Tag: property sector

Drago Capital Buys 75% Of The Company Foujita 16

17 November 2016 – Cinco Días

Drago Capital has acquired 75% of the company Foujita 16, which owns three plots of urban land in Estepona (Málaga). The fund will construct its second housing development on the Costa del Sol on the plots. This project comes after Drago Capital made its first move into the construction sector with the Ocean Hills residential development.

The company has launched itself into the residential market on the Spanish coast. Until recently, funds of this kind invested almost exclusively in tertiary assets (offices, shopping centres and logistics platforms), but the economic recovery and the slight improvement in the property sector has led domestic and international investors alike to search for high returns in the construction of homes. In the case of the Spanish firm, it is firmly committed to the Costa del Sol.

The real estate fund has acquired 75% of Foujita, a Málaga based company that owns three plots of urban land in Estepona. These plots are adjacent to the existing urbanisation that Drago has already built in the area (Ocean Hills), near the Selwo adventure park, where 62 homes have already been built.

Drago will construct 136 apartments on the three new plots, which will be followed by two new developments containing 28 and 33 additional homes. In total, it will build around 260 homes on the Málagan coast, on a plot of land that has a buildable surface area of 30,000 m2.

The fund is making its investment through its subsidiary Esvernia Investments, the same company that developed Ocean Hills. The firm plans to spend between €30 million and €35 million on the development of the site. Several individual investors will join Drago in the project.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

The New RE Kings: Professional & Discreet

7 November 2016 – El País

The property sector still suffers from its soiled reputation as the cause of the bubble that led to the ruin of so many real estate companies, savings banks and families, ultimately bringing down the Spanish economy. But in a very discrete way, the sector is recovering its strength and real estate companies are becoming involved in major corporate operations once again, from purchases to mergers to stock exchange IPOs. The large corporations have also turned their business models on their heads. Whilst previously they undertook all kinds of activity (from property development to rental), we are now seeing specialist companies, many of whom are controlled by overseas investment funds.

The kings of property have also lost the glamour that those self-made businessman, such as Enrique Bañuelos (Astroc), Luis Portillo (Colonial) and Fernando Martín (Martinsa) enjoyed as their fortunes shined on the Forbes rich list (…). Nowadays, the new real estate companies do not have a visible face but rather are professional undertakings, and in many cases the managers are anonymous. The Socimis have taken up their place alongside the private equity funds and the large international investors such as the US businessman George Soros; Wang Jianlin, the richest man in China; and the Mexican magnate Carlos Slim.

Real estate stalwarts, such as Martinsa-Fadesa, Metrovacesa and Astroc, whose names used to feature on property developments, were left for dust, devoured by the black whole of gigantic debt. Their place has been occupied by the Socimis Merlin, Hispania, Lar and Axiare, whose names are barely known by the majority of the general public; by property developers such as Vía Célere and Neinor Homes, some of which have been created by overseas capital either investing directly in their capital or through partnerships for specific projects; and even by the former real estate arms of the banks, most of which are now owned by international funds.

One of the few exceptions to the empires from the last decade that has managed to survive is Colonial, which has cleaned up and transformed into a company that specialises in rental properties, and which is back with new investment plans. Last month, the company chaired by Juan José Brugera acquired 15.1% of the Socimi Axiare for €135 million. “Most of the companies that are left are a selection of the most professional enterprises”, said the Professor of Applied Economics at the Pompeu Fabra University, José García Montalvo. (…).

“The new managers of the real estate companies are more professional”, argues García Montalvo. In addition, the companies are more specialised and some even focus only on specific segments. One example is Lar España, a Socimi that specialises in shopping centre management (although it does also own a few office buildings), which has launched a €240 million investment plan for next year, supported by the major funds that comprise its shareholders, such as Franklin Templeton, Blackrock and Pimco.

