Grupo Iffe Acquires Promorent & Implements a Change in Strategy

25 February 2019 – Eje Prime

Promorent, the second Socimi to enter the Alternative Investment Market (MAB), is changing hands. The company has been acquired by the Institute of Financial and Business Training (“el Instituto de Formación Financiera y Empresarial” or Grupo Iffe), which has purchased a majority stake through a capital increase amounting to €33.7 million, according to confirmation provided by David Carro Meana, CEO of Iffe, speaking to Eje Prime.

Following the operation, the company will cease trading as a Socimi and it has already filed a request with the MAB to enter the segment of expanding businesses under the name Iffe Futura. The group has also approved an increase in its share capital, at an extraordinary shareholders meeting, to take the leap into the field of property development.

Until now, Promorent was a Socimi with a real estate disposition. Now, with the entry of Grupo Iffe, it will also be a property developer. Moreover, the company’s new statutes provide for the possibility of acquiring and administering shares in other companies, even if they are not Socimis.

The new Board of Directors of Iffe Futura will be led by David Carro Meana. The President of Grupo Iffe will become the President and CEO of the company (…).

With this operation, Grupo Iffe is taking control of a listed company and consolidating its business as a property developer. The company, which is headquartered in Oleiros, A Coruña, already operates three other main lines of business: a business school, a financial consultancy and a business incubator.

Promorent, constituted in November 2011, has been a real estate company until now. It was promoted by the Pavón Olid family group and it was the second Socimi to make its debut on the MAB in December 2013. The company has a diversified portfolio comprising 18 assets: 11 homes in the centre of Madrid, 4 commercial premises and 3 plots (…).

Original story: Eje Prime (by Roger Arnau)

Translation: Carmel Drake

Who are the Key Players in the Spanish Real Estate Market?

4 May 2018 – El Mundo

House sales are on the rise, as are house prices and rentals. Mortgages are also continuing their upward trend. Moreover, the resurgence of real estate activity is now a reality that can be seen in the increase in the number of new construction and real estate companies.

A recent report published by Gedesco, a firm specialising in financing for companies, says that one in four of the businesses created in Spain during the first quarter of 2018 belonged to the construction or property development sectors.

That represented a volume of almost 6,000 companies, 1.75% more than during the same quarter in 2017. With respect to the last three months of last year, the increase amounts to 21.9%.

Some good news to help us try to forget the fact that 142,576 construction companies disappeared between 2008 and January 2017 – both building firms and property developers -, according to the latest data from Spain’s National Institute of Statistics (INE).

In eight years, the sector went from having almost 360,000 companies to having just 216,987, a reduction of 39%. If we take the look at real estate companies, there were 106,375 in 2008, whereas there were just 67,812 by 2017, almost half.

The data compiled by INE reveals another interesting fact: the construction companies that had more than 5,000 employees in 2008 have disappeared. Although there were actually only three (including building firms and property developers), by 2017, there were just nine companies with 500 or more workers.

Names such as Martinsa Fadesa – created by the businessman Fernando Martín-, Astroc (chaired by Enrique Bañuelos) and Nozar went into the history books of the Spanish real estate sector, after failing to survive the impact of the recession.

Good health

Now, the outlook for the sector is looking healthy, in line with the increase in construction activity, which last year recorded a 28.9% increase in new build permits, to 80,786. According to the latest data from the Ministry of Development, corresponding to the first two months of this year, new home permits rose by 17.4% to 8,035 in February. Estimates in the sector indicate an output of 150,000 homes p.a. for the next few years.

For Elisa Valero, Marketing Director at Gedesco, “the construction sector is back in business”. Nevertheless, the director adds that “the creation of businesses has never gone away, if we look back a few years, the property developers were still there, but the volume of business creation was much lower”.

Whereas 5,000 companies are now being created, in 2011 – at the height of the crisis – just 2,000 were being constituted (…).

Success stories

Another report published in recent weeks by the College of Registrars in Spain also shows that real estate activity in the country is gaining momentum. In 2017, the weight of construction companies and property developers over the total number of businesses constituted rose to 20%, and the rate of growth in relation to 2016 was 14%.

