay its planned debut on the stock market, although in the case of the real estate asset management company, the delay was motivated by the takeover bid that Blackstone formulated for Hispania, one of its main clients.

In the case of Testa, the firm had initially planned to start trading on the stock market during the second half of June, and one of its possible IPO dates was 22 June. At the end of May, and due to the political and stock market uncertainties, the firm decided to delay that debut until the end of September (…)

Other firms in the sector that had also planned to make stock market debuts before the summer, such as Vía Célere and Haya Real Estate, the servicer owned by the US fund Cerberus, may now wait until a window of opportunity opens in October, depending on the conditions of the market. In the case of Haya, the firm’s debut is currently conditional upon the signing of asset management contracts that it is negotiating with BBVA and Sareb.

In terms of Testa Residencial, by virtue of the OPV, the Socimi Merlin Properties had also planned to exit its share capital, with the placement of the entire 17% stake that it held in the firm.

The market also expected Santander and BBVA to sell some of their stakes in the rental home company, which amount to 37% and 26%, respectively. Acciona, for its part, had still not taken a decision about its 20% stake in the company.

Testa Residencial is one of the largest rental home companies in the country, given that its portfolio contains 10,700 homes and is worth €2.275 billion.

With its debut on the MAB and its likely subsequent debut on the main stock market, the firm seeks to consolidate its position as a new, unprecedented real estate giant in the country, given its specialisation in primary residences for rent, at a time when that sector is experiencing a real boom.

Original story: Expansión 

Translation: Carmel Drake

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

Testa Postpones its Stock Market Debut Due to Political and Market Instability

29 May 2018 – Europa Press

Testa Residencial has postponed its debut on the stock market, initially planned for June, in light of the volatility on the stock market due to the political instability in the country, according to sources at the company speaking to Europa Press.

The rental home Socimi in which Santander and BBVA hold stakes has also decided to debut on the Alternative Investment Market (MAB) rather than list directly on the main stock market as originally planned.

In this way, in order to not lose the status of Socimi, which establishes a deadline for the firm to debut on the stock market, Testa Residencial will have to list on the MAB before 30 September, although it does not rule out debuting on the main stock market in a second phase.

Testa Residencial is whereby the second company, after Azora, to decide to delay its planned debut on the stock market, although in the case of that real estate asset management firm, it attributed its postponement to the takeover that Blackstone has launched over Hispania, one of its main clients.

In the case of Testa, the firm had planned to start trading on the stock market during the second half of June, and was looking at the 22nd of the month as the likely debut date.

The rental home Socimi had planned to make its debut through a public offering of shares (OPV) and a public subscription offering (OPS) of new shares, the latter for €130 million, both aimed at institutional investors.

Second postponed debut

In this way, Testa was going to become the second entity to debut on the main stock market this year, after Metrovacesa in February, but now it is the second real estate company to decide to postpone its debut.

The decisions by Azora and Testa may influence other firms in the sector that had also planned to make their own stock market debuts, such as Vía Célere and Haya Real Estate, the servicer owned by the US fund Cerberus. In that case, the firm’s debut is dependent on the closure of the asset management contracts that it is currently negotiating with BBVA and Sareb.

In terms of Testa Residencial, by virtue of the OPV, the Socimi Merlin Properties had planned to exit its share capital, by placing on the market its entire 17% stake in the firm.

The market was also expecting that Santander and BBVA would sell some of their shares in the rental home company, which amount to 37% and 26%, respectively. Acciona, meanwhile, had not yet taken a decision regarding its 20% stake in the company.

Testa Residencial is one of the largest rental home companies in the country, given that it owns a portfolio of 10,700 homes, worth €2.275 billion.

With its leap onto the stock market, the firm intends to consolidate its position as a new real estate giant, unprecedented in the country, given its specialisation in primary home rentals, at a time when that segment is experiencing in a boom in Spain.

Original story: Europa Press

Translation: Carmel Drake