Another example is Hispania, in which the US multimillionaires and fund managers George Soros and John Paulson hold stakes. It has also grown rapidly since it debuted on the stock market in 2014 and now manages assets amounting to almost €1,500 million. Its strategy is clear: to grow in size. Although it failed in its purchase of Realia, the company led by Concha Osácar and Fernando Gumuzio has absorbed the hotel Socimi Bay and all of the experts in the sector have tipped it to play an important role in upcoming operations. (…).

Original story: El País (by Ramón Muñoz and Lluís Pellicer)

Translation: Carmel Drake

Golf Property Sales Boost Recovery Of RE Market

9 September 2016 – Opp.today

Spanish property sales in major tourism areas have been starting to rise over the last year or so, with a little help from the golf sector.

In fact, the golf industry is a key driver of Spanish home sales, achieving nearly 3,000 transactions in 2016 alone – and buyers can benefit from prices that often rise faster than similar homes elsewhere.

Being close to a golf course can add up to a quarter to the value of a property compared to a regular home, says a new report from the Arum Group, which develops and manages luxury resorts in Spain including Abama Luxury Residences, La Manga Club and Eldorado Playa.

More than two-thirds (68%) of golf courses in Spain have a direct or indirect link with a real estate development, according to the data produced in conjunction with the Real Federación Española de Golf.

The Arum Group has seen strong demand at its Abama Resort in Tenerife with 45 sales in 2015, almost 50% more than predicted, and rising sales from sports enthusiasts at La Manga in Murcia, which has three golf courses.

Agustin La Rocca, Sales Director at Arum Group, says, “The Spanish property market is currently on an upward curve and one of the main drivers is the golf industry. We have certainly noticed the appeal that having world class golf courses adds to real estate developments.

“At both La Manga Club and Abama, we are graced with outstanding examples and there is no doubt that they add to the appeal for our buyers. For a start it means that their views will never be interrupted or built upon and also means that the peace and tranquility of the area will be preserved.”

Golf is a big draw for foreigners in Spain and it is estimated that 160,000 Britons in the country are close to a golf resort. In total, 234,500 properties enjoy ‘direct’ access to a golf course.

Most overseas demand for Arum Group Spanish golf properties comes from the UK, Belgium and Scandinavia, but it has buyers across the globe.

The EU Referendum vote has not affected UK buyer demand, says Agustin La Rocca. “Despite Brexit, British buyers will undoubtedly continue to aspire and want own their own luxury holiday homes in Spain. We have found that our clients are very focused and know exactly what they want from a second home. We do not have many competitors with the same standard of services and facilities and we expect UK demand to continue to grow.”

“The reason for buying depends on the project. Investors at La Manga Club are attracted to its renowned sporting facilities. The gated community offers world-class sporting amenities and wellness facilities perfect for second-homes investors looking for a home in the sun. On the other hand, Abama is more focused on luxury and glamour for those looking for the ultimate cuisine, golf and hotel facilities.”

With a high buyer demand, other developers are considering entering the sector, but it takes experience to be successful, says Agustin La Rocca.

“Over the past year, there have been a number of developers in Spain who have tried to develop golf resort but this is a science that needs lots of technology and it takes a lot of practice. It essential to have a highly experienced team behind the resort in order for it to be a success. In that sense, Arum Group has more than 20 years of experience in developing some of the top golf resorts in Spain.”

As well as boosting real estate sales, golf has also had a positive impact on the Spanish tourism industry with visitor numbers increasing 36.3% in the first quarter of 2016 compared to the same period in 2015, in the region of Murcia alone.

La Manga Club, a 1,400-acre resort in Murcia popular with sports enthusiasts, has seen strong sales thanks to its on-site sporting facilities including three golf courses. It also reports, a rise in visitors using the available rental accommodation. These findings are supported by the Murcia Tourist Board, which recently released data highlighting that tourists staying in private rented accommodation in the region has risen by 25.6% in 2016 compared to the same period last year.