But, looking beyond the figures and back to specific cases (…) we see, for example, that two of the largest property developers of the current cycle were created less than three years ago. The firms in question: Neinor Homes and Aedas, which were created in 2015 and 2016, respectively.

The origins of Vía Célere, another of the important property developers these days, dates back to 2007, at the height of the crisis. The firm emerged after Juan Antonio Gómez-Pintado sold the company that he had chaired, Agofer, and created Vía Célere.

In all three cases, the presence of funds in the shareholding of the companies has stimulated their rates of investment to purchase land on which to build new homes.

Second chances

On the list of property developers that have been created recently, highlights include Kronos Homes, Stoneweg and Q21 Real Estate.

There is another noteworthy name on the current panorama, which, although it cannot be considered a new company, is a clear example of the resurgence of a business after the crisis. The company in question is Metrovacesa. Following a facelift by its creditor banks, it returned to the stock market at the beginning of this year, after abandoning it in 2013.

The firm, controlled by BBVA and Santander, stands out since it is the largest landowner in Spain, amongst the listed property developers, with 6.1 million m2 of land spread over the whole country, with the capacity to build 37,500 homes.

Business transformations such as the one involving Metrovacesa were commonplace during the crisis and resulted in the appearance of new players on the real estate stage.

Another illustrative example has been the birth of the so-called servicers. These companies have emerged in recent years from the former real estate subsidiaries of the banks.

Altamira (whose origins are found in Banco Santander), Servihabitat (La Caixa), and Solvia (Banco Sabadell), amongst others, are fulfilling the mission entrusted to them: to take on the bank’s property, enabling them to complete their clean-ups and to divest the assets by taking advantage of the current boom in activity.

The servicers, whose main activity is located in the Community of Madrid, are also responsible for selling the properties of another one of the stars created in recent years: Sareb, commonly known as the bad bank.

In 2018, that company celebrates its 5th birthday, and during its short life, it has taken over the properties of the entities that have been intervened as a result of the bank restructuring (…).

In recent months, Sareb has also started to market its first new build developments constructed on own land that it holds in its portfolio. In addition, last week, it launched a campaign to sell 3,314 homes along the coast, 95% of which will be lived in for the first time by their new owners.

The Socimis

If there is one group of players that stands out above all of the other newly created real estate companies it is the Socimis.

The real estate investment companies started to trade on the Spanish stock exchange in 2012 as a result of a regulatory change introduced by the Government that gave them free reign to do so.

The Socimis Entrecampos and Promorent were the first to make their debuts. Six years on, there are 51 such companies and, according to some estimates, that number may reach 100 in the future. Merlin, Axiare, Hispania, Lar España, Testa and Colonial – the largest by volume – have all been created in the last four years and are now competing with property developers, such as Neinor and Aedas, on the real estate stage and on the stock market.

In April, one of the newest faces, Sareb’s Socimi Témpore, made its debut. In its first month on the Alternative Investment Market (MAB), it has seen its share price appreciate by 3.85%. When it made its stock market debut, the company’s valuation amounted to €152 million (…).

Original story: El Mundo (by María José Gómez-Serranillos)

Translation: Carmel Drake

Who’s Who Behind The MAB’s Largest Socimis?

6 February 2017 – Expansión

The majority of Spain’s Socimis are now listed on the Alternative Investment Market (MAB). They have a combined market capitalisation of €3,500 million and so account for 68.5% of the value of that market, which is aimed at small and medium-sized companies.

In total, 29 real estate companies form part of the MAB, which comprises 67 companies in total. Seventeen of those real estate companies debuted on the MAB last year (…).

The largest Socimis

With a market capitalisation of €819 million, GMP is the largest Socimi on the MAB, larger even than one of the four Socimis that trades on the main stock market, Lar España. GMP, which was founded in 1979 by the Montoro Alemán family, debuted on the MAB last July, after adopting the Socimi structure two years ago. The real estate company, which owns around twenty office buildings in the most high profile financial districts of Madrid, has the sovereign fund of Singapore GIC as one of its shareholders; GIC owns a 32.9% stake in GMP, which it controls through another MAB-listed company, Eurocervantes.

