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.
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