There is a similar story at the Abama Resort in Tenerife, which features an 18 hole Dave Thomas designed golf course and tennis academy. 45 units were sold in 2015, almost 50% more than predicted, with all purchasers attracted by the lifestyle offered by the resort and its amenities. (…).

In May 2016, across all Spanish property sales, not just golf villas, 32,512 homes were sold, up 23% year-on-year, according to the National Statistics Institute. It is the highest figure since January 2013 and the fourth consecutive month of double-digit annual increases.

Original story: Opp.today

Edited by: Carmel Drake

Brexit Will Hit Spain’s Coastal Housing Market

27 June 2016 – El Mundo

The tremors of the international earthquake caused by Brexit, i.e. the victory of the “Yes” campaign in the United Kingdom’s referendum to leave the European Union (EU), will also be felt in the Spanish housing market. Especially in coastal areas, which are so dependent on British demand. The effects are yet to be measured, but all signs are that the UK Goodbye will overshadow the domestic property sector, at least in the short term.

Until now, the consequences of the possible Brexit, now a harsh reality, had been limited to a slowdown in the number of transactions and the signing of SPA contracts with annulment clauses to be invoked in the event that the United Kingdom left the EU, according to Santiago Sánchez, managing Partner at Engel & Völkers (E&V) in Torrevieja and Orihuela. (…).

“In addition, the new international environment may cause Brits to sell the homes that they already own in exchange for euros. And as we know: more supply and the same or less demand, decreases prices”, warns Sánchez, who acknowledges that the market had assumed the opposite outcome from the vote. “We were expecting a boost in activity following a “No” Brexit vote and for all of the built-up demand to be able to go ahead and make purchases, however…”, he laments.

For Sánchez, nevertheless, the problem that will penalise the housing market the most will be the bureaucractic aspects. “If the United Kingdom leaves the EU, it will become much harder for British citizens to settle down in Spain. They will have to request residence and work permits, take out private health insurance, and they don’t know what will happen in terms of inheritance and gifts, etc”, he said. In any case, the head of E&V believes that Brits will continue to weigh up the appeal of living in Spain. “I think that they will keep buying homes because they want to retire here”, he said.

On the other hand, most economists and real estate experts consulted agree that Brexit is bad news for the recovery of the (housing) sector in Spain, which had been started to gain strength, including along the coast. And it is precisely in the coastal regions where the United Kingdom’s departure from the EU will cause the most negative effects, given that Brits account for 21.3% of house purchases by foreigners, and the vast majority of those purchases are made by the sea. The experts are certain that the devaluation of the pound and the on-going uncertainty will weigh down on this buoyant purchasing activity, both at home and overseas. (…).

Meanwhile, Gonzalo Bernardos, Economist and Director of the Real Estate Masters at the University of Barcelona, is much more positive than his colleagues, and offers a Brexit analysis with a broader outlook. “In light of this emergency situation and to avoid a catastrophe on the markets, I think that the European Central Bank (ECB) will inject a lot of liquidity into the market, which means the banks will have more credit and that will drive the Spanish economy and, therefore, the housing market”, he said. “The current neoliberal EU will be completely redesigned and there will be a major reorganisation of the union to prevent any other country from leaving. We will say goodbye to the strict deficit demands for individual countries. In the case of Spain, the fine that was going to be levied on us, will become worthless”, he said. (…).

Original story: El Mundo (by Jorge Salido Cobo)

Translation: Carmel Drake

Sareb Has Returned €1,000M Assets To Banks

24 June 2016 – Expansión

In recent years, Sareb has found itself with an unexpected line of business as it works to slim down its balance sheet: it has been returning certain assets to the entities that transferred them to it initally. The company chaired by Jaime Echegoyen (pictured above) has returned more than €1,000 million in real estate assets and loans linked to the property sector to groups that transferred it the assets in the first place.

Those €1,000 million represent 2% of Sareb’s balance sheet upon creation – €50,781 million – and 13.5% of the total reduction in its asset value since 2012.