Moreover, GMP is not only the largest Socimi (on the MAB) by market capitalisation, it also holds the largest portfolio of assets, worth €1,800 million as at 30 June 2016.

Another important owner of office buildings is Zambal. This Socimi is the only one of the five largest Socimis on the MAB that is not managed by its owner. The firm Investment Business Beverage Fund, based in Luxembourg and owned by the French magnate Pierre Castel, has appointed Iba Capital to manage its real estate investments in Spain. Iba is led by Castel’s fellow countryman Thierry Julienne.

This Socimi is the landlord of a number of large companies, both home-grown and from overseas. It owns the Madrid headquarters of Vodafone, Enagás, Gas Natural, BMW, Unidad Editorial and Día, amongst other buildings. Its portfolio is worth more than €730 million and its market capitalisation amounts to €559 million.

Meanwhile, Uro Property was created by the creditors of the company Samo, which purchased around 1,130 bank branches leased to Banco Santander in 2007. Nowadays, after selling several batches, it owns 755 branches worth €1,585 million (as at 30 June 2016).

Its main shareholder is the firm Ziloti Holding, although Santander and CaixaBank also hold direct stakes in the company amounting to 22.79% and 14.5%, respectively.

Blackstone, the largest investment fund in the world, has also listed a Socimi on the MAB to manage some of its real estate assets in Spain. Specifically, it has placed the thousands of homes that it owns and rents out into Fidere, worth €317.5 million.

The fifth largest Socimi on the MAB by market capitalisation is Isc Fresh Water. This vehicle was created with more than 200 bank branches from Banco Sabadell purchased in April 2010 by the Mexican fund Fibra Uno, controlled by the investor Moisés El-Mann.

Nowadays, the Socimi owns 213 branches, worth around €374 million, and its main shareholders are the El-Mann family, with a 65% stake and Jacobo Bazbaz Sacal, with 14.85%.

Diversity on the MAB

Each one of the Socimis on the MAB has its own characteristics, ranging from Promorent, with its market capitalisation of €4 million to GMP (which is worth more than €800 million). Their performance on the stock market is also very different: five of them have recorded increases since the beginning of 2017; three have registered decreases; and the remaining 21 have not seen any changes in their share price since the start of the year. (…).

Outlook for 2017

The proliferation of Socimis on the stock market will continue this year, according to the experts, who believe that the economic context favours these companies. (…).

Nevertheless, analysts warn that their small size and lack of liquidity imply risks for investors, since it is possible that they will not be able to sell their shares when they want to, due to the very small volume of business. (…).

Original story: Expansión (by Rocío Ruiz and Diana Esperanza)

Translation: Carmel Drake

The Resurgence Of Spain’s RE Market: Who’s Who?

11 July 2016 – Expansión

Spain’s real estate companies are making a name for themselves on the European map, particularly thanks tothe merger of Merlin and Metrovacesa. The Socimis and funds are also boosting the sector and are throwing themselves into the tertiary business. (…).

Following its merger with Metrovacesa, Merlin now owns assets with a gross value (GAV) of €9,317 million and a net value of €4,927 million. This portfolio of assets have catapulted it into the top ten ranking of the largest listed Socimis in Europe, all of which have a GAV of more than €9,000 million. The largest three are Unibail Rodamco (€37,800 million) Klepierre (€22,100 million) and Land Securities (€18,700 million). Merlin is ranked eighth. Unlike its European counterparts – who are much more specialised but who have a presence in more countries – Merlin is focusing its activity in Spain, although it does own some assets in Portugal and has a more diversified portfolio.


The operation between Merlin and Metrovacesa “is a clear sign of the professionalization of the sector”, according to Humphrey White, CEO of the consultancy firm Knight Frank (…).

Other, smaller Socimis are also competing in the race to grow in size, such as Axiare, Hispania Real and Lar España, which have also gained prominence in the sector. A tier below, we find other Socimis such as Cuatro, Promorent and Mercal Inmuebles, which are listed on the specialist MAB market.

Other Socimis

“One of the first effects of this merger is that the other Socimis are going to have to following the path adopted by Merlin and carry out operations of this kind, so as to place themselves at the same level in the market”, says Borja Ortega, Director of Capital Markets at JLL.

Compared with Merlin, the other Socimis in Spain are much smaller in terms of asset values. Specifically, Hispania, with GAV of €1,500 million; Lar, with €1,050 million; and Axiare with around €900 million, are above or near the threshold of €1,000 million, but light years away from the €9,300 million held by the newly merged Merlin. The large players in the capital markets, such as Blackstone and Fidelity, are demanding liquidity (in terms of share trading) from the listed companies to invest in their share capital. (…).

In this way, the Socimis are facing up to companies with a long history in the real estate sector, such as Colonial, which specialises in prime offices in Barcelona, Madrid and Paris, with assets worth almost €7,000 milion. Colonial, chaired by Juan José Brugera, is currently evaluating the possibility of investing in other European cities, particularly offices in prime locations. The company, one of the real estate companies that survived the burst of the bubble, has just approved the distribution of its first dividend since 2008. It has also launched an investment plan whereby it will allocate €400 million to the acquisition of real estate assets and undertake a €265 million capital increase.

In addition to the Socimis, another major player that has burst onto the new property map with a vengeance is Pontegadea, the investment arm of the founder of the textile empire Inditex, Amancio Ortega.


Pontegadea’s assets, worth more than €6,000 million, are located across a dozen countries in Europe, America and Asia. The company invests in buildings where some of its Zara mega-stores are opening in major cities, such as New York, Boston and Milan. In addition, it has purchased unique office buildings in prime areas such as Torre Picasso in Madrid, considered its largest single investment to date (€400 million). It also owns hotels, such as the one it has just purchased in New York for €68 million from the fund KHP Capital Partners. (…).

Original story: Expansión (by G.Martínez and R.Arroyo)

Translation: Carmel Drake

Hotel Socimis Get Ready To Invade The MAB

16 March 2016 – Cinco Días

Hotel Socimis are getting ready to colonise the Alternative Investment Market (MAB). Hotel chains of all sizes are analysing this vehicle in light of the tax incentives that it offers. More than six companies are already working on their debuts.

Bay, the vehicle created by Hispania and Barcelona, fired the starting gun in the hotel Socimi race. Socimis are vehicles whose activity involves real estate investment, and they also offer tax incentives for investors. “This year, the hotel Socimis will position themselves in the market, with urban properties and holiday resorts”, says Bruno Hallé, Managing Partner at the consultancy firm Magma Hospitality, who highlights the appeal that the Spanish hotel industry holds for both foreign travellers and investors.

The vehicle is being analysed by hotel groups of all sizes (small, medium and large) that have a lot of real estate on their balance sheets and that view this option as an alternative for obtaining liquidity and continuing with their growth strategies, as well as of separating their hotel activity out from their assets. In the case of Bay, it owns a portfolio of 16 vacation hotels, which also includes two shopping centres. That Socimi will soon debut on the MAB.

For other Socimis, the MAB has also become the launch pad. Of the 15 Socimis now operating on that platform, three are hotel companies: Obsido, Trajano and Promorent, and another six such companies are planned over the next few months.

“The Socimi is a vehicle that anyone working in the real estate sector has to consider”, says Antonio Fernández Hernando, President of Armabex, one of the registered advisors to the MAB that specialises in Socimis. It is currently promoting Bluebay, the hotel chain owned by Jamal Satli Iglesias, which has been managing the Hotel Miguel Ángel in Madrid for the last few months. Sources at the hotel group acknowledge that no specific decisions have been taken yet about the assets that are going to be incorporated into this vehicle, but according to estimates, it will have a value of between €450 million and €500 million.

The valuation of the most urgent project that Armabex is working on is much smaller. It will have just one hotel, in the North of Spain, and is owned by a family group, which also plans to launch another vehicle of this type with another four properties.

Behind them is a list of projects under consideration, including one that Antonio Fernández Hernando says has an initial valuation of €150 million.