The assets have been returned due to information or appraisal deficiencies made by the transferring entities, at the time of transfer, between 2012 and 2013. Thus, some assets were transferred to Sareb with values that exceeded their real values and other should not have been transferred to the company at all, as they did not meet the requirements.

Financial sources consulted indicated that some personal loans were transferred to Sareb, which had nothing to do with the purpose of the company.

According to Sareb’s annual reports, corrections are made to asset purchase deeds “for the purposes of identifying the improper categorisation of assets, changes in the perimeter and errors or variations in the estimated valuation on the transfer date”.

Bond returns

With these properties and loans, the entities have returned €1,000 million in bonds that they received in exchange for their assets. (…).

Sareb was created at the end of 2012 from the assets of all of the entities that received public aid during the European bank rescue. Firstly, the banks controlled by the Frob – Bankia, Catalunya Banc, Banco de Valencia, NCG Banco and Banco Gallego – transferred their properties and developer loans, and then those entities that had received aid but not been nationalised –Liberbank, Caja 3 and Banco Ceiss, together with BMN– transferred their assets.

Of all of these entities, Catalunya Banc has received the most assets (in return) from Sareb over the last three and a half years. The entity absorbed by BBVA has now been returned €365 million in total, mainly between 2013 and 2014. CB is followed in the ranking by NCG Banco – now Abanca – with €182 million; Bankia with €168 million; and Banco de Valencia – purchased by CaixaBank – with €161 million.

By year, the most active period in terms of property and loan “adjustments” was 2014, when Sareb returned almost €550 million worth of assets to the entities. But the real estate company is still finding problems with the homes and loans that it was transferred, and this year it has already sent back assets worth almost €60 million to Liberbank, Bankia, Caja 3 and Banco Ceiss. (…).

A new tool

Recently, Sareb launched a new internal tool to help it handle all of the assets that it has on its balance sheet and expedite their transfer. It is called Atlas and it performs more than 300,000 valuations each year, automatically, cross checking market data with socio-economic indicators, such as rental income and population size in each place. (…).

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

The RE Sector Attracts Overseas Investors Once More

12 April 2016 – Cinco Días

(…) Overseas capital is focusing on the property market once again. And Spain is one of the main European markets for offices, hotels and logistics. Madrid and Barcelona are leading the charge and the Socimis at the forefront of the revitalisation of the market. (…)

According to data from the Foreign Investment Register, published by the Ministry of Finance, the construction sector and real estate-related activities secured almost €7,700 million of direct foreign investment in 2015, i.e. 34.5% of the total. As such, one out of every three euros of international funds received by the Spanish economy last year was invested in the property sector.

Productive foreign investment (that which generates activity and employment) grew for the third consecutive year, to close 2015 with an increase of 11%, to €21,724 million. Of that amount, €4,706 million, i.e. 21.7%, was allocated to the construction of residential buildings and property development, compared with €1,762 million in 2014….Meanwhile, real estate-related activities (sales, purchases and rentals) accounted for 13.8% of the total, i.e. €2,992 million. (…).

In the context of this new activity, the Socimis have emerged as the main supporters of the market. The large Socimis experienced a real boom in 2015, when they flooded the MAB with their stock exchange debuts and came close to tripling their profits, which rose from €89.5 million in 2014 to €251.2 million last year, according to data from the CNMV.

Within the last year, the four largest Socimis (Merlin Properties – which has been listed on the Ibex 35 since December -, Hispania – thanks to its partnership with Barceló -, Lar España and Axiare Patrimonio) have doubled the value of the properties they own, to more than €9,200 million in total. (…).

The Socimis accounted for 41% of all funds invested in the purchase of real estate assets in 2015 – they spent €5,237 million on asset transactions. In this way, the increase in the volume of their investments amounted to 129%, in particular due to Merlin’s purchase of Testa for almost €1,800 million.