Among the investors who have realised their plans to launch pure hotel Socimis is Millenium. The group, chaired by Javier Illán, is evaluating the option of creating a hotel Socimi and has set an investment objective of €300 million, which could increase to €500 million, in both the holiday and urban segments.

Besides the Socimis, another alternative preferred by hotel groups in recent years has been the creation of joint ventures with investment firms. Such is the case of Meliá, which launched a company with Starwood Capital, to which it sold a portfolio of six properties for €176 million. “The future of the Socimis will involve the creation of multi-brand vehicles, like the ones that already exist in the US”, says Hallé, who acknowledges that the sector is in its infancy and will become more established over the next few years.

Original story: Cinco Días (by Laura Salces Acebes and Pablo Martín Simón)

Translation: Carmel Drake

Socimis Account For Almost One Third Of The MAB

14 March 2016 – El Economista

Almost one third of the 49 companies currently trading on the Alternative Investment Market (MAB) are Socimis. The real estate investment vehicles have a combined market capitalisation of €1,600 million and have led the debuts on this market, which have accompanied the recovery of the sector.

The first Socimi to make the move onto this growing business market was Entrecampos, which debuted in November 2013, a year in which Promorent also joined the exchange. In the middle of 2012, the Ministry of Development decided to improve the regulations governing Socimis – created in 2009 – whereby relaxing the requirements for their constitution, in relation to capital and the number of shareholders.

Despite that, in 2014, only two Socimis debuted on the MAB, namely Mercal and Obsido; the latter specialises in hotel assets.

The presence of Socimis was almost symbolic until in 2015, when there was also a change of direction in the real estate sector and this type of company – very common in other countries similar to our own – burst onto the MAB, which had been questioned after having witnessed some high profile failures (Gowex, Grupo Nostrum and Bodaclick, amongst others).

Last year, seven Socimis debuted on the MAB. They included Trajano Iberia, which is managed and promoted by a division of Deutsche Bank; Uro Property, whose portfolio mainly comprises bank branches leased to Santander; Corpfin Capital Prime Retail II; Autonomy; Fidere; Zambal; and Zaragoza Properties, which owns a stake in the Puerto Venecia Shopping Resort shopping centre in Zaragoza.

So far this year, four Socimis have debuted on the MAB, namely, Heref Habaneras, owner of the Habaneras shopping centre (in Torrevieja); Corpfin Capital Prime Retail III; Inversiones Doalca and Jaba I Inversiones Inmobiliarias. Indeed, the last two made their debuts on Friday.

Zambal is the Socimi with the largest market capitalisation on the MAB, almost €570 million, followed by Uro Property (€218 million) and Fidere (€192 million). Promorent and Obsido have the smallest market capitalisations in the Socimi segment on the MAB, with €4.3 million and €6.6 million, respectively.

The tax advantages of these vehicles for investors (they are exempt from Corporation Tax, although they must distribute almost 80% of the profit that is not reinvested in the form of dividends) are part of their appeal.

Nevertheless, even though the MAB is still growing and increasingly more companies are joining it, the heavy weight Socimis are listed on the main stock market (Hispania, Axiare, Lar España Real Estate) and Merlin Properties is even listed on the Ibex 35.

Original story: El Economista

Translation: Carmel Drake

Socimi Fever Shakes Up The Stock Market

28 September 2015 – El Economista

After a flurry of activity during 2015, Spain now has 14 listed Socimis, of which 10 trade on the MAB. And this figure is expected to continue to grow over the coming months.

Last week, two Socimis went public on the Alternative Investment Market (‘Mercado Alternativo Bursátil’ or MAB). The first, Autonomy Spain, debuted with an increase of 1.52%, to €16.75.

Autonomy is the parent company of a group that currently comprises two sub-Socimis. The group’s real estate portfolio contains six office buildings – five located in the Community of Madrid and one in Cataluña.

A day later, it was the turn of the Socimi Corpfin Capital Prime Retail II, which became the tenth real estate investment company to go public on the MAB.

The company, which has already invested €75 million in retail premises in “prime” areas of Madrid, San Sebastián, Burgos and Vitoria, expects to invest a further €35 million before November 2016, whereby taking its total investment to €110 million.

This is the first Socimi that the private equity firm Corpfin Capital has listed publicly. The firm also has plans to list another Socimi, Corpfin Capital III, through which it holds joint investments in 8 real estate assets.

The week before, Zaragoza Properties, which owns a stake in the Puerto Venecia Shopping Resort shopping centre in Zaragoza, debuted on the MAB.

Also this year, the Socimi Obsido entered the market for small companies. Its growth plans involve the purchase of hotels in Spain’s principal tourist destinations.

In addition, Trajano Iberia debuted on the stock market (in July). It is managed and promoted by a division of Deutsche Bank, and focuses on “semi prime” offices in Madrid and Barcelona; “prime” offices in secondary cities, shopping centres, and logistics assets.

Also in July, Mercal went public with a portfolio of assets in strategic locations in Spain. Four months before that Uro Property Holding, which owns one third of Santander’s bank branches, began trading on the MAB with a valuation of €259.7 million.

The Socimis Entrecampos, Fidere and Promorent also trade on the MAB, but the largest Socimis, namely Merlin Properties, Hispania, Lar España Real Estate and Axiare, all trade on the main stock exchange. Between them, they had purchased assets amounting to more than €3,100 million as at the middle of August, strengthened by the funds raised through their respective capital increases.

Even Acciona is evaluating the possibility of creating a Socimi for its real estate assets, and this Monday, the General Shareholders’ Meeting of Testa is expected to approve the conversion of the company into a Socimi after it was acquired by Merlin.

Original story: El Economista

Translation: Carmel Drake

RE Companies Gain Strength On Stock Market

11 May 2015 – Expansión

Markets / Colonial is the clearest bet for experts with a medium or long-term outlook

Seven years after the start of the crisis, almost twenty real estate companies are still trading on the stock exchange on a daily basis. A depleted army of survivors from the burst of the huge property bubble, which have now been joined by the Socimis – the newly created companies that specialise in real estate and enjoy significant tax benefits. They are revitalising a sector that has made an unprecedented journey across the desert, resulting in a loss in value of more than €40,000 million in stock exchange terms.

Together, the listed real estate companies (excluding those that have been suspended from trading, such as Martinsa Fadesa and Reyal Urbis), currently have a market value of around €9,000 million. That figure is light years away from the record figure of more than €50,000 million recorded in 2007. Today, the companies in the sector are smaller, their shares are much less liquid and their prices are more volatile.

Strong revaluation

After a long, tough period of adjustment, which is still underway in many cases, the sector has started to recover in 2015. The share price of every real estate company has increased this year (from minimal lows), with the exception of the smallest Socimi in the market (Promorent) and they have accumulated an average gain of 25%. Is this increase in share prices convincing? Is it time to allow real estate companies back into (our investment) portfolios?

Experts agree that it is too soon to bet heavily on the real estate companies, since they still represent risky investments, due to their high degree of indebtedness, plus their results do not entice investors to take positions. Nevertheless, they believe that the option of incorporating property companies into (investment) portfolios on a step-by-step basis is appealing, to take advantage of the potential reactivation of the real estate business in the heat of the economic recovery.

“It is not yet the best time to invest in a significant way in real estate. That ideal time will come during the final phase of the growth cycle of the Spanish economy, which is still in a process of recovery”, says Jaime Díez, from XTB, who says, nevertheless that “now may be a good time to start entering the sector, but in a moderate way, with portfolios investing 5% to 10% of their total funds in such companies. Over the long term, it will be interesting but we should always bear in mind that it is a high risk bet”.