Wealthy individuals and several international funds have invested fully in these investment vehicles, attracted by the low prices in the sector and the tax advantages on offer (Socimis are exempt from paying corporation tax). The Qatar sovereign fund is trying to become the largest shareholder in Colonial; it now owns almost 30% of the Catalan real estate company.

George Soros has strengthened his commitment to Hispania, in which the millionaire John Paulson holds a stake of almost 10%. Carlos Slim controls Realia…Amancio Ortega, with his investment arm Pontegadea, now manages a very interesting and diverse asset portfolio.

The experts agree that the sector has left behind the turbulent times that it experienced following the burst of the real estate bubble. It is undergoing a period of normalisation and stabilisation – albeit a long way from its pre-crisis levels – and it is facing a new environment, with sustainable growth, in a market that is more mature and more professional.

Original story: Cinco Días (by Pablo Pico)

Translation: Carmel Drake

Advent International Puts Tinsa Up For Sale

18 January 2016 – Expansión

Everything is now ready for the sale of Tinsa, Spain’s largest real estate appraiser, which has been controlled by Advent International since 2010. A few months ago, the private equity fund appointed the investment bank Rothschild as advisor to the process, and now that its preparations have been completed, market sources expect the sale to be officially launched this week, with the distribution of the sales prospectus. Advent has declined to comment.

During the months leading up to the launch, the phase during which interest from investors is typically gauged both financial investors (other private equity houses) and industrial companies have expressed their interest in analysing the purchase. The latter include some companies in the same sector, as well as others from beyond, which view the acquisition of a real estate appraiser as an additional or complementary business line, say sources.

The valuation of the company will range between €300 million and €350 million, according to market estimates, an amount that represents around 10x Tinsa’s forecast EBITDA for this year. The company’s results for 2015 have not yet been published, but the company expected to increase sales by 12%, to €86 million, and to generate an EBITDA of €20 million, which it forecasts will rise to around €30 million in 2016.

This outlook reflects the strong recovery that the Spanish real estate sector is enjoying, after a severe period of inactivity following the burst of the bubble and the resultant financial and economic crisis.

In fact, the resurrection of the property market may have been one of the reasons behind Advent’s decision to exit the appraiser. According to sources, if all goes according to plan, the operation will be completed within the first half of this year.

Timing

The situation was completely different when the fund led in Spain by Carlos Santana, CEO, acquired Tinsa. Then, the Spanish real estate sector was in dire straits. Advent acquired a 94.% stake in the appraisal company in November 2010, for around €100 million and whereby took over the shares previously held by 35 different savings banks.

With the sale of Tinsa, Advent’s portfolio of Spanish investment companies, will be reduced to just one asset: the civil explosive manufacturer, Maxam, in which it acquired an almost 50% stake in 2011. Nevertheless, the manager is not planning to withdraw from the country completely. In fact, it is continuing to comb the ground in search of new purchases and it has participated in some of the sales undertaken recently in the PE sector, such as the auction for Parques Reunidos, for which it submitted an initial bid, however that did not meet the demands of the owner, the fund Arle Capital Partners.

Original story: Expansión (by Mamen Ponce de León)

Translation: Carmel Drake

Political Uncertainty and Populism Threaten RE Recovery

1 June 2015 – El Economista

The electoral success of Manuela Carmena (Ahora Madrid) in Madrid and Ada Colau (Barcelona En Comú) in Barcelona has started to take its first victims in the real estate sector. Barely a week has passed since the elections and “some investors have already suspended deals to purchase property in Spain”, warn certain sources close to the negotiations.

The uncertainty regarding the possible political agreements has hit the property sector hard, “just when it was starting to recover”. In Madrid and Barcelona alone, large urban projects amounting to €14,000 million have already been called into question.

Major construction companies, financial institutions and large international funds are involved in these developments, including the Chinese magnate Wang Jianlin, who came to Spain with plans to invest around €4,000 million and who now see his real estate plans for the country being endangered.