Risk profile

Depending on the profile of the investor, Victoria Torre, from Self Bank, recommends investing no more than 5% to 20% of a portfolio in real estate assets. “If we consider an investment in the sector, we would do it from a medium-long term perspective”, she says, noting that there are “various factors that point to the recovery of the business, such as the slight increase in mortgage lending, the recovery in sales, the reduction in the housing stock and the increase in house prices”. In any case, analysts are very selective. Díez believes that the real estate company Colonial is the clearest bet amongst the traditional real estate companies, which have accumulated significant increases so far this year. Quabit’s share price has increased by almost 100%; Inmobiliaria del Sur (which has just signed an agreement with Anida, the real estate arm of BBVA, to develop a large housing development project in Sevilla) has increased its share price by almost 60%; Urbas by 53%; Realia by 41%; and Renta Corporación by 34%. Moreover, Colonial itself and Testa (which is contemplating a full/partial IPO) have both accumulated double-digit gains.

Original story: Expansión (by E. G.)

Translation: Carmel Drake

Up To 15 Socimis Are Planning To Go Public In 2015

12 February 2015 – El Economista

Since the first Socimi debuted on the stock exchange – Entrecampos was the pioneer at the end of 2013 – seven companies of this kind have now floated on the stock market. And according to Jesús González Nieto, the Vice-President and CEO of the Alternative Investment Market (el Mercado Alternativo Bursátil or MAB) the number of listed Socimis will increase this year to include seven or eight more, with two of them planning to go public this quarter.

Nevertheless, market sources close to these transactions claim that the number of vehicles of this kind preparing to go public is even greater: with “up to fifteen” (currently involved in the process).

“Around fifteen Socimis are planning to go public within the next year, with assets ranging from €20 million to €400 million”, said one of the people responsible for placing the shares of these new real estate companies in the market. “Most of them are investments being made by foreign funds in Spain, which are buying up premium assets (hotels and above all, shopping centres). In parallel, there is a stream of hoteliers, who are seeing the benefits of putting their hotels into these vehicles because it allows them to dissociate the business from the properties”, he added.

According to the same source, there are two main reasons as to why non-residents above all are incentivised to constitute Socimis. Firstly, it is easier to exit an investment in one of these type of companies than it is to exit an investment in a specific building, “Socimis represent an easier way of buying (when you have a view) to sell”, he said. And secondly, there are tax advantages: Socimis are exempt from paying corporation tax, and also receive a 95% discount oon property transfer tax. For investors, however, the main appeal of these companies is that the rules require them to distribute 80% of the companies’ gross operating profits in the form of dividends, although at the moment, none of them are expected to make a profit this year.

“For these types of Socimis, those that are businesses, the average IRR of their portfolios is at least 8%”, say a number of financial sources. But amongst the fifteen Socimis that are preparing to float, there are also some property managers. As such “families are using these vehicles as a way of organising their assets to convert immovable property into movable property, whereby allowing it to be easily distributed”, they explain.

The regular stock market or MAB?

What remains to be seen is the market they will choose to list on – namely, the regular stock market or the MAB? The latter allows these types of companies to be valued on a discounted cash flow basis rather than on the basis of their NAVs (net asset values), which is the more accurate ratio used for valuing real estate assets in general and REITs (the US version of Socimis) in particular.

To date, the stats are as follows: of the seven Socimis that have debuted on the stock market in recent years, three have done so on the MAB (Entrecampos, Mercal and Promorent). And the other four have listed on the regular stock exchange: Lar España, Merlin Properties, Hispania and Axia. But, what determines whether these companies list on one market or another? “In reality, all of the Socimis that list today should do so on the MAB. Nevertheless, some of them have jumped onto the regular stock exchange because the investment funds behind them are subject to regulation 401k, which requires them to list on an official exchange, and MAB does not quality; it is regulated but not official. This means that some Socimis were forced to list on the regular stock exchange”, say market sources.

For the time being, the only thing we know about the six or eight companies on MAB’s radar (where they may list, according to comments made by MAB’s Vice President on Wednesday) are their timelines. “Two this quarter” and another “three or four before the summer”. One of them is “a very big player, with a large volume of capital”.

González Nieto explained that he regrets the slow speed of the mechanisms that process the files of these companies; a Socimi has two years from when it first registers to fulfil all of the conditions required to begin its activity, which means that this year is the deadline for those that first signed up in 2013. It is time for the interested parties to “get on with their homework if they regard it as a good opportunity”, he said.

Original story: El Economista (by C. García and J. Gómez)

Translation: Carmel Drake