“Right now, the sector is beginning a process of paralysis in certain segments. All of the investors are waiting for the possible political agreements to be settled so that they can carry out transactions”, explain sources in the sector.

“The is a great deal of uncertainty and considerable ungovernability in many cases, as well as expected increases in taxes and public spending, coupled with the suspension of forecast investments, which may result in the withdrawal of foreign capital”, they warn.

This situation may result in “an important step backwards for the emerging recovery”, given that it comes at a time when the real estate sector was really beginning to take off; record levels of investment were recorded last year. Before the elections, experts predicted that the level of transactions was going to continue (this year), but following recent events, “it is now very difficult to make forecasts”. These warnings coincide with others made this week by several important businessmen, such as the Chairman of OHL, Juan Miguel Villar Mir, who said that (political) groups such as Podemos put Spain’s economic recovery in danger. In a similar way, the markets have penalised the election results and the Ibex 35 recorded a loss of 2.91% last week.

(…)

The urban plans proposed by Carmena and Colau leave most of the major projects, both those already underway as well as those still to be awarded, up in the air. In Madrid, they endanger million-euro developments such as Operación Chamartín, the Madrid Río shopping centre, Operación Mahou-Calderón, the Canalejas complex, Operación Edificio España, la Ciudad de Justicia and even Operación Campamento.

Whilst in Barcelona, projects such as La Maquinista and Heron City shopping centres, the refurbishment of the Nou Camp and urban developments in the surrounding area, the ski slope in the free trade zone of Barcelona SnowWorld and the conversion into hotels of iconic buildings such as Torre Agbar, the Deutsche Bank building on Passeig de Gracia or Project Núñez i Navarro are also at risk.

(…)

Original story: El Economista (by Alba Brualla and Javier Mesones)

Translation: Carmel Drake

Merlin, Hispania And Axia Could Raise More Than €1,340M

5 May 2015 – Expansión

The real estate investment companies are trading at record highs, and (their share prices) still have potential (to increase), say analysts.

The real estate sector is back in fashion. The current liquidity surplus, together with the scarcity of alternative investments, minimum interest rates and low financing costs have led to the resurgence of properties. In this way, the (share prices of the) 4 real estate companies (Socimis) that are listed on the stock exchange (another 5 are listed on the Alternative Investment Market or MAB) have risen by 20% on average during the year and are trading close to record highs. And yet, all of them have “buy” recommendations from the majority of the analysis firms that follow them.

Gaining in size

In this context, Merlin Properties, Hispania (which is not strictly a Socimi, but which has a similar profile) and Axia Real Estate are seeking to raise capital to fully benefit from their investment opportunities. The three entities could raise more than €1,340 million.

The first one to take the plunge was Merlin, which announced a capital increase of 64.6 million shares (50% of the volume in circulation) on 15 April amounting to a value of €613.8 million. The new shares are being issued at €9.50, which represents a discount of 27% on the trading price on the day before the announcement. The subscription period ended on 2 May. The new shares from the capital increase, which are underwritten by UBS, Credit Suisse and Goldman Sachs, amongst other entities, will begin to trade on 12 May. “The transaction makes sense because we believe that the current upwards cycle in terms of revenue and ratings may last for 2 or 3 more years”, say sources at Banco Sabadell. The analysis firm advises investors to “buy” these shares, as do the other five analysts that cover this security. “We believe in the experience and know-how of the management team at Merlin to “play” the upwards property cycle and gain a profit”, they add.

One of Merlin’s main strengths is its size. Analysts calculate that the company may have almost €1,400 million to invest. “It is able to access large transactions that other companies cannot, such as the purchase of Testa”, says Juan Moreno, analyst at Ahorro Corporación. That transaction that would have the blessing of the market if, as it being discussed, the acquisition of 30% of the company is agreed for €500 million, without the payment of a premium over the NAV (net asset value).

Meanwhile, last week Hispania increased its capital by €337 million through an accelerated placement amongst institutions, without the right to preferential subscriptions.

The company, in which George Soros holds a stake, tried to lead the purchase of Realia last March. In the end, Carlos Slim was the “cat that got the cream”, through FCC, but experts liked the design of the operation. “Hispania is innovative in the transactions it proposes. For example, it seeks to enter (companies) by purchasing debt, restructuring that debt and then buying the company at a lower price”, says Moreno. The expert also highlights the recent alliance signed between Hispania and Barceló to create a Socimi to invest in the hotel sector.

Three of the four analyst firms that follow the security advise investors to “buy”. In terms of Axia, the Socimi has announced its intention to increase its capital by 36 million shares (100% of its capital) for a value of €396 million. For the time being, the market does not know whether the current shareholders will have preferential subscription rights. But, in any case, the experts like the security, which has increased in value by 10.77% during the year. Two of the three firms that follow it advise investors to ”buy” and the third advise investors to “hold”. The share price may increase by 8.7% to €13.10.

Original story: Expansión (by C. Sekulits)

Translation: Carmel Drake

Socimis Are The Star Players In The RE Sector In 2015

22 April 2015 – Expansión

The value of companies in the sector has increased by 30% on average in 2015 / The Socimis Merlin, Lar España and Hispania are the analysts’ favourites to benefit from the recovery in the property sector.

The real estate sector is gathering strength on the stock exchange. So far in 2015, (the share values of) companies linked to the property sector have increased by 30% on average on the stock market.

Experts think that now is a good time to invest in these securities, given the strong economic outlook for Spain and the signs of recovery in their businesses. Investment in the real estate sector amounted to €2,463 million during the first quarter (of 2015), i.e. three times as much as during the same period last year. Analysts do not rule out that investment this year may exceed the record high of €11,470 million reached in 2007.

Factors in its favour

“Several factors point to an improvement of the sector: the rise in mortgage lending, the increase in (the volume of) sales, the reduction in the housing stock, and the increase in house prices”, says Victoria Torre, at Self Bank.

Nevertheless, the experts are not convinced: not all companies represent (good) investment opportunities. For Bankinter, it is still too early to back the traditional real estate companies and property developers, whose securities are small in size and have scarce liquidity. For that entity, the best opportunities in the sector are the Socimis (listed real estate investment companies). One of the major attractions of these companies is their returns: they pay out at least 80% of their profits to their shareholders and their returns per dividend can reach 4%.

The favourites in the sector

Merlin Properties is Bankinter’s favourite listed Socimi because it considers that it has an established investment portfolio, visibility over earnings and acceptable levels of liquidity and capitalisation. Juan Moreno, at Ahorro, also backs that company, whose (share price) has increased by 29.88% during the year. “Although (its shares) are trading slightly above our valuation (they closed trading yesterday at €11.76), we consider that the current environment of excess liquidity and low interest rates justify its current prices. The Socimi’s differentiating factor is its size, which allows it to access transactions for which there is less competition”, he explains.

Moreover, the returns on its dividends amount to 3.8%, i.e. the highest in the real estate sector. The six companies that track its value are advising (investors) to buy its shares. UBS gives it an upside potential of 6%, up to €12.41.

Another one of the options preferred by investors is Lar España. The company is a good way of betting on the recovery in the market for shopping centres. “It has just acquired the As Termas shopping centre for €67 million, which will help it to grow and boost its results”, says Remo Bosch, from the firm RBL Asesores. Lar’s share price has increased by 16% in 2015 and it has an upside potential of 10%, according to the consensus of analysts consulted by Bloomberg.

Moreno also thinks that Hispania is attractive. “It is proposing transactions that generate value, such as its agreement with Barceló, which in our opinion will generate €1.90 per share for every shareholder”, he says. He gives its shares a target price of €13.10, i.e. 4.5% above yesterday’s closing price.

Original story: Expansión (by D. Esperanza)

Translation: Carmel Drake